Luzon Surety Co vs de Garcia

Facts:

1) Ladislao Chavez, principal, and petitioner Luzon Surety Co Inc, executed a surety bond in favor of PNB
Victorias Branch to guaranty a crop loan granted by the latter to Chavez in the sum of PhP9,000.

2) Vicente Garcia, together with Ladislao Chavez and Ramon Lacson, as guarantors, signed an indemnity
agreement binding themselves solidarily liable to indemnify Luzon Surety Co Inc against any and all damages,
costs and and other expenses which the petitioner may sustain or incur in consequence of having become
guarantor upon said bond, to pay interest at the rate of 12% per annum, computed and compounded quarterly
until fully paid; and to pay 15% of the amount involved in any litigation or other matters growing out of or
connected therewith for attorney's fees.

3) On April 27, 1956, PNB filed a complaint against Ladislao Chavez and Luzon Surety Co. to recover the
amount of PhP4,577.95, in interest, attorney’s fees and other costs.

4) On August 8, 1957, Luzon Surety Co. instituted a third party complaint against Chavez, Lacson and Garcia.

5) On September 17, 1958, a judgment was rendered ordering Chavez and Luzon Surety Co. to pay PNB in
solidarity. The same decision likewise ordered the third party defendants Chavez, Garcia and Lacson to pay
Luzon Surety Co. the amount to be paid to PNB.

6) On July 30, 1960, a writ of execution was issued against Garcia to satisfy the claim of the petitioner. A writ of
garnishment was soon issued levying and garnishing the sugar quedans of the Garcia spouses from their sugar
plantation.

7) Spouses Garcia filed a suit for injunction and the trial court ruled in favor of them.

Issue:

WON the CPG could be liable on an indemnity agreement executed by the husband to accommodate a third
party in favor of a surety agreement

Held:

No. Decision appealed from was affirmed. Costs against petitioner.

Ratio Decidendi:

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and
those contracted by the wife, also for the same purpose, in the cases where she may legally bind the
partnership;
(2) Arrears or income due, during the marriage, from obligations which constitute a charge upon
property of either spouse or of the partnership;
(3) Minor repairs or for mere preservation made during the marriage upon the separate property of
either the husband or the wife; major repairs shall not be charged to the partnership;
(4) Major or minor repairs upon the conjugal partnership property;
(5) The maintenance of the family and the education of the children of both husband and wife, and of
legitimate children of one of the spouses;
(6) Expenses to permit the spouses to complete a professional, vocational or other course. (1408a)

Petitioner contends that Garcia’s transaction as a guarantor through which he acquires the capacity of being
trusted, adds to his reputation and enhances his standing in the community. He can thus secure money with
which to carry on the purposes of their conjugal partnership. While not entirely without basis, such argument
cannot prosper for it would negate what is expressly provided for in Article 161.

In the most categorical language, a conjugal partnership under that provision is liable only for such "debts and
obligations contracted by the husband for the benefit of the conjugal partnership." There must be the requisite
showing then of some advantage which clearly accrued to the welfare of the spouses. There is none in this case.
While Garcia by thus signing the agreement may be said to enhance his reputation, such benefit, even if
hypothetically accepted, is too remote and fanciful to come within the express terms of the provision.

Its language is clear; it does not admit of doubt. No process of interpretation or construction need be resorted to.
It peremptorily calls for application. Where a requirement is made in explicit and unambiguous terms, no
discretion is left to the judiciary. It must see to it that its mandate is obeyed. So it is in this case. That is how the
Court of Appeals acted, and what it did cannot be impugned for being contrary to law.