LUZON SURETY CO., INC. vs.

JOSEFA AGUIRRE DE GARCIA, VICENTE GARCIA and

the FOURTH DIVISION OF THE COURT OF APPEALS
G.R. No. L-25659 October 31, 1969

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 inthe 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 and
attorney's fees related to the loan.
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 Conjugal Property of Gains could be liable on an indemnity agreement executed by
the husband to accommodate a third party in favour of a surety agreement.

Held:
No.
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.
In the most categorical language, a conjugal partnership under Art. 161 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. 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.