G.R. No. 27957, February 17, 1928
LA FABRICA DE CERVEZA DE SAN MIGUEL, plaintiff-appellee, vs. ABELARDO HIZON, ET AL., defendants-appellants.

FACTS

La Fabrica de Cerveza de San Miguel (plaintiff) filed an action to recover the sum of P14,052.16 from defendant Abelardo Hizon for “Royal Soft Drinks” and beer furnished to him as its sales agent. The other defendants were sued as sureties on Hizon’s bonds. Hizon denied liability and filed a counterclaim for damages, alleging that the plaintiff terminated his agency without cause. The trial court appointed a referee to receive evidence. The referee found Hizon indebted to the plaintiff in the sum of P12,586.62 and detailed the suretyship liabilities of the other defendants based on four separate bonds totaling P14,000. The trial court initially rendered judgment based on the referee’s report. After motions for reconsideration, the court set aside its decision to allow further arguments on the referee’s report but ultimately reinstated its judgment against all defendants, holding them jointly and severally liable for the full amount. The defendants appealed.

ISSUE

1. Whether the trial court erred in its rulings regarding Hizon’s demurrer and counterclaim.
2. Whether the trial court erred in holding the sureties jointly and severally liable with the principal debtor for the entire judgment amount, rather than limiting their liability to the respective amounts of their bonds.

RULING

The Supreme Court MODIFIED the trial court’s decision.
1. On Hizon’s Liability: The Court found no merit in Hizon’s assignments of error regarding the overruling of his demurrer, the disallowance of his counterclaim, and the specific accounting items. The referee’s findings, which the trial court affirmed, were supported by the evidence. The judgment holding Abelardo Hizon liable for P12,586.62 was AFFIRMED.
2. On the Sureties’ Liability: The Supreme Court MODIFIED the liability of the sureties. The trial court erred in holding them jointly and severally liable with Hizon for the entire judgment amount. The obligations of a surety are strictly construed and cannot be extended beyond the terms of the contract. The four bonds (Exhibits H, I, J, K) were distinct contracts with specific limits (P3,000, P2,000, P6,000, and P3,000, respectively). Therefore, the sureties’ liability is several, not joint and several with each other for the total obligation. Each set of sureties is liable only up to the amount stipulated in their respective bonds, but solidarily (jointly and severally) with the principal debtor, Abelardo Hizon, within that limit.

DISPOSITIVE PORTION:
Abelardo Hizon is sentenced to pay the plaintiff P12,586.62. His co-defendants, as sureties, are sentenced to pay the plaintiff, jointly and severally with Abelardo Hizon, the proportional parts of said sum as may be covered by the amounts of their respective bonds. The judgment is affirmed in all other respects. Costs against the appellants.