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G.R. No.

L-42518
August 29, 1936 WISE & CO., INC., plaintiff-appellee, vs. DIONISIO P.
TANGLAO, defendant-appellant.
The appellant in his own behalf. Franco and Reinoso for appellee.
AVANCEÑA, C. J.:
In the Court of First Instance of Manila, Wise & Co. instituted civil case No. 41129 against Cornelio C. David
for the recovery of a certain sum of money David was an agent of Wise & Co. and the amount claimed from him
was the result of a liquidation of accounts showing that he was indebted in said amount. In said case Wise & Co.
asked and obtained a preliminary attachment of David's property. To avoid the execution of said attachment,
David succeeded in having his Attorney Tanglao execute on January 16, 1932, a power of attorney (Exhibit A) in
his favor, with the following clause:
To sign for me as guarantor for himself in his indebtedness to Wise & Company of Manila, which
indebtedness appears in civil case No. 41129, of the Court of First Instance of Manila, and to mortgage
my lot (No. 517-F of the subdivision plan Psd-20, being a portion of lot No. 517 of the cadastral survey
of Angeles, G. L. R. O. Cad. Rec. No. 124), to guarantee the said obligations to the Wise & Company,
Inc., of Manila.
On the 18th of said month David subscribed and on the 23d thereof, filed in court, the following document
(Exhibit B):
COMPROMISE
Come now the parties, plaintiff by the undersigned attorneys and defendants in his own behalf and
respectfully state:
I. That the defendant confesses judgment for the sum of six hundred forty pesos (P640), payable at
the rate of eighty pesos (P80) per month, the first payment to be made on February 15, 1932 and
successively thereafter until the full amount is paid; the plaintiff accepts this stipulation.
II. That as security for the payment of said sum of P640, defendant binds in favor of, and pledges
to the plaintiff, the following real properties:
1. House of light materials described under tax declaration No. 9650 of the municipality of
Angeles, Province of Pampanga, assessed at P320.
2. Accesoria apartments with a ground floor of 180 sq. m. with the first story of cement
and galvanized of iron roofing located on the lot belonging to Mariano Tablante Geronimo,
said accesoria is described under tax declaration No. 11164 of the municipality of Angeles,
Province of Pampanga, assessed at P800.
3. Parcel of land described under Transfer Certificate of Title No. 2307 of the Province of
Pampanga recorded in the name of Dionisio Tanglao of which defendant herein holds a
special power of attorney to pledge the same in favor of Wise & Co., Inc., as a guarantee
for the payment of the claim against him in the above entitled cause. The said parcel of
land is bounded as follows: NE. lot No. 517 "Part" de Narciso Garcia; SE. Calle Rizal;
SW. lot No. 517 "Part" de Bernardino Tiongco; NW. lot No. 508 de Clemente Dayrit;
containing 431 sq. m. and described in tax declaration No. 11977 of the municipality of
Angeles, Pampanga, assessed at P423.

It does not appear that the execution of this judgment has been asked for and Exhibit B. with the costs to the plaintiff. For the foregoing considerations. 1830 of the Civil Code. The plaintiff has in its favor a judgment against debtor David for the payment of debt. The only obligation which Exhibit B. David used said power of attorney only to mortgage the property and did not enter into contract of suretyship. leaving an unpaid balance of P296. to enter into a contract of suretyship and a contract of mortgage of the property described in the document. A. Wherefore. It appears from the foregoing that defendant. At any rate. a foreclosure suit is not instituted in this case against Tanglao. David paid the sum of P343. Tanglao empowered David. and even if this inference might be made. Wise & Co. in connection with Exhibit A. Tanglao could not have contracted any personal responsibility for the payment of the sum of P640. However. with Wise & Co. said lien to be cancelled only on the payment of the full amount of the judgment in this case. on account of the P640 which he bound himself to pay under Exhibit B.53.53. . even granting that defendant Tanglao may be considered as a surety under Exhibit B. is that resulting from the mortgage of a property belonging to him to secure the payment of said P640. shows that David has two pieces of property the value of which is in excess of the balance of the debt the payment of which is sought of Tanglao in his alleged capacity as surety. the appealed judgment is reversed and the defendant is absolved from the complaint.That this guaranty is attached to the properties above mentioned as first lien and for this reason the parties agree to register this compromise with the Register of Deeds of Pampanga. the parties pray that the above compromise be admitted and that an order issue requiring the register of Deeds of Pampanga to register this compromise previous to the filing of the legal fees. Nothing is stated in Exhibit B to the effect that Tanglao became David's surety for the payment of the sum in question. now institutes this case against Tanglao for the recovery of said balance of P296. Neither is this inferable from any of the clauses thereof.47 to Wise & Co. There is no doubt that under Exhibit. but a purely personal action for the recovery of the amount still owed by David. under the law. on the other hand. So ordered. However.. and decision of the Supreme Court of Spain of March 2. the action does not yet lie against him on the ground that all the legal remedies against the debtor have not previously been exhausted (art. 1891). in his name. has created on the part of Tanglao. it would be insufficient to create an obligation of suretyship which. must be express and cannot be presumed.

Plaintiff moved for a reconsideration of the order to this effect. May 25. CONCEPCION. constituted by the latter in favor of the former.EN BANC [G. presided over by Hon. No.” chan roblesvirtualawlibrary chan roblesvirtualawlibrary Although originally forwarded to the Court of Appeals. notwithstanding the fact that Defendant-Appellant was not served with a copy thereof nor served with notice of the hearing thereof. INC. the sum of P2. Plaintiff-Appellee. he filed. Plaintiff moved for summary judgment which a branch of the Court of First Instance of Iloilo. that: chanroblesvirtuallawlibrary “1. vs. Roman Ibañez. in his brief. Thereafter.53. Alfredo Brillantes is solvent and has many properties within the Province of Iloilo. Judge Makalintal rendered the aforementioned decision. notwithstanding the fact that said Mr.” Thereupon. ordering the land described in the complaint and subject of the mortgage to be sold at public auction in accordance with law in order to realize the amount of the judgment debt and costs. by way of “special and affirmative” defense: chanrobl esvirtuallawlibrary “That the Defendant herein has executed the deed of mortgage Annex A for the only purpose of guaranteeing — as surety and/or guarantor — the payment of the above mentioned debt of Mr. ELISEO BARBOSA. He maintains. also. as security for the payment of the sum of P2. the sum of P200 by way of attorney’s fees. “That the Plaintiff until now has no right action against the herein Defendant on the ground that said Plaintiff.] SOUTHERN MOTORS. presided over by Hon. Querube C.: This is an appeal from a decision of the Court of First Instance of Iloilo: chanroblesvirtuallawlibrary “(a) Ordering the Defendant Eliseo Barbosa to pay to the Court. and did not resort nor intends to resort all the legal remedies against the true debtor Mr. Southern Motors. denied upon the ground that it “is premature”.. and (b) Upon failure of the Defendant to pay as aforesaid. Plaintiff. Judge. the case was referred to the branch of said court. until fully paid. and had adopted the “policy of refraining from entertaining any other civil cases and all incidents related thereto. until after said cadastral cases shall have been finally disposed of.R. with interest at the rate of 12% per annum computed on the basis of the amounts of the installments mentioned in the mortgage and of the dates they respectively fell due. J. for the benefit of the Plaintiff within a period of ninety (90) days from receipt by the Defendant hereof. who had failed to settle his obligation in accordance with the terms and conditions of the corresponding deed of mortgage.889. Alfredo Brillantes the debt contracted by the latter in favor of said Plaintiff.889. Alfredo Brillantes in favor of the Plaintiff. without motive whatsoever. because that of Judge Ibañez would be busy trying cadastral cases. plus costs. Soon later. Alfredo Brillantes. 1956. Makalintal. from which the Defendant has appealed. the same has certified the record to this Court in view of the fact that the issues raised in the appeal involve merely questions of law. Judge. Defendant-Appellant. to foreclose a real estate mortgage. 1951..53 due to said Plaintiff from one Alfredo Brillantes. The trial court erred in hearing Plaintiff-Appellee’s ‘motion for reconsideration’ dated June 9. brought this action against Eliseo Barbosa. another motion praying that the case be transferred to another branch of said court. for action.” With the express authority of Judge Ibañez. Inc. upon said motion for reconsideration. L-9306. did not intent or intent to exhaust all recourses to collect from the true debtor Mr. Defendant Eliseo Barbosa filed an answer admitting the allegations of the complaint and alleging. .

in which event herein mortgagor authorizes and empowers herein mortgagee-company to take any of the following actions to enforce said payment. had not been exhausted as yet. at 8: 00 a. applying the proceeds of the purchase price at public sale of the real property herein mortgaged to any deficiency . for resolution. administrators and assigns shall well and truly perform the full obligations above-stated according to the terms thereof. to the prejudice of the substantial rights of Appellant. Atty.2. his counsel in the lower court. then this mortgage shall be null and void. executors. and did not intend to exhaust. “(a) Foreclose. It will be recalled that each one of the allegations made in Plaintiff’s complaint were expressly admitted in Defendant’s answer. in which he merely alleged. “The court a quo erred in depriving Defendant-Appellant of his property rights without due process of law. 1951. for. said motion for reconsideration had the effect of placing before then Judge Makalintal. untenable. chanrobl esvirtuallawlibrary The second assignment of error is. As stated in our discussion of the first assignment of error. on Saturday. The only issue set up by the pleadings was the sufficiency of said affirmative defense. by the name of Agripino Aguilar.” The first assignment of error is based upon an erroneous predicate. was actually served on June 9. Thus. this pretense is refuted by the record. “The trial court erred in rendering a ‘judgment on the pleadings’ in Appellee’s favor when no issue was at all submitted to it for resolution. upon the ground that it was premature. and (2) whether the mortgage in question could be foreclosed although Plaintiff had not exhausted. It is not true that there was no issue submitted for determination by the lower court when it rendered the decision appealed from. the following issues. with copy of Plaintiff’s motion for reconsideration. considering the allegations of Plaintiff’s complaint and those of Defendant’s answer. through an employee of his office.m. because the property of Alfredo Brillantes. apart from calling for a reexamination of the question posed by said order of Judge Ibañez. chanrobl esvirtuallawlibrary chan roblesvirtualawlibrary The third assignment of error is predicated upon the alleged lack of notice of the hearing of Plaintiff’s motion for reconsideration. it is obvious that Defendant’s affirmative defense is devoid of merit for: chanrobl esvirtuallawlibrary 1. June 16. evidently. to wit: (1) whether a summary judgment or a judgment on the pleadings was in order. otherwise it shall remain in full force and effect. Zamora. to a judgment on the pleadings. Alfredo Brillantes or herein mortgagor. the principal debtors.. In other words. or soon thereafter as counsel may be heard. the properties of his principal debtor. the chattel mortgage above referred to and/or also this mortgage. to render a judgment on the pleadings. Moreover. whether it was proper. Alfredo Brillantes. And such was the only point discussed by the Defendant in his opposition to Plaintiff’s motion for a summary judgment. under the circumstances.. 3. with notice to the effect that said motion would be submitted for the consideration and approval of the lower court. judicially or extrajudicially. for the satisfaction of Plaintiff’s credit. referring. revived said issue of sufficiency of the aforementioned affirmative defense. as “special and affirmative” defense. Plaintiff’s motion for reconsideration of the order of Judge Roman Ibañez refusing to render said judgment. namely. Manuel F. there was no question of fact left for determination. The deed of mortgage executed by him specifically provides: chanrobl esvirtuallawlibrary “That if said Mr. that Plaintiff is not entitled to foreclose the mortgage constituted in its favor by the Defendant. and were not sought to be exhausted. likewise. contrary to Defendant’s assertion. his heirs. 1951.

“The mortgage directly and immediately subjects the property upon which it is imposed. the things in which the pledge or mortgage consists may be alienated for the payment to the creditor. whereas pledges and mortgages fall under Title XVI of the same Code. Rules of Court. 4118. that a mortgagor is not entitled to the exhaustion of the property of the principal debtor. Wherefore. together with its interest of 12 per cent per annum. It has been held already (Saavedra vs. Rule 70. . Price.” 2. whoever the possessor may be. prior thereto. without any such pledge or mortgage. It is SO ORDERED. to satisfy the full amount of P2.53. 2087. however. in which the following provisions. are governed by Title XV of said Code. to demand exhaustion of the property of the principal debtor. among others. Guarantees.889. together with its interest hereby secured. 3135 and Act No. with costs against the Defendant-Appellant. 4. The right of guarantors. Although an ordinary personal guarantor — not a mortgagor or pledgor — may demand the aforementioned exhaustion.judicially under the provisions of Act No. who shall be entitled. or chan roblesvirtualawlibrary “(b) Simply foreclose this mortgage judicially in accordance with the provisions of section 2. the creditor may. under Article 2058 of the Civil Code of the Philippines. 68 Phil. secure a judgment against said guarantor. exists only when a pledge or a mortgage has not been given as special security for the payment of the principal obligation. 688). are found: chanrobl esvirtuallawlibrary ART. 2126.. to a deferment of the execution of said judgment against him until after the properties of the principal debtor shall have been exhausted to satisfy the obligation involved in the case. to the fulfillment of the obligation for whose security it was constituted. or extra. the decision appealed from is hereby affirmed.889. “It is also of the essence of these contracts that when the principal obligation becomes due.” 3.” ART.53.or difference between the purchase price of said chattel at public auction and the amount of P2.

2-00914-5 (for P294. 8848 and 8849) with the Regional Trial Court. Presidential Decree No. respectively.G. on behalf of El Oro Corporation. on or before 8 December 1981.R. 2-00914-5 for P294.: The Case. Petitioner Jose Tupaz bound himself to sell the goods covered by the letter of credit and to remit the proceeds to respondent bank. El Oro Corporation had a contract with the Philippine Army to supply the latter with "survival bolos. This is a petition for review1 of the Decision2 of the Court of Appeals dated 7 September 2000 and its Resolution dated 18 October 2000. a trust receipt corresponding to Letter of Credit No.05 and P294. if sold. Respondent bank made several demands for payments but El Oro Corporation made partial payments only. the then Makati Fiscal’s Office found probable cause to indict petitioners. Respondent bank granted petitioners’ application and issued Letter of Credit No. THE COURT OF APPEALS and BANK OF THE PHILIPPINE ISLANDS. On 27 June 1983 and 28 June 1983.05 to Tanchaoco Incorporated and Letter of Credit No. After Tanchaoco Incorporated and Maresco Corporation delivered the raw materials to El Oro Corporation. Petitioners bound themselves to sell the goods covered by that letter of credit and to remit the proceeds to respondent bank. 2-00896-3 for P564. in his personal capacity. TUPAZ IV and PETRONILA C. Respondent bank charged petitioners with estafa under Section 13. The Ruling of the Trial Court. 115 ("Section 13") 7 or Trust Receipts Law ("PD 115"). The 7 September 2000 Decision affirmed the ruling of the Regional Trial Court. After preliminary investigation. 2-00896-3 (for P564. 2005 JOSE C. Branch 144 in a case for estafa under Section 13. or to return the goods. J. respondent bank paid the former P564. During the trial. Simultaneous with the issuance of the letters of credit. Makati. TUPAZ. On 30 September 1981.000. Tupaz ("petitioners") were Vice-President for Operations and Vice-President/Treasurer. vs. petitioners. The Facts. 115. if sold. Presidential Decree No. CARPIO. respondent bank presented evidence on the civil aspect of the cases. of El Oro Engraver Corporation ("El Oro Corporation"). The letters of credit were in favor of El Oro Corporation’s suppliers. Petitioners pleaded not guilty to the charges and trial ensued. applied with respondent Bank of the Philippine Islands ("respondent bank") for two commercial letters of credit. Tupaz IV and Petronila C.000 to Maresco Corporation.871. Respondents. Petitioners did not comply with their undertaking under the trust receipts. El Oro Corporation replied that it could not fully pay its debt because the Armed Forces of the Philippines had delayed paying for the survival bolos. The Makati Fiscal’s Office filed the corresponding Informations (docketed as Criminal Case Nos.871.000). Tanchaoco Manufacturing Incorporated 3 ("Tanchaoco Incorporated") and Maresco Rubber and Retreading Corporation 4 ("Maresco Corporation"). a trust receipt corresponding to Letter of Credit No.05).871. No. if not sold. Petitioners. Makati. On 9 October 1981. Tupaz IV ("petitioner Jose Tupaz") signed. on 17 January 1984 and the cases were raffled to Branch 144 ("trial court") on 20 January 1984. in their capacities as officers of El Oro Corporation. 145578 November 18. The Court of Appeals’ Resolution of 18 October 2000 denied petitioners’ motion for reconsideration. if not sold." To finance the purchase of the raw materials for the survival bolos. respectively. respondent bank’s counsel5 and its representative6 respectively sent final demand letters to El Oro Corporation. or to return the goods. On 16 July 1992. petitioners signed trust receipts in favor of respondent bank. on or before 29 December 1981. petitioners signed. the trial court rendered judgment acquitting petitioners of . petitioner Jose C. Petitioners Jose C.

After all. the civil liability of the accused does not arise ex delicto but rather based ex contractu and as such is distinct and independent from any criminal proceedings and may proceed regardless of the result of the latter. Tupaz and Petronila Tupaz. they are not personally liable for El Oro Corporation’s debts. however.00 as expenses of litigation. P5. jointly and solidarily should be held civilly liable to the Bank of the Philippine Islands. alleging that they executed the subject documents including the trust receipt agreements only in their capacity as such corporate officers. Tupaz. However. 115) is no bar to the institution of a civil action for collection. judgment is hereby rendered ACQUITTING both accused Jose C. PD 115] that civil liability arising from the violation of the trust receipt agreement is distinct from the criminal liability imposed therein. Thus. The appellate court held: It is clear from [Section 13. 1992) with the stipulated interest at the rate of 18% per annum. our Supreme Court held that acquittal in the estafa case (P. The Ruling of the Court of Appeals. is contradicted by the evidence on record.000. the Court of Appeals affirmed the trial court’s ruling. an independent civil action to enforce the civil liability may be filed against the corporation aside from the criminal action against the responsible officers or employees.129. El Oro Engraver Corporation. with which they dealt both in their personal capacity and as officers of El Oro Engraver Corporation. They said that these instruments are mere pro-forma and that they executed these instruments on the strength of a board resolution of said corporation authorizing them to apply for the opening of a letter of credit in favor of their suppliers as well as to execute the other documents necessary to accomplish the same. Jose C. the trial court held: [S]ince the civil action for the recovery of the civil liability is deemed impliedly instituted with the criminal action. Such contention. and costs of the suit. The dispositive portion of the trial court’s Decision provides: WHEREFORE. plus 10% of the total amount due as attorney’s fees. as in fact the prosecution thereof was actively handled by the private prosecutor. Tupaz. they are free to institute an action to collect the same. the letter of credit applicant and principal debtor. El Oro Engraver Corporation. This is because in such cases. jointly and solidarily. In its Decision of 7 September 2000. In the case of Vintola vs.19 (as of January 23. Appellants argued that they cannot be held solidarily liable with their corporation. However. to pay the Bank of the Philippine Islands the outstanding principal obligation of P624. The mere fact that they were unable to collect in full from the AFP and/or the Department of National Defense the proceeds of the sale of the delivered survival bolos manufactured from the raw materials covered by the trust receipt agreements is no valid defense to the civil claim of the said complainant and surely could not wipe out their civil obligation. IV and Petronila Tupaz based upon reasonable doubt. are hereby ordered. In holding petitioners civilly liable with El Oro Corporation.D. The trust receipt agreement indicated in clear and unmistakable terms that the accused signed the same as surety for the corporation and that they bound . Petitioners contended that: (1) their acquittal "operates to extinguish [their] civil liability" and (2) at any rate. the trial court found petitioners solidarily liable with El Oro Corporation for the balance of El Oro Corporation’s principal debt under the trust receipts. Insular Bank of Asia and America. xxx [W]e hereby hold that the acquittal of the accused-appellants from the criminal charge of estafa did not operate to extinguish their civil liability under the letter of credit-trust receipt arrangement with plaintiffappellee.estafa on reasonable doubt. IV and Petronila Tupaz. Petitioners appealed to the Court of Appeals. the Court believes that the El Oro Engraver Corporation and both accused Jose C.

the undersigned Applicant and Surety hereby agree. plus 10% of the total amount due as attorney’s fees. this petition.000. 3. may act only through its directors.] 2. therefore. Petitioners contend that: 1. notwithstanding their acquittal in the criminal cases filed against them. and employees. THE SAME IS NOT YET DUE AND PAYABLE. to each and all stipulations. Hence. SINCE THEY SIGNED THE LETTER[S] OF CREDIT AS ‘SURETY’ AS OFFICERS OF EL ORO. Here. the dorsal side of the trust receipts contains the following stipulation: To the Bank of the Philippine Islands: In consideration of your releasing to ………………………………… .19 (as of January 23.themselves directly and immediately liable in the event of default with respect to the obligation under the letters of credit which were made part of the said agreement.00 as expenses of litigation and costs of suit. The trial court thus did not err in holding the appellants solidarily liable with El Oro Engraver Corporation for the outstanding principal obligation of P624. The Ruling of the Court. jointly and severally. PD 115 extinguished their civil liability. officers. The petition is partly meritorious. Even in the application for the letter of credit. acting as such corporate agents. and (b) whether petitioners’ acquittal of estafa under Section 13. being a juridical entity. AND THEREFORE. THE QUESTIONED TRANSACTIONS ARE SIMULATED AND VOID." xxx Having contractually agreed to hold themselves solidarily liable with El Oro Engraver Corporation under the subject trust receipt agreements with appellee Bank of the Philippine Islands. 1992) with the stipulated interest at the rate of 18% per annum. it is likewise clear that the undertaking of the accused is that of a surety as indicated [in] the following words: "In consideration of your establishing the commercial letter of credit herein applied for substantially in accordance with the foregoing. AN EXCLUSIVE LIABILITY OF EL ORO. We affirm the Court of Appeals’ ruling with the modification that petitioner Jose Tupaz is liable as guarantor of El Oro Corporation’s debt under the trust receipt dated 30 September 1981. xxx PETITIONERS ARE NOT PERSONALLY LIABLE TO xxx RESPONDENT BANK. herein accused-appellants may not. (2) If so — (a) whether petitioners’ liability is solidary with El Oro Corporation. A corporation. On Petitioners’ Undertaking Under the Trust Receipts. directors or officers are personally liable for the corporation’s debts only if they so contractually agree or stipulate. [AND] 4. The Issues The petition raises these issues: (1) Whether petitioners bound themselves personally liable for El Oro Corporation’s debts under the trust receipts. GRANTING WITHOUT ADMITTING THAT THE QUESTIONED OBLIGATION WAS INCURRED BY THE CORPORATION. As an exception. GRANTING THAT THE QUESTIONED OBLIGATION WAS ALREADY DUE AND PAYABLE.129. invoke the separate legal personality of the said corporation to evade their civil liability under the letter of credit-trust receipt arrangement with said appellee. Debts incurred by these individuals. IN THE ALTERNATIVE. provisions and conditions on the reverse side hereof. without need of demand. A JUDGMENT OF ACQUITTAL OPERATE[S] TO EXTINGUISH THE CIVIL LIABILITY OF PETITIONERS[. P5. are not theirs but the direct liability of the corporation they represent.

Before making demand upon me/us. We dismissed this claim and held the corporate officer liable as guarantor . without any need whatsoever on your part to take any steps or exhaust any legal remedies that you may have against the said ………… before making demand upon me/us. The Nature of Petitioner Jose Tupaz’s Liability Under the Trust Receipt Dated 30 September 1981 As stated. Petitioner placed his signature after the typewritten words "ARMCO INDUSTRIAL CORPORATION" found at the end of the solidary guarantee clause. In Ong v. Not being a party to the trust receipt dated 30 September 1981. pertaining to. without any need whatsoever on your part to take any steps or exhaust any legal remedies that you may have against the said ……………………………………………. jointly and severally. petitioners signed below this clause as officers of El Oro Corporation. the Court held that the corporate representative did not undertake to guarantee personally the payment of the corporation’s debts. petitioner Petronila Tupaz is not liable under such trust receipt. Intermediate Appellate Court. on demand. petitioner Jose Tupaz bound himself personally liable for El Oro Corporation’s debts. Thus. in the event of default and/or non-fulfillment in any respect of this undertaking on the part of the said ……………………………………. Court of Appeals. Hence. jointly and severally. we find that he did so in his personal capacity. thus: [P]etitioner did not sign in his personal capacity the solidary guarantee clause found on the dorsal portion of the trust receipts. agree and promise to pay to you. The petitioner in that case contended that the stipulation "we jointly and severally agree and undertake" rendered the corporate officer solidarily liable with the corporation. on demand. agree and promise to pay to you. in the event of default and/or non-fulfillment in any respect of this undertaking on the part of the said ……… I/we further agree that my/our liability in this guarantee shall be DIRECT AND IMMEDIATE. whatever sum or sums of money which you may call upon me/us to pay to you." By so signing that trust receipt. In the trust receipt dated 9 October 1981. the Court interpreted a substantially identical clause in a trust receipt signed by a corporate officer who bound himself personally liable for the corporation’s obligation. a corporate representative signed a solidary guarantee clause in two trust receipts in his capacity as corporate representative. and/or in any way connected with. Petitioner Jose Tupaz did not indicate that he was signing as El Oro Corporation’s Vice-President for Operations. arising out of. This is error. we sustain petitioners’ claim that they are not personally liable for El Oro Corporation’s obligation. I/We. under petitioner Petronila Tupaz’s signature are the words "Vice-Pres–Treasurer" and under petitioner Jose Tupaz’s signature are the words "Vice-Pres–Operations. the dorsal side of the trust receipt dated 30 September 1981 provides: To the Bank of the Philippine Islands. the dorsal portion of which petitioner Jose Tupaz signed alone. Hence. this Trust Receipt. for the trust receipt dated 9 October 1981. In consideration of your releasing to ………………………………… under the terms of this Trust Receipt the goods described herein. and/or in any way connected with. arising out of.under the terms of this Trust Receipt the goods described herein. this Trust Receipt. petitioner did not undertake to guaranty personally the payment of the principal and interest of ARMAGRI’s debt under the two trust receipts. pertaining to. Evidently. petitioners did not bind themselves personally liable for El Oro Corporation’s obligation. I/we further agree that my/our liability in this guarantee shall be DIRECT AND IMMEDIATE. whatever sum or sums of money which you may call upon me/us to pay to you. In Prudential Bank v. The lower courts interpreted this to mean that petitioner Jose Tupaz bound himself solidarily liable with El Oro Corporation for the latter’s debt under that trust receipt. There. For the trust receipt dated 30 September 1981. I/We.

the benefit of excussion may be waived. However. it must be strictly construed against the party responsible for its preparation. We held: Petitioner [Prudential Bank] insists that by virtue of the clear wording of the xxx clause "x x x we jointly and severally agree and undertake x x x. It. as such. the trial court shall compute El Oro Corporation’s total liability under each of the trust receipts dated . from the date due until paid xxx. Petitioner likewise admits that the questioned provision is a solidary guaranty clause. which the trial court used. together with the questioned solidary guaranty clause. which. Based on the guidelines laid down in Eastern Shipping Lines. therefore. thereby clearly distinguishing it from a contract of surety. The Court further ruled that had there been more than one signatories to the trust receipt. any doubt as to the import or true intent of the solidary guaranty clause should be resolved against the petitioner." The clear import of this stipulation is that petitioner Jose Tupaz waived the benefit of excussion under his guarantee. Chi’s participation therein is limited to the affixing of his signature thereon. Second. That trust receipt (and the trust receipt dated 9 October 1981) provided for payment of attorney’s fees equivalent to 10% of the total amount due and an "interest at the rate of 7% per annum. xxx Furthermore. petitioner Jose Tupaz waived excussion when he agreed that his "liability in [the] guaranty shall be DIRECT AND IMMEDIATE. [respondent] Chi’s liability therein is solidary. As guarantor. Court of Appeals. It does not refer to the undertaking between either one or both of them on the one hand and the petitioner on the other with respect to the liability described under the trust receipt. the parties stipulated that drafts drawn under the letters of credit are subject to interest at the rate of 18% per annum. is no longer useful as it does not specify the amounts owing under each of the trust receipts. the defense of exhaustion (excussion) may be raised by a guarantor before he may be held liable for the obligation. v. the accrued stipulated interest earns 12% interest per annum from the time of the filing of the Informations in the Makati Regional Trial Court on 17 January 1984. It is. excussion is not a pre-requisite to secure judgment against a guarantor. Further. is on a form drafted and prepared solely by the petitioner. The guarantor can still demand deferment of the execution of the judgment against him until after the assets of the principal debtor shall have been exhausted. The clause "we jointly and severally agree and undertake" refers to the undertaking of the two (2) parties who are to sign it or to the liability existing between themselves." and the concluding sentence on exhaustion. This is further bolstered by the last sentence which speaks of waiver of exhaustion. the total amount due as of the date of the finality of this Decision will earn interest at 18% per annum until fully paid since this was the stipulated rate in the applications for the letters of credit. this would have been correct if two (2) guarantors had signed it. petitioner Jose Tupaz is liable for El Oro Corporation’s principal debt and other accessory liabilities (as stipulated in the trust receipt and as provided by law) under the trust receipt dated 30 September 1981. respondent bank’s suit against petitioner Jose Tupaz stands despite the Court’s finding that he is liable as guarantor only. The trust receipt. is ineffective in this case because the space therein for the party whose property may not be exhausted was not filled up. the solidary liability would exist between the guarantors. however.only. The lower courts correctly applied the 18% interest rate per annum considering that the face value of each of the trust receipts is based on the drafts drawn under the letters of credit. Inc. The accounting of El Oro Corporation’s debts as of 23 January 1992. or at such other rate as the bank may fix. in the execution of this Decision. described the guaranty as solidary between the guarantors. First. Under the trust receipt dated 30 September 1981. nevertheless. Under Article 2058 of the Civil Code. Hence. without any need whatsoever on xxx [the] part [of respondent bank] to take any steps or exhaust any legal remedies xxx. Xxx Our xxx reading of the questioned solidary guaranty clause yields no other conclusion than that the obligation of Chi is only that of a guarantor. a contract of adhesion." In the applications for the letters of credit.

his liability arose not from the criminal act of which he was acquitted (ex delito) but from the trust receipt contract (ex contractu) of 30 September 1981. Tupaz IV is liable for El Oro Engraver Corporation’s total debt under the trust receipt dated 30 September 1981 as thus computed by the Regional Trial Court. respectively. SO ordered. the application of which needs no further proof from the parties. petitioners assail the trust receipts as simulated. Revised Penal Code). We AFFIRM the Decision of the Court of Appeals dated 7 September 2000 and its Resolution dated 18 October 2000 with the following MODIFICATIONS: 1) El Oro Engraver Corporation is principally liable for the total amount due under the trust receipts dated 30 September 1981 and 9 October 1981. of years from due date until finality of judgment Interest on interest = interest computed as of the filing of the complaint (17 January 1984) x 12% x no. for instance. Alternatively. his acquittal did not extinguish his civil liability. Petitioner Jose Tupaz signed the trust receipt of 30 September 1981 in his personal capacity. Alfa RTW Manufacturing Corporation where we also ordered the trial court to compute the amount of obligation due based on a formula substantially similar to that indicated above: The total amount due xxx [under] the xxx contract[] xxx may be easily determined by the trial court through a simple mathematical computation based on the formula specified above. These assertions have no merit. Mathematics is an exact science. theft. Although the trial court acquitted petitioner Jose Tupaz. 332. Makati. As the Court of Appeals correctly held. Petitioners raise for the first time in this appeal the contention that El Oro Corporation’s debts under the trust receipts are not yet due and demandable. upon finality of this Decision. as computed by the Regional Trial Court. where the court expressly declares that the liability of the accused is not criminal but only civil in nature xxx as. Neither is there merit to petitioners’ claim that the trust receipts were simulated. where the civil liability does not arise from or is not based upon the criminal act of which the accused was acquitted xxx. of years until finality of judgment Attorney’s fees is 10% of the total amount computed as of finality of judgment Total amount due as of the date of finality of judgment will earn an interest of 18% per annum until fully paid. WHEREFORE. . respondent bank chose not to file a separate civil action to recover payment under the trust receipts. Here. Tupaz IV and Petronila C. petitioners did not deny applying for the letters of credit and subsequently executing the trust receipts to secure payment of the drafts drawn under the letters of credit. Under the terms of the trust receipts dated 30 September 1981 and 9 October 1981. Instead. and. 8848 and 8849. Branch 144. the civil liability is not extinguished by acquittal — [w]here the acquittal is based on reasonable doubt xxx as only preponderance of evidence is required in civil cases. El Oro Corporation’s debts fell due on 29 December 1981 and 8 December 1981. and malicious mischief committed by certain relatives who thereby incur only civil liability (See Art. 2) Petitioner Jose C.30 September 1981 and 9 October 1981 based on the following formula: TOTAL AMOUNT DUE = [principal + interest + interest on interest] – partial payments made Interest = principal x 18 % per annum x no. Makati. Tupaz are not liable under the trust receipt dated 9 October 1981. During the trial. in the felonies of estafa. respondent bank sought to recover payment in Criminal Case Nos.The rule is that where the civil action is impliedly instituted with the criminal action. we reiterate what we said in Rizal Commercial Banking Corporation v. Branch 144. and 3) Petitioners Jose C. In so delegating this task. On the other Matters Petitioners Raise. we GRANT the petition in part. based on the formula provided above. Petitioner Jose Tupaz’s Acquittal did not Extinguish his Civil Liability.