Facts:

-Petitioners Jose Tupaz and Petronila Tupaz were VP for Operations and VP-
Treasurer respectively of El Oro Corporation which supplied the PH Army with
“survival bolos”.
-To finance the purchase of the raw materials for the survival bolos, petitioners,
on behalf of El Oro Corp. applied with respondent BPI for 2 commercial letters
of credit.
-The 2 commercial letters of credit were in favor of El Oro’s suppliers,
Tanchaoco Incorporated and Maresco Corporation.
- Respondent BPI granted the application and issued 2 letters of credit: P564K
to Tanchaoco and P294K to Maresco.
- Simultaneously with the issuance of the letters of credit, petitioners signed
trust receipts in favor of respondent BPI wherein Tupaz signed the trust
receipt corresponding to Tanchaoco and bound himself to sell the goods
covered by the LoC and to remit the proceeds to the bank if sold but if not,
return the goods on or before December 29, 1981.
- Also, on October 9, 1981, the petitioners signed the trust corresponding to
the LoC in favor of Maresco.
- After Tanchaoco and Maresco delivered the raw materials to El Oro, BPI paid
them in full respectively.
- Petitioners failed to comply with their undertaking under the trust receipts.
After repeated demands of BPI, the bank sent a final demand letter to El Oro
Corporation to which it claimed that they cannot fully pay because AFP had
delayed paying.
- Thus, BPI charged petitioners with estafa under Trust Receipts Law.
- RTC Makati acquitted petitioners of estafa on reasonable doubt but found
petitioners solidarily liable with El Oro Corporation.
- Petitioners appealed to the CA contending that they are not personally liable
with El Oro’s debts.
- CA affirmed RTC Makati claiming that civil liability arising from violation of
trust receipt agreement is distinct from the criminal liability.
- In the case of Vintola v. Insular Bank, the SC held that acquittal in estafa
case is no bar to the institution of a civil action for collection.
- Petitioners contend that they cannot be held solidarily liable with El Oro
as they executed the subject documents only in their capacity as
corporate officers.
- Such contention is contradicted by the evidence on record. The trust
receipt agreement showed that the accused signed the same as surety
for the corporation and that they bound themselves directly in the event
of default.
- Hence, this instant petition.

Issue:
1) WON petitioners bound themselves personally liable for El Oro’s debts under
the trust receipts (No to Petronila, Yes to Jose Tupaz)
2) WON petitioners liability is solidary with El Oro (Yes to Jose Tupaz)
3) WON petitioners acquittal of estafa extinguished their civil liability (Not
CredTrans related)

Held:

1) Issue on trust receipts

A corporation, being a juridical entity, may act only through its directors,
officers and employees. Debts incurred by these individuals, acting as
corporate agents, are not theirs but the direct liability. As an exception,
directors or officers are personally liable for the corporations debts only if they
contractually agree or stipulate.

In the trust receipt in favor of Maresco where both petitioners signed,

petitioners signed below as officers of El Oro’s Corporation. Thus, under
petitioner’s signature are “VP Treasurer” and “VP Operations” respectively. By
doing so, they did not bind themselves personally liable for El Oro’s debt.

However, in the trust receipt in favor of Tanchaoco where only Petitioner

Jose Tupaz signed, the Court found that he did so in his personal
capacity. He did not indicate that he was signing as El Oro’s VP for
Operations. Hence, petitioner Jose Tupaz bound himself personally liable
for El Oro’s debts.

2) Issue on solidary liability

Any doubt as to the import of the solidary guaranty clause should be
resolved against the petitioner. The trust receipt, together with the questioned
solidary guaranty clause, is on a form drafted and prepared solely by the
petitioner.

However, respondent bank’s suit against petitioner Jose Tupaz stands

despite the Court’s ruling that he is liable as guarantor only. First, excussion is
not a pre-requisite to secure judgment against a guarantor. 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. Second, the
benefit of excussion may be waived. Under the trust receipt signed by
Petitioner Jose Tupaz, Jose waived excussion when he agreed that his liability
in the guaranty shall be direct. The clear import of this stipulation is that
petitioner Jose Tupaz waived the benefit of excussion under his guarantee.

As guarantor, petitioner Jose Tupaz is liable for El Oro’s debt and other
accessory liabilities stipulated in the trust receipts.