Tupaz v. CA

Facts:
Petitioners Jose C. Tupaz IV and Petronila C. Tupaz (petitioners') were Vice-President for Operations and Vice-President/Treasurer, respectively, of El Oro Engraver Corporation. El Oro had a contract with the Philippine Army to supply the latter with 'survival bolos.

To finance the purchase of the raw materials for the survival bolos, petitioners applied with respondent BPI for two commercial letters of credit. The letters of credit were in favor of El Oro Corporation's suppliers, Tanchaoco Manufacturing Incorporated  and Maresco Rubber and Retreading Corporation. Respondent bank granted petitioners' application and issued Letter of Credit.

Simultaneous with the issuance of the letters of credit, petitioners signed trust receipts in favor of respondent bank. Petitioner Jose C. Tupaz IV signed, in his personal capacity and another, in their capacities as officers.

Petitioners did not comply with their undertaking under the trust receipts.

Respondent bank charged petitioners with estafa under Section 13, Presidential Decree No. 115 or Trust Receipts Law in RTC Makati. Petitioners were acquitted. However, 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. 

Petitioners appealed to the CA. Petitioners contended that: (1) their acquittal 'operates to extinguish [their] civil liability and (2) at any rate, they are not personally liable for El Oro Corporation's debts. CA affirmed the RTC ruling.

 

Issue: 

Whether petitioners bound themselves personally liable for El Oro Corporation's debts under the trust receipts

Held:

As guarantor, 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.