G.R. No.

145578 November 18, 2005

JOSE C. TUPAZ IV and PETRONILA C. TUPAZ, Petitioners,
vs.
THE COURT OF APPEALS and BANK OF THE PHILIPPINE ISLANDS, Respondents.
Facts of the case:
 Jose C. Tupaz IV and Petronila C. Tupaz were Vice-President for Operations and
Vice-President/Treasurer, respectively, of El Oro Engraver Corporation (“El Oro
Corporation”). El Oro Corporation 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, on
behalf of El Oro Corporation, applied with Bank of the Philippine Islands for two
commercial letters of credit.
 The letters of credit were in favor of El Oro Corporation’s suppliers, Tanchaoco
Manufacturing Incorporated Simultaneous with the issuance of the letters of credit,
petitioners signed trust receipts in favor of respondent bank.
 Jose C. Tupaz IV signed, in his personal capacity, a trust receipt corresponding
to Letter of Credit for P564,871.05.
 Petitioners did not comply with their undertaking under the trust receipts.
 BPI made several demands for payments but El Oro Corporation made partial
payments only.
 BPI’s counsel and its representative respectively sent final demand letters to El
Oro Corporation. 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.

Issue: Whether or not Tupaz can escape liability in violation of the Trust Receipt Law by
the delayed payment of the bolo

Held:
A corporate representative signing as a solidary guarantee as corporate
representative did not undertake to guarantee personally the payment of the corporation’s
debts. In the trust receipt dated 9 October 1981, petitioners signed below this clause as
officers of El Oro Corporation. Thus, 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.” By so signing that trust receipt, petitioners did not bind
themselves personally liable for El Oro Corporation’s obligation. In Ong v. Court of
Appeals, a corporate representative signed a solidary guarantee clause in two trust
receipts in his capacity as corporate representative. There, the Court held that the
corporate representative did not undertake to guarantee personally the payment of the
corporation’s debts.
A corporation, being a juridical entity, may act only through its directors, officers,
and employees. Debts incurred by these individuals, acting as such corporate agents, are
not theirs but the direct liability of the corporation they represent. As an exception,
directors or officers are personally liable for the corporation’s debts only if they so
contractually agree or stipulate. ; Excussion is not a prerequisite to secure judgment
against a guarantor; The benefit of excussion may be waived.
G.R. No. 185945 December 05, 2012

FIDELIZA J. AGLIBOT, Petitioner,

vs.
INGERSOL L. SANTIA, Respondent.

FACTS:
 Engr. Ingersol L. Santia (Santia) loaned the amount of P2,500,000.00 to Pacific
Lending & Capital Corporation (PLCC), through its Manager, petitioner Fideliza J.
Aglibot (Aglibot).
 The loan was evidenced by a promissory note. Allegedly as a guaranty for the
payment of the note, Aglibot issued and delivered to Santia eleven (11) post-dated
personal checks drawn from her own account maintained at Metrobank.
 Upon presentment of the checks for payment, they were dishonored by the bank
for having been drawn against insufficient funds or closed account. Santia thus
demanded payment from PLCC and Aglibot of the face value of the checks, but
neither of them heeded his demand. Consequently, eleven (11) Informations for
violation of B.P. 22 were filed before the MTCC.
 MTCC acquitted Aglibot. On appeal, the RTC rendered a decision absolving
Aglibot and dismissing the civil aspect of the.
 On appeal, the CA ruled that Aglibot is personally liable for the loan.
 Thus, Aglibot filed this instant petition for certiorari. She argued that she was
merely a guarantor of the obligation and therefore, entitled to the benefit of
excussion under Article of the 2058 of the Civil Code. She further posited that she
is not personally liable on the checks since she merely contracted the loan in behalf
of PLCC.

ISSUES: 1. Is Aglibot entitled to the benefit of excussion?
2. Is Aglibot personally liable on the checks?

HELD:

1.Aglibot cannot invoke the benefit of excussion. It is settled that the liability of the
guarantor is only subsidiary, and all the properties of the principal debtor, the PLCC in
this case, must first be exhausted before the guarantor may be held answerable for the
debt. Thus, the creditor may hold the guarantor liable only after judgment has been
obtained against the principal debtor and the latter is unable to pay, "for obviously the
‘exhaustion of the principal’s property’ — the benefit of which the guarantor claims
— cannot even begin to take place before judgment has been obtained." This rule is
contained in Article 2062 of the Civil Code, which provides that the action brought by the
creditor must be filed against the principal debtor alone, except in some instances
mentioned in Article 2059 when the action may be brought against both the guarantor
and the principal debtor.

The Court must, however, reject Aglibot’s claim as a mere guarantor of the
indebtedness of PLCC to Santia for want of proof, in view of Article 1403(2) of the Civil
Code, embodying the Statute of Frauds. Under the above provision, concerning a
guaranty agreement, which is a promise to answer for the debt or default of another, the
law clearly requires that it, or some note or memorandum thereof, be in writing. Otherwise,
it would be unenforceable unless ratified, although under Article 1358 of the Civil Code,
a contract of guaranty does not have to appear in a public document.
Contracts are generally obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present, and the Statute of Frauds
simply provides the method by which the contracts enumerated in Article 1403(2) may be
proved, but it does not declare them invalid just because they are not reduced to writing.
Thus, the form required under the Statute is for convenience or evidentiary purposes only.

On the other hand, Article 2055 of the Civil Code also provides that a guaranty is
not presumed, but must be express, and cannot extend to more than what is stipulated
therein. This is the obvious rationale why a contract of guarantee is unenforceable unless
made in writing or evidenced by some writing.

2. Aglibot is an accommodation party and therefore liable to Santia. The appellate court
ruled that by issuing her own post-dated checks, Aglibot thereby bound herself personally
and solidarily to pay Santia, and dismissed her claim that she issued her said checks in
her official capacity as PLCC’s manager merely to guarantee the investment of Santia.
The facts present a clear situation where Aglibot, as the manager of PLCC, agreed to
accommodate its loan to Santia by issuing her own post-dated checks in payment thereof.
She is what the Negotiable Instruments Law calls an accommodation party.

The relation between an accommodation party and the party accommodated is, in
effect, one of principal and surety — the accommodation party being the surety. It is a
settled rule that a surety is bound equally and absolutely with the principal and is deemed
an original promisor and debtor from the beginning. The liability is immediate and direct.

It is not a valid defense that the accommodation party did not receive any valuable
consideration when he executed the instrument; nor is it correct to say that the holder for
value is not a holder in due course merely because at the time he acquired the instrument,
he knew that the indorser was only an accommodation party. Unlike in a contract of
suretyship, the liability of the accommodation party remains not only primary but also
unconditional to a holder for value, such that even if the accommodated party receives
an extension of the period for payment without the consent of the accommodation party,
the latter is still liable for the whole obligation and such extension does not release him
because as far as a holder for value is concerned, he is a solidary co-debtor.