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Donna Cel A.

Isubol
Case: Tupaz v. CA GR 145578
Facts:
Petitioners Jose Tupas IV and Petronila Tupaz were the Vice-President for Operations and Vice-
President/Treasurer, respectively, of El Oro Engraver Corporation. The said corporation had a
contract with the Philippine Army to supply the latter with survival bolos. To finance the
purchase of the raw material for the said bolos, the petitioners, on behalf of the corporation,
applied with respondent Bank of the Philippines (BPI) for two commercial letters of credit in
favor of El Oro Corporations suppliers, Tanchaoco Manufacturing Incorporated (Tanchaoco
Incorporated) and Maresco Rubber and Retreading Corporation (Maresco Corporation).
Respondent BPI granted petitioners application and issued a letter of credit for P564,871.05 to
Tanchaoco Incorporated and another letter of credit for P294,000 to Maresco Corporation.
Thereafter, the petitioners signed trust receipts in favor of BPI. Petitioner Tupaz signed, in his
personal capacity, a trust receipt corresponding to the letter of credit to Tanchaoco Inc. and
bound himself to sell the goods covered by the said letter of credit and to remit the proceeds to
BPI, if sold, or to return the goods, if not sold on or before 29 Dec 1981. On 9 Oct 1981, the
petitioners signed, in their capacities as officers of the corporation, a trust receipt corresponding
to the letter of credit to Maresco Corporation and bound themselves to sell the goods and to remit
the proceeds to BPI if sold, or to return the goods if not sold, on or before 8 Dec 1981. After
Tanchaoco Inc. and Maresco Inc. delivered the raw materials to the corporation, BPI paid for the
letters of credit. The petitioners did not comply with their undertaking under the trust receipts so
BPI made several demands for payment but the corporation made partial payments. BPIs
counsel and its representative sent final demand letters to the corporation but the latter said that it
could not pay fully because the Armed Forces of the Philippines (AFP) delayed payment for the
bolos. BPI charged the petitioners with estafa under the Trust Receipts Law (PD 115) to which
the petitioners pleaded not guilty to the charges. The trial court acquitted the petitioners but
rendered them solidarily liable with the corporation for the balance of the principal debt under
trust receipts. The petitioners appealed to the Court of Appeals but the latter affirmed the trial
courts ruling. Hence, this petition.
Issue:
Whether or not the petitioners are liable as guarantor under the trust receipt
Ruling:
YES. Respondent banks suit against petitioner Jose Tupaz stands despite the Courts finding
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, petitioner Tupaz waived excussion
when he agreed that his liability in the guaranty shall be direct and immediate, without any need
whatsoever on xxx the part of BPI to take any steps or exhaust any legal remedies xxx. The
clear import of this stipulation is that petitioner Tupaz waived the benefit of excussion under his
guarantee.
As guarantor, petitioner Jose Tupaz is liable for El Oro Corporations principal debt and other
accessory liabilities (as stipulated in the trust receipt and as provided by law) under the trust
receipt.
Donna Cel A. Isubol
Case: China Banking Corporation v. CA
Facts:
By a decision in a civil case, the residential land in the name of Sps. Alfonso Roxas and Kiang
Ming Chu Chua was levied on execution. Kiang Ming Chu filed an action questioning the levy
because the land was conjugal partnership property which resulted to a compromise agreement
that the levy shall be valid to the extent of the share of Alfonso. An alias notice of levy was
issued and after the execution sale, a certificate of sale was executed in favor of Metrobank, the
judgment creditor. China Banking Corporation (CBC) filed a complaint or sum of money
against Pacific Multi Agro-Industrial Corporation and Alfonso Chua. The trial court rendered a
decision on 7 Nov 1985 ordering the defendants to pay CBC and the latter appealed to the Court
of Appeals but was dismissed. The notice of levy on execution was issued on 4 Feb 1991 against
the right and interest of Alfonso Chua. The same was sold at a public auction and a certificate of
sale was executed in favor of CBC. On 21 Nov 1988, Alfonso Chua executed in favor of his son,
Paulino, an assignment of right to redeem and the redemption by the latter of the property from
Metrobank were annotated. The respondents Paulino and Kiang Ming Chu filed a civil case
alleging that the former has a prior and better right over CBC due to the assignment being
inscribed on the title on an earlier date than annotation of the notice of levy and certificate of sale
in favor of CBC. Both the trial court and the Court of Appeals (CA) ruled in favor of the
respondents. The court reversed and set aside the decision of the CA declaring the levy on
execution valid and the assignment of rights to redeem rescinded which prompted the
respondents to filed a motion for reconsideration.
Issue:
Whether or not the rescission of the assignment of right to redeem and validation of the levy on
execution cannot be enforced
Ruling:
At the time Chinabank levied on Alfonso Roxas Chuas share in TCT No. 410603 on February 4,
1991, the said property was no longer his. The same had already been acquired by Metrobank
and, later, redeemed by Paulino Roxas Chua. Even without the assignment of the right to redeem
to Paulino, the subject 1/2 share in the property would pertain to Metrobank. Either way,
Chinabank would not stand to acquire the same. It is an established doctrine that a judgment
creditor only acquires at an execution sale the identical interest possessed by the judgment debtor
in the property which is the subject of the sale. It follows that if, at the time of the execution sale,
the judgment debtor had no more right to or interest in the property because he had already sold
it to another, then the purchaser acquires nothing. Chinabank was a redemptioner that could
redeem the property from Metrobank. It was a judgment creditor with a lien on the property sold
subsequent to the judgment under which the property was sold. Hence, what Chinabank could
have done was to redeem the property ahead of Paulino. In the alternative, it could have moved
for the rescission of the assignment to Paulino of the right to redeem, but within the twelve-
month period of redemption. Beyond that, there would be no more right of redemption and, thus,
no more assignment to rescind. Under Rule 39, Section 29 (a) of the 1964 Rules of Court, the
judgment debtor or his successor in interest may redeem real property sold on execution. Paulino
is included within the term successor in interest.