G.R. No. 122502 December 27, 2002
LORENZO M. SARMIENTO, JR. and GREGORIO LIMPIN, JR., petitioners, vs. COURT OF APPEALS and ASSOCIATED BANKING CORP., respondents.

FACTS

On September 6, 1978, Gregorio Limpin, Jr. and Antonio Apostol applied for and were granted an Irrevocable Domestic Letter of Credit by Associated Banking Corporation for P495,000.00 to purchase assorted scrap irons from LS Parts Hardware and Machine Shop. A Trust Receipt was executed by Limpin and Apostol, which contained a stipulation signed by Lorenzo Sarmiento, Jr. as a surety/guarantor, wherein he jointly and severally undertook to pay the bank on demand all sums arising from the trust receipt. The trust receipt provided that the merchandise was received in trust from the bank, to be sold for cash, with the proceeds to be turned over to the bank, and the due date was December 5, 1978. The defendants failed to comply with their undertaking. The bank made demands starting March 1980. A criminal complaint for Violation of the Trust Receipt Law was filed on June 11, 1986. An Information was filed, but Sarmiento was dropped as an accused, while Limpin was convicted. The defendants claimed the scrap iron was lost when the transporting vessel capsized and that the goods were delivered to “Davao Libra Industrial Sales,” a concern in which they had no interest. Associated Banking Corporation filed a separate civil case for sum of money. The Regional Trial Court ruled in favor of the bank, ordering Sarmiento and Limpin to pay jointly and severally the principal sum plus interest, attorney’s fees, and costs. The Court of Appeals affirmed the decision.

ISSUE

Whether the filing of a separate civil action for the recovery of civil liability based on the trust receipt is procedurally barred because the civil liability was not expressly reserved in the prior criminal action.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The separate civil action is not barred. With respect to Sarmiento, he was dropped from the criminal Information, so the criminal case could not bar a civil action against him. With respect to Limpin, the reservation to file a separate civil action need not be express; it may be implied. In this case, the bank’s act of withdrawing the appearance of its private prosecutor in the criminal case at an early stage implied it had no intention to press its claim for civil liability in that criminal action. Furthermore, the civil action is based on an obligation arising from contract (the trust receipt) and not from the act or omission complained of as a felony. Under Article 31 of the Civil Code, such a civil action may proceed independently of the criminal proceedings and regardless of the result of the latter. The civil liability ex contractu is separate and distinct from any criminal liability under the Trust Receipts Law.