JN Devt Vs Phil Export

SUPREME COURT REPORTS ANNOTATED VOLUME 468 17/01/2019, 1)45 PM
VOL. 468, AUGUST 31, 2005 555

JN Development Corporation vs. Philippine Export and
Foreign Loan Guarantee Corporation
G.R. No. 151060. August 31, 2005.*
JN DEVELOPMENT CORPORATION, and SPS.

RODRIGO and LEONOR STA. ANA, petitioners, vs.
PHILIPPINE EXPORT AND FOREIGN LOAN
GUARANTEE CORPORATION, respondent.
*
G.R. No. 151311. August 31, 2005.
NARCISO V. CRUZ, petitioner, vs. PHILIPPINE EXPORT

and FOREIGN LOAN GUARANTEE CORPORATION,
respondent.
Obligations and Contracts; Guarantees; Excussions; Under a

contract of guarantee, the guarantor binds himself to the creditor to
fulfill the obligation of the principal debtor in case the latter should
fail to do so, though the guarantor cannot be compelled to pay the
creditor unless the said creditor has exhausted all the property of the
debtor and resorted to all legal remedies against the debtor;
Excussion may only be invoked after legal remedies against the
principal debtor have been exhausted.·Under a contract of
guarantee, the guarantor binds himself to the creditor to fulfill the
obligation of the principal debtor in case the latter should fail to do
so. The guarantor who pays for a debtor, in turn, must be
indemnified by the latter. However, the guarantor cannot be
compelled to pay the creditor unless the latter has exhausted all the
property of the debtor and resorted to all the legal remedies against
the debtor. This is what is
_______________
http://www.central.com.ph/sfsreader/session/000001685a4de6c148a48ac2003600fb002c009e/p/AQN832/?username=Guest Page 1 of 19
* SECOND DIVISION.
556
556 SUPREME COURT REPORTS ANNOTATED
JN Development Corporation vs. Philippine Export and Foreign

Loan Guarantee Corporation
otherwise known as the benefit of excussion. It is clear that

excussion may only be invoked after legal remedies against the
principal debtor have been expanded. Thus, it was held that the
creditor must first obtain a judgment against the principal debtor
before assuming to run after the alleged guarantor, „for obviously
the Âexhaustion of the principalÊs propertyÊ cannot even begin to take
place before judgment has been obtained.‰ The law imposes
conditions precedent for the invocation of the defense. Thus, in
order that the guarantor may make use of the benefit of excussion,
he must set it up against the creditor upon the latterÊs demand for
payment and point out to the creditor available property of the
debtor within the Philippines sufficient to cover the amount of the
debt.
Same; Same; Same; While the guarantor enjoys the benefits of

excussion, nothing prevents him from paying the obligation once
demand is made on him.·While a guarantor enjoys the benefit of
excussion, nothing prevents him from paying the obligation once
demand is made on him. Excussion, after all, is a right granted to
him by law and as such he may opt to make use of it or waive it.
PhilGuaranteeÊs waiver of the right of excussion cannot prevent it
from demanding reimbursement from petitioners. The law clearly
requires the debtor to indemnify the guarantor what the latter has
paid.
Same; Same; Default; That payment was actually made after

the term of the guarantee is not material·what is controlling is that
default and demand on the guarantor had taken place while the
guarantee was still in force.·The guarantee was only up to 17
December 1980. JNÊs obligation with TRB fell due on 30 June 1980,
and demand on PhilGuarantee was made by TRB on 08 October

1980. That payment was actually made only on 10 March 1981 does
not take it out of the terms of the guarantee. What is controlling is
that default and demand on PhilGuarantee had taken place while
the guarantee was still in force.
Same; Same; Excussions; The requirement that the guarantor

should consent to any extension granted by the creditor to the debtor
under Art. 2079 is for the benefit of the guarantor who can waive it;
The law does not prohibit the payment by a guarantor on his own
volition, heedless of the benefit of excussion; The law recognizes the
right of a guarantor to recover what it has paid, even if the payment
was made before the debt becomes due, or if made without notice to
557
VOL. 468, AUGUST 31, 2005 557

the debtor, subject to some conditions.·There is likewise no merit in

petitionersÊ claim that PhilGuaranteeÊs failure to give its express
consent to the alleged extensions granted by TRB to JN had
extinguished the guarantee. The requirement that the guarantor
should consent to any extension granted by the creditor to the
debtor under Art. 2079 is for the benefit of the guarantor. As such,
it is likewise waivable by the guarantor. Thus, even assuming that
extensions were indeed granted by TRB to JN, PhilGuarantee could
have opted to waive the need for consent to such extensions. Indeed,
a guarantor is not precluded from waiving his right to be notified of
or to give his consent to extensions obtained by the debtor. Such
waiver is not contrary to public policy as it is purely personal and
does not affect public interest. In the instant case, PhilGuaranteeÊs
waiver can be inferred from its actual payment to TRB after the
latterÊs demand, despite JNÊs failure to pay the renewal/guarantee
fee as indicated in the guarantee. For the above reasons, there is no
basis for petitionerÊs claim that PhilGuarantee was a mere
volunteer payor and had no legal obligation to pay TRB. The law
does not prohibit the payment by a guarantor on his own volition,
heedless of the benefit of excussion. In fact, it recognizes the right of
a guarantor to recover what it has paid, even if payment was made

before the debt becomes due, or if made without notice to the debtor,
subject of course to some conditions.
Same; Same; Same; What is peculiar in the instant case is that

the principal debtors themselves are muddling the issues and
raising the same defenses against the guarantor which only the
guarantor may invoke against the creditor.·The benefit of
excussion, as well as the requirement of consent to extensions of
payment, is a protective device pertaining to and conferred on the
guarantor. These may be invoked by the guarantor against the
creditor as defenses to bar the unwarranted enforcement of the
guarantee. However, PhilGuarantee did not avail of these defenses
when it paid its obligation according to the tenor of the guarantee
once demand was made on it. What is peculiar in the instant case is
that petitioners, the principal debtors themselves, are muddling the
issues and raising the same defenses against the guarantor, which
only the guarantor may invoke against the creditor, to avoid
payment of their own obligation to the guarantor. The Court cannot
countenance their self-seeking desire to be exonerated from the
duty to reimburse PhilGuarantee after it had
558

paid TRB on their behalf and to unjustly enrich themselves at the

expense of PhilGuarantee.
Forgery; Signatures; Forgery cannot be presumed and must be

proved by clear, positive and convincing evidence and the burden of
proof lies on the party alleging it; Mere variance of signatures cannot
be considered as conclusive proof that the same were forged.·Anent
the issue of forgery, the CA is correct in reversing the decision of the
trial court. Save for the denial of Narciso Cruz that it was not his
signature in the Undertaking and the perfunctory comparison of the
signatures, nothing in the records would support the claim of
forgery. Forgery cannot be presumed and must be proved by clear,
positive and convincing evidence and the burden of proof lies on the
party alleging forgery. Mere denial will not suffice to overcome the
positive value of the Undertaking, which is a notarized document,
has in its favor the presumption of regularity, and carries the
evidentiary weight conferred upon it with respect to its due
execution. Even in cases where the alleged forged signature was
compared to samples of genuine signatures to show its variance
therefrom, this Court still found such evidence insufficient. Mere
variance of the signatures cannot be considered as conclusive proof
that the same were forged.
PETITIONS for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Raymond P. Palad for JN Dev. Corp. and Sps. Rodrigo
and Leonor Sta. Ana.
Benito F. Ambrosio for petitioner N.V. Cruz.
The Government Corporate Counsel for respondent
Phil. Export, etc.
Ma. Rosario S. Manalang-Demigilio and Isabelo G.
Gumaro collaborating counsel for respondent Trade &
Investment DevÊt. Corp. of the Phils.
559
VOL. 468, AUGUST 31, 2005 559

TINGA, J.:
Before 1us are consolidated petitions questioning the

Decision of the Court of Appeals (CA) in CA-G.R. CV No.
61318, entitled Philippine Export and Foreign Loan
Guarantee Corporation v. JN Development Corporation, et
al., which reversed the Decision of the Regional Trial Court
(RTC) of Makati, Branch 60.
On 13 December 1979, petitioner JN Development
Corporation („JN‰) and Traders Royal Bank (TRB) entered
into an agreement whereby TRB would extend to JN an
Export Packing Credit Line for Two Million Pesos
(P2,000,000.00). The loan was covered

2
by several securities,
including a real estate mortgage and a letter of guarantee
from respondent Philippine Export and Foreign Loan
Guarantee Corporation („PhilGuarantee‰), now Trade and
Investment Development Corporation of the Philippines,3
covering seventy percent (70%) of the credit line. 4With
PhilGuarantee issuing a guarantee in favor of TRB,5 JN,
petitioner spouses Rodrigo
6
and Leonor Sta. Ana and7
petitioner Narciso Cruz executed a Deed of Undertaking
(Undertaking) to assure repayment to PhilGuarantee.
It appears that JN failed to pay the loan to TRB upon its
maturity; thus, on 8 October 1980 TRB 8
requested
PhilGuarantee to make good its guarantee. PhilGuarantee
informed
_______________
1Penned by Associate Justice Portia Aliño-Hormachuelos, with JJ.

Mercedes Gozo-Dadole and Bienvenido L. Reyes concurring. G.R. No.
151060, Rollo, pp. 21-34.
2 The real estate mortgage was on a parcel of land covered by TCT No.
T-79587 located in Sta.Cruz, Laguna.
3 RTC Records, pp. 31-35. The loan agreement also required a Deed of
Undertaking to mortgage the equipment to be purchased and a Deed of
Suretyship executed by the officers of JN.
4 RTC Records, pp. 36-37.
5 Petitioners in G.R. No. 151060.
6 Petitioner in G.R. No. 151311.
8 Exhibits, Exhibit „O,‰ p. 70.
560

JN about the call made by TRB, and

9
inquired about the
action of JN to settle the loan. Having received no
response from JN, on 10 March 1981 PhilGuarantee paid
TRB Nine Hundred Thirty Four Thousand Eight Hundred
Twenty Four Pesos and Thirty Four Centavos
10
(P934,824.34). Subsequently, PhilGuarantee made several
demands on JN, but the latter failed to pay. On 30 May
1983, JN, through Rodrigo Sta. Ana, proposed to settle the
obligation „by way11 of development and sale‰ of the
mortgaged property. PhilGuarantee, however, rejected the
proposal. 12
PhilGuarantee thus filed a Complaint for collection of
money and damages against herein petitioners.
In its Decision dated 20 August 1998, the RTC dismissed
PhilGuaranteeÊs Complaint as well as the counterclaim of
petitioners. It ruled that petitioners are not liable to
reimburse PhilGuarantee what it had paid to TRB. Crucial
to this holding was the courtÊs finding that TRB was able to
foreclose the real estate mortgage 13 executed by JN, thus
extinguishing petitionersÊ obligation. Moreover, there was
no showing that after the said foreclosure, TRB had
demanded from JN any deficiency or the payment of the
difference between14
the proceeds of the foreclosure sale and
the actual loan. In addition, the RTC held that since
PhilGuaranteeÊs guarantee was good for only one year from
17 December 1979, or until 17 December 1980, and since it
was not renewed after the expiry of said period,
PhilGuarantee15
had no more legal duty to pay TRB on 10
March 1981. The RTC likewise ruled that Cruz cannot be
held liable under the Undertaking since he was not the one
who signed the document, in line with its finding that his
_______________
9 Id., Exhibit „H,‰ p. 35.

10 Id., Exhibit „D,‰ p.14.
11 Exhibits, p. 71.
13 Id., at p. 411.
14 Id., at p. 412.
15 Ibid.
561
VOL. 468, AUGUST 31, 2005 561

signature found in the records16is totally different from the

signature on the Undertaking.
According to the RTC, the failure of TRB to sue JN for
the recovery of the loan precludes PhilGuarantee from
seeking recoupment from the spouses Sta. Ana and Cruz
what it paid to TRB. Thus, PhilGuaranteeÊs payment to
TRB amounts 17
to a waiver of its right under Art. 2058 of the
Civil Code.
Aggrieved by the RTC Decision, PhilGuarantee appealed
to the CA. The appellate court reversed the RTC and
ordered petitioners to pay PhilGuarantee Nine Hundred
Thirty Four Thousand Six Hundred Twenty Four Pesos and
Thirty Four 18Centavos (P934,624.34), plus service charge
and interest.
In reaching its denouement, the CA held that the RTCÊs
finding that the loan was extinguished by virtue of the
foreclosure
19
sale of the mortgaged property had no factual
support, and that such finding is negated by Rodrigo Sta.
AnaÊs testimony that JN did not receive any 20
notice of
foreclosure from PhilGuarantee or from TRB. Moreover,
Sta. Ana even offered the same mortgaged property 21
to
PhilGuarantee to settle its obligations with the latter.
The CA also ruled that JNÊs obligation had become due
and demandable within the one-year period of effectivity of
the guarantee; thus, PhilGuaranteeÊs payment to TRB
conformed with its guarantee, although the payment itself 22
was effected one year after the maturity date of the loan.
Contrary to the trial courtÊs finding, the CA ruled that the
contract of guarantee was not extinguished by the alleged
lack of evidence on PhilGuaranteeÊs consent to the
extensions granted by TRB to
_______________
16 Id., at p. 415.
17 Ibid.
18 CA Rollo, p. 211.
19 Id., at p. 205.
20 Ibid.
21 Id., at p. 206.
22 Id., at p. 207.
562

23 24
JN. Interpreting Art. 2058 of the Civil Code, the
appellate court explained that while the provision states
that the guarantor cannot be compelled to pay unless the
properties of the debtor are exhausted, the guarantor is not
precluded from waiving the 25
benefit of excussion and paying
the obligation altogether.
Finally, the CA found that Narciso Cruz was unable to
prove the alleged forgery of his signature in the
Undertaking, the evidence presented not being sufficient to
overcome the presumption of regularity
26
of the Undertaking
which is a notarized document.
Petitioners sought reconsideration of the Decision and
prayed for the admission of documents evidencing the
foreclosure of the real estate mortgage, but the motion for
reconsideration was denied by the CA for lack of merit. The
CA ruled that the documentary evidence presented by
petitioners cannot be considered as newly discovered
evidence, it being already in existence while the case was
pending before the trial court, the very forum before which
it should have been presented. Besides, a foreclosure sale
per se is not proof of petitionersÊ
27
payment of the loan to
PhilGuarantee, the CA added.
So now before the Court are the separate petitions for
review of the CA Decision. JN and the spouses Sta. Ana,
petitioners in G.R. No. 151060, posit that the CA erred in
interpreting Articles
28
2079, 2058, and 2059 of the Civil Code
in its Decision. Meanwhile, petitioner Narciso Cruz in
G.R. No. 151311 claims that the CA erred when it held that
petitioners
_______________
23 Ibid.
24 Art. 2058. The guarantor cannot be compelled to pay the creditor
unless the latter has exhausted all the property of the debtor, and has
resorted to all the legal remedies against the debtor.

25 CA Rollo, pp. 209-210.
26 Id., at p. 209.
27 Resolution dated 12 December 2001, CA Rollo, pp. 305-306.
28 G.R. No. 151060, Rollo, p. 8.
563
VOL. 468, AUGUST 31, 2005 563

are liable to PhilGuarantee despite its payment after the

expiration of its contract of guarantee and the lack of
PhilGuaranteeÊs consent to the extensions granted by TRB
to JN. Moreover, Cruz questions the reversal of the ruling
of the trial court
29
anent his liability as a signatory to the
Undertaking.
On the other hand, PhilGuarantee maintains that the
date of default, not the actual date of payment, determines
the liability of the guarantor and that having paid TRB
when the loan
30
became due, it should be indemnified by
petitioners. It argues that, contrary to petitionersÊ claim,
there could be no waiver of its right to excussion more 31
explicit than its act of payment to TRB very directly.
Besides, the right to excussion is for the benefit of the
guarantor and is not a32 defense for the debtor to raise and
use to evade liability. Finally, PhilGuarantee maintains
that there is no sufficient evidence proving the alleged
forgery of CruzÊs signature on the Undertaking, which is a
notarized document and 33as such must be accorded the
presumption of regularity.
The Court finds for PhilGuarantee.
_______________
29 G.R. No. 151311, Rollo, p. 17.

30 G.R. No. 151060, Rollo, p. 407, citing Art. 2066 of the Civil Code,
which reads:
The guarantor who pays for a debtor must be indemnified by the latter.
The indemnity comprises:
(1) The total amount of the debt;

(2) The legal interests thereon from the time the payment was made known
to the debtor, even though it did not earn interest for the creditor;
(3) The expenses incurred by the guarantor after having notified the debtor
that payment had been demanded of him.
31 G.R. No. 151060, Rollo, p. 408.

32 PhilGuaranteeÊs Memorandum, G.R. No. 151060, Rollo, pp. 405-406.
33 G.R. No. 151060, Rollo, pp. 408-410.
564

Under a contract of guarantee, the guarantor binds himself

to the creditor to fulfill the obligation of the principal
34
debtor in case the latter should fail to do so. The
guarantor who pays for35 a debtor, in turn, must be
indemnified by the latter. However, the guarantor cannot
be compelled to pay the creditor unless the latter has
exhausted all the property of the debtor 36and resorted to all
the legal remedies against the debtor. This is what is
otherwise known as the benefit of excussion.
It is clear that excussion may only be invoked after legal
remedies against the principal debtor have been expanded.
Thus, it was held that the creditor must first obtain a
judgment against the principal debtor before assuming to
run after the alleged guarantor, „for obviously the
Âexhaustion of the principalÊs propertyÊ cannot even
37
begin to
take place before judgment has been obtained.‰ The law
imposes conditions precedent for the invocation of the
defense. Thus, in order that the guarantor may make use of
the benefit of excussion, he must set it up against the
creditor upon the latterÊs demand for payment and point
out to the creditor available property of the debtor within 38
the Philippines sufficient to cover the amount of the debt.
While a guarantor enjoys the benefit of excussion,
nothing prevents him from paying the obligation once
demand is made on him. Excussion, after all, is a right
granted to him by law and as such he may opt to make use
of it or waive it. PhilGuaranteeÊs waiver of the right of

excussion cannot prevent it from demanding
reimbursement from petition-
_______________
34 Art. 2047, Civil Code.

35 Art. 2066, id.
36 Art. 2058, id.
37 Baylon v. Court of Appeals, 371 Phil. 435, 444; 312 SCRA 502, 510
(1999) citing Vda. de Syquia v. Jacinto, 60 Phil. 861 (1934).
38 Art. 2060, Civil Code.
565
VOL. 468, AUGUST 31, 2005 565

ers. The law clearly requires the debtor

39
to indemnify the
guarantor what the latter has paid.
PetitionersÊ claim that PhilGuarantee had no more
obligation to pay TRB because of the alleged expiration of
the contract of guarantee is untenable. The guarantee,
dated 17 December 1979, states:
In the event of default by JNDC and as a consequence thereof,

PHILGUARANTEE is made to pay its obligation arising under the
aforesaid guarantee PHILGUARANTEE shall pay the BANK the
amount of P1.4 million or 70% of the total obligation unpaid. . .
....
This guarantee shall be valid for a period of one (1) year from
date hereof but may be renewed upon payment by JNDC of the
40
guarantee fee at the same rate of 1.5% per annum.
The guarantee was only up to 17 December 1980. JNÊs

obligation with TRB fell due on 30 June 1980, and demand
on PhilGuarantee was made by TRB on 08 October 1980.
That payment was actually made only on 10 March 1981
does not take it out of the terms of the guarantee. What is
controlling is that default and demand on PhilGuarantee
had taken place while the guarantee was still in force.
There is likewise no merit in petitionersÊ claim that Phil-

GuaranteeÊs failure to give its express consent to the
alleged extensions granted by TRB to JN had extinguished
the guarantee. The requirement that the guarantor should
consent to any extension granted by the creditor to the
debtor under Art. 2079 is for the benefit of the guarantor.
As such, it is likewise waivable by the guarantor. Thus,
even assuming that extensions were indeed granted by
TRB to JN, PhilGuarantee could have opted to waive the
need for consent to such extensions. Indeed, a guarantor is
not precluded from waiving his right to be notified of or to
give his consent to extensions ob-
_______________
39 Art. 2058, id.

40 Exhibits, p. 7.
566

tained by the debtor. Such waiver is not contrary to public

policy as41 it is purely personal and does not affect public
interest. In the instant case, PhilGuaranteeÊs waiver can
be inferred from its actual payment to TRB after the
latterÊs demand, despite JNÊs failure to pay 42
the
renewal/guarantee fee as indicated in the guarantee.
For the above reasons, there is no basis for petitionerÊs
claim that PhilGuarantee was a mere volunteer payor and
had no legal obligation to pay TRB. The law does not
prohibit the payment by a guarantor on his own volition,
heedless of the benefit of excussion. In fact, it recognizes
the right of a guarantor to recover what it has paid, 43even if
payment was made before the debt44 becomes due, or if
made without notice to the debtor, subject of course to
some conditions.
PetitionersÊ invocation of our ruling
45
in Willex Plastic
Industries, Corp. v. Court of Appeals is misplaced, if not
irrelevant. In the said case, the guarantor claimed that it
could not
_______________
41 PeopleÊs Bank and Trust Co. v. Santana, 149 Phil. 169, 174; 42
SCRA 119, 122 (1971).
42 Supra note 40.
43 Art. 2069. If the debt was for a period and the guarantor paid it
before it became due, he cannot demand reimbursement of the debtor
until the expiration of the period unless the payment has been ratified by
the debtor.
Art. 2070. If the guarantor has paid without notifying the debtor, and
the latter not being aware of the payment, repeats the payment, the
former has no remedy whatever against the debtor, but only against the
creditor. Nevertheless, in case of a gratuitous guaranty, if the guarantor
was prevented by a fortuitous event from advising the debtor of the
payment, and the creditor becomes insolvent, the debtor shall reimburse
the guarantor for the amount paid.
44 Art. 2068. If the guarantor should pay without notifying the debtor,
the latter may enforce against him all the defenses which he could set up
against the debtor at the time the payment was made.
45 G.R. No. 103066, 25 April 1996, 256 SCRA 478, cited in PetitionersÊ
Memorandum, G.R. No. 151060, Rollo, pp. 268-270.
567
VOL. 468, AUGUST 31, 2005 567

be proceeded against without first exhausting all of the

properties of the debtor. The Court, finding that there was
an express renunciation of the benefit of excussion in the
contract of guarantee, ruled against the guarantor.
The cited case finds no application in the case a quo.
PhilGuarantee is not invoking the benefit of excussion. It
cannot be overemphasized that excussion is a right granted
to the guarantor and, therefore, only he may invoke it at
his discretion.
The benefit of excussion, as well as the requirement of
consent to extensions of payment, is a protective device
pertaining to and conferred on the guarantor. These may be
invoked by the guarantor against the creditor as defenses

to bar the unwarranted enforcement of the guarantee.
However, PhilGuarantee did not avail of these defenses
when it paid its obligation according to the tenor of the
guarantee once demand was made on it. What is peculiar
in the instant case is that petitioners, the principal debtors
themselves, are muddling the issues and raising the same
defenses against the guarantor, which only the guarantor
may invoke against the creditor, to avoid payment of their
own obligation to the guarantor. The Court cannot
countenance their self-seeking desire to be exonerated from
the duty to reimburse PhilGuarantee after it had paid TRB
on their behalf and to unjustly enrich themselves at the
expense of PhilGuarantee.
Petitioners assert that TRBÊs alleged foreclosure of the
real estate mortgage over the land executed as security for
the loan agreement had extinguished PhilGuaranteeÊs
obligation; thus, PhilGuaranteeÊs recourse should 46 be
directed against TRB, as 47per the pari-passu provision in
the contract of guarantee. We disagree.
_______________
46 Exhibits, p. 7.
„. . . In the event of default by JNDC and as a consequence thereof,

PHILGUARANTEE is made to pay its obligation arising under the aforesaid
guarantee, PHILGUARAN-TEE shall pay the BANK the amount of P1.4
million or 70% of the total obligation unpaid, but in no case shall such payment
exceed the amount of its guarantee of P1.4 million. However, any amount/s
that PHILGUARANTEE or the BANK may subsequently recover from
JNDC or from any other source pertaining to this transaction shall be
shared pari-passu in the proportion of 70% for PHILGUARANTEE and
30% for the BANK.‰ (Emphasis supplied).
47 PetitionersÊ Memorandum, G.R. No. 151060, Rollo, p. 257.
568

The foreclosure was made on 27 August 1993, „after the

case was submitted for decision in 1992 and before 48
the
issuance of the decision of the court a quo in 1998.‰ Thus,
foreclosure was resorted to by TRB against JN when they
both had become aware that PhilGuarantee had already
paid TRB and that there was a pending case filed by
PhilGuarantee against petitioners. This matter was not
raised and proved in the trial court, nor in the appeal
before the CA, but raised for the first time in petitionersÊ
motion for reconsideration in the CA. In their appellantsÊ
Brief, petitioners claimed that „there was no need for the
defendant-appellee JNDC to present any evidence before
the lower court
49
to show that indeed foreclosure of the REM
took place.‰ As properly held by the CA,
. . . Firstly, the documents evidencing foreclosure of mortgage

cannot be considered as newly discovered evidence. The said
documents were already subsisting and should have been presented
during the trial of the case. The alleged foreclosure sale was made
on August 23, 1993 . . . while the decision was rendered by the trial
court on August 20, 1998 about five (5) years thereafter. These
documents were likewise not submitted by the defendants-appellees
when they submitted their appelleesÊ Brief to this Court. Thus,
these cannot be considered as newly discovered evidence but are
more correctly ascribed as suppressed forgotten evidence. . .
Secondly, the alleged foreclosure sale is not proof of payment of the
50
loan by defendant-appellees to the plaintiffs-appellants.
_______________
48 Omnibus Motion, CA Rollo, pp. 251-252.

49 CA Rollo, p. 21.
50 Id., at pp. 305-306.
569
VOL. 468, AUGUST 31, 2005 569

Besides, the complaint a quo was filed by PhilGuarantee as

guarantor for JN, and its cause of action was premised on
its payment of JNÊs obligation after the latterÊs default.

PhilGuarantee was well within its rights to demand
reimbursement for such payment made, regardless of
whether the creditor, TRB, was subsequently able to obtain
payment from JN. If double payment was indeed made,
then it is JN which should go after TRB, and not
PhilGuarantee. Petitioners have no one to blame but
themselves, having allowed the foreclosure of the property
for the full value of the loan despite knowledge of
PhilGuaranteeÊs payment to TRB. Having been aware of
such payment, they should have opposed the foreclosure, or
at the very least, filed a supplemental pleading with the
trial court informing the same of the foreclosure sale.
Likewise, petitioners cannot invoke the pari-passu
clause in the guarantee, not being parties to the said
agreement. The clause is clearly for the benefit of the
guarantor and no other. 51
The Court notes the letter of Rodrigo Sta. Ana offering,
by way of settlement of JNÊs obligations to PhilGuarantee,
the very same parcel of land mortgaged as security for the
loan agreement. This further weakens the position of
petitioners, since it becomes obvious that they
acknowledged the payment made by PhilGuarantee on
their behalf and that they were in fact willing to negotiate
with PhilGuarantee for the settlement of the said
obligation before the filing of the complaint a quo.
Anent the issue of forgery, the CA is correct in reversing
the decision of the trial court. Save for the denial of Narciso
Cruz that it was not his signature in the Undertaking and
the perfunctory comparison of the signatures, nothing in
the records would support the claim of forgery. Forgery
cannot be presumed and must be proved by clear, positive
and convincing evidence and the burden of proof lies on the
party
_______________
51 Exhibits, p. 71.
570

52
alleging forgery. Mere denial will not suffice to overcome
the positive value of the Undertaking, which is a notarized
document, has in its favor the presumption of regularity,
and carries the evidentiary weight
53
conferred upon it with
respect to its due execution. Even in cases where the
alleged forged signature was compared to samples of
genuine signatures to show its variance therefrom, 54
this
Court still found such evidence insufficient. Mere
variance of the signatures cannot be 55 considered as
conclusive proof that the same were forged.
WHEREFORE, the consolidated petitions are DENIED.
The Decision of the Court of Appeals in CA-G.R. CV No.
61318 is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Puno (Chairman), Austria-Martinez, Callejo, Sr. and

Chico-Nazario, JJ., concur.
Consolidated petitions denied.
Notes.·A guarantor or surety is bound by the same

consideration that makes the contract effective between the
principal parties thereto. (Willex Plastic Industries
Corporation vs. Court of Appeals, 256 SCRA 478 [1996])
An extension granted to the debtor by the creditor
without the consent of the guarantor extinguishes the
guaranty. (Security Bank and Trust Company, Inc. vs.
Cuenca, 341 SCRA 781 [2000])
··o0o··
_______________
52 Ladignon v. Court of Appeals, 390 Phil. 1161, 1170; 336 SCRA 42, 48
(2000).
53 Aznar Brothers Realty Company v. Court of Appeals, et al., 384 Phil.
95, 112; 327 SCRA 359, 374 (2000).
54 Ladignon v. Court of Appeals, supra note 52.
55 Veloso v. Court of Appeals, 329 Phil. 398; 260 SCRA 593 (1996).
571
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JN Devt Vs Phil Export

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JN Devt Vs Phil Export

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SUPREME COURT REPORTS ANNOTATED VOLUME 468 17/01/2019, 1)45 PM

VOL. 468, AUGUST 31, 2005 555

G.R. No. 151060. August 31, 2005.*

JN DEVELOPMENT CORPORATION, and SPS.

NARCISO V. CRUZ, petitioner, vs. PHILIPPINE EXPORT

Obligations and Contracts; Guarantees; Excussions; Under a

556 SUPREME COURT REPORTS ANNOTATED

JN Development Corporation vs. Philippine Export and Foreign

otherwise known as the benefit of excussion. It is clear that

Same; Same; Same; While the guarantor enjoys the benefits of

Same; Same; Default; That payment was actually made after

and demand on PhilGuarantee was made by TRB on 08 October

Same; Same; Excussions; The requirement that the guarantor

VOL. 468, AUGUST 31, 2005 557

JN Development Corporation vs. Philippine Export and Foreign

the debtor, subject to some conditions.·There is likewise no merit in

a guarantor to recover what it has paid, even if payment was made

Same; Same; Same; What is peculiar in the instant case is that

558 SUPREME COURT REPORTS ANNOTATED

JN Development Corporation vs. Philippine Export and Foreign

paid TRB on their behalf and to unjustly enrich themselves at the

Forgery; Signatures; Forgery cannot be presumed and must be

PETITIONS for review on certiorari of a decision of the

The facts are stated in the opinion of the Court.

VOL. 468, AUGUST 31, 2005 559

Before 1us are consolidated petitions questioning the

(P2,000,000.00). The loan was covered

1Penned by Associate Justice Portia Aliño-Hormachuelos, with JJ.

560 SUPREME COURT REPORTS ANNOTATED

JN about the call made by TRB, and

9 Id., Exhibit „H,‰ p. 35.

VOL. 468, AUGUST 31, 2005 561

signature found in the records16is totally different from the

562 SUPREME COURT REPORTS ANNOTATED

resorted to all the legal remedies against the debtor.

VOL. 468, AUGUST 31, 2005 563

are liable to PhilGuarantee despite its payment after the

29 G.R. No. 151311, Rollo, p. 17.

(1) The total amount of the debt;

31 G.R. No. 151060, Rollo, p. 408.

564 SUPREME COURT REPORTS ANNOTATED

Under a contract of guarantee, the guarantor binds himself

of it or waive it. PhilGuaranteeÊs waiver of the right of

34 Art. 2047, Civil Code.

VOL. 468, AUGUST 31, 2005 565

ers. The law clearly requires the debtor

In the event of default by JNDC and as a consequence thereof,

The guarantee was only up to 17 December 1980. JNÊs

There is likewise no merit in petitionersÊ claim that Phil-

39 Art. 2058, id.

566 SUPREME COURT REPORTS ANNOTATED

tained by the debtor. Such waiver is not contrary to public

VOL. 468, AUGUST 31, 2005 567

be proceeded against without first exhausting all of the

invoked by the guarantor against the creditor as defenses

„. . . In the event of default by JNDC and as a consequence thereof,

47 PetitionersÊ Memorandum, G.R. No. 151060, Rollo, p. 257.

568 SUPREME COURT REPORTS ANNOTATED

The foreclosure was made on 27 August 1993, „after the

. . . Firstly, the documents evidencing foreclosure of mortgage

48 Omnibus Motion, CA Rollo, pp. 251-252.

VOL. 468, AUGUST 31, 2005 569

Besides, the complaint a quo was filed by PhilGuarantee as