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G.R. No. L-38185. September 24, 1986

Procedural History:
For resolution is an appeal from the decision of the Court of Appeals which affirmed in
toto the decision of the then Court of First Instance of Rizal rendered in the petition for
review of the decree of registration issued in Land Registration Case No. N- 2597,
L.R.C. Record No. N-17939.

Statement of Facts:
On September 15, 1959, petitioners-spouses Hilario Ramirez and Valentina Bonifacio
filed an application for registration of a parcel of riceland in Pamplona, Las Pinas, Rizal.
After notice and publication, nobody appeared to oppose the application. An order of
general default was issued and the court allowed the petitioners to present evidence in
support of their claim. Thereafter, the petitioners presented parole evidence that they
acquired the land in question by purchase from Gregoria Pascual during the early part of
the American regime but the corresponding contract of sale was lost and no copy or
record of the same was available.

On January 30, 1960, the court ordered the issuance of the decree of registration and
consequently, Original Certificate of Title No. 2273 of the Registry of Deeds of Rizal
was issued in the petitioners names. On March 30, 1960, private respondents filed a
petition to review the decree of registration on the ground of fraud. The respondents
alleged among others that they obtained a loan of P400.00 from the petitioners in which
they secured with a mortgage on the land in question by way of antichresis and that there
were several attempts to redeem the
land but were refused by the petitioners. The trial court ordered the cancellation of the
original certificate of title. The Court of Appeals affirmed the decision.

Can an antichretic creditor acquire land of debtor by prescription?

No, an antichretic creditor cannot acquire the land of a debtor by prescription.

An antichretic creditor is not a possessor in the concept of owner but a mere holder
placed in possession of the land by its owners. Thus, possession of an antichretic creditor
cannot serve as a title for acquiring dominion. The court, from other cases like Trillana v.
Manansala, Valencia v. Acala and Barretto v. Barretto, held that the antichretic creditor
cannot ordinarily acquire by prescription the land surrendered to him by the debtor.

The decision appealed from is affirmed with a modification that the respondents are
ordered to pay the petitioners the amount of P400.00 as principal for the contract of
antichresis, the fruits obtained from the possession of the land having been applied to the
interests on the loan.


G.R. No. L-16666 April 10, 1992

Machetti undertook to construct a building for Hospicio. One of the agreements
condition was for the contractor to obtain the "guarantee" of the Fidelity and Surety
Company. The guarantee was for the compliance of Machetti to the contracts terms and
conditons. Subsequently it was found that the work had not been carried out in
accordance with the specifications which formed part of the contract. Hospicio therefore
refused to pay the balance of the contract price. Machetti thereupon brought an action to
which Hospicio presented a counterclaim. After the issue was joined, Machetti, on
petition of his creditors declared insolvency. An order was then entered suspending the
proceeding in the case. Hospicio led a motion asking that the Fidelity be made cross-
defendant which was granted. Hospicio then led a complaint against the Fidelity asking
for a judgment against the company upon its guaranty.CFI rendered judgment against the
Fidelity. The case is now before this court upon appeal by the Fidelity from said

ISSUE:WON the contract is one of guaranty or surety.

JUDGMENT:The judgment appealed from is reversed.

HOLDING:The circumstances in the contract are disdistinguishing features of contracts

of guaranty. The contract is the guarantor's separate undertaking in which the principal
does not join. It rests on a separate consideration moving from the principal and that
although it is written in continuation of the contract for the construction of the building,
it is collateral undertaking separate and distinct from the latter.While a surety undertakes
to pay if the principal does not pay, the guarantor only binds himself to pay if the
principal cannot pay.

The one is the insurer of the debt, the other an insurer of the solvency of the debtor.The
Fidelity having bound itself to pay only in the event its principal, Machetti, cannot pay it
follows that it cannot be compelled to pay until it is shown that Machetti is unable to pay.
Such inability to pay is not determined until the final liquidation of his estate and is not
suciently established by the mere fact that he has been declared insolvent in
insolvency proceedings.

BPI vs. Intermediate Appellate Court

GR# L-66826, August 19, 1988

Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar savings
accountand a peso current account. An application for a dollar drat was accomplished by
Virgillo Garcia branch manager of COMTRUST payable to a certain Leovigilda Dizon.
In the PPLICtion, Garcia indicated that the amount was to be charged to the dolarsavings
account of the Zshornacks. There was no indication of the name of the purchaser of the
dollar draft. Comtrust issued a check payable to the order of Dizon. When Zshornack
noticed the withdrawal from his account, he demanded an explanation from the bank. In
its answer, Comtrust claimed that the peso value of the withdrawal was given to Atty.
Ernesto Zshornack, brother of Rizaldy. When he encashed with COMTRUST a cashiers
check for P8450 issued by the Manila Banking Corporation payable to Ernesto.

Issue: Whether the contract between petitioner and respondent bank is a deposit?

The document which embodies the contract states that the US$3,000.00 was received by
the bank for safekeeping. The subsequent acts of the parties also show that the intent of
the parties was really for the bank to safely keep the dollars and to return it to Zshornack
at a later time. Thus, Zshornack demanded the return of the money on May 10, 1976, or
over five months later.

The above arrangement is that contract defined under Article 1962, New Civil Code,
which reads:
Art. 1962. A deposit is constituted from the moment a person receives a thing belonging
to another, with the obligation of safely keeping it and of returning the same. If the
safekeeping of the thing delivered is not the principal purpose of the contract, there is no
deposit but some other contract.
ANA vs.
G.R. No. 151060. August 31, 2005

Traders Royal Bank (TRB) extended to JN Development Corporation (JN) an Export
Packing Credit Line for P2,000,000. The loan was covered by a real estate mortgage and
a letter of guarantee from respondent Philippine Export and Foreign Loan Guarantee
Corporation (PhilGuarantee). Upon JNs failure to pay the loan when it matured,
PhilGuarantee, upon TRBs request to make good its guarantee, paid the latter.
Subsequently, PhilGuarantee made several demands on JN, but the latter proposed to
settle the obligation by way of development and sale of the mortgaged property instead,
which PhilGuarantee rejected. PhilGuarantee thus filed a complaint for collection of
money and damages against herein petitioners. The RTC ruled that since TRB was able
to foreclose the real estate mortgage executed by JN the obligation was extinguished and
thus the latter is not liable to reimburse PhilGuarantee. In addition, the RTC held that
since the guarantee was good for only one year, which was not renewed after the expiry
of said period, PhilGuarantee had no more legal duty to pay TRB. On appeal, the CA
reversed the RTCs decision.

1. Whether or not PhilGuarantees payment to TRB amounts to a waiver of its right under
2058 of the Civil Code
2. Whether or not PhilGuarantee had no obligation to pay TRB because of the alleged
expiration of contract of guarantee

1. 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. Under Article 2058, 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 (benefit of
excussion). The creditor must first obtain a judgment against the principal debtor before
assuming to run after the alleged guarantor since the exhaustion of the principals
property cannot begin to take place before judgment has been obtained. In order that the
guarantor may make use of the benefit of excussion, he must set it up against the creditor
upon the latters 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. Excussion is
a right granted to the guarantor by
law and as such he may opt to make use of it or waive it. PhilGuarantees waiver of the
right of
excussion cannot prevent it from demanding reimbursement from petitioners. While a
guarantor enjoys the benefit of excussion, nothing prevents him from paying the
obligation once demand is made on him. The law clearly requires the debtor to indemnify
the guarantor what the latter has paid.
2. The guarantee was only up to December 17, 1980. JNs obligation with TRB fell due
on June 30,1980, and demand on PhilGuarantee was made by TRB on October 8, 1980.
That payment was actually made only on March 10, 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. 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 once demand
was made on it.