SECOND DIVISION

MANUEL GO CINCO and ARACELI S. GO CINCO, Petitioners,

- versus -

COURT OF APPEALS, ESTER SERVACIO and MAASIN TRADERS LENDING CORPORATION, Respondents.G.R. No. 151903

Present:

[footnoteRef:1]*CORONA, J., [1: ]

[footnoteRef:2]**CARPIO-MORALES, [2: ]

Acting Chairperson,[footnoteRef:3]***NACHURA, [3: ]

BRION, and ABAD, JJ.

Promulgated:

October 9, 2009

x ------------------------------------------------------------------------------------------x

D E C I S I O N

BRION, J.:

Before the Court is a petition for review on certiorari filed by petitioners, spouses Manuel and Araceli Go Cinco (collectively, the spouses Go Cinco), assailing the decision dated June 22, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 47578, as well as the resolution[footnoteRef:4] dated January 25, 2002 denying the spouses Go Cincos motion for reconsideration. [4: ]

THE FACTUAL ANTECEDENTS

In December 1987, petitioner Manuel Cinco (Manuel) obtained a commercial loan in the amount of P700,000.00 from respondent Maasin Traders Lending Corporation (MTLC). The loan was evidenced by a promissory note dated December 11, 1987, and secured by a real estate mortgage executed on December 15, 1987 over the spouses Go Cincos land and 4-storey building located in Maasin, Southern Leyte. Under the terms of the promissory note, the P700,000.00 loan was subject to a monthly interest rate of 3% or 36% per annum and was payable within a term of 180 days or 6 months, renewable for another 180 days. As of July 16, 1989, Manuels outstanding obligation with MTLC amounted to P1,071,256.66, which amount included the principal, interest, and penalties.To be able to pay the loan in favor of MTLC, the spouses Go Cinco applied for a loan with the Philippine National Bank, Maasin Branch (PNB or the bank) and offered as collateral the same properties they previously mortgaged to MTLC. The PNB approved the loan application for P1.3 Million[footnoteRef:5] through a letter dated July 8, 1989; the release of the amount, however, was conditioned on the cancellation of the mortgage in favor of MTLC. [5: ]

On July 16, 1989, Manuel went to the house of respondent Ester Servacio (Ester), MTLCs President, to inform her that there was money with the PNB for the payment of his loan with MTLC. Ester then proceeded to the PNB to verify the information, but she claimed that the banks officers informed her that Manuel had no pending loan application with them. When she told Manuel of the banks response, Manuel assured her there was money with the PNB and promised to execute a document that would allow her to collect the proceeds of the PNB loan. On July 20, 1989, Manuel executed a Special Power of Attorney[footnoteRef:6] (SPA) authorizing Ester to collect the proceeds of his PNB loan. Ester again went to the bank to inquire about the proceeds of the loan. This time, the banks officers confirmed the existence of the P1.3 Million loan, but they required Ester to first sign a deed of release/cancellation of mortgage before they could release the proceeds of the loan to her. Outraged that the spouses Go Cinco used the same properties mortgaged to MTLC as collateral for the PNB loan, Ester refused to sign the deed and did not collect the P1.3 Million loan proceeds. [6: ]

As the MTLC loan was already due, Ester instituted foreclosure proceedings against the spouses Go Cinco on July 24, 1989. To prevent the foreclosure of their properties, the spouses Go Cinco filed an action for specific performance, damages, and preliminary injunction before the Regional Trial Court (RTC), Branch 25, Maasin, Southern Leyte. The spouses Go Cinco alleged that foreclosure of the mortgage was no longer proper as there had already been settlement of Manuels obligation in favor of MTLC. They claimed that the assignment of the proceeds of the PNB loan amounted to the payment of the MTLC loan. Esters refusal to sign the deed of release/cancellation of mortgage and to collect the proceeds of the PNB loan were, to the spouses Go Cinco, completely unjustified and entitled them to the payment of damages. Ester countered these allegations by claiming that she had not been previously informed of the spouses Go Cincos plan to obtain a loan from the PNB and to use the loan proceeds to settle Manuels loan with MTLC. She claimed that she had no explicit agreement with Manuel authorizing her to apply the proceeds of the PNB loan to Manuels loan with MTLC; the SPA merely authorized her to collect the proceeds of the loan. She thus averred that it was unfair for the spouses Go Cinco to require the release of the mortgage to MTLC when no actual payment of the loan had been made. In a decision dated August 16, 1994,[footnoteRef:7] the RTC ruled in favor of the spouses Go Cinco. The trial court found that the evidence sufficiently established the existence of the PNB loan whose proceeds were available to satisfy Manuels obligation with MTLC, and that Ester unjustifiably refused to collect the amount. Creditors, it ruled, cannot unreasonably prevent payment or performance of obligation to the damage and prejudice of debtors who may stand liable for payment of higher interest rates. After finding MTLC and Ester liable for abuse of rights, the RTC ordered the award of the following amounts to the spouses Go Cinco: [7: ]

(a) P1,044,475.15 plus 535.63 per day hereafter, representing loss of savings on interest, by way of actual or compensatory damages, if defendant corporation insists on the original 3% monthly interest rate;(b) P100,000.00 as unrealized profit;(c) P1,000,000.00 as moral damages;(d) P20,000.00 as exemplary damages;(e) P22,000.00 as litigation expenses; and(f) 10% of the total amount as attorneys fees plus costs.Through an appeal with the CA, MTLC and Ester successfully secured a reversal of the RTCs decision. Unlike the trial court, the appellate court found it significant that there was no explicit agreement between Ester and the spouses Go Cinco for the cancellation of the MTLC mortgage in favor of PNB to facilitate the release and collection by Ester of the proceeds of the PNB loan. The CA read the SPA as merely authorizing Ester to withdraw the proceeds of the loan. As Manuels loan obligation with MTLC remained unpaid, the CA ruled that no valid objection could be made to the institution of the foreclosure proceedings. Accordingly, it dismissed the spouses Go Cinco complaint. From this dismissal, the spouses Go Cinco filed the present appeal by certiorari. THE PETITIONThe spouses Go Cinco impute error on the part of the CA for its failure to consider their acts as equivalent to payment that extinguished the MTLC loan; their act of applying for a loan with the PNB was indicative of their good faith and honest intention to settle the loan with MTLC. They contend that the creditors have the correlative duty to accept the payment. The spouses Go Cinco charge MTLC and Ester with bad faith and ill-motive for unjustly refusing to collect the proceeds of the loan and to execute the deed of release of mortgage. They assert that Esters justifications for refusing the payment were flimsy excuses so she could proceed with the foreclosure of the mortgaged properties that were worth more than the amount due to MTLC. Thus, they conclude that the acts of MTLC and of Ester amount to abuse of rights that warrants the award of damages in their (spouses Go Cincos) favor. In refuting the claims of the spouses Go Cinco, MTLC and Ester raise the same arguments they raised before the RTC and the CA. They claim that they were not aware of the loan and the mortgage to PNB, and that there was no agreement that the proceeds of the PNB loan were to be used to settle Manuels obligation with MTLC. Since the MTLC loan remained unpaid, they insist that the institution of the foreclosure proceedings was proper. Additionally, MTLC and Ester contend that the present petition raised questions of fact that cannot be addressed in a Rule 45 petition. THE COURTS RULINGThe Court finds the petition meritorious.Preliminary ConsiderationsOur review of the records shows that there are no factual questions involved in this case; the ultimate facts necessary for the resolution of the case already appear in the records. The RTC and the CA decisions differed not so much on the findings of fact, but on the conclusions derived from these factual findings. The correctness of the conclusions derived from factual findings raises legal questions when the conclusions are so linked to, or are inextricably intertwined with, the appreciation of the applicable law that the case requires, as in the present case. The petition raises the issue of whether the loan due the MTLC had been extinguished; this is a question of law that this Court can fully address and settle in an appeal by certiorari. Payment as Mode of Extinguishing ObligationsObligations are extinguished, among others, by payment or performance, the mode most relevant to the factual situation in the present case. Under Article 1232 of the Civil Code, payment means not only the delivery of money but also the performance, in any other manner, of an obligation. Article 1233 of the Civil Code states that a debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered, as the case may be. In contracts of loan, the debtor is expected to deliver the sum of money due the creditor. These provisions must be read in relation with the other rules on payment under the Civil Code, which rules impliedly require acceptance by the creditor of the payment in order to extinguish an obligation. In the present case, Manuel sought to pay Ester by authorizing her, through an SPA, to collect the proceeds of the PNB loan an act that would have led to payment if Ester had collected the loan proceeds as authorized. Admittedly, the delivery of the SPA was not, strictly speaking, a delivery of the sum of money due to MTLC, and Ester could not be compelled to accept it as payment based on Article 1233. Nonetheless, the SPA stood as an authority to collect the proceeds of the already-approved PNB loan that, upon receipt by Ester, would have constituted as payment of the MTLC loan. Had Ester presented the SPA to the bank and signed the deed of release/cancellation of mortgage, the delivery of the sum of money would have been effected and the obligation extinguished. As the records show, Ester refused to collect and allow the cancellation of the mortgage.Under these facts, Manuel posits two things: first, that Esters refusal was based on completely unjustifiable grounds; and second, that the refusal was equivalent to payment that led to the extinguishment of the obligation. a. Unjust Refusal to Accept PaymentAfter considering Esters arguments, we agree with Manuel that Esters refusal of the payment was without basis.

Ester refused to accept the payment because the bank required her to first sign a deed of release/cancellation of the mortgage before the proceeds of the PNB loan could be released. As a prior mortgagee, she claimed that the spouses Go Cinco should have obtained her consent before offering the properties already mortgaged to her as security for the PNB loan. Moreover, Ester alleged that the SPA merely authorized her to collect the proceeds of the loan; there was no explicit agreement that the MTLC loan would be paid out of the proceeds of the PNB loan. There is nothing legally objectionable in a mortgagors act of taking a second or subsequent mortgage on a property already mortgaged; a subsequent mortgage is recognized as valid by law and by commercial practice, subject to the prior rights of previous mortgages. Section 4, Rule 68 of the 1997 Rules of Civil Procedure on the disposition of the proceeds of sale after foreclosure actually requires the payment of the proceeds to, among others, the junior encumbrancers in the order of their priority.[footnoteRef:8] Under Article 2130 of the Civil Code, a stipulation forbidding the owner from alienating the immovable mortgaged is considered void. If the mortgagor-owner is allowed to convey the entirety of his interests in the mortgaged property, reason dictates that the lesser right to encumber his property with other liens must also be recognized. Ester, therefore, could not validly require the spouses Go Cinco to first obtain her consent to the PNB loan and mortgage. Besides, with the payment of the MTLC loan using the proceeds of the PNB loan, the mortgage in favor of the MTLC would have naturally been cancelled. [8: ]

We find it improbable for Ester to claim that there was no agreement to apply the proceeds of the PNB loan to the MTLC loan. Beginning July 16, 1989, Manuel had already expressed intent to pay his loan with MTLC and thus requested for an updated statement of account. Given Manuels express intent of fully settling the MTLC loan and of paying through the PNB loan he would secure (and in fact secured), we also cannot give credit to the claim that the SPA only allowed Ester to collect the proceeds of the PNB loan, without giving her the accompanying authority, although verbal, to apply these proceeds to the MTLC loan. Even Esters actions belie her claim as she in fact even went to the PNB to collect the proceeds. In sum, the surrounding circumstances of the case simply do not support Esters position. b. Unjust Refusal Cannot be Equated to PaymentWhile Esters refusal was unjustified and unreasonable, we cannot agree with Manuels position that this refusal had the effect of payment that extinguished his obligation to MTLC. Article 1256 is clear and unequivocal on this point when it provides that

ARTICLE 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. In short, a refusal without just cause is not equivalent to payment; to have the effect of payment and the consequent extinguishment of the obligation to pay, the law requires the companion acts of tender of payment and consignation. Tender of payment, as defined in Far East Bank and Trust Company v. Diaz Realty, Inc., is the definitive act of offering the creditor what is due him or her, together with the demand that the creditor accept the same. When a creditor refuses the debtors tender of payment, the law allows the consignation of the thing or the sum due. Tender and consignation have the effect of payment, as by consignation, the thing due is deposited and placed at the disposal of the judicial authorities for the creditor to collect.A sad twist in this case for Manuel was that he could not avail of consignation to extinguish his obligation to MTLC, as PNB would not release the proceeds of the loan unless and until Ester had signed the deed of release/cancellation of mortgage, which she unjustly refused to do. Hence, to compel Ester to accept the loan proceeds and to prevent their mortgaged properties from being foreclosed, the spouses Go Cinco found it necessary to institute the present case for specific performance and damages. c. Effects of Unjust RefusalUnder these circumstances, we hold that while no completed tender of payment and consignation took place sufficient to constitute payment, the spouses Go Cinco duly established that they have legitimately secured a means of paying off their loan with MTLC; they were only prevented from doing so by the unjust refusal of Ester to accept the proceeds of the PNB loan through her refusal to execute the release of the mortgage on the properties mortgaged to MTLC. In other words, MTLC and Ester in fact prevented the spouses Go Cinco from the exercise of their right to secure payment of their loan. No reason exists under this legal situation why we cannot compel MTLC and Ester: (1) to release the mortgage to MTLC as a condition to the release of the proceeds of the PNB loan, upon PNBs acknowledgment that the proceeds of the loan are ready and shall forthwith be released; and (2) to accept the proceeds, sufficient to cover the total amount of the loan to MTLC, as payment for Manuels loan with MTLC. We also find that under the circumstances, the spouses Go Cinco have undertaken, at the very least, the equivalent of a tender of payment that cannot but have legal effect. Since payment was available and was unjustifiably refused, justice and equity demand that the spouses Go Cinco be freed from the obligation to pay interest on the outstanding amount from the time the unjust refusal took place;[footnoteRef:9] they would not have been liable for any interest from the time tender of payment was made if the payment had only been accepted. Under Article 19 of the Civil Code, they should likewise be entitled to damages, as the unjust refusal was effectively an abusive act contrary to the duty to act with honesty and good faith in the exercise of rights and the fulfillment of duty. [9: ]

For these reasons, we delete the amounts awarded by the RTC to the spouses Go Cinco (P1,044,475.15, plus P563.63 per month) representing loss of savings on interests for lack of legal basis. These amounts were computed based on the difference in the interest rates charged by the MTLC (36% per annum) and the PNB (17% to 18% per annum), from the date of tender of payment up to the time of the promulgation of the RTC decision. The trial court failed to consider the effects of a tender of payment and erroneously declared that MTLC can charge interest at the rate of only 18% per annum the same rate that PNB charged, not the 36% interest rate that MTLC charged; the RTC awarded the difference in the interest rates as actual damages. As part of the actual and compensatory damages, the RTC also awarded P100,000.00 to the spouses Go Cinco representing unrealized profits. Apparently, if the proceeds of the PNB loan (P1,203,685.17) had been applied to the MTLC loan (P1,071,256.55), there would have been a balance of P132,428.62 left, which amount the spouses Go Cinco could have invested in their businesses that would have earned them a profit of at least P100,000.00.We find no factual basis for this award. The spouses Go Cinco were unable to substantiate the amount they claimed as unrealized profits; there was only their bare claim that the excess could have been invested in their other businesses. Without more, this claim of expected profits is at best speculative and cannot be the basis for a claim for damages. In Lucas v. Spouses Royo,[footnoteRef:10] we declared that: [10: ]

In determining actual damages, the Court cannot rely on speculation, conjecture or guesswork as to the amount. Actual and compensatory damages are those recoverable because of pecuniary loss in business, trade, property, profession, job or occupation and the same must be sufficiently proved, otherwise, if the proof is flimsy and unsubstantiated, no damages will be given. [Emphasis supplied.]

We agree, however, that there was basis for the award of moral and exemplary damages and attorneys fees. Esters act of refusing payment was motivated by bad faith as evidenced by the utter lack of substantial reasons to support it. Her unjust refusal, in her behalf and for the MTLC which she represents, amounted to an abuse of rights; they acted in an oppressive manner and, thus, are liable for moral and exemplary damages.[footnoteRef:11] We nevertheless reduce the P1,000,000.00 to P100,000.00 as the originally awarded amount for moral damages is plainly excessive. [11: ]

We affirm the grant of exemplary damages by way of example or correction for the public good in light of the same reasons that justified the grant of moral damages. As the spouses Go Cinco were compelled to litigate to protect their interests, they are entitled to payment of 10% of the total amount of awarded damages as attorneys fees and expenses of litigation. WHEREFORE, we GRANT the petitioners petition for review on certiorari, and REVERSE the decision of June 22, 2001 of the Court of Appeals in CA-G.R. CV No. 47578, as well as the resolution of January 25, 2002 that followed. We REINSTATE the decision dated August 16, 1994 of the Regional Trial Court, Branch 25, Maasin, Southern Leyte, with the following MODIFICATIONS:

(1) The respondents are hereby directed to accept the proceeds of the spouses Go Cincos PNB loan, if still available, and to consent to the release of the mortgage on the property given as security for the loan upon PNBs acknowledgment that the proceeds of the loan, sufficient to cover the total indebtedness to respondent Maasin Traders Lending Corporation computed as of June 20, 1989, shall forthwith be released; (2) The award for loss of savings and unrealized profit is deleted;(3) The award for moral damages is reduced to P100,000.00; and(4) The awards for exemplary damages, attorneys fees, and expenses of litigation are retained.

The awards under (3) and (4) above shall be deducted from the amount of the outstanding loan due the respondents as of June 20, 1989. Costs against the respondents.

SO ORDERED.

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.D E C I S I O N TINGA, J.:Before us 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 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, covering seventy percent (70%) of the credit line.[3] With PhilGuarantee issuing a guarantee in favor of TRB,[4] JN, petitioner spouses Rodrigo and Leonor Sta. Ana and 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 requested PhilGuarantee to make good its guarantee.[8] PhilGuarantee informed JN about the call made by TRB, and inquired about the action of JN to settle the loan.[9] 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 (P934,824.34).[10] 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 way of development and sale of the mortgaged property.[11] PhilGuarantee, however, rejected the proposal.PhilGuarantee thus filed a Complaint[12] for collection of money and damages against herein petitioners.In its Decision dated 20 August 1998, the RTC dismissed PhilGuarantees 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 courts finding that TRB was able to foreclose the real estate mortgage executed by JN, thus extinguishing petitioners obligation.[13] Moreover, there was no showing that after the said foreclosure, TRB had demanded from JN any deficiency or the payment of the difference between the proceeds of the foreclosure sale and the actual loan.[14] In addition, the RTC held that since PhilGuarantees 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, PhilGuarantee had no more legal duty to pay TRB on 10 March 1981.[15] 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 signature found in the records is totally different from the signature on the Undertaking.[16]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, PhilGuarantees payment to TRB amounts to a waiver of its right under Art. 2058 of the Civil Code.[17]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 Centavos (P934,624.34), plus service charge and interest.[18]In reaching its denouement, the CA held that the RTCs finding that the loan was extinguished by virtue of the foreclosure sale of the mortgaged property had no factual support,[19] and that such finding is negated by Rodrigo Sta. Anas testimony that JN did not receive any notice of foreclosure from PhilGuarantee or from TRB. [20] Moreover, Sta. Ana even offered the same mortgaged property to PhilGuarantee to settle its obligations with the latter.[21] The CA also ruled that JNs obligation had become due and demandable within the one-year period of effectivity of the guarantee; thus, PhilGuarantees payment to TRB conformed with its guarantee, although the payment itself was effected one year after the maturity date of the loan.[22] Contrary to the trial courts finding, the CA ruled that the contract of guarantee was not extinguished by the alleged lack of evidence on PhilGuarantees consent to the extensions granted by TRB to JN.[23] Interpreting Art. 2058 of the Civil Code,[24] 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 benefit of excussion and paying the obligation altogether.[25]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 of the Undertaking which is a notarized document. [26] 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 petitioners payment of the loan to PhilGuarantee, the CA added.[27]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 2079, 2058, and 2059 of the Civil Code in its Decision.[28] Meanwhile, petitioner Narciso Cruz in G.R. No. 151311 claims that the CA erred when it held that petitioners are liable to PhilGuarantee despite its payment after the expiration of its contract of guarantee and the lack of PhilGuarantees consent to the extensions granted by TRB to JN. Moreover, Cruz questions the reversal of the ruling of the trial court anent his liability as a signatory to the Undertaking.[29]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 became due, it should be indemnified by petitioners.[30] It argues that, contrary to petitioners claim, there could be no waiver of its right to excussion more explicit than its act of payment to TRB very directly.[31] Besides, the right to excussion is for the benefit of the guarantor and is not a defense for the debtor to raise and use to evade liability.[32] Finally, PhilGuarantee maintains that there is no sufficient evidence proving the alleged forgery of Cruzs signature on the Undertaking, which is a notarized document and as such must be accorded the presumption of regularity.[33]The Court finds for PhilGuarantee.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.[34] The guarantor who pays for a debtor, in turn, must be indemnified by the latter.[35] 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.[36] 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 exhaustion of the principals property cannot even begin to take place before judgment has been obtained.[37] 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 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.[38]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. PhilGuarantees 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.[39]Petitioners claim that PhilGuarantee had no more obligation to pay TRB because of the alleged expiration of the contract of guarantee is untenable. The guarantee, dated17 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 guarantee fee at the same rate of 1.5% per annum.[40]The guarantee was only up to 17 December 1980. JNs 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 petitioners claim that PhilGuarantees 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.[41] In the instant case, PhilGuarantees waiver can be inferred from its actual payment to TRB after the latters demand, despite JNs failure to pay the renewal/guarantee fee as indicated in the guarantee.[42]For the above reasons, there is no basis for petitioners 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,[43] or if made without notice to the debtor,[44] subject of course to some conditions.Petitioners invocation of our ruling in Willex Plastic Industries, Corp. v. Court of Appeals[45] is misplaced, if not irrelevant. In the said case, the guarantor claimed that it could not 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 TRBs alleged foreclosure of the real estate mortgage over the land executed as security for the loan agreement had extinguished PhilGuarantees obligation; thus, PhilGuarantees recourse should be directed against TRB, as per the pari-passu provision[46] in the contract of guarantee.[47] We disagree.The foreclosure was made on 27 August 1993, after the case was submitted for decision in 1992 and before the issuance of the decision of the court a quo in 1998.[48] 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 petitioners motion for reconsideration in the CA. In their appellants Brief, petitioners claimed that there was no need for the defendant-appellee JNDC to present any evidence before the lower court to show that indeed foreclosure of the REM took place.[49] 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 appellees 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 loan by defendant-appellees to the plaintiffs-appellants.[50]Besides, the complaint a quo was filed by PhilGuarantee as guarantor for JN, and its cause of action was premised on its payment of JNs obligation after the latters 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 PhilGuarantees 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.The Court notes the letter[51] of Rodrigo Sta. Ana offering, by way of settlement of JNs 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 alleging forgery.[52] 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.[53] 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.[54] Mere variance of the signatures cannot be considered as conclusive proof that the same were forged.[55]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.