G.R. No.

L-56450 July 25, 1983

RODOLFO T. GANZON and GREGORIO L. LIRA, in his capacity as Ex-Oficio Provincial Sheriff of Iloilo,
petitioners,
vs.
THE HONORABLE SANCHO Y. INSERTO, Presiding Judge, Branch I of the Court of First Instance of Iloilo,
RANDOLPH C. TAJANLANGIT and ESTEBAN C. TAJANLANGIT, respondents.
GUTIERREZ, JR., J.:
May the respondent court order that a mortgage on real property be substituted by a surety bond and direct the Register of
Deeds to cancel the mortgage lien annotated on the Torrens Title since the surety bond already secures the obligation earlier
secured by the cancelled mortgage?
The petitioner comes to us stating that the lower court acted with grave abuse of discretion and in excess of its jurisdiction
in so ruling.
On August 28, 1979, petitioner Rodolfo Ganzon initiated proceedings to extra-judicially foreclose a real estate mortgage
executed by the private respondents in his favor. The Deed of Real Estate Mortgage executed on March 19, 1979 (Annex
"A", Petition) between Randolph Tajanlangit and Esteban Tajanlangit as mortgagors on one hand and Rodolfo Ganzon as
mortgagee on the other hand was to secure the payment by the Tajanlangits of a promissory note amounting to P40,000.00
in favor of Ganzon, to wit:
xxx xxx xxx
That whereas, the MORTGAGORS are justly indebted to the MORTGAGEE in the amount of FORTY THOUSAND
(P40,000.00) PESOS, Philippine Currency, as evidenced by their promissory note for said sum, in the words and figures as
follows:
P40,000.00 Iloilo City
March 19, 1979
For value received, we promise to pay RODOLFO T. GANZON, or order, at his residence in Molo, Iloilo City, the sum of
FORTY THOUSAND (P40,000.00) PESOS, Philippine Currency, in two (2) installments as follows: P20,000.00 on or
before 25 May 1979; and P20,000.00 on or before 25 August 1979. This note shall not draw interest. (Annex "A", Rollo, p.
15)
The mortgage covered a parcel of residential land, Lot No. 1901-E-61-B-1- F of the subdivision plan Psd-274802, located
in the District of Molo, Iloilo City covered by Transfer Certificate of Title No. T-50324.
Thereafter, petitioner Gregorio Lira, in his capacity as ex-oficio provincial sheriff of Iloilo served personal notice of the
foreclosure proceedings on the private respondents. Lira also caused the publication in a newspaper of general circulation
in the City and Province of Iloilo of a Notice of Extra Judicial Sale of Mortgaged Property, setting the sale at public auction
of the mortgaged property at 10:00 a.m. on September 28, 1979, at his office at the Provincial Capitol, Iloilo City.
On September 27, 1979, a day before the scheduled public auction, the private respondents filed a civil action for specific
performance, damages, and prohibition with preliminary injunction against the petitioners with the respondent court. The
action, docketed as CFI Case No. 13053, sought to declare the extrajudicial foreclosure proceedings and all proceedings
taken in connection therewith null and void. The private respondents asked for the issuance of a writ of preliminary
injunction to enjoin the petitioners from proceeding with the foreclosure and public auction sale. Acting on the urgent ex-
parte motion of private respondents, the trial court issued an order enjoining the provincial sheriff from proceeding with the
scheduled auction sale on September 28, 1979.
On October 31, 1979, the private respondents filed an amended complaint. For purposes of the instant petition, the pertinent
allegations in the amended complaint are the following: (1) On August 25, 1978, defendant, now petitioner Rodolfo Ganzon
executed a deed of absolute sale of a parcel of land in favor of plaintiff, now respondent Esteban Tajanlangit. The parcel of
land, subject of the sale is described as Lot No. 1900 of the Cadastral Survey of Iloilo located at Molo, Iloilo City covered
by Transfer Certificate of Title No. T- 39579 with an area of 24,442 square meters, more or less; (2) The deed of real estate
mortgage which is the subject of the extra-judicial proceedings initiated by defendant Rodolfo Ganzon executed by plaintiffs
Esteban Tajanlangit and Randolph Tajanlangit in his favor was for the purpose of securing the payment of P40,000.00 which
formed part of the purchase price of Lot No. 1900; (3) Incorporated in the aforesaid deed of absolute sale was a proviso to
the effect that vendor-defendant Rodolfo Ganzon guaranteed to have the occupants of the lot to vacate the premises within
120 days after the execution thereof, to wit:
xxx xxx xxx
The vendor warrants to the vendee peaceful possession of the above- mentioned parcel of land and that the said vendor shall
see to it that all occupants thereof at the execution of this deed shall vacate the premises within a period of one hundred
twenty (120) days computed from the date of the execution of this document.
(4) The aforestated guaranty was violated by defendant Ganzon since the occupants of the said lot up to the present are still
within the premises of the lot; and (5) The extra-judicial foreclosure is illegal since defendant Ganzon committed a breach
in his warranty and the deed of real estate mortgage does not contain any stipulation authorizing mortgagee Ganzon to
extrajudicially foreclose the mortgaged property.
On March 28, 1980 the petitioners filed their answer to the amended complaint. They admitted the veracity of the deed of
absolute sale covering said Lot No. 1900 but denied that the real estate mortgage covering Lot No. 1901 subject of the extra-
judicial foreclosure proceedings was executed by Esteban Tajanlangit and Randolph Tajanlangit in favor of Rodolfo Ganzon
to secure the payment of the balance of the purchase price of Lot No. 1900. They maintained that the real estate mortgage
was an entirely different transaction between the Tajanlangits and Ganzon from the sale of Lot No. 1900 embodied in the
absolute deed of sale of realty. They further maintained that the extra-judicial foreclosure proceedings would be in
accordance with the terms and conditions of the said mortgage.
After the issues had been joined but before actual trial, the private respondents filed a "Motion For Release Of Real Estate
And For The Clerk Of Court To Accept Bond Or Cash In Lieu Thereof," to which the petitioners interposed an Opposition.
In an order dated November 20, 1980, the respondent court granted the respondents' motion. The order states:
This is a Motion for Release of Real Estate Mortgage and for the Clerk of Court to Accept Bond or Cash in Lieu Thereof.
It appears that defendant sold to Esteban Tajanlangit, Jr. Lot No. 1900 of the Cadastral Survey of Iloilo under Transfer
Certificate of Title No. T- 39579. The document of sale provides that the vendee who is the defendant herein, promised to
exclude from the premises the occupants. To secure the unpaid balance of P40,000.00, plaintiffs executed a real estate
mortgage on their Lot No. 1901-4-61-B-1-1 of the subdivision plan Psd-274802. Because defendant failed to clear the
occupants of Lot No. 1900, as provided for in the contract of sale, plaintiffs withheld payment of the P40,000.00. To clear
the title of Lot No. 1901-E-61-B-1-1 plaintiffs are willing to submit a bond in the sum of P80,000.00 which is double the
consideration of the mortgage.
WHEREFORE, in the interest of justice, considering that plaintiffs are willing and able to pay the P40,000.00 and
considering further that defendant has not yet cleared the premises he sold to plaintiffs of tenants, the Register of Deeds of
Iloilo City is ordered to cancel the mortgage lien on Transfer Certificate of Title No. T-50324, upon showing by the plaintiffs
that they have put up the surety bond in the sum of P80,000.00. " (Annex "F", Rollo, p. 58)
On January 28, 1981, the respondents after receipt of the aforesaid order, put up a surety bond in the amount of P80,000.00
with the Summa Insurance Corporation as surety (Annex " G ") for the approval of the respondent court,
On February 14, 1981, the petitioners filed an Urgent Motion for Reconsideration Of The Order Dated November 20, 1980,
And Opposition To The Approval of Surety Bond.
The respondent court in its order dated February 24, 1981, denied the aforesaid motion. The order states:
Finding the motion filed by plaintiff through counsel for approval of surety bond well taken and considering that the
opposition filed by defendants does not question the validity of the surety bond itself but is anchored upon grounds that had
already been passed upon by this Court in the order dated November 20, 1980, the surety bond in the amount of P80,000.00
issued by Summa Insurance Corporation is hereby approved.
The defendant Rodolfo T. Ganzon, through Atty. Salvador Cabaluna, Jr., is hereby ordered to surrender to the plaintiffs,
through Atty. Hannibal de los Reyes the owner's copy of TCT No. 50324, so that the mortgage annotated therein in favor
of defendant Rodolfo T. Ganzon could be duly cancelled. (Annex "I", Rollo, p. 65).
Hence, the instant petition.
On March 18, 198 1, we issued a temporary restraining order enjoining the respondents from enforcing the orders dated
November 20, 1980 and February 24, 1981 of the Court of First Instance of Iloilo, Branch I at Iloilo City.
On July 8, 1981, we gave due course to the petition and required the parties to submit their respective memoranda.
As stated earlier, the issue raised before us is whether or not the trial court may order the cancellation of a mortgage lien
annotated in a Torrens Certificate of Title to secure the payment of a promissory note and substitute such mortgage lien
with a surety bond approved by the same court to secure the payment of the promissory note.
In issuing its November 20, 1980 order, the trial court before trial on the merits of the case assumed that the real estate
mortgage subject of the extra- judicial foreclosure proceedings was indeed a security for the payment of a P40,000.00
promissory note which answered for the balance of the purchase price of the sale between Ganzon as vendor and Esteban
Tajanlangit was vendee of Lot No. 1900. With this assumption, the trial court concluded that Rodolfo Ganzon violated his
warranty that he would clear the parcel of land of its occupants within 120 days after the execution of the deed of absolute
sale of realty. On this premise and upon motion of the private respondents, the court ordered the Register of Deeds to cancel
the mortgage lien annotated in the Transfer Certificate of Title covering the mortgaged parcel of land and to substitute
therein a surety bond approved by the trial court.
It must be noted that petitioner Rodolfo Ganzon vehemently denied the allegation that the P 40,000.00, consideration of the
promissory note which resulted in the execution of the real estate mortgage to secure its payment was a balance of the
purchase price of Lot No. 1900. As earlier stated, Ganzon maintained in his Answer that the real estate mortgage arose from
a different transaction. At the pre-trial, what the parties admitted were the existence and due execution of the documents,
including the absolute deed of sale of realty and the subject real estate mortgage. In connection with the documents, the
issues per the pre-trial order were "... whether or not the documents express the true intention of the parties, and whether or
not they complied with the provisions of the document. (Rollo, p. 78) Hence, at that stage of the case, the trial court's order
dated November 20, 1980 had no factual basis.
Even on the assumption that the factual bases of the trial court's questioned orders were justified by evidence in the records
the same would still not be proper.
A mortgage is but an accessory contract. "The consideration of the mortgage is the same consideration of the principal
contract without which it cannot exist as an independent contract." (Banco de Oro v. Bayuga, 93 SCRA 443, citing China
Banking Corporation v. Lichauco, 46 Phil. 460). On the effects of a mortgage we ruled in Philippine National Bank v.
Mallorca (21 SCRA 694):
xxx xxx xxx
... By Article 2126 of the Civil Code, (Formerly Article 1876 of the Civil Code of Spain of 1889.) a 'mortgage directly and
immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the
obligation for whose security it was constituted.' Sale or transfer cannot affect or release the mortgage. A purchaser is
necessarily bound to acknowledge and respect the encumbrance to which is subject the purchased thing and which is at the
disposal of the creditor 'in order that he, under the terms of the contract, may recover the amount of his credit therefrom.'
(Bischoff vs. Pomar, 12 Phil. 690, 700) For, a recorded real estate is a right in rem, a lien on the property whoever its owner
may be. (Altavas, The Law of Mortgages in the Philippine Islands, 1924 ed., p. 2) Because the personality of the owner is
disregarded; the mortgage subsists notwithstanding changes of ownership; the last transferee is just as much of a debtor as
the first one; and this, independent of whether the transferee knows or not the person of the mortgagee. (Id., at p. 6) So it is,
that a mortgage lien is inseparable from the property mortgaged. All subsequent purchasers thereof must respect the
mortgage, whether the transfer to them be with or without the consent of the mortgagee. For, the mortgage, until discharge,
follows the property. (Peña, Registration of Land Titles and Deeds, 1961 ed., p. 225; emphasis supplied. See also V.
Tolentino, Civil Code of the Philippines, 1962 ed., p. 477)
Applying the principles underlying the nature of a mortgage, the real estate mortgage constituted on Lot No. 1901-E-61-B-
lF of the subdivision plan Psd-27482, located in the District of Molo, Iloilo City covered by Transfer Certificate of Title
No. T-50324 can not be substituted by a surety bond as ordered by the trial court. The mortgage lien in favor of Petitioner
Rodolfo Ganzon is inseparable from the mortgaged property. It is a right in rem, a lien on the property. To substitute the
mortgage with a surety bond would convert such lien from a right in rem, to a right in personam. This conversion can not
be ordered for it would abridge the rights of the mortgagee under the mortgage contract.
Moreover, the questioned orders violate the non-impairment of contracts clause guaranteed under the Constitution.
Substitution of the mortgage with a surety bond to secure the payment of the P40,000.00 note would in effect change the
terms and conditions of the mortgage contract. Even before trial on the very issues affecting the contract, the respondent
court has directed a deviation from its terms, diminished its efficiency, and dispensed with a primary condition.
WHEREFORE, the instant petition is hereby GRANTED. The Orders dated November 20, 1980 and February 24, 1981 of
the trial court are SET ASIDE. Our March 18, 1981 Temporary Restraining Order is made PERMANENT. No costs.
SO ORDERED.

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

HILARIO RAMIREZ and VALENTINA BONIFACIO, petitioners,

vs.
HONORABLE COURT OF APPEALS, FRANCISCA MEDINA, MATILDE MARTIN, EMILIO MARTIN, DELFIN
GUINTO, TEOFILO GUINTO, PRUDENCIO GUINTO and MARGARITA GUINTO, respondents.

This 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.

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 parol evidence that they acquired the land in question by purchase from Gregorio 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, the private respondents Francisca Medina, Basilio Martin, Matilde Martin, Delfin Guinto, Teofilo Guinto,
Prudencio Guinto and Margarita Guinto, petitioners' nephews and nieces, filed a petition to review the decree of registration on
the ground of fraud. The private respondents based their claim to the land on the following allegations: that they are the legal heirs
of the deceased Agapita Bonifacio who died intestate on March 11, 1936; that Valentina Bonifacio is a sister of the deceased
Agapita Bonifacio, they being the children of one Gregoria Pascual; that Gregoria Pascual previously owned the land in question
as evidenced by Tax Declaration No. 6611 of Las Pinas Rizal issued on December 8, 1920; that Agapita Bonifacio acquired the
property in question by purchase from Gregoria Pascual for which reason Tax Declaration No. 8777 was issued in her name on
May 21, 1928; that Gregoria Pascual during her lifetime, from 1916, possessed the said property in the concept of owner, publicly
and uninterruptedly, which possession was continued by Agapita Bonifacio in 1928; that in 1938 respondents obtained a loan of
P400.00 from the petitioners which they secured with a mortgage on the land in question by way of antichresis; that for this
reason, Tax Declaration No. 8777 was cancelled and substituted by Tax Declaration Nos. 9522 and 2385 issued in the names of
the petitioners; that, thereafter, the petitioners began paying taxes on the land; that after several attempts to redeem the land were
refused by the petitioners, the respondents filed a complaint in the Court of First Instance of Pasay City docketed as Civil Case
No. 272-R for the recovery of the possession and ownership of the said property; that when they learned of the issuance of the
certificate of title to the land in the petitioners' names, they also filed the instant petition for review. The previous complaint, Civil
Case No. 272-R, was subsequently dismissed on a joint petition filed by the parties after they agreed to have the determination of
the question of ownership resolved in the registration proceedings.

In their answer, the spouses Ramirez denied the material allegations of the petition, they based their claim to the land on two
deeds of sale allegedly executed on April 15, 1937 and April 23, 1937 which they allegedly found accidentally in March 1960.

After trial, the court found that deeds of sale spurious. It further found that the respondents took possession of the land as owners
after the death of Agapita Bonifacio and in 1938, mortgaged it to the spouses Ramirez to secure the payment of a loan in the
amount of P400.00. It was agreed that the respondents could not redeem the property within a period of five years and that the
petitioners would take possession of the land, enjoy its fruits, and pay the land taxes thereon. The written agreement was kept by
the petitioners as creditors. The trial court appreciated the fact of the petitioners' failure, despite formal request, to produce the
document in court in favor of the respondents. Finding the claims of the herein respondents sustained by the evidence, it ordered
the reconveyance of the property in the following manner:

WHEREFORE, judgment is hereby rendered in favor of petitioners and against applicants as follows:

1) Setting aside its decision dated December 28, 1959 insofar as it found and declared applicants to be the owners
of the parcel of land described in Exhibits A, B and C and insofar as it ordered the registration thereof in their
names;

2) Declaring the petitioners, all Filipinos, all of legal age, and all residents of Ligas Bacoor, Cavite, to be the
true and absolute owners pro indiviso of the said parcel of land described in Exhibits A, B and C in the following
proportions:

a. Francisca Medina, married to Tomas de Leon, one-third (1/3) thereof;

b. Emilio Martin, married to Dolores Antonio, and Matilde Martin, married to Federico Torres, one-third (1/3)
thereof-,

c. Teofilo Guinto, married to Rocila de la Cruz, Delfin Guinto, married to Gregoria Pamaran, Prudencio Guinto,
married to Ana Guinto, and Margarita Guinto, married to Felix Calacala one- third (1/3) thereof;

3) Ordering the registration of the said parcel of land described in Exhibits A, B and C in the names of petitioners;

4) Setting aside its order for the issuance of the decree of registration in favor of applicants dated January 30,
1959, and ordering the issuance of the decree of registration in the names of petitioners;

5) Cancelling Original Certificate of Title No. 2273 of the Register of Deeds of Rizal in the names of applicants
and the issuance in lieu thereof of another original certificate of title in the names of petitioners in the proportion
of their ownership of the property as stated in paragraph 2 above;

6) Ordering applicants to pay P3,000.00 to petitioners as and for attorney's fees;

7) Ordering applicants to pay the costs of this suit.

The decision was affirmed by the Court of Appeals. On a motion for reconsideration filed by the petitioners, the same appellate
court, but with a new member, promulgated a resolution setting aside the original decision. On a motion for reconsideration filed
by the private respondents, this resolution was set aside and the original decision was reinstated.
The petitioners went to this Court in a petition for review on certiorari with the following questions:

ONE-HAS THE COURT OF FIRST INSTANCE, ACTING AS A LAND REGISTRATION COURT, THE
JURISDICTION TO GIVE DUE COURSE TO A PETITION FOR REVIEW OF DECREE UNDER SEC. 38
OF ACT 496 AND TO RE-OPEN THE ORIGINAL PROCEEDINGS WHEN THE PETITION IS ACTUALLY
ONE OF RECONVEYANCE AND NOT BASED ON ACTUAL OR EXTRINSIC FRAUD?

TWO-DOES SEC. 38 OF ACT NO. 496 APPLY ON ALL FORES (SIC) TO ORIGINAL LAND
REGISTRATION PROCEEDINGS HAD UNDER PARAGRAPH B, SECTION 48 OF COM. ACT NO. 141
AS AMENDED BY REP. ACT NO. 1942 WHEREIN THE LAND INVOLVED IS PUBLIC
AGRICULTURAL LAND?

THREE-HAS THE COURT OF FIRST INSTANCE, ACTING AS A LAND REGISTRATION COURT, THE
POWER AND AUTHORITY TO VEST TITLE ON THE LAND INVOLVED TO HEREIN PRIVATE
RESPONDENTS AND ORDER EVEN ITS PARTITION AMONGST THEM IN THE FACE OF THE
ADMITTED FACT THAT THE LAND IS IN ACTUAL POSSESSION OF PETITIONERS WHILE PRIVATE
RESPONDENTS HAD NOT POSSESSED THE SAME AT ALL?

FOUR-DO THE PRIVATE RESPONDENTS HAVE THE LEGAL CAPACITY AND QUALIFICATION TO
ACQUIRE AND BE VESTED BY THE COURT WITH TITLE TO THE LAND IN QUESTION?

We find the petition without merit.

The first question does not warrant favorable consideration. The issue was submitted to the appellate court and in our opinion,
correctly resolved therein. The Court of Appeals stated:

... The petition alleged that 'the applicants Hilario Ramirez and Valentina Bonifacio willfully and fraudulently
suppressed the facts that the petitioners are the legal and rightful owners of the ricefield in question and that they
possess the said ricefield merely as antichretic creditors as security for the loan of P400.00; that the applicants
are guilty of fraudulent misrepresentation and concealment when they declared in their application, in the case
at bar, that no other person had any claim or interest in the said land.' These we believe are sufficient allegations
of extrinsic fraud.

In the applicant's application for registration, which followed the form required by the Land Registration Act,
the applicants alleged that 'to the best of our knowledge and belief, there is no mortgage or incumbrance of any
kind whatsoever affecting said land, nor any other person having any estate or interest therein, legal or equitable,
in possession, remainder, reversion or expectancy.' This allegation is false and made in bad faith, for, as We have
found, the applicants are not the owners of the land sought to be registered and they are in possession thereof
only as antichretic creditors.

The averments in the petition for review of the decree of registration constitute specific and not mere general allegations of actual
and extrinsic fraud. Competent proof to support these allegations was adduced. We find no compelling reason to disturb the
findings of the two courts below.

The petitioners in this case did not merely omit a statement of the respondents' interest in the land. They positively attested to the
absence of any adverse claim therein. This is clear misrepresentation. The omission and concealment, knowingly and intentionally
made, of an act or of a fact which the law requires to be performed or recorded is fraud, when such omission or concealment
secures a benefit to the prejudice of a third person (Estiva v. Alvero, 37 Phil. 497).

In the case of Libundan v. Palma Gil (45 SCRA 17), this Court held:

The purpose of the law in giving aggrieved parties, deprived of land or any interest therein, through fraud in the
registration proceedings, the opportunity to review the decree is to insure fair and honest dealing in the
registration of land. But the action to annul a judgment, upon the ground of fraud, would be unavailing unless
the fraud be extrinsic or collateral and the facts upon which it is based have not been controverted or resolved in
the case where the judgment sought to be annulled was rendered. Extrinsic or collateral fraud, as distinguished
from intrinsic fraud, connotes any fraudulent scheme executed by a prevailing litigant 'outside the trial of a case
against the defeated party, or his agents, attorneys or witnesses, whereby said defeated party is prevented from
presenting fully and fairly his side of the case.' But intrinsic fraud takes the form of 'acts of a party in a litigation
during the trial, such as the use of forged instruments or perjured testimony, which did not affect the presentation
of the case, but did prevent a fair and just determination of the case.

Thus, relief is granted to a party deprived of his interest in land where the fraud consists in a deliberate
misrepresentation that the lots are not contested when in fact they are, or in applying for and obtaining
adjudication and registration in the name of a co-owner of land which he knows had not been alloted to him in
the partition, or in intentionally concealing facts, and conniving with the land inspector to include in the survey
plan the bed of a navigable stream, or in willfully misrepresenting that there are no other claims, or in deliberately
failing to notify the party entitled to notice, or in inducing him not to oppose an application, or in misrepresenting
about the indentity of the lot to the true owner by the applicant causing the former to withdraw his opposition.
 In all these examples the overriding consideration is that the fraudulent scheme of the prevailing litigant
prevented a party from having his day in court or from presenting his case, The fraud, therefore, is one that
affects and goes into the jurisdiction of the court.

The second question assigned as an error must also be resolved against the petitioners.

Section 122 of Act No. 496 otherwise known as the Land Registration Act provides:

SEC. 122. Whenever public lands in the Philippine Islands belonging to the Government of the United States or
to the Government of the Philippine Islands are alienated, granted, or conveyed to persons or the public or private
corporations, the same shall be brought forthwith under the operation of this Act and shall become registered
lands. It shall be the duty of the official issuing the instrument of alienation, grant, or conveyance in behalf of
the Government to cause such instrument before its delivery to the grantee, to be filed with the register of deeds
for the province where the land lies and to be there registered like other deeds and conveyances, whereupon a
certificate shall be entered as in other cases of registered land, and an owner's duplicate certificate issued to the
grantee. The deed, grant, or instrument of conveyance from the Government to the grantee shall not take effect
as a conveyance or bind the land, but shall operate only as contract between the Government and the grantee and
as evidence of authority to the clerk or register of deeds to make registration. The act of registration shall be the
operative act to convey and affect the land, and in all cases under this Act, registration shall be made in the office
of the register of deeds for the province where the land lies. The fees for registration shall be paid by the grantee.
After due registration and issue of the certificate and owner's duplicate, such land shall be registered land for all
purposes under this Act.

The law is clear. We can apply it to the facts without need for judicial interpretation. Once the deed, grant, or instrument of
conveyance of public land is registered with the Register of Deeds and the corresponding certificate and owner's duplicate title is
issued, such land is deemed registered land. It is brought within the scope and operation of the Land Registration Law. This is the
doctrine laid down by this Court in a long line of cases. (See Heirs of Deogracias Ramos v. Court of Appeals, 139 SCRA 293;
Lahora v. Dayanghirang 37 SCRA 346; Ramirez v. Court of Appeals, 30 SCRA 297; Director of Lands v. Jugado 2 SCRA 32;
Nelayan v. Nelayan, 109 Phil. 183; Republic v. Heirs of Carle 105 Phil. 1227; El Hogar Filipino v. Olviga, 60 Phil. 17; Manolo
v. Lukban, 48 Phil. 973). The land in this case having been registered and covered by an original certificate of title issued by the
Register of Deeds of Rizal, it is within the provisions of the Land Registration Act. Thus, the decree of registration granted by the
lower court in favor of the petitioners may be reviewed on the ground of actual and extrinsic fraud pursuant to Section 38 of the
same Act.

There is likewise no merit in the third assigned error. While there was an admission that the petitioners have been in actual
possession of the disputed land since 1938, it was made to show and prove the fact that the petitioners are only antichretic creditors.
The respondents never admitted that they have not possessed the land at all. On the contrary, they alleged that they and their
predecessors-in-interest namely Gregoria Pascual and Agapita Bonifacio have been in possession of the land since time
immemorial and that the petitioners were placed in possession of the land pursuant to a contract of antichresis.

The court below found that the petitioners are merely antichretic creditors. This finding and its factual bases were affirmed by the
Court of Appeals. On the basis of the evidence supporting this conclusion, this finding is binding on us as it is not our duty to
weigh evidence on this point all over again. This court has on several occasions held that the antichretic creditor cannot ordinarily
acquire by prescription the land surrendered to him by the debtor (Trillana v. Manansala, et al., 96 Phil. 865; Valencia v. Acala,
42 Phil. 177; Barreto v. Barreto, 3 Phil. 234). The petitioners are not possessors in the concept of owner but mere holders placed
in possession of the land by its owners. Thus, their possession cannot serve as a title for acquiring dominion (See Art. 540, Civil
Code).

The fourth issue raised by the petitioners is answered by a referral to the detailed factual findings and conclusions of the trial
court. Ten pages of the record on appeal (Record on Appeal, CA-G.R. No. 40425-R, pp. 56-66) state in convincing detail the
portion of the trial court's decision which support its conclusion that Hilario Ramirez and Valentina Bonifacio are not the owners
of the disputed land and have no registrable right over it and that the respondents herein have established their ownership by a
strong preponderance of evidence. The respondents were declared the true and real owners and entitled to registration in their
names. The final resolution of the Court of Appeals affirmed the trial court's decision in toto. We see no reversible error in this
finding.

The argument of laches is explained and countered by the close relationship of the parties and the nature of a contract of
antichresis. The private respondents are nephews and nieces, with their spouses, of the petitioners. Moreover, there is evidence to
show that long before the filing of the cases, there had been attempts to recover the property.

In view of the foregoing, we are constrained to affirm the appellate court's decision. We note, however, that in spite of the finding
of an existing contract of antichresis between the parties, the two courts below did not order the payment of the principal amount
of mortgage. Under Article 2136 of the Civil Code, the debtor cannot reacquire the enjoyment of the immovable without first
having totally paid what he owes the creditor.

WHEREFORE, the decision appealed from is hereby AFFIRMED with a modification that the respondents are ordered to pay the
petitioners the amount of P 400.00 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, 1922

ROMULO MACHETTI, plaintiff-appelle,

vs.
HOSPICIO DE SAN JOSE, defendant-appellee, and
FIDELITY & SURETY COMPANY OF THE PHILIPPINE ISLANDS, defendant-appellant

It appears from the evidence that on July 17, 1916, one Romulo Machetti, by a written agreement undertook to construct a building
on Calle Rosario in the city of Manila for the Hospicio de San Jose, the contract price being P64,000. One of the conditions of
the agreement was that the contractor should obtain the "guarantee" of the Fidelity and Surety Company of the Philippine Islands
to the amount of P128,800 and the following endorsement in the English language appears upon the contract:

MANILA, July 15, 1916.

For value received we hereby guarantee compliance with the terms and conditions as outlined in the above contract.

FIDELITY AND SURETY COMPANY OF THE PHILIPPINE ISLANDS.

(Sgd) OTTO VORSTER,

Vice-President.

Machetti constructed the building under the supervision of architects representing the Hospicio de San Jose and, as the work
progressed, payments were made to him from time to time upon the recommendation of the architects, until the entire contract
price, with the exception of the sum of the P4,978.08, was paid. Subsequently it was found that the work had not been carried out
in accordance with the specifications which formed part of the contract and that the workmanship was not of the standard required,
and the Hospicio de San Jose therefore answered the complaint and presented a counterclaim for damages for the partial
noncompliance with the terms of the agreement abovementioned, in the total sum of P71,350. After issue was thus joined,
Machetti, on petition of his creditors, was, on February 27, 1918, declared insolvent and on March 4, 1918, an order was entered
suspending the proceeding in the present case in accordance with section 60 of the Insolvency Law, Act No. 1956.

The Hospicio de San Jose on January 29, 1919, filed a motion asking that the Fidelity and Surety Company be made cross-
defendant to the exclusion of Machetti and that the proceedings be continued as to said company, but still remain suspended as to
Machetti. This motion was granted and on February 7, 1920, the Hospicio filed a complaint against the Fidelity and Surety
Company asking for a judgement for P12,800 against the company upon its guaranty. After trial, the Court of First Instance
rendered judgment against the Fidelity and Surety Company for P12,800 in accordance with the complaint. The case is now before
this court upon appeal by the Fidelity and Surety Company form said judgment.

As will be seen, the original action which Machetti was the plaintiff and the Hospicio de San Jose defendant, has been converted
into an action in which the Hospicio de San Jose is plaintiff and the Fidelity and Surety Company, the original plaintiff's guarantor,
is the defendant, Machetti having been practically eliminated from the case.

But in this instance the guarantor's case is even stronger than that of an ordinary surety. The contract of guaranty is written in the
English language and the terms employed must of course be given the signification which ordinarily attaches to them in that
language. In English the term "guarantor" implies an undertaking of guaranty, as distinguished from suretyship. It is very true that
notwithstanding the use of the words "guarantee" or "guaranty" circumstances may be shown which convert the contract into one
of suretyship but such circumstances do not exist in the present case; on the contrary it appear affirmatively that the contract is
the guarantor's separate undertaking in which the principal does not join, that its 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 a collateral
undertaking separate and distinct from the latter. All of these circumstances are distinguishing features of contracts of guaranty.

Now, 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. (Saint vs. Wheeler & Wilson Mfg. Co.,
95 Ala., 362; Campbell, vs. Sherman, 151 Pa. St., 70; Castellvi de Higgins and Higgins vs. Sellner, 41 Phil., 142;
;U.S. vs. Varadero de la Quinta, 40 Phil., 48.) This latter liability is what the Fidelity and Surety Company assumed in the present
case. The undertaking is perhaps not exactly that of a fianza under the Civil Code, but is a perfectly valid contract and must be
given the legal effect if ordinarily carries. The Fidelity and Surety Company having bound itself to pay only 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 ability
may be proven by the return of a writ of execution unsatisfied or by other means, but is not sufficiently established by the mere
fact that he has been declared insolvent in insolvency proceedings under our statutes, in which the extent of the insolvent's inability
to pay is not determined until the final liquidation of his estate.

The judgment appealed from is therefore reversed without costs and without prejudice to such right of action as the cross-
complainant, the Hospicio de San Jose, may have after exhausting its remedy against the plaintiff Machetti. So ordered.