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Guaranty and Suretyship
Guaranty and Suretyship
Art. 2047. By guaranty a person, called the guarantor, Common law guaranty and suretyship
binds himself to the creditor to fulfill the obligation of Civil law surety - common law guaranty Civil law Co-
the principal debtor in case the latter should fail to do debtors in solidum - common law suretyship
so.
Where party binds himself solidarily with
If a person binds himself solidarily with the principal principal debtor
debtor, the provisions of Section 4, Chapter 3, Title I of It is possible to bind himself solidarily without
this Book shall be observed. In such case the contract is affecting the nature of the contract, in which case action
called a suretyship. can be brought outright against the guarantor.
Definition of guaranty But it has been held that where a party signs a
1. Contract between guarantor and creditor promissory note as a co-maker and binds herself
2. In the broad sense includes pledge and mortgage solidarily, the undertaking is deemed to be that of a
because the purpose of guaranty maybe accomplished by surety as an insurer of the debt, not a guarantor who
securing the fulfillment of an obligation through warrants the insolvency of the debtor (Palmares v. CA).
personal guaranty of a third person but also by
furnishing to the creditor for his security, property with Nature of surety’s undertaking
authority to collect the debt (Manresa) 1. Liability is contractual and accessory but direct –
direct, immediate, primary, absolute regardless whether
or not the principal debtor is financially capable to fulfill Guaranty Suretyship
his obligations. Surety is considered as being the same Independent agreement to Regular party to the
party as the debtor and their liabilities are interwoven as pay the obligation if undertaking
to be inseparable (usually bound by same agreement, primary debtor fails to do
same instrument). so
Collateral undertaking Original promissor
2. Liability is limited by the terms of the contract –
contractual in nature and ordinarily restricted to the
Secondarily or subsidiarily Primarily liable
obligation expressly assumed therein. Surety not
liable
presumed and cannot be extended by implication beyond
the terms of the contract.
Not bound to take notice Held to know every default
3. Liability arises only if principal debtor is held liable of the non-performance of of his principal
a. In the absence of collusion, surety is bound his principal
by a judgment against the principal even though he
was not a party to the proceedings. Discharged by the mere Not discharged by either
b. Principal debtor and surety may be sued indulgence of the mere indulgence or neglect
separately or together. principal; not liable unless and want of notice
c. Unless required by surety contract, demand notified of default
or notice of default is not required to fix the
surety’s liability. Undertakes to pay if the Undertakes to pay if the
d. Accommodation party liable on the principal cannot or is principal does not pay
instrument to a holder for value although he unable to pay Insurer of debt itself
has the right to reimbursement, the relation Insurer of the solvency of
between them, is in effect, that of principal the debtor
and surety (People v. Maniego).
e. A surety bond is void where there is no Guaranty Indorsement
principal debtor, undertaking requires that Security Transfer
obligation be enforceable against someone Liability more extensive, If not promptly presented
else besides the surety (Manila Railroad Co. discharged only up to the and no due notice within
v. Alvendia) extent of the loss suffered reasonable time,
4. Surety not entitled to exhaustion – surely assumes in consequence completely discharged
solidary liability Warrants solvency of Does not warrant solvency
debtor
5. Undertaking is to creditor, not to debtor – unless Cannot be sued as Can be sued as promissor
otherwise expressly provided, surety makes no covenant promissor
with the principal debtor. Promise is not implied by law.
Guaranty Warranty
6. Surety is not entitled to notice of principal’s default Contract by which a Undertaking that the title,
– Commencement of suit is sufficient demand; surety is person is bound to another quality, or quantity of the
bound to take notice of the principal’s default and to for the fulfillment of a subject matter of a contract
perform the obligation. promise or engagement of is what it has been
a third party presented to be
7. Prior demand by the creditor upon principal not
required – Right to proceed against surety exists Art. 2048. A guaranty is gratuitous, unless there is a
independently of his right to proceed against the stipulation to the contrary.
principal where both are equally bound (Art. 1216).
Proper remedy is to pay and then ask for reimbursement. Guaranty generally gratuitous – Onerous only when
there is a stipulation to the contrary (Art. 1933, 1956,
8. Surety is not exonerated by neglect of creditor to sue 1965).
principal – There is nothing to prevent the creditor from
proceeding against the principal at any time. He may pay Cause of contract of guaranty
and be subrogated in all his rights. 1. Presence of cause which supports principal
obligation – same cause, sufficient that there is a
consideration for the principal debtor (Pyle v. Johnson)
2. Absence of direct obligation or benefit to guarantor Nevertheless, a guaranty may be constituted to
– valid; consideration need not pass directly to surety or guarantee the performance of a voidable or an
guarantor; sufficient to move principal. unenforceable contract. It may also guarantee a natural
obligation.
Art. 2049. A married woman may guarantee an
obligation without the husband's consent, but shall not Necessity of valid principal obligation
thereby bind the conjugal partnership, except in cases Accessory, requires a principal obligation. If
provided by law. principal obligation is void, guaranty is void.
Married woman as guarantor – ordinarily binds only Guaranty of voidable, unenforceable and natural
her personal property (Art. 145, FC); binds conjugal obligations
partnership: 1. Voidable – inasmuch as contract is binding unless
1. With husband’s consent annulled (Art. 1390)
2. Without husband’s consent in cases 2. Unenforceable – because it is not void (Art. 1403)
provided by law 3. Natural – when guaranteed, implied recognition of
liability transforming the obligation to civil (Art. 1423)
Art. 2050. If a guaranty is entered into without the
knowledge or consent, or against the will of the Art. 2053. A guaranty may also be given as security for
principal debtor, the provisions of Articles 1236 and future debts, the amount of which is not yet known; there
1237 shall apply. can be no claim against the guarantor until the debt is
liquidated. A conditional obligation may also be
Guaranty undertaken without knowledge of debtor – secured.
unilateral for the benefit of the creditor, not the principal
debtor. Guaranty of future debts
Continuing guaranty or suretyship - contemplates a
1. If payment without knowledge of debtor, future course of dealings, covering a series of
a. Recovery to the extent beneficial to debtor transactions generally for an indefinite time or until
(Art. 1236) revoked. Subsidiary so no claim until debt liquidated.
b. Guarantor cannot compel creditor to
subrogate him in his rights (mortgage, 1. Secure payment of loan at maturity – loan
guaranty or penalty) (Art. 1237). maturity and all other obligations which may
become due or be owing
2. If payment is made with knowledge and consent of
the debtor, he is subrogated by virtue of the payment to 2. Secure payment of any debt subsequently
all rights of the creditor against the debtor (Art. 2067) incurred – prospective in operation. Contract
continuing when object is to give a standing
Art. 2051. A guaranty may be conventional, legal or credit (Dino v. CA)
judicial, gratuitous, or by onerous title.
3. Secure existing unliquidated claims – Future
It may also be constituted, not only in favor of the debts may also refer to debts existing at the time of
principal debtor, but also in favor of the other the constitution of the guaranty of the amount is not
guarantor, with the latter's consent, or without his known.
knowledge, or even over his objection. No theoretical or doctrinal difficulty in
saying that surety itself is valid and binding
Guaranty by reason of origin even before the principal obligation to be
1. Judicial – constituted by decree of court secured is thereby born (Atok Finance Corp.
2. Legal – by virtue of a provision of law v. CA)
3. Conventional – by virtue of the will of the parties
Guaranty of conditional obligations
Double or sub-guaranty – constituted to guarantee the Suspensive condition – guarantor liable after the
obligation of a guarantor fulfillment of condition
Art. 2052. A guaranty cannot exist without a valid Resolutory condition – fulfillment extinguishes
obligation. principal obligation and the guaranty
Art. 2054. A guarantor may bind himself for less, but 3. Guaranty with a term subsequently
not for more than the principal debtor, both as regards cancelled – not liable for obligations
the amount and the onerous nature of the conditions. subsequently entered into
Should he have bound himself for more, his obligations 4. Liability of surety limited to a fixed period –
shall be reduced to the limits of that of the debtor. cannot be bound for a longer time unless
renewed. Renewal valid (Art. 1306)
Guarantor’s liability cannot exceed principal 5. Liability of surety to expire on maturity of
obligation principal obligation – unfair, nullifies the
1. Subsidiary and accessory purpose of contract. Liability attaches to surety
2. Surety may pay as part of damages, interest at the as soon as the principal defaults
legal rate, judicial costs (Art. 2055) and attorney’s fees 6. Liability of surety to pay in case of forfeiture
(Art. 2088) even without stipulation and even if he of imported goods –guarantees payment of
becomes liable for an amount higher than the total in the appraised value and not legality of import
bond. 7. Bond requires lessor to report to surety any
3. Surety may be made to pay penalty violation of lessee – does not cover defaults
prior. Only prospective unless intention to the
Principal’s liability may exceed guarantor’s contrary clearly shown.
obligation 8. Bond issued to secure defendant from
Amount specified in the bond does not limit the possible damages as a result of injunction –
extent of damages that may be recovered from principal cannot be issued to satisfy any other claim of the
(Visayan Distributors v. Flores) parties
9. Bond issued in favor of a plaintiff who filed
Art. 2055. A guaranty is not presumed; it must be a case for collection – does not guarantee that
express and cannot extend to more than what is the plaintiff’s cause of action is meritorious
stipulated therein. 10. Contract requires that notice of principal’s
default be given to surety – where contract
If it be simple or indefinite, it shall compromise not only stipulates, failure to comply will prevent
the principal obligation, but also all its accessories, recovery from surety
including the judicial costs, provided with respect to the
latter, that the guarantor shall only be liable for those Strictissimi juris applicable only to
costs incurred after he has been judicially required to accommodation surety
pay. Without motive of pecuniary gain and should be
protected against unjust pecuniary impoverishment.
Guaranty not presumed: requires the expression of Applicable only where the contract has been ascertained
consent on the part of the guarantor to be bound and a surety or guaranty.
cannot be presumed because of the existence of a
contract or principal obligation. Rule of strict construction not applicable to
compensated sureties
Reason for rule – assurance that the guarantor intended 1. Business associations organized for the purpose of
to bind himself and he proceeded with consciousness assuming classified risks in large numbers for profit and
on an impersonal basis
Guaranty covered by the Statute of Frauds – must be
reduced to writing, being ―a special promise to answer 2. Secured from all possible loss by adequate
for the debt, default or miscarriage of another.‖ (Art. counterbonds or indemnity agreements
1403[2]) But need not be in a public document to be
valid (Art. 1358). 3. They are in fact insurers
Guaranty strictly construed – against the creditor and in Extent of guarantor’s liability
favor of the debtor. Any doubt must be resolved in favor 1. Where guaranty definite – limited in whole or in part
of the guarantor (PNB v. CA) to the principal debt, to the exclusion of accessories
1. Liability for obligation stipulated – not for 2. Where guaranty indefinite – comprises the principal
prior debts unless intent to be liable shown obligation, all its accessories, (including the judicial
2. Guaranty to render accounting – does not costs after being judicially required to pay)
guarantee that money due will be paid a. Guarantor could have limited his liability and
if he did not, it is presumed that he wanted to be
bound to the extent established.
2. Guarantor selected by the principal debtor – debtor
Acceptance of guaranty by creditor and notice answers for the integrity, capacity and solvency until
thereof to guarantor extinguishment of debt
Creditor not required because he binds himself 3. Guarantor personally designated by the creditor –
to nothing. responsibility of the selection borne by the creditor
Art. 2057. If the guarantor should be convicted in first Right of creditor to secure judgment against
instance of a crime involving dishonesty or should guarantor prior to exhaustion
become insolvent, the creditor may demand another who Creditor may secure a judgment against the
has all the qualifications required in the preceding guarantor, who shall be entitled to a deferment of
article. The case is excepted where the creditor has execution until properties of the creditor shall have been
required and stipulated that a specified person should exhausted (Tupaz v. CA). There is nothing procedurally
be the guarantor. objectionable in impleading guarantor as a co-defendant.
Art. 2059. The excussion shall not take place:
Qualifications of guarantor (1) If the guarantor has expressly renounced it;
1. Integrity (2) If he has bound himself solidarily with the debtor;
2. Capacity to bind himself (3) In case of insolvency of the debtor;
3. Sufficient property to answer for the obligation (4) When he has absconded, or cannot be sued within
which he guarantees the Philippines unless he has left a manager or
representative;
Jurisdiction follows principle that the accessory (5) If it may be presumed that an execution on the
follows the principal. property of the principal debtor would not result in the
satisfaction of the obligation.
Effect of subsequent loss of required
qualifications Exceptions to benefit of excussion
Qualifications need only be present at the time 1. Art. 2059
of the perfection of the contract. Subsequently, the 2. Art. 2060
creditor can: 3. Judicial bondsman or sub-surety
4. Pledge or mortgage has been given as a special
1. Demand another guarantor with proper qualification security
a. Dishonesty – conviction required 5. Fails to interpose it as a defense before judgment
b. Insolvency – judicial declaration not required is rendered against him
2. Waive and hold the guarantor to his bargain
Exceptions provided in Art. 2059
Selection of guarantor
1. Specified person stipulated as guarantor – 1. Right waived – personal right recognized, waiver
substitution may not be demanded must be made in express terms
2. Liability assumed that of surety – becomes surety The guarantor may appear so that he may, if he so
with primary liability as a solidary co-debtor desire, set up such defenses as are granted him by law.
3. Insolvency of debtor proven by unsatisfied writ of The benefit of excussion mentioned in Art. 2058 shall
execution – guarantor guarantees solvency; insolvency always be unimpaired, even if judgment should be
must be actual and may be proven by the return of writ rendered against the principal debtor and the guarantor
unsatisfied in case of appearance by the latter.
4. Debtor absconds or cannot be locally sued – creditor
not required to go after the debtor who is hiding and to Procedure when creditor sues
incur the delays and expenses incident thereto 1. Sent against principal – creditor must sue principal
5. Resort to all legal remedies, a useless formality alone; guarantor only after judgment has been obtained
against principal debtor
Art. 2060. In order that the guarantor may make use of
the benefit of exclusion, he must set it up against the 2. Notice to guarantor of action – must be notified so
creditor upon the latter's demand for payment from him, that he may appear
and point out to the creditor available property of the a. Guarantor appears – given benefit of
debtor within Philippine territory, sufficient to cover the excussion
amount of the debt. b. Guarantor does not appear – cannot set up
excussion
Art. 2061. The guarantor having fulfilled all the
conditions required in the preceding article, the creditor 3. Hearing before execution can be issued against
who is negligent in exhausting the property pointed out guarantor – entitled to be heard before an execution can
shall suffer the loss, to the extent of said property, for be issued against him where he is not a party
the insolvency of the debtor resulting from such
negligence. Art. 2063. A compromise between the creditor and the
principal debtor benefits the guarantor but does not
Duty of creditor to make prior demand for prejudice him. That which is entered into between the
payment from guarantor guarantor and the creditor benefits but does not
1. When demand made – can only be made after prejudice the principal debtor.
judgment on the debt
2. Actual demand to be made – not mere joining of Effects of compromise
guarantor as co-defendant Compromise – contract whereby the parties, by
making reciprocal concessions, avoid litigation or put an
Duty of guarantor to set up benefit of excussion end to one already commenced (Art. 2028).
Set it up, point it out – failure to do so forecloses 1. Where prejudicial – binds parties only (Art.
his right to set up the defense of excussion 1311); cannot prejudice the guarantor or debtor
when not party to compromise
1. Property located abroad – would not conform with 2. Where in the nature of a stipulation in favor
the purpose of guaranty of a third person – if in the nature of stipulation
2. Property not easily available – guarantor should pour autrui, guarantor and debtor though not
facilitate its realization and the payment of the debt parties can benefit from a compromise
Duty of creditor to resort to all legal remedies Art. 2064. The guarantor of a guarantor shall enjoy the
Neglect of not exhausting, guarantor bears the benefit of excussion, both with respect to the guarantor
loss to the extent of value of said property. and to the principal debtor.
Joinder of guarantor and principal as parties Art. 2065. Should there be several guarantors of only
defendant one debtor and for the same debt, the obligation to
1. General Rule – not a joint contractor, cannot be sued answer for the same is divided among all. The creditor
2. Exception – rule not required where it would merely cannot claim from the guarantors except the shares
delay ultimate accounting of the guarantor which they are respectively bound to pay, unless
solidarity has been expressly stipulated.
Art. 2062. In every action by the creditor, which must
be against the principal debtor alone, except in the The benefit of division against the co-guarantors ceases
cases mentioned in Art. 2059, the former shall ask the in the same cases and for the same reasons as the
court to notify the guarantor of the action. benefit of excussion against the principal debtor.
Benefit of division among several guarantors
1. In whose favor applicable – several guarantors for If the guarantor has compromised with the creditor, he
one debtor for one debt, not applicable to guarantors of cannot demand of the debtor more than what he has
several debtors of one debt really paid.
2. Extent of liability of several guarantors – joint (Art.
1208), not liable to creditors beyond their respective Guarantor’s right to subrogation
shares 1. Effect of subrogation – right to indemnification and
3. Exceptions – conditions under Art. 2059 and when subrogation granted to guarantor applies also to surety
solidary expressly stipulated (Art. 2047[2]) (Art. 2047)
2. Accrual, basis and nature of right – subrogation
Benefit of excussion among several guarantors necessary to enable guarantor to enforce the indemnity
For exhaustion, co-guarantors need not point out a. Arises from operation of law upon payment
available property of co-guarantors. But when creditor b. Stands not upon contract, but upon natural
claims an insolvent co-guarantor’s share, other co- justice
guarantors can point out the former’s available property. c. Not a contractual right
d. Cannot demand more than what he has paid
2. Between the Debtor and the Guarantor (Art. for
2066-2072) 3. When right not available – when there is no right to
be reimbursed
Art. 2066. The guarantor who pays for a debtor must be
indemnified by the latter. Art. 2068. If the guarantor should pay without notifying
the debtor, the latter may enforce against him all the
The indemnity comprises: defenses which he could have set up against the creditor
(1) The total amount of the debt; at the time the payment was made.
(2) The legal interests thereon from the time the payment
was made known to the debtor, even though it did not Art. 2069. If the debt was for a period and the
earn interest for the creditor; guarantor paid it before it became due, he cannot
(3) The expenses incurred by the guarantor after having demand reimbursement of the debtor until the expiration
notified the debtor that payment had been demanded of of the period unless the payment has been ratified by the
him; debtor.
(4) Damages, if they are due.
Effect of payment by guarantor before/after
Guaranty, a contract of indemnity – guarantor has the maturity
right to reimbursement of 1. Obligation with a period demandable only when the
day comes, guarantor who paid before maturity not
1. Total amount of the debt – no right until guarantor entitled to reimbursement because there is no need to
actually paid unless right is given to contract accelerate payment
2. Legal interest thereon – guarantor entitled from the 2. When demand made on guarantor during term of
time of notice of payment to the debtor which is in effect guarantee, immaterial if payment is made after the term
a demand, whether or not it earns interest
3. Expenses incurred by the guarantor – only those that Art. 2070. If the guarantor has paid without notifying
the guarantor has to satisfy in accordance with law as a the debtor, and the latter not being aware of the
consequence of the guaranty (Art. 2055[2]) payment, repeats the payment, the former has no remedy
4. Damages, if they are due – in accordance with law; whatever against the debtor, but only against the
general rules on damages (Arts. 2195-2235) apply creditor. Nevertheless, in case of a gratuitous guaranty,
if the guarantor was prevented by a fortuitous event
Exceptions to right to indemnity or from advising the debtor of the payment, and the
reimbursement creditor becomes insolvent, the debtor shall reimburse
1. Constituted without the knowledge or against the will the guarantor for the amount paid.
of the debtor – only insofar as had been beneficial (Art.
2050) Effect of repeat payment by debtor
2. No intention to be reimbursed (Art. 1238) 1. General rule – Notice to debtor before payment. If
3. Waiver without notice, remedy is to collect from creditor but no
Art. 2067. The guarantor who pays is subrogated by cause of action for the return even when it becomes
virtue thereof to all the rights which the creditor had insolvent
against the debtor.
2. Exception – may still claim even in spite of lack of Recovery by surety against indemnitor even
notice before payment
a. Creditor becomes insolvent 1. Indemnity agreement for benefit of surety – if debtor
b. Guarantor prevented from fortuitous event agrees to terms, obligations of the contract have the
from notifying debtor force of law
c. Guaranty is gratuitous 2. Indemnity agreement may be against actual loss as
well as liability – if against loss, indemnitor liable to
Art. 2071. The guarantor, even before having paid, may person only when paid; if against liability, indemnitor
proceed against the principal debtor: liable to person upon attachment of liability
3. Such agreement valid
(1) When he is sued for the payment;
(2) In case of insolvency of the principal debtor; Art. 2072. If one, at the request of another, becomes a
(3) When the debtor has bound himself to relieve him guarantor for the debt of a third person who is not
from the guaranty within a specified period, and this present, the guarantor who satisfies the debt may sue
period has expired; either the person so requesting or the debtor for
(4) When the debt has become demandable, by reason of reimbursement.
the expiration of the period for payment;
(5) After the lapse of ten years, when the principal Guarantor of a third person at request of another
obligation has no fixed period for its maturity, unless it has a right to claim reimbursement after
be of such nature that it cannot be extinguished except satisfying the debt either from:
within a period longer than ten years; 1. Person who requested him to be a guarantor
(6) If there are reasonable grounds to fear that the 2. Debtor.
principal debtor intends to abscond;
(7) If the principal debtor is in imminent danger of 3. Between Co-Guarantors (Art. 2073-2075)
becoming insolvent.
Art. 2073. When there are two or more guarantors of
In all these cases, the action of the guarantor is to the same debtor and for the same debt, the one among
obtain release from the guaranty, or to demand a them who has paid may demand of each of the others the
security that shall protect him from any proceedings by share which is proportionally owing from him.
the creditor and from the danger of insolvency of the If any of the guarantors should be insolvent, his share
debtor. shall be borne by the others, including the payer, in the
same proportion.
Right of guarantor to proceed against debtor
before payment The provisions of this Art. shall not be applicable, unless
Applicable to surety, purpose is to enable the the payment has been made by virtue of a judicial
guarantor to take measures for the protection of his demand or unless the principal debtor is insolvent.
interest in view of the probability that he would be called
upon to pay the debt. Right to contribution of guarantor who pays
Remedy to which guarantor entitled – Guarantor cannot 1. Restrictions – applicable when
ask for payment unless he as actually paid. a. In virtue of a judicial demand
b. Because the principal debtor is insolvent
The alternative remedies are: 2. Effect of insolvency of any guarantor – follows Art.
1. Obtain a release form guaranty 1217[2])
2. Demand or security 3. Accrual and basis of right – Guarantor who paid
becomes ipso jure entitled to proportionate contribution
Art. 2066 and 2071 distinguished or reimbursement without need of cession from creditor
Art. 2066 Art. 2071
Enforcement of rights of Before he has paid but Art. 2074. In the case of the preceding article, the co-
guarantor against debtor after he becomes liable guarantors may set up against the one who paid, the
after he paid same defenses which would have pertained to the
Right of action before Protective remedy before principal debtor against the creditor, and which are not
payment payment purely personal to the debtor.
Substantive right Preliminary remedy
No such person Release or security Defense available to co-guarantors: all defenses the
debtor would have against creditor but not those which
are purely personal
become due does not of itself constitute any extension of
Art. 2075. A sub-guarantor, in case of the insolvency of time referred to herein.
the guarantor for whom he bound himself, is responsible
to the co-guarantors in the same terms as the guarantor. Release by extension of term granted by creditor
to debtor
III. Extinguishment of Guaranty (Art. 2076- 1. Where release without consent of guarantor –
2081) extinguishes guaranty
a. Payments due to debtor from third persons
Art. 2076. The obligation of the guarantor is assigned to creditor - extinguishes
extinguished at the same time as that of the debtor, and b. Where obligation payable in installments –
for the same causes as all other obligations. extension as to one will not affect
surety/guaranty’s liability as to others
Causes of extinguishment of guaranty c. Consent to extension waived in advance by
1. Accessory and subsidiary – extinguishes when the guarantor – valid, not contrary to law or public
principal obligation is extinguished: policy
a. Payment or performance, loss of the thing d. Payment by guarantor after creditor’s demand
due, condonation or remission of the debt, e. Extension not granted by creditor on the bond
confusion or merger of rights of the creditor and – does not extinguish
debtor, compensation and novation (Art. 1231) f. Extension granted to first-tier obligors – will
2. Other causes: annulment, rescission, fulfillment of a not extinguish liability of second-tier obligors
resolutory condition, and prescription (Art. 1231) 2. Prejudice to guarantor and period of extension
3. Release of guarantor made by creditor (Art. 2078) immaterial
3. Extension must be based on a new agreement – mere
Material alteration of principal contract failure or neglect to demand payment not deemed a
1. Effect of material alteration – constitutes novation suspension
and surety cannot be held to a new contract without its 4. Diligence on the part of creditor to enforce his claim
consent generally not required – this is for surety. For guaranty,
2. When alteration material – surety or guaranty will if the creditor has done any act whereby the guaranty
not be released where such change does not make the was impaired in value, or discharged that act would have
obligation more onerous (Visayan Distributors v. Flores) wholly or partially released the guarantor
5. No cause of action against creditor for delay
Art. 2077. If the creditor voluntarily accepts immovable
or other property in payment of the debt, even if he Art. 2080. The guarantors, even though they be
should afterwards lose the same through eviction, the solidary, are released from their obligation whenever by
guarantor is released. some act of the creditor they cannot be subrogated to
the rights, mortgages, and preference of the latter.
Release by conveyance of property
Eviction revives the principal obligation but not Release by guarantor cannot be subrogated
the guaranty. The cause of action is against the debtor 1. Fault of creditor for non-subrogation – act of one
for eviction which is not part of the guaranty. cannot prejudice another
2. Duty of the creditor to account for his lien on
Art. 2078. A release made by the creditor in favor of principal’s property – to retain and maintain security;
one of the guarantors, without the consent of the others, impairment will discharge the surety to the extent of lien
benefits all to the extent of the share of the guarantor to released. This is a trust relation with the creditor as
whom it has been granted. trustee bound to account to the surety the value of the
security.
Release of guarantor without consent of others
Others will be prejudiced if one of the Art. 2081. The guarantor may set up against the
guarantors becomes insolvent. The release benefits all to creditor all the defenses which pertain to the principal
the extent of the share of the guarantor released. debtor and are inherent in the debt; but not those that
are personal to the debtor.
Art. 2079. An extension granted to the debtor by the
creditor without the consent of the guarantor IV. Legal and Judicial Bonds (Art. 2082-2084)
extinguishes the guaranty. The mere failure on the part
of the creditor to demand payment after the debt has Art. 2082. The bondsman who is to be offered in virtue
of a provision of law or of a judicial order shall have the
qualifications prescribed in Art. 2056 and in special
laws.
Nature of bonds
1. Contractual in nature – only in consequence of a
meeting of minds under the conditions essential to a
contract (Art. 1305)
2. Special class of guaranty, in virtue of a judicial or
court order