GUARANTY

Art 2047: Contract of guaranty: A guarantor binds himself to the creditor

to fulfill the obligation of the principal debtor IN CASE THE PRINCIPAL

DEBTOR FAILS TO DO SO

 Characteristics of Guaranty

o Accessory: dependent on a principal obligation

o Subsidiary and conditional: it takes effect only when the

principal debtor fails to pay

o Unilateral: it only gives rise to an obligation on the part

of the guarantor to the creditor

o Guarantor must be distinct from the guarantor

 Characteristics of Suretyship:

o If a person solidarily binds himself with the principal

debtor, it is called a contract of suretyship

o Surety’s liability to the creditor is direct, immediate,

primary and absolute

 However, surety is ONLY liable to the creditor if the

principal debtor is held liable

o The surety may be sued separately or together with the

principal debtor

 The creditor may even sue the surety first as soon

as the principal debtor is held to be in

delay/default because the debtor’s default is also

the surety’s default

o Surety is not entitled to the benefit of excussion

DIFFERENCE OF GUARANTY AND SURETYSHIP

Guaranty Suretyship

Liability of guarantor depends upon

an independent agreement to pay

the obligation

Surety assumed liability as a

regular party to the undertaking (A

surety is usually bound with his

principal in the same instrument)

Guarantor is subsidiarily liable: he

basically insures the solvency of the

principal debtor

Surety is primarily liable: he is the

insurer of the debt/obligation itself

Guarantor’s engagement is

collateral

Surety’s engagement is to the effect

that he is an original promissory

Manila Surety: a guarantor

assures that that the he will pay if

Lirag: essence of the surety’s

obligation is to pay the creditor

the principal debtor cannot or is

unable to pay

without qualification if the principal

debtor does not pay

Art 2048: Guaranty GENERALLY gratuitous unless there is a stipulation to

the contrary

 It is not necessary to prove any consideration between the

guarantor/surety and the creditor

o BECAUSE: a guarantor/surety is bound by the same

consideration that makes the contract effective between

the principal parties

 Consideration does not have to directly pass to the guarantor or

surety

 It also never necessary that the guarantor should receive any part

or benefit, if there be, accruing to the principal

 Severino v. Severino: compromise to end litigation was deemed

to be sufficient consideration to support a contract of guaranty

Art 2049: A married woman may guarantee an obligation without the

husband’s consent but it shall only bind the conjugal partnership when for

example, the guaranty redounded to the benefit of the family

 General Rule: A married woman who acts as guarantor ordinarily

just binds her separate property

o Exception: She can bind the conjugal property with her

husband’s consent or if it redounds to the benefit of the

family

 A married woman may act as a guarantor for her husband

Art 2050: Guaranty entered into without knowledge of principal debtor

 A guaranty can be constituted without the knowledge or even

against the will of the principal debtor

 IF PERSON PAYS WITHOUT KNOWLEDGE or AGAINST THE

WILL of the debtor:

o That person (no-consent guarantor) can recover only

insofar has the payment has been beneficial to the debtor

o That person cannot compel the creditor to subrogate him

in his rights, such as those arising from a mortgage,

guaranty or penalty

 Ex: A owes B 20k. Without knowledge of A, G

agrees to guarantee A’s obligation. If A has already

paid 15k, but G still pays 20k, then G can only

recover 5k from A because it is only that amount