Art 2051: Different kinds of guaranty

 Conventional: by agreement of the parties

 Legal: constituted by law

 Judicial: required y court to guarantee the eventual right of the

parties

 Gratuitous: guaranty due to the pure liberality of guarantor

 Onerous: guarantor receives valuable consideration

 Sub-guaranty: a guaranty constituted to guarantee the obligation

of the guarantor

Art 2052: Valid obligation required for guaranty

 Guaranty may be constituted to guarantee a:

o Valid obligation

 IMPORTANT: it doesn’t have to depend on an

existing/current obligation because it can even

apply to future debts

o Voidable contract

 Ex. A guaranty may support an obligation procured

through vitiated consent because a voidable

contract is valid until anulled

o Unenforceable contract

o Natural obligation

 When the debtor himself offers a guaranty for his

natural obligation, he impliedly recognizes his

liability, therefore transforming his obligation to a

civil one

 Municipality of Gasan v. Marasigan: a contract deemed void

cannot be a basis of suretyship/contract of guaranty

Art 2053: Guaranty of future debts and conditional obligations

 A guaranty for future debts is a continuing guaranty/suretyship

o It contemplates a future course of dealings, covering a

series of transactions generally for an indefinite time until

revoked

o It is intended to provide security with respect to future

transactions

o It covers transactions which are within the description or

contemplation of the contract of guaranty until the

expiration of the guaranty

o IMPORTANT: Future debts, even if the amount is not yet

known, may be guaranteed BUT there can be no claim

against the guarantor UNTIL the amount of the debt is

ascertained or fixed and demandable.

o Smith Bell and Co v. PNB: A guarantor may only be

liable if the debt is liquidated/fixed/ascertainable

 A guaranty may be for a conditional obligation

o If the principal obligation is subject to a suspensive

condition, the guarantor is only liable only after the

fulfillment of the condition

o If the principal obligation is subject to a resolutory

condition, the happening of the condition extinguishes

both the principal obligation and the guaranty

Art 2054: Guarantor’s liability cannot exceed principal obligation

 A guarantor may bind himself for less

o Ex. A borrows 20k from B. G guarantees 15k only. If A

was only able to pay 10k, B can still collect the balance

(10k) from G

 A guarantor may not bind himself for more and in case he does,

his obligation shall be reduced to the limits of that of the debtor

 Exception: Creditors suing on a suretyship bond may recover

from the surety as part of their damages; interest at the legal

rate, judicial costs and attorney’s fees when appropriate EVEN

without stipulation and even if the surety would thereby become

liable to pay more than the total amount stipulated in the bond

o Note: It’s not really that the guarantor/surety is held liable

for more than what he guaranteed because he is made to

pay by reason of his failure to pay when demanded (Next

Provision!)