TITLE XV – GUARANTY In this appeal, Vizconde argues that she should not be convicted of Estafa

given that she was a mere suretyr for Pagluyan, and her liability for the
CHAPTER 1 – NATURE AND EXTENT OF GUARANTY contract was strictly civil in nature, and criminal liability can only be imputed
to the principal debtor.
Classifications of Guaranty
Issue: Whether or not Vizconde, as surety, can be held liable for Estafa
A. In the Broad Sense: committed by the principal debtor.
a. Personal Guaranty
b. Real Guaranty Ruling: Vizconde should not be held criminally liable.
B. Under Personal Guaranty:
a. Property so-called or Guaranty in the strict sense What Vizconde solely undertook was to guarantee the obligation of
b. Suretyship Pagulayan to return the ring or deliver its value; and that guarantee created
C. Under Real Guaranty if the property is REAL Property: only a civil obligation, without more, upon default of the principal.
a. Real Mortgage
b. Antichresis Upon the evidence, appellant Vizconde was a mere guarantor, a solidary
D. Under Real Guaranty if the property is PERSONAL Property: one to be sure, of the obligation assumed by Pagulayan to complainant
a. Pledge Perlas. Whatever liability was incured by Pagulayan for defaulting on such
b. Chattel Mortgage obligation, that of Vizconde consequent upon such default was merely civil,
not criminal. It was, therefore, error to convict her of estafa.
ARTICLE 2047. By guaranty a person, called the guarantor, binds
himself to the creditor to fulfill the obligation of the principal debtor in ---END OF CASE---
case the latter should fail to do so.
Characteristics of a Contract of Guaranty
If a person binds himself solidarily with the principal debtor, the
provisions of Section 4, Chapter 3, Title I of this Book shall be a. It is a civil contract.
observed. In such case the contract is called a suretyship. (1822a) b. There must be a meeting of the minds between the parties. Hence,
there must be acceptance by the creditor. XPN: If the guaranty is
1. Guaranty in the Strict Sense - as defined in the first paragraph of Art. direct and unconditional, then no prior notice by the creditor is
2047 needed to indicate his acceptance.
c. It is consensual, nominate, accessory, and unilateral.
The parties to a contract of guaranty are the guarantor and the creditor. The d. It is governed by the Statute of Frauds.
contract between the guarantor and the debtor is a contract of indemnity.
2. Suretyship – as defined the second paragraph of Art. 2047
CASE: Vizconde v. Intermediate Appellate Court
CASE: Manila Surety and Fidelity Co. v. Batu Construction & Co.
Facts: Perlas sold a ring to Pagluyan, which was paid by the latter using a
post-dated check. Vizconde, herein Appellant, guaranteed that the check Fact: Batu Construction availed the services of Manila Surety and had them
will be sufficiently funded on the given due date, as evidenced by the post a surety bond in favor of the Government of the Philippines to secure
receipt of the sale, holding Vizconde jointly and severally liable with the faithful Performance of the construction of the Bacarra Bridge in Ilocos
Pagluyan. Upon presentment to the bank, the check was dishonored for Norte.
insufficiency of funds. Despite repeated demands, Pagluyan failed to make
good on her obligation to fund the check. Hence, both Pagluyan and After the government annulled its contract with Batu Construction for an
Vizconde were charged and convicted of the crime of Estafa for allegedly alleged unsatisfactory work, the government notified Manila Surety that it
misappropriating and converting the said ring. would be held liable as surety. Manila Surety then filed a case against Batu
Construction on the basis of its right to procced against the principal debtor GUARANTOR SURETY
under Art. 2071. Batu argues that they cannot be proceeded against by a. Subsidiary liability Primary Liability
Manila Surety by virtue of Art. 2071 since such Article can only be availed b. Pays if the Debtor CANNOT Pays if the Debtor DOES NOT
of by a guarantor, not a surety. c. Insurer of the debtor’s Insurer of debt
insolvency
Issue: Whether or not the last paragraph of Art. 2071 may be availed of by
a surety. ARTICLE 2048. A guaranty is gratuitous, unless there is a stipulation
to the contrary. (n)
Ruling: No, they cannot.
ARTICLE 2049. A married woman may guarantee an obligation without
A guarantor is the insurer of the solvency of the debtor; a surety is an the husband’s consent, but shall not thereby bind the conjugal
insurer of the debt. A guarantor binds himself to pay if the principal is partnership, except in cases provided by law. (n)
unable to pay; a surety undertakes to pay if the principal does not pay. The
reason which could be invoked for the non-availability to a surety of the ARTICLE 2050. If a guaranty is entered into without the knowledge or
provisions of the last paragraph of article 2071 of the new Civil Code would consent, or against the will of the principal debtor, the provisions of
be the fact that guaranty like commodatum is gratuitous. But guaranty could articles 1236 and 1237 shall apply. (n)
also be for a price or consideration as provided for in article 2048. So, even
if there should be a consideration or price paid to a guarantor for him to If the guarantor assumes liability without the consent of the debtor, the
insure the performance of an obligation by the principal debtor, the following articles apply:
provisions of article 2071 would still be available to the guarantor. In
suretyship the surety becomes liable to the creditor without the benefit of
ARTICLE 1236. The creditor is not bound to accept payment or
the principal debtor's exclusion of his properties, for he (the surety) maybe
performance by a third person who has no interest in the fulfillment of the
sued independently. So, he is an insurer of the debt and as such he has
obligation, unless there is a stipulation to the contrary.
assumed or undertaken a responsibility or obligation greater or more
onerous than that of guarantor. Such being the case, the provisions of
article 2071, under guaranty, are applicable and available to a surety. The Whoever pays for another may demand from the debtor what he has paid,
reference in article 2047 to, the provisions of Section 4, Chapter 3, Title 1, except that if he paid without the knowledge or against the will of the debtor,
Book IV of the new Civil Code, on solidary or several obligations, does not he can recover only insofar as the payment has been beneficial to the
mean that suretyship which is a solidary obligation is withdrawn from the debtor. (1158a)
applicable provisions governing guaranty.
ARTICLE 1237. Whoever pays on behalf of the debtor without the
Plaintiff's cause of action comes under paragraph 1 of article 2071 of the knowledge or against the will of the latter, cannot compel the creditor to
new Civil Code, because the action brought by Ricardo Fernandez and 105 subrogate him in his rights, such as those arising from a mortgage,
persons in the Justice of the Peace Court of Laoag, province of Ilocos guaranty, or penalty. (1159a)
Norte, for the collection of unpaid wages amounting to P5,960.10, is in
connection with the construction of the Bacarra Bridge, undertaken by the ARTICLE 2051. A guaranty may be conventional, legal or judicial,
Batu Construction & Company, and one of the defendants therein is the gratuitous, or by onerous title.
herein plaintiff, Manila Surety.
It may also be constituted, not only in favor of the principal debtor, but
---END OF CASE--- also in favor of the other guarantor, with the latter’s consent, or
without his knowledge, or even over his objection. (1823)
A. Types of Guaranty according to this Article: If it be simple or indefinite, it shall comprise not only the principal
obligation, but also all its accessories, including the judicial costs,
1. Conventional – by agreement of the parties provided with respect to the latter, that the guarantor shall only be
2. Legal – required by law liable for those costs incurred after he has been judicially required to
3. Judicial – required by the court pay. (1827a)
4. Gratuitous – no benefit for guarantor
5. Onerous – for a burden A. Form of Contract – the contract of guaranty must be in writing because
it is a “special promise to answer for the debt, default, or miscarriage of
B. Sub-Guaranty – as defined by the second paragraph of Art. 2051. This another” as provided for in the Statute of Frauds.
is an obligation between the sub-guarantor and creditor. B. Classifications of Guaranty under this Article:
a. With a Term
ARTICLE 2052. A guaranty cannot exist without a valid obligation. b. With a Condition
c. Simple or Indefinite – those with no term or amount fixed. In this
case, the second paragraph of Art. 2055 applies fully.
Nevertheless, a guaranty may be constituted to guarantee the
performance of a voidable or an unenforceable contract. It may also
guarantee a natural obligation. (1824a) ARTICLE 2056. One who is obliged to furnish a guarantor shall
present a person who possesses integrity, capacity to bind himself,
and sufficient property to answer for the obligation which he
A. Accessory follows the Principal. If the principal is void, the guaranty is
also void. guarantees. The guarantor shall be subject to the jurisdiction of the
court of the place where this obligation is to be complied with. (1828a)
B. Exceptions – as stated the second paragraph of Art. 2052.
Qualifications of a Guarantor at the time of perfection of the Guaranty:
ARTICLE 2053. A guaranty may also be given as security for future
debts, the amount of which is not yet known; there can be no claim
against the guarantor until the debt is liquidated. A conditional 1. Integrity
obligation may also be secured. (1825a) 2. Capacity to Bind
3. Sufficient Property – excludes those out of his reach and those
under litigation
A. A guaranty may cover both present and future debts. However, there
can only be a claim against the guarantor once the debt is liquidated.
B. Liquidated Debt – when the debt is for a price fixed in the contract The Creditor can naturally waive these requirements
C. Continuing Surety Agreements – one where a debtor, along with a
surety, bind themselves jointly and severally for any future debt the ARTICLE 2057. If the guarantor should be convicted in first instance of
debtor might enter into. In this case, there would be no need for a crime involving dishonesty or should become insolvent, the creditor
separate suretyships for each transaction of the debtor. may demand another who has all the qualifications required in the
preceding article. The case is excepted where the creditor has
ARTICLE 2054. A guarantor may bind himself for less, but not for required and stipulated that a specified person should be the
more than the principal debtor, both as regards the amount and the guarantor. (1829a)
onerous nature of the conditions.
Effect of Conviction:
Should he have bound himself for more, his obligations shall be
reduced to the limits of that of the debtor. (1826) 1. The creditor may demand a substitute guarantor from the one
obliged to furnish a guarantor.
ARTICLE 2055. A guaranty is not presumed; it must be express and 2. Exception: when the guarantor is selected by the creditor.
cannot extend to more than what is stipulated therein. 3. The law says “first instance”, not Court of First Instance.”
 CHAPTER 2 ARTICLE 2059. This excussion shall not take place:

Effects of Guaranty (1) If the guarantor has expressly renounced it;

SECTION 1 (2) If he has bound himself solidarily with the debtor;

Effects of Guaranty Between the Guarantor and the Creditor (3) In case of insolvency of the debtor;

In general, the effects between the guarantor and the creditor are the (4) When he has absconded, or cannot be sued within the Philippines
following: unless he has left a manager or representative;

1. The guarantor is entitled to the benefit of excussion (benefit of (5) If it may be presumed that an execution on the property of the
exhaustion) of the debtor’s properties except in the cases principal debtor would not result in the satisfaction of the obligation.
mentioned under Art. 2059, and provided that the guarantor follows (1831a)
Art. 2060.
2. A compromise between the creditor and the principal debtor A. Exceptions to the benefit of Excussion – as provided for by Art. 2059,
benefits but does not prejudice the guarantor. which is not exclusive.
3. If there should be several guarantors, they are in general entitled to B. Additional instances of the exception:
the benefit of division.
1. Art. 2084 – if the guaranty is in a judicial bond.
ARTICLE 2058. The guarantor cannot be compelled to pay the creditor 2. If Art. 2060 is not complied with.
unless the latter has exhausted all the property of the debtor, and has
resorted to all the legal remedies against the debtor. (1830a) C. Paragraph 4 refers to an ABSCONDING DEBTOR

Benefit of Excussion – as defined by Art. 2058. The guarantor can invoke ARTICLE 2060. In order that the guarantor may make use of the
this right provided: benefit of excussion, he must set it up against the creditor upon the
latter’s demand for payment from him, and point out to the creditor
1. He sets it up as a defense before judgment is rendered against available property of the debtor within Philippine territory, sufficient to
himself. cover the amount of the debt. (1832)
2. He has not pledged not mortgaged his own property to the creditor
for the satisfaction of the principal obligation for clearly, a mortgagor Requisites before the Guarantor can use the benefit of Excussion:
is not entitled to the benefit of exhaustion.
3. He does not fall in the cases enumerated in Art. 2059. 1. The Guarantor must set it up when the creditor demands payment.
4. He complies with Art. 2060. 2. The Guarantor must point out available property of the debtor within
the Philippines.
Duties of the Creditor so he can hold the Guarantor liable:
ARTICLE 2061. The guarantor having fulfilled all the conditions
1. Exhaust all the property of the debtor, subject to the exceptions of required in the preceding article, the creditor who is negligent in
Art. 2059. exhausting the property pointed out shall suffer the loss, to the extent
2. Resort to all the legal remedies against the debtor. of said property, for the insolvency of the debtor resulting from such
3. Prove that the debtor is still unable to pay. negligence. (1833a)
4. Notify the guarantor of the debtor’s inability to pay, otherwise, if the
guarantor is prejudiced by lack of notice, he cannot be made to pay,
The creditor suffers loss to the extent of the value of the property pointed
unless of course there is a waiver on the part of the guarantor.
out by the guarantor but not exhausted by the creditor.
ARTICLE 2062. In every action by the creditor, which must be against The indemnity comprises:
the principal debtor alone, except in the cases mentioned in article
2059, the former shall ask the court to notify the guarantor of the (1) The total amount of the debt;
action. The guarantor may appear so that he may, if he so desire, set
up such defenses as are granted him by law. The benefit of excussion (2) The legal interests thereon from the time the payment was made
mentioned in article 2058 shall always be unimpaired, even if known to the debtor, even though it did not earn interest for the
judgment should be rendered against the principal debtor and the creditor;
guarantor in case of appearance by the latter. (1834a)
(3) The expenses incurred by the guarantor after having notified the
A. Generally, the suit must be against the Principal Debtor Alone, except in debtor that payment had been demanded of him;
the cases under Art. 2059.
B. The Notification under this Article is Obligatory while the Appearance of (4) Damages, if they are due. (1838a)
the Guarantor is not.
ARTICLE 2067. The guarantor who pays is subrogated by virtue
ARTICLE 2063. A compromise between the creditor and the principal
thereof to all the rights which the creditor had against the debtor.
debtor benefits the guarantor but does not prejudice him. That which
is entered into between the guarantor and the creditor benefits but
does not prejudice the principal debtor. (1835a) If the guarantor has compromised with the creditor, he cannot
demand of the debtor more than what he has really paid. (1839)
ARTICLE 2064. The guarantor of a guarantor shall enjoy the benefit of
excussion, both with respect to the guarantor and to the principal A. Benefit of Subrogration – as provided for under Art. 2067.
debtor. (1836) B. Exception – when the guaranty is made without the knowledge or
consent of the debtor (under Art. 1237)
ARTICLE 2065. Should there be several guarantors of only one debtor
and for the same debt, the obligation to answer for the same is divided ARTICLE 2068. If the guarantor should pay without notifying the
among all. The creditor cannot claim from the guarantors except the debtor, the latter may enforce against him all the defenses which he
shares which they are respectively bound to pay, unless solidarity has could have set up against the creditor at the time the payment was
been expressly stipulated. made. (1840)

The benefit of division against the co-guarantors ceases in the same ARTICLE 2069. If the debt was for a period and the guarantor paid it
cases and for the same reasons as the benefit of excussion against before it became due, he cannot demand reimbursement of the debtor
the principal debtor. (1837) until the expiration of the period unless the payment has been ratified
by the debtor. (1841a)
A. Benefit of Division – as provided for by Art. 2065.
B. The benefit of Division ceases for the same causes for when the benefit ARTICLE 2070. If the guarantor has paid without notifying the debtor,
of Excussion also ceases (like the cases under Art. 2059) and the latter not being aware of the payment, repeats the payment,
the former has no remedy whatever against the debtor, but only
against the creditor. Nevertheless, in case of a gratuitous guaranty, if
SECTION 2
the guarantor was prevented by a fortuitous event from advising the
debtor of the payment, and the creditor becomes insolvent, the debtor
Effects of Guaranty Between the Debtor and the Guarantor shall reimburse the guarantor for the amount paid. (1842a)

ARTICLE 2066. The guarantor who pays for a debtor must be

indemnified by the latter.
Requisites for the application of the second sentence of Art. 2070, which A. Purpose of this article – to allow the guarantor to exercise either one of
obligates the debtor to reimburse the guarantor, in case of payment by both two rights:
the guarantor and the debtor to the creditor:
1. To obtain release from the guaranty
1. The contract should be a gratuitous guaranty. 2. To demand security
2. The guarantor must have paid the creditor.
3. The debtor must have paid the creditor again. A money judgment for this purpose would be erroneous.
4. The debtor must not have been notified and is not aware of the
payment by the guarantor. B. The Remedies here are ALTERNATIVE
5. The guarantor was prevented by a fortuitous event from advising C. This Article applies to a SURETY
the debtor of the payment.
6. The creditor becomes insolvent. ARTICLE 2072. If one, at the request of another, becomes a guarantor
for the debt of a third person who is not present, the guarantor who
ARTICLE 2071. The guarantor, even before having paid, may proceed satisfies the debt may sue either the person so requesting or the
against the principal debtor: debtor for reimbursement. (n)

(1) When he is sued for the payment; SECTION 3

(2) In case of insolvency of the principal debtor; Effects of Guaranty as Between Co-Guarantors

(3) When the debtor has bound himself to relieve him from the ARTICLE 2073. When there are two or more guarantors of the same
guaranty within a specified period, and this period has expired; debtor and for the same debt, the one among them who has paid may
demand of each of the others the share which is proportionally owing
(4) When the debt has become demandable, by reason of the from him.
expiration of the period for payment;
If any of the guarantors should be insolvent, his share shall be borne
(5) After the lapse of ten years, when the principal obligation has no by the others, including the payer, in the same proportion.
fixed period for its maturity, unless it be of such nature that it cannot
be extinguished except within a period longer than ten years; The provisions of this article shall not be applicable, unless the
payment has been made in virtue of a judicial demand or unless the
(6) If there are reasonable grounds to fear that the principal debtor principal debtor is insolvent. (1844a)
intends to abscond;
Art. 2073 v. Art. 2065
(7) If the principal debtor is in imminent danger of becoming insolvent.
1. The former is a benefit against the co-guarantors, while the latter is
In all these cases, the action of the guarantor is to obtain release from a benefit against the creditor.
the guaranty, or to demand a security that shall protect him from any 2. In the former there is already payment, while in the latter there is no
proceedings by the creditor and from the danger of insolvency of the payment yet.
debtor. (1843a) 3. In the former, the payment must have been made due to judicial
demand or the principal debtor’s insolvency, while in the latter there
seems to exist no such qualifications for its application.
ARTICLE 2074. In the case of the preceding article, the co-guarantors ARTICLE 2079. An extension granted to the debtor by the creditor
may set up against the one who paid, the same defenses which would without the consent of the guarantor extinguishes the guaranty. The
have pertained to the principal debtor against the creditor, and which mere failure on the part of the creditor to demand payment after the
are not purely personal to the debtor. (1845) debt has become due does not of itself constitute any extension of
time referred to herein. (1851a)
ARTICLE 2075. A sub-guarantor, in case of the insolvency of the
guarantor for whom he bound himself, is responsible to the co- ARTICLE 2080. The guarantors, even though they be solidary, are
guarantors in the same terms as the guarantor. (1846) released from their obligation whenever by some act of the creditor
they cannot be subrogated to the rights, mortgages, and preferences
CHAPTER 3 of the latter. (1852)

Extinguishment of Guaranty ARTICLE 2081. The guarantor may set up against the creditor all the
defenses which pertain to the principal debtor and are inherent in the
ARTICLE 2076. The obligation of the guarantor is extinguished at the debt; but not those that are purely personal to the debtor. (1853)
same time as that of the debtor, and for the same causes as all other
obligations. (1847) CHAPTER 4

Two Cause for Extinguishment of the Guaranty Legal and Judicial Bonds

1. Direct – when the guaranty itself is extinguished independently of ARTICLE 2082. The bondsman who is to be offered in virtue of a
the principal obligation provision of law or of a judicial order shall have the qualifications
2. Indirect – when the principal obligation ends, the accessory prescribed in article 2056 and in special laws. (1854a)
obligation of guaranty naturally ends
1. A bond merely stands as a solidary guaranty for a principal
Effect of Novation - If a contract is novated without the guarantor’s consent, obligation, which exists independently of said bond, the latter being
the guaranty ends merely an accessory obligation.
2. A bond being for the benefit of the creditor, it follows that the
ARTICLE 2077. If the creditor voluntarily accepts immovable or other creditor can legally waive a bond requirement.
property in payment of the debt, even if he should afterwards lose the 3. If a bond is given to suspend the execution of a final decree, the
same through eviction, the guarantor is released. (1849) object is impossible, hence the bond is void.

Effect of Dacion En Pago ARTICLE 2083. If the person bound to give a bond in the cases of the
preceding article, should not be able to do so, a pledge or mortgage
considered sufficient to cover his obligation shall be admitted in lieu
1. Dacion en pago may be accepted as payment for the debt, either by
thereof. (1855)
Immovable or Movable Property
2. If the Creditor is subsequently evicted from said properties, the
principal obligation is revived, but not the guaranty, because the ARTICLE 2084. A judicial bondsman cannot demand the exhaustion of
creditor was the one who took the risk. the property of the principal debtor.

ARTICLE 2078. A release made by the creditor in favor of one of the A sub-surety in the same case, cannot demand the exhaustion of the
guarantors, without the consent of the others, benefits all to the extent property of the debtor or of the surety.
of the share of the guarantor to whom it has been granted. (1850)
No right of excussion for bondsman and sub-surety.