CHAPTER 2

Effects of Guaranty

SECTION 1
Effects of Guaranty Between the Guarantor and the Creditor

Article 2058. The guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property
of the debtor, and has resorted to all the legal remedies against the debtor. (1830a)

Article 2059. The excussion shall not take place:

(1) If the guarantor has expressly renounced it;

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

(3) In case of insolvency of the debtor;

(4) When he has absconded, or cannot be sued within the Philippines unless he has left a manager or representative;

(5) If it may be presumed that an execution on the property of the principal debtor would not result in the satisfaction
of the obligation. (1831a)

Article 2060. In order that the guarantor may make use of the benefit of exclusion, he must set it up against the
creditor upon the latter's demand for payment from him, and point out to the creditor available property of the debtor
within Philippine territory, sufficient to cover the amount of the debt. (1832)

Article 2061. The guarantor having fulfilled all the conditions required in the preceding article, the creditor who is
negligent in exhausting the property pointed out shall suffer the loss, to the extent of said property, for the insolvency
of the debtor resulting from such negligence. (1833a)

Article 2062. In every action by the creditor, which must be against the principal debtor alone, except in the cases
mentioned in article 2059, the former shall ask the court to notify the guarantor of the 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
mentioned in article 2058 shall always be unimpaired, even if judgment should be rendered against the principal
debtor and the guarantor in case of appearance by the latter. (1834a)

Article 2063. A compromise between the creditor and the principal 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)

Article 2064. The guarantor of a guarantor shall enjoy the benefit of excussion, both with respect to the guarantor
and to the principal debtor. (1836)

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 among all. The creditor cannot claim from the guarantors except the shares which they are
respectively bound to pay, unless solidarity has been expressly stipulated.

The benefit of division against the co-guarantors ceases in the same cases and for the same reasons as the benefit
of excussion against the principal debtor. (1837)

SECTION 2
Effects of Guaranty Between the Debtor and the Guarantor

Article 2066. The guarantor who pays for a debtor must be indemnified by the latter.

The indemnity comprises:

(1) The total amount of the debt;

(3) The expenses incurred by the guarantor after having notified the debtor that payment had been demanded of him;

(4) Damages, if they are due. (1838a)

Article 2067. The guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had against
the debtor.

If the guarantor has compromised with the creditor, he cannot demand of the debtor more than what he has really
paid. (1839)

Article 2068. If the guarantor should pay without notifying the debtor, the latter may enforce against him all the
defenses which he could have set up against the creditor at the time the payment was made. (1840)

Article 2069. If the debt was for a period and the guarantor paid it before it became due, he cannot demand
reimbursement of the debtor until the expiration of the period unless the payment has been ratified by the debtor.
(1841a)

Article 2070. If the guarantor has paid without notifying the debtor, 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 the guarantor was prevented by a fortuitous event from advising the
debtor of the payment, and the creditor becomes insolvent, the debtor shall reimburse the guarantor for the amount
paid. (1842a)

Article 2071. The guarantor, even before having paid, may proceed against the principal debtor:

(1) When he is sued for the payment;

(2) In case of insolvency of the principal debtor;

(3) When the debtor has bound himself to relieve him from the guaranty within a specified period, and this period has
expired;

(4) When the debt has become demandable, by reason of the expiration of the period for payment;

(5) After the lapse of ten years, when the principal obligation has no fixed period for its maturity, unless it be of such
nature that it cannot be extinguished except within a period longer than ten years;

(6) If there are reasonable grounds to fear that the principal debtor intends to abscond;

(7) If the principal debtor is in imminent danger of becoming insolvent.

In all these cases, the action of the guarantor is to obtain release from the guaranty, or to demand a security that
shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor. (1834a)

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 satisfies the debt may sue either the person so requesting or the debtor for reimbursement. (n)

SECTION 3.
Effects of Guaranty as Between Co-Guarantors

Article 2073. When there are two or more guarantors of the same 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 from him.

If any of the guarantors should be insolvent, his share shall be borne by the others, including the payer, in the same
proportion.

The provisions of this article shall not be applicable, unless the payment has been made by virtue of a judicial
demand or unless the principal debtor is insolvent. (1844a)
Article 2074. In the case of the preceding article, the co-guarantors may set up against the one who paid, the same
defenses which would have pertained to the principal debtor against the creditor, and which are not purely personal
to the debtor. (1845) ARTICLE 2075. A sub-guarantor, in case of the insolvency of the guarantor for whom he bound
himself, is responsible to the co-guarantors in the same terms as the guarantor. (1846)

CHAPTER 3
Extinguishment of Guaranty

Article 2076. The obligation of the guarantor is extinguished at the same time as that of the debtor, and for the same
causes as all other obligations. (1847)

Article 2077. If the creditor voluntarily accepts immovable or other property in payment of the debt, even if he should
afterwards lose the same through eviction, the guarantor is released. (1849)

Article 2078. A release made by the creditor in favor of one of the guarantors, without the consent of the others,
benefits all to the extent of the share of the guarantor to whom it has been granted. (1850)

Article 2079. An extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the
guaranty. The mere failure on the part of the creditor to demand payment after the debt has become due does not of
itself constitute any extension of time referred to herein. (1851a)

Article 2080. The guarantors, even though they be solidary, are released from their obligation whenever by some act
of the creditor they cannot be subrogated to the rights, mortgages, and preference of the latter. (1852)

Article 2081. The guarantor may set up against the creditor all the defenses which pertain to the principal debtor and
are inherent in the debt; but not those that are personal to the debtor. (1853)

CHAPTER 4
Legal and Judicial Bonds

Article 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 article 2056 and in special laws. (1854a)

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 thereof. (1855)

Article 2084. A judicial bondsman cannot demand the exhaustion of the property of the principal debtor.

A sub-surety in the same case, cannot demand the exhaustion of the property of the debtor or of the surety.