SCRIPT outline WITH Q&A Louie: Welcome stuff. Our contestant today are Migs and Aeron.

They are (brothers/bestfriends/lovers?) do you want to be millionaires? Why? Migs and/or Aeron: (answer) Louie: Rules: Multiple choice but you have to explain why that is your final answer. You have 3 lifelines and 2 passes. You can get 2 questions wrong and still proceed to the next question. After the Php300,000 point, you have the option to leave with your winnings or proceed to the next question. 1. The creditor can compel the ordinary personal guarantor to pay only after (get this wrong)
a. b. c. d. The The The The debtor refuses to pay guarantor has more money than the principal at the time of demand debtor has expressly stated his desire that the guarantor pay the debt. property of debtor and other legal remedies have been exhausted

Explanation: article 2058. However, this only applies when a pledge or mortgage has not been given as special security for the payment of the principal obligation. In which cases, the properties pledged or mortgaged can be alienated as payment for the creditor (Southern Motors v Barbosa)

2. What is not included in the indemnity when the guarantor pays for the debt to the creditor?
a. b. c. d. Total amount of the debt Legal interest only if it earned interest for the creditor Expenses incurred by the debtor Damages, if they are due

3. The obligation of the guarantor is extinguished:

a. b. c. d. before that of the debtor at the same time as that of the debtor after that of the debtor the obligation of the debtor does not matter

4. The following characterizes a contract of guaranty (as opposed to a contract of surety) except: (get this wrong again)
a. often discharged by the mere indulgence of the creditor to the principal, and is usually not liable unless notified of the default of the principal b. insures the solvency of the debtor and binds guarantor to pay if the principal is unable to pay c. an accessory promise by which a person binds himself for another already bound, and agrees with the creditor to satisfy the obligation if the debtor does not d. A separate undertaking, in which the principal does not join Explanation: As discussed in the case of E Zobel v SolidBank, a surety is usually bound with his principal by the same instrument, executed at the same time, and on the same consideration. He is an original promissor and debtor from the beginning. On the other hand, the contract of guaranty is the guarantor's own separate undertaking, in which the principal does not join. It is usually entered into before or after that of the principal, and is often supported on a separate consideration from that supporting the contract of the principal. Simply put, a surety is distinguished from a guaranty in that a guarantor is the insurer of the solvency of the debtor and thus binds himself to pay if the

principal is unable to pay while a surety is the insurer of the debt, and he obligates himself to pay if the principal does not pay.

Louie: did they get it right? Well find out when we return. Commercial no. 1 5. (offer check) Which is not true as regards the effects of guaranty as between co-guarantors? (50:50)
a. If any of the guarantors should be insolvent, his share shall not be borne by the others. b. The co-guarantor who paid the debt may demand each of the others to share which is proportionally owing from him. c. The co-guarantors may set up the defense which would have pertained to the principal debtor against the creditor. d. A sub-guarantor, in case of insolvency of the guarantor, is responsible to the coguarantors in the same terms as the guarantor.

6. (offer check) The bondsman who is to be offered in virtue of a provision of law or of a judicial order shall possess: (ask the audience)
a. b. c. d. integrity capacity to bind himself sufficient property to bind himself all of the above

7. (offer check) The guarantor may set up against the creditor all the defenses which pertain to the principal debtor and are inherent in the debt; except:
a. b. c. d. Defenses Defenses Defenses Defenses alleging forgery alleging the cancellation of the guaranty before the debt was incurred that are personal to the debtor invoking insolvency

8. (offer check) A guarantor cannot make use of the benefit of excussion in the following cases except: (phone a friend)
a. b. c. d. The guarantor has expressly renounced it The debtor is solvent The guarantor has bound himself solidarily with the debtor On the presumption that the execution of the property of the principal debtor would not satisfy the obligation. Explanation: as provided for in Art 2059, a guarantor cannot set up the exhaustion of the property of the debtor and other legal remedies if the debtor is insolvent.

9. (offer check) When can the guarantor proceed against the principal debtor even before having paid?
a. b. c. d. When he is sued for the payment In case of insolvency of the principal debtor When the debt has become demandable All of the above

e. Louie: is that the correct answer? Do we have new millionaires? Stay tuned blah. Commercial no. 2 Louie: Were back. The correct answer is blah. Congratulations. Blah. END

RULES ON INTEREST LOAN 1. Commercial interest or monetary interest a. Stipulated in writing b. Of no stipulation, no interest (Siga-an) c. If there is stipulation but void for being excessive- 12% legal interest (jurisprudence), but Tan v. CA held that the entire clause is stricken out, hence as if no interest. 2. Penalty interest a. Eastern Shipping SECURITIES Loan o Major

organs Guaranty Surety Mortgage Real estate chattel Pledge Minor organs Assignment of credit Securitization (special law) Obsolete organ Antichresis