GUARANTY AND SURETYSHIP

Articles 2066 2081

(Sections 2 and 3)

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;
(2) The legal interests thereon from the time the payment
was made known to the debtor, even though it did not
earn interest for the creditor;
(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)

(1) The guarantor has no right to demand reimbursement

until he has actually paid the deb, unless by the terms

of the contract, he is given the right before making the
payment.
(2) the guarantor is entitled to legal interest from the time
notice of payment of the debt was made known to the
debtor. The notice is, in effect, a demand so that if the
debtor does not pay immediately, he incurs in delay,
and, hence, renders him liable for legal interest.
(3) the expenses referred to are only those that the
guarantor has to satisfy in accordance with law as a
consequence of the guaranty, not those which depend
upon his will or own acts.
(4) the guarantor is entitled to recover damages only if
they are due in accordance with law.

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)
Effect of the subrogation. Subrogation transfers to the person subrogated the
credit with all the rights thereto appertaining either against the debtor or against
third persons, be they guarantors or possessors of mortgages, subject to
stipulation in conventional subrogation. (Art. 1303)

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. (140)
If the debtor has already paid the creditor, when that guarantor pays, the
debtor can set up the against the guarantor the defense of previous
extinguishment of the obligation by payment

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)
Effect of repeat payment by debtor.
G.R.: before the guarantor pays the creditor, he must first notify the debtor.
If he fails to give such notice and the debtor repeats the payment, the
guarantors only remedy is to collect from the creditor, but he has no

cause of action against the debtor for the return of the amount paid by
him (guarantor) even if the creditor should become insolvent .
Exception:
The guarantor may still claim reimbursement from the debtor in spite
of lack of notice if the following conditions are present:
(a) The creditor becomes insolvent
the guarantor was prevented by fortuitous event to advise the
debtor of the payment; and
(c) the guaranty is gratuitous
(b)

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 CoGuarantors

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)
Defenses available to co-guarantors.
In the action filed by the paying guarantor against his coguarantors for their proportionate shares in the obligation,
the latter may avail themselves of all defenses which the
debtor would have interposed against the creditor but not
those which cannot be transmitted for being purely
personal to the debtor .

Article 2075. A sub-guarantor, in case of

insolvency of the guarantor for whom
bound himself, is responsible to the
guarantors in the same terms as
guarantor. (1846)

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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)
Guaranty being accessory and subsidiary, it is also

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)
If the creditor grants an extension of time to the
debtor without the consent of the guarantor (or
surety), the latter is discharged from his
undertaking.

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)
If there can be no subrogation because of the
fault of the creditor, as when the creditor
releases or fails to register a mortgage, the
guarantors are thereby released.
Founded on the principle of law that the act of
one cannot prejudice another. It also avoids
opportunity for collusion between the creditor
and the debtor or a third person

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)
This article provides for the defenses,
except those which are purely personal to
the debtor, that may be interposed by the
guarantor proceeded against the creditor.
Inasmuch as the guarantor proceeded
against takes the place of the debtor, it
would be absurd and unjust to deny him
the defenses of the latter because the
guarantor who is only subsidiarily liable
would be put in a worse position than the