CHAPTER 2 Effects of Guaranty

SECTION 1 Effects of Guaranty Between the

Guarantor and the Creditor (2058-2065)

said judgment against him, until after the

properties of the principal debtor shall have
been exhausted, to satisfy the latters
obligation.

I. Procedure When Creditor Sues

A. Creditor must sue the principal alone
1. Reason: A contract of guaranty is accessory
and subsidiary
2. Exception: Art. 2059

D. Who may avail

1. Guarantor - ordinary and personal guarantors
2. Sub-guarantor - as against the principal debtor
and the guarantor (Art. 2064)
3. Co-guarantors - as against the

B. Creditor shall ask the court to notify the

guarantor of the action

C. How to avail
1. Guarantor must set it up against the creditor
upon demand for payment.

1. If the guarantor appears

He is still given the benefit of excussion,
under Art. 2058, even if judgment should
be rendered against him and the principal
debtor.
2. If guarantor does not appear
He cannot set up the defenses which, by
appearing, are allowed to him by law, and
it may no longer be possible for him to
question the validity of the judgment
rendered against the debtor.
C. Hearing before execution can be issued against
guarantor
A guarantor is entitled to be heard before an
execution can be issued against him where he
is not a party in the case involving his
principal.
II. Benefit of Excussion
A. Definition
The right of GUARANTOR to demand that the
creditor first:
1. EXHAUST all properties of principal debtor
2. RESORT to all legal remedies against the
principal debtor
The creditor has a right to secure judgment
against guarantor prior to exhaustion. The
creditor may, prior thereto, secure a judgment
against the guarantor, who shall be entitled,
however, to a deferment of the execution of

The duty of the creditor to demand payment

upon the guarantor takes place after a
judgment has been obtained against for the
exhaustion of the debtor's properties.
Joining the guarantor in the suit against the
principal debtor is not the demand intended by
law.
2. Point out to the creditor available property of
the debtor within the Philippines, sufficient to
cover the amount of debt.
The guarantor having fulfilled all the conditions
required above, the creditor who is negligent in
exhausting the property pointed out shall suffer
the loss, but only to the extent of the value
of the said property for the insolvency of the
debtor (Art. 2061).
D. Exceptions
1. Right waived - must be made in express terms
2. Liability assumed is that of surety - guarantor
binds himself solidarily with the principal debtor
3. Insolvency of debtor is proven by an unsatisfied
writ of execution
It is not sufficiently established by the mere
fact that the debtor has been declared
insolvent in insolvency proceedings, in which
the extent of the insolvents inability to pay is
not determined until the final liquidation of his
estate.
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