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mortgage. However, a foreclosure suit was not instituted against Atty. Tanglao but a
purely personal action for the recovery of the amount still owned by Atty. Tanglao.
(2) Even granting that Atty. Tanglao may be considered a surety (or guarantor), the
action does not lie against him on the ground that all the legal remedies against him
have not previously been asked for and David has property sufficient to pay the
balance of the debt the payment of which is sought of Tanglao in his alleged
capacity as surety. A guaranty or surety must be expressed and cannot be
presumed. Art 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 legal
remedies against the debtor.
HELD: The creditors can go after the surety in the counter bond even without
exhausting the properties of Felicisimo. Although the counter bond contemplated in
the afore quoted Sec. 17, Rules 57, of the Rules of Court is an ordinary guaranty
where the sureties assume a subsidiary liability, the rule cannot apply to a counter
bond where the surety bound itself "jointly and severally" (in solidum) with the
defendant as in the present case.
Imperial Insurance is primarily liable to pay the counter bond. Imperial Insurance,
Inc. had bound itself solidarily with the principal, the deceased defendant Felicisimo
V. Reyes. In accordance with Article 2059, par. 2, excussion shall not take place if
the guarantor has bound himself solidarily with the debtor. Section 17, Rule 57 of
the Rules of Court cannot be construed that an execution against the debtor be first
returned unsatisfied even if the bond were a solidary one, for a procedural rule may
not amend the substantive law expressed in the Civil Code, and further would nullify
the express stipulation of the parties that the surety's obligation should be solidary
with that of the defendant.
Arroyo vs Jungsay
Plaintiff is Jose Arroyo, guardian of Tito Jocsing, an imbecile.
Defendant is Florentino Jungsay and his bondsmen. Florentino was the former
guardian of Jocsing. The defendants absconded with Jocsings funds.A judgement
was made by the lower court against the defendants for P6,000, together with
interest and costs, the bondsmen appealed.
Issue: W/N the defendants should be credited with P4,400, the alleged value of
certain property but is in the exclusive possession of third parties under claim of
ownership.
Held: No. Defendants invoke the benefit of excussionin Article 1834 of the (old) Civil
Code. Excussiongives to the surety the benefit of a levy (excusion), even when a
judgment is rendered against both the surety and the principal.The effect of this is to
stay proceedings against the surety until judgment has been obtained against the
principal debtor, and execution against his property has proved insufficient.
The court however held that before the surety is entitled to this benefit, he must
point out to the creditor property of the principal debtor which can be sold and which
is sufficient to cover the amount of the debt. (Article 1832 OCC, read Art 2060
NCC).
According to Manresa, the claim for the benefit of excussion have several elements:
1.) It must be claimed in a timely manner
2.) Surety must designate property of the debtor where the debt is to be satisfied
and importantly,
3.) Such property must be realizable and that it be situated in Spanish territory.
The same requisites were cited in Hill &Co,
1.) The surety who wants to claim the benefit of excussion must demand it in
limine (on the institution of the proceedings)
2.) He must point out creditor property of the principal debtor
3.) The property must not be incumbered, subject to seizure; and must furnish a
sufficient sum to have the discussion carried into effect
The purpose of a bond is to secure performance and the attachment of a property
situated a great distance away or a property that is not readily realizable would be a
lengthy and extremely difficult proceeding.
The surety is tasked with designating the property because he the one to be
benefitted by such task and the one most interested in avoiding difficulties in its
execution.
In this case, the property the defendants want credited to them is not sufficient to
pay the indebtedness; it is not salable; it is so incumbered that third parties have,
full possession under claim of ownership.In all these respects the sureties have
failed to meet the requirements of article 1832 of the Civil Code.
Where a guardian absconds or is beyond the jurisdiction of the court, the proper
method, under article 1834 of the Civil Code and section 577 of the Code of Civil
Procedure, in order to ascertain whether such guardian is liable and to what extent,
in order to bind the sureties on his official bond, is by a proceeding in the nature of a
civil action wherein the sureties are made parties and given an opportunity to be
heard. All this was done in the instant case
Disposition: Lower court affirmed.
Insurance Co. executed a bond of 3,000. Since the value of merchandise exceeded
3,000 Manila Compania de Seguros executed a bond of 2,000 with the same terms
and conditions that the bonds would respond for the obligation of Manila
Tobacconists. Mira Hermanos sued the 2 insurance companies for the amount of
2,500
who pays for a debtor, in turn, must be indemnified by the latter. However, the
guarantor cannot be compelled to pay the creditor unless the latter has exhausted
all the property of the debtor and resorted to all the legal remedies against the
debtor. This is what is otherwise known as the benefit of excussion
Held: No, The benefit of division is applicable only where there are several
guarantors or sureties of only one debtor for the same debt. In the instant case,
although the 2 bonds on their face appear to guarantee the same debt coextensively up to 2K that Provident Insurance Co. alone extending beyond the
sum up to 3K in reality said bonds do not guarantee the same debt.
FACTS: Pyramid filed with the RTC a Complaint for specific performance and
damages with application for the issuance of a writ of preliminary attachment
against the petitioner and wife Marilyn.
Art. 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 shares which they are respectively bound to pay,
unless solidarily has been expressly stipulated. The benefit of division against the
co-guarantors ceased in the same cases and for the same reasons as the benefit of
excussion against the principal debtor.
Petitioner filed with the RTC his Answer to respondents Complaint. As a special and
affirmative defense, petitioner argued that the benefit of excussion was still available
to him as a guarantor since he had set it up prior to any judgment against him.
According to petitioner, respondent failed to exhaust all legal remedies to collect
from Macrogen the amount due under the Compromise Agreement, considering that
Macrogen Realty still had uncollected credits which were more than enough to pay
for the same. Given these premise, petitioner could not be held liable as guarantor.
It must be stressed that despite having been served a demand letter at his office,
petitioner still failed to point out to the respondent properties of Macrogen Realty
sufficient to cover its debt as required under Article 2060 of the Civil Code. Such
failure on petitioners part forecloses his right to set up the defense of excussion.
Worthy of note as well is the Sheriffs return stating that the only property of
Macrogen Realty which he found was its deposit of P20,242.23 with the Planters
Bank.
Article 2059(5) of the Civil Code thus finds application and precludes petitioner from
interposing the defense of excussion. We quote:
Art. 2059. This excussion shall not take place:
NO
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Under a contract of guarantee, the guarantor binds himself to the creditor to fulfill
the obligation of the principal debtor in case the latter should fail to do so. The
guarantor who pays for a debtor, in turn, must be indemnified by the latter. However,
the guarantor cannot be compelled to pay the creditor unless the latter has
exhausted all the property of the debtor and resorted to all the legal remedies
against the debtor. This is what is otherwise known as the benefit of excussion
(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.