GUARANTY AND SURETYSHIP b.

Indefinite or simpleone where the guaranty

(ARTICLES 2047 TO 2084)
NATURE AND EXTENT OF GUARANTY
Article 2047. By guaranty, a person, called the guarantor, binds himself to the creditor
to fulfill the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section
4, Chapter 3, Title I of this Book shall be observed. In such case, the contract is called a
suretyship.
GUARANTY
> Contract between the guarantor and creditor
> In a broad sense, it includes pledge and mortgage because the purpose of guaranty may
be accomplished not only by securing the fulfillment of an obligation contracted by the
principal debtor through the personal guaranty of a third person but also by
furnishing to the creditor for his
security, property with authority to collect the debt from the proceeds of the same in
case of default.
includes not only the principal obligation but also
all its accessories
SURETYSHIP
> A relation which exists where one person has undertaken an obligation and another
person is also under a direct and primary obligation or other duty to a third person, who is
entitled to but one performance, and as between the two who are bound, the one
rather than the other should perform
> Contractual relation resulting from an agreement whereby one person, the surety,
engages to be answerable for a debt, default, miscarriage of another known as
the principal
LAW APPLICABLE TO SURETYSHIP
> Second paragraph
> It covers OBLIGATIONS, DIFFERENT KINDS OF OBLIGATIONS, JOINT AND
SOLIDARY OBLIGATIONS, OBLIGATIONS AND CONTRACTS
> If a person binds himself solidarily with the principal debtor, the contract is called
suretyship and the guarantor is called the SURETY
What is the distinction between Guaranty and Suretyship?

CHARACTERISTICS OF A GUARANTY 1. Guaranty is collateral while Surety is an original promissory undertaking.

1. Accessorybecause it is dependent for its existence upon the principal obligation
guaranteed by it
2. Subsidiary and conditionalit takes effect only when the principal debtor fails in
his obligation subject to limitation
3. Unilateral
a. Gives rise only to the duty on the part of the guarantor in relation to the
creditor and not vice versa
b. It may be entered into even without the intervention of the principal debtor
4. Contract, which requires that the guarantor be a distinct person from the principal
debtor because a person cannot be the personal guarantor of himself
2. In guaranty, the guarantor is primarily liable while in suretyship, the surety is
secondarily available.
3. The guarantor binds himself to pay if the principal cannot pay. The surety undertakes to
pay if the principal does not pay.
4. The guarantor is the insurer of the solvency of the debtor. The surety is the insurer of
the debt.
5. The guarantor can avail of the benefit of excussion and division in case the creditor
proceeds against him. The surety cannot avail of the benefit of excussion and division.
The following instances will extinguish a contract of guaranty:

CLASSIFICATION OF GUARANTY 1.) Release in favor of one of the guarantors, without the others' consent, will benefit all to
1. Guaranty in the broad sense the extent of the share of the guarantor who was released from his liability.
a. Personalguaranty properly so-called or guaranty in the strict sense. The
guarantee given is the credit given by the person who guarantees the fulfillment of 2.) If the creditor voluntarily accepts immovable or other property in payment of the debt,
the principal obligation. even if he loses them later through eviction or conveyance of property.
b. Realthe guaranty is property, movable or immovable
2. As to its origin 3.) Effect of eviction: revival or the principal property but not the guaranty
a. Conventional
b. Legal 4.) If by an act of the creditor the guarantors, though solidarily liable, can't be subrogated
c. Judicial to the creditor's rights, mortgages and preferences.
3. As to consideration
a. Gratuitous 5.) For the same causes as all obligations under Art. 1231 of the Civil Code
b. Onerous (extinguishment of obligations: payment/performance, loss, condonation/remission,
4. As to persons guaranteed confusion/merger of rights, compensation, novation, annulment, recission, prescription and
a. Single fulfillment of a resolutory condition.)
b. Double or sub-guarantyone constituted to secure the fulfillment of a guarantee in
another guaranty 6.) When the principal obligation is extinguished.
5. As to its scope and extent
a. Definiteone where the guaranty is limited to the principal obligation only, or to a 7.) Extension granted by the creditor to the debtor without the guarantor's consent.
specific portion
thereof RIGHT OF GUARANTOR TO BENEFIT OF EXCUSSION OR EXHAUSTION
1. Guarantor is only secondarily liable > The creditor however may secure prior thereto a judgment against the guarantor, who
2. All legal remedies against debtor to be first exhausted shall be entitled to a deferment of the execution of said judgment against him until
after the properties of the principal debtor shall have been first exhausted to satisfy the
RIGHT OF CREDITOR TO SECURE JUDGMENT AGAINST GUARANTOR PRIOR TO latters obligation
EXHAUSTION
> As a rule, an ordinary personal guarantor may demand exclusion of all the
property of debtor before he can be compelled to pay