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LAW ON NECESSARY DEPOSIT &

LAW ON GUARANTY
NECESSARY DEPOSIT Under Art. 1996.

A deposit is necessary:
1. When it is made in compliance with a legal
obligation
2. When it takes place on the occasion of any
calamity, such as fire, storm, flood, pillage,
shipwreck, or other similar events
Article 1997. The deposit referred to in No. 1 of
the preceding articles shall be governed by the
provisions of the law establishing it, and in case
of deficiency, by the rules on voluntary deposit.
The deposit mentioned in No. 2 of the preceding
article shall be regulated by the provisions
concerning voluntary deposit and by Article
2186.

Necessary deposit in compliance with a legal
obligation:
a. Judicial deposit of a thing the possession of
which is being disputed in a litigation by two or
more persons
b. Deposit with a bank or public institution of
public bonds or instruments of credit payable
to order or bearer given in usufruct when the
usufructuary does not give proper security for
their conservation



c. Deposit of a thing pledged when the creditor
uses the same without the authority of the
owner or misuses it in any other way
d. Those required in suits are provided in Rules
of Court
e. Those constituted to guarantee contracts with
the government; the deposit arises from an
obligation of public or administrative character

Necessary deposit made on the occasion of any
calamity:
1. Deposit created by accident or fortuitous event
2. Possession of movable property passes from
one person to another by accident or fortuitously
through force of circumstances and which the law
imposes on the recipient the obligations of a
bailee
3. More immediate object is to save the property
rather than its safekeeping
4. There must be a causal relation between the
calamity and the constitution of the deposit
deposito miserable
Article 1998.
The deposit of effects made by travelers in
hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall
be responsible for them as depositaries,
provided that notice was given to them, or
their employees, of the effects brought by the
guests and that, on the part of the latter, they
take the precautions which said hotel-keepers
or their substitutes advised relative to the care
and vigilance of their effects.

Article 1999. The hotel-keeper is liable for the
vehicles, animals and articles which have been
introduced or placed in the annexes of the
hotel.
Before keepers of hotels or inns may be held
responsible, the following elements must
concur:
a. They have been previously informed about
the effects brought by the guests
b. Latter have taken the precautions prescribed
regarding their safekeeping.





The responsibility imposed extends to all those
who offer lodging for a compensation
Travelers and guestsrefers to
transients and not to boarders; non-
transients are governed by the rules on lease
Inna public house for the lodging of
travelers for compensation and until capacity
is reached; a place of public entertainment
that does not provide lodging
Motelan establishment which provides
lodging and parking and in which the rooms
are usually accessible from an outdoor
parking area

Article 2000. The responsibility referred to in the
two preceding articles shall include the loss of,
or injury to the personal property of the guests
caused by the servants or employees of the
keepers of hotels or inns as well as by strangers;
but not that which may proceed from any force
majeure.

The fact that travelers are constrained to rely on
the vigilance of the keeper of the hotel or inn
shall be considered in determining the degree of
care required of him. 2001.


The act of a thief or robber, who has entered the
hotel is not deemed force majeure, unless it is
done with the use of arms or through an
irresistible force. Article 2002.

The hotel-keeper is not liable for compensation
if the loss is due to the acts of the guests, his
family, servants or visitors, or it the loss arises
from the character of the things brought into
the hotel
Hotel-keeper is liable regardless of the amount
of care exercised:
a. Loss or injury is caused by his servants or
employees as well as by strangers provided
that notice has been given and proper
precautions taken
b. Loss is caused by the act of thief or robber
done without the use of arms and irresistible
force.

Hotel-keeper is not liable in the following
cases:
a. Loss or injury is cause by force majeure, theft
or robbery by a stranger with the use of arms
or irresistible force, unless he is guilty of fault
or negligence failing to provide against the loss
or injury from his cause
b. Loss is due to the acts of the guests, his
family, servants or visitors
c. Loss arises from the character of the things
brought into the hotel
Article 2003. The hotel-keeper cannot free
himself from responsibility by posting notices
to the effect that he is not liable for the articles
brought by the guest. Any stipulation between
the hotel-keeper and the guest whereby the
responsibility of the former as set forth in
Articles 1998 to 2001 is suppressed or
diminished shall be void.
It is not necessary in order to hold an inn-
keeper liable that the effects of the guests be
actually delivered to him or his employees; it is
enough that they are within the inn.

Article 2003. The hotel-keeper cannot free
himself from responsibility by posting notices
to the effect that he is not liable for the articles
brought by the guest. Any stipulation between
the hotel-keeper and the guest whereby the
responsibility of the former as set forth in
Articles 1998 to 2001 is suppressed or
diminished shall be void.
It is not necessary in order to hold an inn-
keeper liable that the effects of the guests be
actually delivered to him or his employees; it is
enough that they are within the inn.

SEQUESTRATION OR JUDICIAL
DEPOSIT
Art. 2005. A judicial deposit or sequestration
takes place when an attachment or seizure of
property in litigation is ordered.
Art. 2006. Movable as well as immovable property
may be the object of sequestration.
Art. 2007. The depositary of property or objects
sequestrated cannot be relieved of his
responsibility until the controversy which gave rise
thereto has come to an end, unless the courts so
orders. 2008. The depositary of property
sequestrated is bound to comply, with respect to
the same, with all the obligations of a food father
of a family.




SEQUESTRATION OR JUDICIAL
DEPOSIT
Judicial deposit or sequestrationtakes place
when an attachment or seizure of property in
litigation is ordered by a court
Deposit is judicial because it is auxiliary to a case
pending in court
Purpose: to maintain status quo during the
pendency of the litigation or to insure the right of
the parties to the property in case of a favorable
judgment
Depositary of sequestrated property is the person
appointed by the court

Judicial deposit Extrajudicial deposit
Cause or origin Will of the court Will of the parties, hence,
there is a contract
Purpose As security and to
secure the right of a
party to recover in case
of a favorable judgment
Custody and safekeeping of
the thing
Subject matter Either movable or
immovable property but
generally immovable
property
Only movable property
Remuneration Always remunerated or
onerous
May be compensated or not,
but generally gratuitous
In whose behalf it is held In behalf of a person
who, by the judgment,
has a right
In behalf of the depositor or
third person designated
JUDICIAL DEPOSIT
Article 2009. As to matters not provided for in
this Code, judicial sequestration shall be
governed by the Rules of Court.

The law on judicial deposit is remedial or
procedural in nature


SALIENT NOTES ON LAW ON
GUARANTY
NATURE AND EXTENT OF CONTRACT
The peculiarity of the contract of guaranty
is that it is founded on another contract.
Without a principal obligation a guaranty
cannot exist.
Thus, Art. 2052 provides: A guaranty
cannot exist without a valid obligation,
although it may be constituted to
guarantee the performance of a voidable
or unenforceable contract, or it may also
guarantee a natural obligation, or a
conditional obligation
Definition

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 contract is called a
suretyship. (Art. 2047)

Parties

At least three persons are involved in the
relationship of guaranty.
They are
the principal debtor,
the principal creditor and
the guarantor, who undertakes to fulfill the
obligation in case the principal debtor should
fail to do so.

DISTINCTIONS
Sometimes the words "guaranty" and "surety"
are used interchangeably. Therefore, it is
important to know the distinctions between
them.
1. The guarantor's obligation is collateral to that
of the principal debtor; while a surety is directly
and primarily liable for the debt or obligation as
if he were the principal debtor himself. In other
words, the guarantor is subsidiarily liable, while
the surety is solidarity liable.

DISTINCTIONS
2. The guarantor promises to pay only when
the principal debtor cannot pay; while a
surety's obligation arises the very instant the
contract is agreed upon; in other words his
obligation is coextensive with that of the
principal debtor. He is, as a matter of fact, a co-
principal debtor. Thus surety pays when
principal debtor does not pay.


DISTINCTIONS
3. The contract of guaranty as to form is
governed by the Statute of Frauds, hence, to be
enforceable must be in writing because a
guaranty is a special promise to answer for the
debt, default of miscarriage of another; while a
suretyship does not come under the application
of the Statute of Frauds, because a suretyship is
a promise that creates a primary obligation.


DISTINCTIONS
4. The guarantor enjoys the benefit of exhaustion
or "excussion," which means that the guarantor's
liability arises only after the creditor has
exhausted the properties of the debtor and has
resorted to all the legal remedies against the
debtor (Art.2058); while the surety binds himself if
the debtor does not pay, and the reason why the
debtor does not pay is immaterial, because the
"surety is liable as fully and under the same
conditions as if the debt were his from the very
beginning."
DISTINCTIONS
5. Liability of the guaranty is a collateral
undertaking while surety is original promissor.

6. Guarantor is insurer of the solvency of the
debtor while surety is the insurer of the debt
itself;
Characteristics of Guaranty

Accessory - because it needs a principal
obligation to exist.
Consensual - because it is perfected by mere
consent.
Nominate - because it has a definite name
under the Civil Code.
Generally gratuitous - because the guarantor
does not receive any consideration for his
guaranty, unless there is a stipulation to the
contrary. (Art.2048)

Kinds of Guaranty

As to Manner of Creation:
Conventional - created by agreement of the
parties.
Legal - created by provision of law.
Judicial - created by decree of court.

Kinds of Guaranty

As to consideration:
Gratuitous - guarantor receives no consideration
for the guaranty.
Onerous - the guarantor receives a valuable
consideration for the guaranty.
As to person guaranteed
Single one constituted solely to guarantee or
secure performance of the principal obligation
Double or sub-guaranty one constituted to
secure the fulfillment of a prior guaranty
Kinds of Guaranty

As to its scope and extent:
Definite one where the guaranty is limited to
the principal obligation only or to specific
portion thereof
Indefinite or simple one where the guaranty
includes not only the principal obligation but
also all its accessories including judical cost
A guaranty may also be entered into without
the knowledge or consent, or against the will of
the principal debtor.
But in the event of payment by the guarantor,
he shall be entitled to reimbursement by the
debtor only insofar as his payment is beneficial
to the debtor.
But where the guaranty is consented to by the
debtor, the guarantor is entitled to
reimbursement for whatever he paid and to be
subrogated into the rights of the creditor.

A guaranty may also be constituted in favor of
another guarantor, with the latter's consent, or
without his knowledge, or even over his
objection, in which case it is called a sub-
guaranty and the guarantor, the sub-guarantor.

There may be also two or more guarantors of
the same debtor, in which case they are called
co-guarantors.

Extent of Guaranty
The guarantor may bind himself for less, but not
for more than the principal obligation, both as
regards the amount and the onerous nature of
the conditions.

Should he have bound himself for more, his
obligation shall be reduced to the limits of that
of the debtor. (Art.2054)

Examples

D is indebted to C for P10,000. G bound himself to C to
guarantee A's obligation to the extent of P5,000.
But should G bound himself as guarantor of D to the
extent of P12,000, the obligation of G shall be
reduced only to the extent of P10,000, the amount of
the principal obligation. The reason is obvious. As to
the excess of P2,000 guaranty of G there exists no
principal debt, hence the guaranty does not exist in so
far as the excess of P2,000 is concerned.

Examples

A is indebted to B for P50,000. The obligation is not
secured by a mortgage or pledge. C , however,
guaranteed A's obligation and to show his
willingness to guarantee the debt, C constituted a
real mortgage as security for his guaranty. If A could
not pay, B cannot foreclose the mortgage
constituted by C, because that will make the
guaranty more onerous than the principal
obligation.
The guaranty may also be given as security
for future debts the amount of which is not
yet known. But the creditor cannot claim
from the guarantor until the debt is
liquidated.(Art.2053)
Example
A is obliged to give to B 10% of his yearly
sales in his business. C acted as guarantor. Until
the yearly sales have been ascertained, no
claim can be had as against C.
A guaranty cannot be presumed, it must be
express and cannot extend to more than
what is stipulated therein, although it may
comprise not only the principal obligation,
but also its accessories, including the judicial
costs, in which case the guaranty is called
simple or indefinite.
However, as regards the judicial costs, the
guarantor shall only be liable for such costs
incurred after he has been judicially required
to pay. (Art.2055)

Qualifications of Guarantor
A guarantor gives a creditor additional
security in the thought that if the debtor can
not pay, he can recover from the
guarantor.
To assure him of such it is necessary that the
guarantor must possess the following
qualifications:
He must possess integrity.
He must have capacity to bind himself.
He must have sufficient property to answer for
the obligation which he guarantees. (Art.2056)

Married Woman as Guarantor
A married woman may guarantee an obligation
without the husband's consent. This is in
accordance with Art. 73 of the Family Code which
provides that "either spouse may exercise any
legitimate profession, occupation, business
activity without the consent of the other.
when it involves paraphernal or separate
property
But generally the married woman cannot bind the
conjugal property, the administration of which is
jointly exercised by both spouses.

When Guarantor Loses Capacity

In the event that the guarantor be convicted in
first instance of a crime involving dishonesty or
should become insolvent, the creditor may
demand another who has all the preceding
qualifications, except in the case where the
guarantor who was convicted or became
insolvent was specified by the creditor.
(Art.2057)

EFFECT OF GUARANTY
A. Between Guarantor and Creditor

As explained earlier, a guarantor has only a
subsidiary liability. In order, however, that the
credit or can proceed against the guarantor, he
must first exhaust all the property of the
debtor, and has resorted to all legal remedies
against the debtor.
This is the so-called benefit of exhaustion or
"excussion" of the guarantor. (Art.2058)

In order for the guarantor to avail of this
benefit, he must set it up against the creditor
upon the latter's demand for payment from
him, and point out to the creditor available
property of the debtor within the Philippines
sufficient to cover the amount of the debt.
(Art.2060)



The demand referred to in the preceding paragraph
is that made by the creditor after a judgment has
already been rendered and could not be satisfied.

Thus, Art. 2062 provides that the guarantor's
benefit of excussion shall always be unimpaired,
even if judgment should be rendered against the
principal debtor and the guarantor in case of
appearance by the latter.

Any action brought by the creditor must be against
the debtor alone, although the principal debtor
may ask the court to notify the guarantor, who may
appear if he so desires, to set up such defenses he
has against the creditor.



The creditor who is negligent in exhausting the
property pointed out by the guarantor shall
suffer the loss, to the extent of said property,
the insolvency of the debtor resulting from such
negligence. (Art.2061)

When Guarantor Loses the Benefit of
Exhaustion (Excussion)

If the guarantor has expressly renounced it;
If he has bound himself solidarily with the
debtor;
In case of insolvency of the debtor;
When he has absconded, or cannot be sued
within the Philippines unless he has left a
manager or representative;
It may be presumed that an execution on the
property of the principal debtor would not
result in the satisfaction of the obligation. (Art.
2059)

The benefit of exhaustion is a right that pertains
to the guarantor, therefore, he may avail of it or
he may renounce it.

Where the guarantor binds himself solidarity
with the debtor, his liability is no longer
subsidiary but primary, hence he does notenjoy
said benefit.

It has been held that for the guarantor to lose
his benefit of exhaustion, the insolvency of the
debtor must be judicially declared. (Cachovs.
Valles, 45 Phil. 107)

Even if the debtor is out of the Philippines, but
has left a manager or representative, he can be
sued because service of legal process can be
made through his manager or representative.

Where the guarantor upon the creditor's
demand fails to set up the benefit of exhaustion
against the creditor and to point out to the
latter available properties of the debtor within
the Philippines to cover the amount of the debt,
it was held that there arises a presumption that
an execution of the property of the debtor may
not result in the satisfaction of the obligation.
(Garcia vs. Lianco et al, (CA) 50 O.G.1145)

Sub-guarantor's Benefit of Excussion (Exhaustion)
The guarantor of a guarantor shall enjoy the
benefit of excussion, both with respect to the
guarantor and the principal debtor. (Art. 2064)
Example
A is indebted to B for P20,000. C is the guarantor.
D also guarantees C. The creditor has no claim yet
against D, the sub-guarantor, unless he has
exhausted the properties of A, the debtor, and the
properties of C, the guarantor. Only after
exhaustion of both properties and the obligation is
not satisfied, that B, the creditor, can demand
from D.


Several Guarantors of One Debtor
The co-guarantors enjoy two benefits, namely:
The benefit of exhaustion as regards the
properties of the debtor; and
The benefit of division among themselves.
Before the co-guarantors can be held liable for
the obligation, the creditor must first exhaust
all the property of the debtor and must take all
remedies against him.
If after exhaustion of the property of the
debtor and all remedies against him are taken,
but the obligation is not satisfied, then the
creditor can hold the co-guarantors liable only
for their proportionate share of the obligation.
This is the benefit of division.

However, the benefit of division against the co-
guarantors ceases in the same cases and for the
same reasons as the benefit of excussion against the
principal debtor.
Example
A is indebted to B in the amount of P30,000. X and Y
are the guarantors. If all the properties of A are
exhausted and all remedies against him are taken
but the obligation remains unsatisfied, B can claim
from X only P15,000 and Y also his proportionate
share of P15,000. But, if in the foregoing example, it
is stipulated that X and Y are solidarily liable with A,
then X and Y lose their benefit of division. Hence, B
can claim from either of them the total amount of
P30,000.

Between Debtor and Guarantor
The guarantor who pays has the following rights
against the debtor:
To be indemnified by the debtor of:
-The total amount of the debt;
-The legal interest thereon from the time the
payment was made known to the debtor,
even though it did not earn interest for the
creditor;
- The expenses incurred by the guarantor after
having notified the debtor that payment had
been demanded of him;
- Damages, if they are due. (Art.2066)


He is also subrogated by virtue thereof to all the
rights which the creditor had against the
debtor.(Art.2067,par.1)

If he becomes a guarantor for the debt of an
absent debtor at the request of another, the
guarantor who satisfies the debt may sue either
the person so requesting or the debtor for
reimbursement. (Art. 2072)

Example

Pedro wants to borrow P5,000 from Jose, who
was willing to let him borrow, provided there is
a guarantor. Pedro then approached Juan,
asking him to look for a guarantor for him. Juan
asked his friend, Carlos to be the guarantor of
Pedro. If Carlos eventually pays the debt, Carlos
can seek reimbursement from either Pedro the
debtor or Juan, the person who requested him
to be a guarantor.

Effect of Compromise

A compromise between the creditor and
the principal debtor benefits the guarantor but
does not prejudice him. That which is entered
into between the guarantor and the 'creditor
benefits but does not prejudice the principal
debtor. (Art. 2064)

If the guarantor has compromised with the
creditor, he cannot demand of the debtor more
than what he has really paid. (Art. 2067, par.2)

Example

A is indebted to B in the amount of P20,000, with
C as guarantor. Subsequently, a compromise was
entered into between A and B, reducing the debt
to P15,000. This compromise benefits C in the
sense that if A just the same cannot pay, the
liability of C is only P15,000.


On the other hand, if the compromise was
between B and C reducing the debt of P20,000
to P18,000, and just the same A cannot pay,
therefore it is C who pays B, P18,000. A shall be
liable to indemnify C for only P18,000, because
the compromise between the guarantor and
the creditor must also benefit the principal
debtor.

Payment by Guarantor without Notice to Debtor

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.
(Art.2068)

This is contrary to the nature of the obligation of
aguarantor. Being subsidiarily liable, he should
wait until the debtor has had the opportunity to
pay, for paying ahead of the latter without his
consent, has deprived the debtor of his
opportunity to set up defenses against his creditor.

Example

A is indebted to B in the amount of P10,000
with C as guarantor. l-n another obligation, B is
also indebted to A in the amount of P8,000.
Assume that both obligations are due, but C at
once paid B, P10,000 with out the knowledge
or consent of A. A can raise the defense of
partial compensation against C which defense
he could have raised against B, the creditor.




Likewise, if the guarantor has paid without
notifying the debtor, and the latter not being
aware of the payment, repeats the payment, the
guarantor cannot seek reimbursement from the
debtor. He can only seek reimbursement from the
creditor.

The exception is in case of a gratuitous guaranty,
and the guarantor was prevented by a fortuitous
event from advising the debtor of the payment,
and the creditor becomes insolvent, the guarantor
shall be reimbursed by the debtor.(Art.2070)


Example

A is indebted to B in the amount of P10,000 with C
as guarantor. When the debt became due, C paid B
without notifying A. So A, unaware of such
payment paid B . C cannot seek reimbursement
from A. C can recover from B on the basis of quasi-
contract.

In the foregoing example, if the guaranty is
gratuitous and C's failure to notify A of the
payment was due to a fortuitous event, and B
became insolvent, C can recover from A.

Payment by Guarantor before Maturity
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. (Art.2069)




The guarantor, by paying the creditor before
the maturity of the debt, deliberately deprived
the debtor of his benefit of the period, and for
that reason, the guarantor can seek
reimbursement from the debtor only upon
maturity of the obligation.

Of course, if the debtor ratifies the early
payment of the guarantor, such ratification is
equivalent to a waiver of his benefit of the
period.

When Guarantor Who Has Not Yet Paid can
Proceed against the Debtor
The guarantor, even before having paid, may
proceed against the principal debtor;
When he is sued for the payment;
In case of the insolvency of the principal
debtor;
When the debtor has bound himself to
relieve him from the guaranty within a
specified period, and this period has expired;
When the debt has become demandable, by
reason of the expiration of the period for
payment;

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 cannotbe
extinguished except within a period longer than
ten years;
If there are reasonable grounds to fear that the
principal debtor intends to abscond;
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. (Art. 2071)
The remedy afforded to the guarantor by the
foregoing rule is not to seek reimbursement
from the debtor, because he has not yet paid,
but to obtain a release from the guaranty or to
obtain a security for his protection should he
be made to pay.
It must also be remembered that there are
certain cases where the guarantor does not
enjoy the benefit of excussion, hence, it is but
proper that he also be protected even before
he has actually paid.

As earlier discussed, the co-guarantors among
themselves enjoy the benefit of division,
meaning that each one is responsible only for
his proportionate share of the debt. Hence if
one of them has paid the full amount of the
debt, he can demand of each of the others the
share which is proportionately owing from him.



If any one of the guarantors should be
insolvent, his share shall be borne by the
others, including the payer, in the same
proportion.
But the above rule shall be applicable only :
If the payment is made by virtue of a judicial
demand; or
The payment is made because the principal
debtor is insolvent, (Art.2073)

Even in these cases, 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. (Art.
2074)




Example
A is indebted to B in the amount of P30.000, with
X, Y and Z as guarantors. If A becomes insolvent,
and X pays B the whole P30,000, X can seek
reimbursement from Y and Z their proportionate
share which is P10,000 each. Should Y turn out to
be insolvent, A shall bear the P5,000 and Z shall
also bear the other P5,000.

But Y and Z , when sued by X for reimbursement
can set up against X defenses which the principal
debtor could set up against the creditor and which
defenses are not personal to the principal debtor.


These defenses may be: compensation,
remission, prescription or other defenses
derived from the nature of the obligation.

There are defenses which the debtor may avail
of against his guarantor, and defenses available
to co-guarantors. Further, the law allows a
guarantor to avail of the defenses which
pertain to the principal debtor and are inherent
in the debt but not the defenses which are
purely personal to the debtor.
Liability of Sub-Guarantor in case of Insolvency of
Guarantor

The sub-guarantor, in case of the insolvency of the
guarantor for whom he bound himself, is
responsible to the co-guarantor in the same terms
as the guarantor. (Art.2075)

Example
Suppose in the foregoing example D is the sub-
guarantor of Y. In case of insolvency of Y, D is liable
to the co-guarantors X and Z in the same manner as
Y. So X can seek reimbursement from D the
proportionate share of Y, which is P10,000.

EXTINGUISHMENT OF GUARANTY

The guarantor may be discharged from his
obligation by the usual methods of discharging
the principal obligation. These are payment loss
of the thing due, remission, compensation,
confusion and novation. In other words if any
one of these modes exist to extinguish principal
obligation, the guaranty is also extinguished.
This is so, because of the accessory nature of the
contract of guaranty.




There are, however, additional acts that will
extinguish the contract of guaranty. These are;

Acceptance by the creditor of immovable or other
property in payment of the debt; (Art.2077)
Extension of time granted to the debtor without
the consent of the guarantor; (Art. 2079)
When by some act of creditor, the guarantor
cannot be subrogated to the rights, mortgages
and preferences of the creditor; (Art. 2080)
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 was granted. (Art.2078)

When the obligation of the debtor is a money debt,
the payment, must also be in money. But where the
debtor transfers to the creditor either immovable or
other property in payment of his money debt, this is
known as "dation in payment." Such special form of
payment relieves the guarantor from any
responsibility. This holds true, even if the creditor is
subsequently evicted of the property. In case of
eviction, the creditor's action against the debtor is
no longer for the payment of the principal
obligation but for his warranty against eviction. This
is different and distinct from what the guarantor
guaranteed.

Granting an extension to the debtor without the
consent of the guarantor is prejudicial to the
latter, hence in justice and in equity, the
guarantor is discharged from his liability.

However, the mere failure of the creditor to
demand payment from the debtor when the
principal obligation becomes due does not
constitute an extension of the term of the
obligation. (Hongkong & Shanghai Bank v. Aldecoa
& Co., 30 Phil. 255)

It is equally settled In law, that the guarantor
who was made to pay because the debtor
could not pay, has a right to be subrogated into
the rights of the creditor. So when the creditor
by his acts has deprived the guarantor of such
right, it stands to reason that the guarantor
shall be released from his responsibility. This
holds true even if the guarantors may be
solidary. Such act on the part of the creditor is
again prejudicial to the guarantors.



A release of the share of one of the
guarantors by the creditor without the
consent of the other guarantors, is prejudicial
to the latter in The event the guarantor
becomes insolvent. Hence, the release must
benefit all to the extent of the share of the
guarantor released.

Legal and Judicial Bonds
A bond offered by virtue of a provision of law or of a
judicial order (like a bail bond) is a suretyship for the
fulfillment of a principal obligation.

Therefore a bondsman is a surety and not a
guarantor. If the person required to give a bond,
should not be able to do so, a pledge or mortgage
considered sufficient to cover his obligation shall be
admitted in lieu thereof. (Art.2083)

A judicial bondsman has no benefit of excussion, for
he cannot demand the exhaustion of the property of
the principal debtor. The sub-surety in the same case,
cannot demand the exhaustion of the property of the
debtor or of the surety. (Art.2084)
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