4.

Debtor absconds or cannot be sued within the

Philippines
5. Resort to all legal remedies is a useless formality
6. Others
i. Non-compliance with Art. 2060
ii. If he is a judicial bondsman or sub-surety
iii. Failure to interpose it as a defense before
judgment is rendered against him
iv. Where a pledge or mortgage has been given
by him as a special security
III. Effects of Compromise
A. General rule
A contract binds only the parties thereto and
not third persons. Hence, a compromise cannot
prejudice the guarantor or the debtor, as the
case may be, when he is not a party to such
compromise.
B. Exception to the rule
However, even if the guarantor or debtor is not
a party to such compromise, the same can
benefit him as it is in the nature of a stipulation
in favor of a third person which the guarantor
or debtor may accept unless it has been
revoked before his acceptance.
IV. Benefit of Division
A. Definition
Right of a co-guarantor, as against the creditor,
to pay only the divided share that it is bound
to pay
B. Application
This article entitles the several guarantors of
only one debtor and for the same debt.
C. Exceptions
1. Express stipulation of solidarity
2. Article 2059

SECTION 2 Effects of Guaranty between the

Debtor and the Guarantor (Art. 2066-2072)
I. Right to Indemnification

It is the debtor that is directly and

principally liable so it is just that the
guarantor who pays must be indemnified.
Indemnity comprises:
a. Total amount of debt but if the
guarantor paid a smaller amount
due to compromise, he cannot
demand more than he actually
paid
b. Legal interest from notice of
payment of the debt.
c. Expenses incurred by the
guarantor

expenses
as
consequence of the guaranty;
expenses after payment has been
demanded
d. Damages, if they are due
Exceptions to Right of Indemnity
a. A. 2050
b. A. 1238
c. Subject to waiver
A. Effect of payment before/after maturity (2069)
(1) Obligation with a period obligation
demandable only when the day fixed
comes. When guarantor pays before
maturity, he is not entitled to
reimbursement since there is no necessity
for accelerating payment.
Rationale: Guaranty is subsidiary.
However, the debtor is liable if payment
was made with his consent or the same was
ratified by him.
In any case, guarantor can recover upon
expiration of the period.
(2) Where demand made during term of
guarantee, the fact that payment was
actually made after said term is not
material. What is controlling is that default
and demand on guarantor had taken place
while the guarantee is still in force.
B. Effect of repeat payment