LAW ON CREDIT TRANSACTIONS- GUARANTY

__________________________________1. The guarantor, binds himself to the creditor to fulfill the

obligation of the principal debtor in case the latter should fail to do so.

__________________________________2. This refers to guaranty property so- called or guaranty in the

strict sense.

__________________________________3. One constituted by agreement of the parties

__________________________________4. One imposed by virtue of provision of law

__________________________________5. One required by a court to guarantee the eventual right of

one of the parties in a case.

__________________________________6. One where the guarantor does not receive any price or
remuneration for acting as such

__________________________________7. One where the guarantor receives valuable consideration

for his guaranty

__________________________________8. One constituted solely to guarantee or secure performance

of the principal obligation

__________________________________9. One constituted to secure the fulfillment of a prior guaranty

__________________________________10. One where the guaranty is limited to the principal

obligation only, or to a specific portion thereof

__________________________________11. One where the guaranty includes not only the principal
obligation but also its accessories including judicial costs

__________________________________12. It may be defined as a relation which exist where one

person (principal) has undertaken an obligation and another person is also under a direct and primary
obligation or other duty to obligee.

__________________________________13. It is one constituted by decree of court not by virtue of a

provision of law or by virtue of an agreement of the parties

__________________________________14. One constituted to guarantee the obligation of a guarantor

__________________________________15. It is a contract whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already commenced.

__________________________________16.

TRUE OR FALSE
 1. If a person, bind himself solidarily with the principal debtor, in this such case the contract is
called a suretyship.
2. If immovable the guaranty is in the form of pledge and if movable, in the form of real mortgage
or antichresis.
3. A guaranty is gratuitous, unless there is a stipulation to the contrary
4. A married woman may guarantee an obligation without the husband’s consent, but shall not
thereby bind the community or conjugal partnership.
5. A married woman who acts as a guarantor ordinarily binds only her separate property.
6. A guaranty can exist without a valid obligation.
7. A guarantor may bind himself for less, but not more than the principal debtor, both as regards
the amount and the onerous nature of the conditions.
8. The guarantor cannot be compelled to pay the creditor when the latter has exhausted all the
property of the debtor, and has resorted to all the legal remedies against the debtor.
9.

MULTIPLE CHOICE

1. The following are the characteristics of guaranty; except

a. It is accessory because it is dependent for its existence upon the principal obligation
guaranteed by it
b. It is subsidiary because it takes effect only when the principal debtor fails in his obligation
c. It is unilateral because it gives rise only to a duty on the part of the guarantor in relation to
creditor and not vice versa
d. It may not be entered into even without the intervention of the principal debtor
2. The guarantee is the credit given by the person who guarantees the fulfillment of the principal
obligation
a. Personal b. Real c. Conventional d. Gratuitous e. Onerous
3. The guarantee is property, movable or immovable.
a. Personal b. Real c. Conventional d. Gratuitous e. Onerous
4. D is indebted to C in the amount of P1,000.00 with G as guarantor. On the maturity, D fails to
pay.
a. C can compel G to pay if the former has spent some of the property of the debtor
b. C cannot compel G to pay unless the former has exhausted all the property of the debtor
and has resorted to all the legal remedies against D because the obligation of G is only
secondary
c. C can proceed against G immediately upon nonpayment by D without the exhaustion of the
property of D
d. C cannot proceed against G immediately upon payment by D without he exhaustion of the
property of D
5. The guaranty may be
a. Conventional d. Gratuitous
b. Legal e. Onerous
c. Judicial
6. If the principal obligation is subject to suspensive condition
a. The guarantor is liable only before the fulfillment of the condition
 b. The guarantor is liable after the fulfillment of the condition
c. The happening of the condition extinguishes the guaranty only.
d. The happening of the condition extinguishes both the principal obligation and the guaranty.
7. If the principal obligation is subject to resolutory condition
a. The guarantor is liable only before the fulfillment of the condition
b. The guarantor is liable after the fulfillment of the condition
c. The happening of the condition extinguishes the guaranty only.
d. The happening of the condition extinguishes both the principal obligation and the guaranty.
8. D borrowed from C P15,000.00 with G limiting his guarantee to P10,000.00. D was able to pay
only P10,000.00.
a. C cannot claim the balance of P5,000 from G since its D’s obligation to pay the portion.
b. C can claim from G the balance of P5,000 without the guaranty of D.
c. C may claim the balance from G by virtue of the latter’s guaranty.
d. D must pay all portion to C, he cannot pass his obligation to G.
9. The following are the qualifications of guarantor should possess; except
a. He possesses integrity
b. He has capacity to bind himself
c. He must be a relative
d. He has sufficient property
10. The benefit of excussion shall not take place;
I. If the guarantor has expressly renounce it
II. If he has bound himself solidarily with the debtor
III. In case of insolvency of the debtor
IV. When he has absconded or cannot be sued within the Philippines unless he has left a
manager or representative
V. If he fails to interpose it as defense before judgment is rendered against him
VI. If it may be presumed to that an execution on the property of the principal debtor
would not result in the satisfaction of the obligation
a. I, II, III, and IV c. I, II, III, and VI
b. I, II, III, IV, and VI d. I, III, IV, V, and VI
11. The benefit of excussion is a personal right recognized in a guarantor.
a. Right waived
b. Liability assumed that of surety
c. Insolvency of debtor actually exists
d. Debtor absconds or cannot be sued locally
12. If the guarantor binds himself solidarily with the principal debtor, he becomes a surety with
primary liability as a solidary co-debtor. In effect, he renounces the benefit of exhaustion.
a. Resort to all legal remedies useless
b. Liability assumed that of surety
c. Right waived
d. Debtor absconds or cannot be sued locally
13.