a.

Law applicable to contract of suretyship

• Autocorp. Group v. Intra Strata Assurance Corp., G.R. NO. 166662. June 27, 2008
b. Common law guaranty and suretyship
• Palmares v. CA, G.R. No. 126490 March 31, 1998, 288 SCRA 422
c. Nature of surety’s undertaking
i Liability is contractual and accessory but direct
ii Liability is limited by the terms of the contract
iii Liability arises only if principal debtor is held liable
• People v. Maniego, G.R. No. L-30910 February 27, 1987
• Manila Railroad Co. v. Alvendia, G.R. No. L-22137. May 19, 1966
d. Guaranty v. Suretyship
e. Terminology used by the parties
• Reiss v. Memije, G.R. No. L-5447. March 1, 1910
f. Guaranty vs. Indorsement
g. Guaranty v. Warranty
h. Guaranty generally gratuitous
i. Cause of contract of guaranty
j. Married woman as guarantor
k. Guaranty undertaken without knowledge of debtor
l. Guaranty by reason of origin
i Judicial
ii Legal
iii Conventional
m. Double or sub-guaranty
n. Guaranty of voidable, unenforceable and natural obligations
i Voidable
ii Unenforceable
iii Natural
o. Guaranty of future debts
i Continuing guaranty or suretyship
ii Secure payment of loan at maturity
iii Secure payment of any debt subsequently incurred
• Diño v. CA, G.R. No. 89775. November 26, 1992
iv Secure existing unliquidated claims
No theoretical or doctrinal difficulty in saying that surety itself is valid and binding
even before the principal obligation to be secured is thereby born
• Atok Finance Corp. v. CA, G.R. No. 80078 May 18, 1993
p. Guaranty of conditional obligations
q. Guarantor’s liability cannot exceed principal obligation
r. Principal’s liability may exceed guarantor’s obligation
s. Amount specified in the bond does not limit the extent of damages that may be
recovered from principal
• Visayan Distributors v. Flores, G.R. No. L-3751. October 25, 1952
t. Guaranty not presumed
u. Reason for rule
v. Guaranty covered by the Statute of Frauds
w. Guaranty strictly construed
• PNB v. CA, G.R. No. 33174. July 4, 1991
x. Strictissimi juris applicable only to accommodation surety
y. Rule of strict construction not applicable to compensated sureties
z. Extent of guarantor’s liability
aa. Acceptance of guaranty by creditor and notice thereof to guarantor
bb. Qualifications of guarantor
cc. Between the Guarantor and the Creditor
dd. Right of guarantor to benefit of excussion or exhaustion
ee. Right of creditor to secure judgment against guarantor prior to exhaustion
ff. Exceptions to benefit of excussion
gg. Exceptions provided in Art. 2059
hh. Duty of creditor to make prior demand for payment from guarantor
ii. Duty of guarantor to set up benefit of excussion
jj. Duty or creditor to resort to all legal remedies
kk. Joinder of guarantor and principal as parties-defendant
ll. Procedure when creditor sues
mm. Effects of compromise
nn. Compromise
oo. Benefit of division among several guarantors
pp. Benefit of excussion among several guarantors
qq. Guaranty, a contract of indemnity
 i Total amount of the debt
ii Legal interest thereon
iii Expenses incurred by the guarantor
iv Damages, if they are due
rr. Exceptions to right to indemnity or reimbursement
ss. Guarantor’s right to subrogation
tt. Effect of payment by guarantor before/after maturity
uu. Effect of repeat payment by debtor
vv. Right of guarantor to proceed against debtor before payment
ww. Remedy to which guarantor entitled
xx. Art. 2066 and 2071 distinguished
yy. Recovery by surety against indemnitor even before payment
zz. Guarantor of a third person at request of another
aaa. Right to contribution of guarantor who pays
bbb. Defense available to co-guarantors
ccc. Causes of extinguishment of guaranty
ddd. Material alteration of principal contract
eee. Release by conveyance of property
fff. Release of guarantor without consent of others
ggg. Release by extension of term granted by creditor to debtor
hhh. Release by guarantor cannot be subrogated
iii. Surety, Articles 1207 to 1222, 2082 to 2084, Civil Code
jjj. Bond
kkk. Bondsman
lll. Qualifications of personal bondsman
mmm. Pledge or mortgage in lieu of bond
nnn. Bondsman and sub-surety not entitled to excussion
ooo. Negligence of creditor will not release surety.
• E. Zobel, Inc. v. CA, G.R. No. 113931, May 6, 1998
ppp. Surety v. Guaranty
• International Finance Corp. v. Imperial Textile Mills, G.R. No. 160324,
November 15, 2005
• Philippine Blooming Mills, Inc. v. CA, G.R. No. 142381, October 15, 2003
• Escano & Silos v. Ortigas, JR., G.R. No. 151953, June 29, 2007
qqq. Rights to indemnification and subrogation as established and granted to
the guarantor by Articles 2066 and 2067 extend as well to sureties as
defined under Art. 2047
• Tupaz IV & Tupaz, v. CA, G.R. No. 145578, November 18, 2005
rrr. Excussion not a pre-requisite to secure judgment against a guarantor