HANDOUT NO.

14G

Contract of Guaranty – contract where a person called a guarantor, binds

himself to a creditor to fulfill the obligation of the principal debtor in case the latter
should fail to do so.

Contract of Suretyship –contract where a person binds himself solidarily with

the principal debtor to fulfill the obligation.

Distinctions

Point of distinction Guaranty Surety

As to degree of liability
As to privity in the
contract
As to nature of liability
As to what is insured
As to availment of the
benefit of excussion
See: Machetti v. Hospicio de San Jose, 43 Phil. 297; Higgins v. Sellner, 41 Phil. 142)
Subsidiary (secondary) Primary liability
liability
Guarantor assumes Surety assumes liability
liability by virtue of an as a regular party to the
independent agreement undertaking or contract
to pay the obligation if
principal fails to do so
Liability is collateral Liability is original
(pays if debtor CANNOT) (pays if debtor DOES
NOT)
Insurer of solvency of Insurer of debt
debtor
Guarantor can avail of Surety cannot
benefit of excussion and
division in case creditor
proceeds against him

Benefit of Excussion – right by which the guarantor cannot be compelled to pay

the creditor unless the latter has exhausted all the property of the principal
debtor, and has resorted to all of the legal remedies against such debtor.

 Instances when Benefit of Excussion not applicable – Art. 2059 NCC

 Instances when guarantor may proceed against the principal debtor even
before payment – Art. 2071 NCC

Sources: Pointers in Bar Examination, Garcia, 1999 Edition

Civil Code of the Philippines, Book No. V, Edgardo Paras, 1995 Edition

A. Villegas