Suretyship

Presumption
- Indefinite or simple (extends to accessories)

2047
By guaranty, a person 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 provisions of Section 4,
Chapter 3, Title I of this Book shall be observed.
In such case, the contract is called suretyship.
Definition
Suretyship is a relation where the principal debtor
has undertaken an obligation, and the surety is
also under a direct and primary obligation to the
obligee. As between the two, the surety, rather
than principal debtor, should perform.
This is where the guarantor binds himself
solidarily with the principal debtor. Guarantor =
Surety.
Rules Applicable
- Art 1207 1222 (Sec. 4, Chap 3, Title I)
- Art 2047 2084 (Provision on Guaranty)
Kinds of Solidarity
- Passive solidarity (debtors are solidarily liable)
- Active solidarity (creditors are solidarily liable)
- Mixed solidarity
Guaranty VS Suretyship
Guaranty
Liability depends upon
independent agreement
to pay when primary
debtor fails to do so
Secondarily liable
(Principal cannot pay)
Collateral undertaking
Insurer of solvency
Does not contract
that principal will
pay, but that he can
do so.

Suretyship
Liability as a regular
party

Primary liable (Principal

does not pay)
Charged as original
promisor
Insurer of debt
Responsibility more
onerous: pay if principal
does not pay

Characteristics
Not presumed
- Unenforceable unless in writing (Statute of
Frauds)

Qualifications of Guarantor
Guaranty of Future Debts
Continuing Guaranty or Suretyship
- Future series of transactions for indefinite
time; prospective
- Binds himself to:
o Secure payment at maturity surety
binds himself to guaranty punctual
payment
o Secure payment of debt subsequently
incurred (continuing)
o Secure existing unliquidated debts
Guarantors Liability Cannot Exceed Principal
Obligation
Gen. Rule: Guarantor cannot bind himself for
more than principal obligation. If he does, his
liability shall be reduced. He may bind himself for
less than obligation.
Exceptions:
-Damages (interest, judicial costs, attorneys fees)
o Even without stipulation and even in excess
of principal obligation, creditor may recover
from the surety.
o Reason: made to pay by his initial failure to
pay when demanded which compelled
creditor to take judicial actions.
- Penalty provided for violation of condition
Strictly Construed
Against creditor, in favor of surety
*Surety attaches as soon as the principal debtor
defaults, and notice is given to surety.
Remedy
Foreclose counterbond (if any) set up by the
principal debtor
No right of excussion
2059 par 2: Excussion shall not take place if he
has bound himself solidarily with the debtor.
Surety with primary responsibility as a co-debtor
Legal & Judicial Bonds
Bondsman is a surety by provision of law or judicial
order.