Article 2047 of the Civil Code: Guaranty and suretyship
Status: In force
What does Article 2047 say?
By guaranty a person, called the guarantor, 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 a suretyship.
What does it mean in plain language?
Article 2047 of the Civil Code defines two ways a person can answer for someone else's debt. A guarantor promises to pay if the debtor fails, and as a rule can be asked to pay only after the creditor has gone after the debtor first. A surety binds himself solidarily with the debtor, so the creditor may collect from the surety directly. A "co-maker" who signs a loan "jointly and severally" may be treated as a surety, as in the case explained below.
How does it work in real life?
Nestor, the co-maker
Nestor signs his friend's loan as "co-maker" and the note says he is bound "jointly and severally". When the friend stops paying, the lender demands the full amount from Nestor. Following Palmares and Article 1216, the lender may collect from Nestor without first suing the friend.
Belen, the guarantor
Belen signs a separate document promising to pay her brother's debt "if he cannot pay", with no solidary clause and no waiver. She is a guarantor. Under Articles 2058 and 2060, she may ask the creditor to go after her brother's property first, by pointing out property he has in the Philippines.
A waiver hidden in the form
Carlo signs as "guarantor", but the form also says he waives excussion and will pay on first demand. Following TIDCORP, the label does not decide: he may be treated as solidarily liable.
What does this mean in practice?
- An agent needs a special power of attorney to bind the principal as a guarantor or surety (Article 1878). See when is a special power of attorney needed?
- Not knowing what a signed document means does not usually excuse the signer: see Article 3.
- Interest must be agreed in writing (Article 1956). For time limits on collection, see how many years to collect a debt.
- See also the comparison guarantor vs surety and the question on the liability of a co-maker.
- This page does not cover what a surety or co-maker may recover from the borrower after paying. For free or low-cost legal help, see where to find legal help.
What does Article 2047 say?
By guaranty a person, called the guarantor, 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 a suretyship.
Some terms:
- Principal debtor: the person who borrowed or owes the money.
- Solidarily (or "jointly and severally"): each debtor can be made to pay the whole debt.
- Section 4, Chapter 3, Title I: the Civil Code rules on solidary obligations (Articles 1207 to 1222).
How is a guarantor protected?
A guarantor has the benefit of excussion:
The guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property of the debtor, and has resorted to all the legal remedies against the debtor.
The benefit is lost in the cases listed in Article 2059:
This excussion shall not take place: (1) If the guarantor has expressly renounced it; (2) If he has bound himself solidarily with the debtor; (3) In case of insolvency of the debtor; (4) When he has absconded, or cannot be sued within the Philippines unless he has left a manager or representative; (5) If it may be presumed that an execution on the property of the principal debtor would not result in the satisfaction of the obligation.
To use it, Article 2060 requires the guarantor to raise it when the creditor demands payment and to point out available property of the debtor in the Philippines sufficient to cover the debt. Article 2055 adds that a guaranty is not presumed: it must be express and cannot extend to more than what is stipulated.
Why can a surety be sued alone?
Because a surety is a solidary debtor. Article 1216 applies:
The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected.
Solidarity is not presumed either. Article 1207 says there is solidary liability only when the obligation expressly says so, or when the law or the nature of the obligation requires it.
How have courts applied these rules?
- The co-maker. In Palmares v. Court of Appeals (1998), a woman signed a promissory note as co-maker, agreeing to be "jointly and severally" liable. She argued she was only a guarantor. The Court held that the clear terms made her a surety. It said a surety is an insurer of the debt, while a guarantor is an insurer of the solvency of the debtor, and that under Article 1216 the creditor may proceed even against the surety alone. The Court deleted the 3% monthly penalty interest in that case.
- Labels do not decide. In Trade and Investment Development Corporation v. Philippine Veterans Bank (2019), a party called a "guarantor" had waived the benefit of excussion and agreed to directly shoulder the debt. The Court said this made it solidarily liable, because whether an obligation is a suretyship is not a matter of nomenclature.
Frequently asked questions
What is the difference between a guarantor and a surety?
In Palmares v. Court of Appeals (1998), the Supreme Court said a surety is an insurer of the debt, while a guarantor is an insurer of the solvency of the debtor. A surety promises to pay if the principal does not; a guarantor answers only after the creditor has proceeded against the principal debtor.
Is a co-maker liable for the whole loan?
If the co-maker bound himself jointly and severally (solidarily) with the borrower, Article 2047 calls the contract a suretyship. In Palmares (1998), the Court said the creditor may then proceed even against the surety alone, under Article 1216.
What is the benefit of excussion?
Under Article 2058, a guarantor cannot be compelled to pay unless the creditor has exhausted all the property of the debtor and resorted to all legal remedies against him. Article 2059 lists cases where this does not apply, including when the guarantor bound himself solidarily.
Can a guaranty be implied?
No. Article 2055 says a guaranty is not presumed; it must be express and cannot extend to more than what is stipulated.
Does calling someone a guarantor in the contract settle the issue?
No. In Trade and Investment Development Corporation v. Philippine Veterans Bank (2019), the Court said whether an obligation is a suretyship is not a matter of nomenclature. A guarantor who waives excussion and agrees to directly shoulder the debt becomes solidarily liable.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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