Are You Liable as Co-Maker of Someone's Loan?

Article 2047 defines both:

In Palmares v. Court of Appeals (1998), the Supreme Court explained: "A surety is an insurer of the debt, whereas a guarantor is an insurer of the solvency of the debtor." A surety promises to pay if the borrower does not. A guarantor agrees that the creditor may come after him only after proceeding against the borrower, if the borrower cannot pay.

A guaranty is also never presumed. Article 2055 says it "must be express and cannot extend to more than what is stipulated therein."

If the co-maker is solidarily liable, yes. Article 1216 says:

In Palmares, a co-maker had signed a promissory note binding herself jointly and severally with the borrowers. The Court held that "the creditor has the right to proceed even against the surety alone." The Court added that an undertaking "to pay upon default of the principal debtor does not automatically remove it from the ambit of a contract of suretyship."

But solidarity must come from the document or the law. Article 1207 says "There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity."

It protects a guarantor. Under Article 2058, "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."

Article 2059 lists when excussion does not apply, including when the guarantor "has expressly renounced it", when "he has bound himself solidarily with the debtor", and when the debtor is insolvent. Under Article 2060, the guarantor must raise it when the creditor demands payment and point out property of the debtor in the Philippines enough to cover the debt.

Labels do not decide. In TIDCORP v. Philippine Veterans Bank (2019), a "guarantor" had waived excussion and agreed to shoulder the debt directly. The Court held that such a guarantor "undoubtedly makes himself/herself solidarily liable to the creditor", because "The determination of whether an obligation is a suretyship is not a matter of nomenclature and semantics."

This is a made-up example to show how the rules work. It is not advice for any real case.

Nestor signs his friend Arman's promissory note as "co-maker". The note says the signers are bound "jointly and severally". Arman stops paying. Under Article 1216 and Palmares, the lender may demand the whole unpaid loan from Nestor, without first suing Arman.

If instead the document had made Nestor only a guarantor, with no solidary clause and no waiver, Nestor could invoke excussion and ask the lender to go after Arman's property first.

Whether Nestor can later recover from Arman what he paid is not covered on this page.

See also the comparison guarantor vs surety and the meaning of suretyship.

Talk to a lawyer before you sign as co-maker or guarantor, if a lender demands that you pay someone else's loan, or if you are sued as co-maker. Your liability depends on the exact words of what you signed.

If you cannot afford a lawyer, see Free legal help in the Philippines. For more on loans, see Debt and collection and How many years does a creditor have to collect a debt?