EFFECTS OF GUARANTY (Article 2058 2065)

ARTICLE 2058:
1. What is the Benefit of Excussion or Exhaustion?
2. Can a creditor secure a judgment against the guarantor prior to the exhaustion of
remedies against the debtor? Yes, however the execution of the judgment must be
deferred until after the exhaustion of remedies against the principal.
3. Can you implead the guarantor or make him a co-defendant in a civil case against
the principal debtor? Yes, there is nothing in the law that prohibits this because it is
convenient to implead him to avoid filing a separate case and avoiding clogging of
court dockets.
ARTICLE 2059:
1. What are the instances where excussion cannot take place?
ARTICLE 2062:
If the creditor sues the debtor alone, can he ask the court to notify theguarantor of such
action even if he is not impleaded as a party to the action? Yes, again nothing in the law
that prohibits notice to the guarantor of such action.
ARTICLE 2063:
What is a compromise? A contract whereby the parties by making reciprocal concessions,
avoid a litigation or put an end to one already commenced.
ARTICLE 2065:
If there are several guarantors of only one debtor for the same debt, what are their
obligation towards the creditor? Is it joint or solidary? It is JOINT unless solidarity has
been stipulated upon.
EFFECTS OF GUARANTY BETWEEN THE DEBTOR AND THE GUARANTOR
(ARTICLES 2066-2072)
ARTICLE 2066:
1. What comprises the indemnity of the guarantor from the debtor?
2. Can the guarantor demand reimbursement before payment to the creditor?
General Rule: No, Exception: if he has been given such right in the contract. (Read
and digest: Tuason, Tuason Inc. Vs. Machuca, 46 Phil 561 [1924].
ARTICLE 2067:
1. What is the effect of SUBROGATION in a contract of guaranty?
ARTICLE 2069:
1. Can the guarantor pay the debt even before it becomes due? Yes.
2. Can he ask for reimbursement from the debtor even if the debt is not yet due? No,
except if payment was later on ratified by the debtor.
ARTICLE 2070:
General rule: Guarantor must first notify the debtor before paying the debt.
Exception: if there is a stipulation to the contrary.

1. If the guarantor paid the creditor without notifying the debtor, guarantor has no
remedy against the debtor in case of double payment. His remedy is to go after
the creditor, legal basis is unjust enrichment on the part of the creditor.
Exceptions to lack of notice to the debtor: (in these cases, guarantor can
claim reimbursement from the debtor even if there was no notice)
a. The creditor becomes insolvent
b. The guarantor was prevented by fortuitous event to advise the debtor of the
payment
c. The guaranty is gratuitous
EFFECTS OF GUARANTY AS BETWEEN CO-GUARANTORS
(ARTICLES 2073-2075) just read the provisions.
EXTINGUISHMENT OF GUARANTY (ARTICLES 2076 -2081)
ARTICLE 2076:
1. What are the causes of extinguishment of an obligation?
ARTICLE 2077:
1. Can the creditor accepts immovable property from the guarantor as payment for
the debt? Yes, there is nothing in the law that prohibits the same.
LEGAL AND JUDICIAL BONDS (ARTICLES 2082-2084)
1. What are the qualifications of the bondsman?
2. Define a bondsman?
3. Can a judicial bondsman demand the exhaustion of the property of the principal
debtor? No, article 2084.
4. What is the effect of negligence of the creditor in collecting the debt? Read and
digest Phil. National Bank vs. Manila Surety and Fidelity Co., Inc., 14 SCRA 776
[1965].

PLEDGE
1. What are the requisites essential to the contracts of pledge and mortgage? Art.
2085
2. Define a contract of pledge.
3. What are the kinds of pledge?
4. What are the characteristics of pledge?
5. Can future property be the subject of pledge and mortgage? No!
6. Can a co-owner of a property alienate his share in the property? Yes
ARTICLE 2088:
Can the creditor appropriate the thing given by way of pledge or mortgage? No, even if
there is a stipulation to that effect.
Read and digest: Duran vs. Intermediate Appelate Court 138 SCRA 491 doctrine of
mortgage in good faith
ARTICLE 2089:
1. A pledge or mortgage is indivisible, what is the meaning of Indivisibility of a
contract?
2. What is a suspensive or resolutory condition?
ARTICLE 2092:

Read and digest: Laplana vs. Gachitorena Chereau, 48 Phil 163 [1925].
PROVISIONS APPLICABLE ONLY TO PLEDGE (ARTICLES 2093-2123)
1. Additional requisite as to a contract of pledge: -That the thing pledged be placed
in the possession of the creditor or of a third person by common agreement.
RATIONALE: because one of the characteristics of a contract of pledge is that it is a
REAL CONTRACT. (article 2093)
2. What could be the things subject of a contract of pledge? Limited only to personal
properties. Those within the commerce of man which are susceptible of
possession. (Article 2094)
3. Can incorporeal rights be the subject of pledge? Yes, but only those evidenced by a
negotiable instrument.
4. In case of pledge of negotiable instruments, do you need delivery of the same?
Yes, because pledge is a real contract so to be perfected, delivery is a requisite. In
case of negotiable instruments, it must be indorsed. (see Article 2095)
5. What are the requirements in a contract of pledge so that it may take effect
against third persons? The contract must contain the following: (a) description of
the thing pledged; (b) date of the pledge must appear in the public instrument.
(see article 2096)
6. Can the pledgor alienate or sell the thing pledged? Yes, subject to the prior consent
of the pledge. Reason: in a contract of pledge, the pledgor retains ownership of the
thing pledged. However, the rights of the pledge will still exist until after the
satisfaction of the obligation, namely: (a) the thing sold may still be alienated to
satisfy the obligation in the contract of pledge and; (b) the pledge must continue in
possession of the thing pledged during the existence of the contract.
7. What is the degree of diligence required in taking care of the thing pledged? The
creditor must exercise the diligence of a good father of a family. (Article 2099)
8. Who shall be liable for the expenses made in the preservation of the thing
pledged? The pledgor, since ownership does not pass to the pledgee. Pledgee has
the right to ask for reimbursement in case of expenses incurred for the
preservation of the thing pledged.
9. Who shall bear the loss in case the thing pledged perished or deteriorated? The
pledgee shall be responsible for the loss or deterioration by reason of fraud,
negligence, delay or violation of the terms of the contract.
10.
Who shall bear the loss in case of fortuitous event? The pledgor, because he
is still the owner of the thing pledged.
11.
Can the pledge deposit the thing pledged with a third person? No, unless
there is a stipulation to the contrary. See Article 2100.
12.
Can the pledgee use the thing pledged or appropriate the fruits thereof? No,
unless there is authority coming from the pledgor.
13.
What are the instances wherein the owner/pledgor may ask the thing
pledged be deposited judicially or extrajudicially? See article 2104
(a) If the creditor uses the thing without authority;
(b)If he misuses the thing in any other way;
(c) If the thing is in danger of being lost or impaired because of the
negligence or wilful act of the pledge.

14.
If the thing pledged is in danger of being lost or impaired through the
negligence or fault of the pledge, what is the remedy of the pledgor? The pledgor
may require that the thing be deposited with a third person (extrajudicial deposit).
The pledgee has the duty to preserve the thing given with diligence of a good
father of a family.
15.
What are the requisites for the application of Article 2107the right of the
pledgor to substitute thing pledged:
(a) The pledgor has reasonable grounds to fear the destruction or impairment
of the thing pledged;
(b)There is no fault on the part of the pledgee;
(c) The pledgor is offering in place of the thing, another thing in pledge which
is of the same kind and quality as the former; and
(d)The pledge does not choose to exercise his right to cause the thing
pledged to be sold at a public auction.
In the application of the above requisites, the law (Article 2107) provides two (2)
remedies to wit: (1) the pledgor has the right to demand the return of the thing
pledged upon offering another thing in pledge; (2) as to the pledge, the right to
cause the same to be sold at public auction.
16.
In case the pledge has been deceived as to the substance or quality of the
thing pledged, what are his remedies? (a) to claim another thing in pledge; or (b)
to demand immediate payment of the principal obligation. The remedies are
alternative so he can just choose one. Article 2109.
17.
How is a contract of pledge extinguished? By the return of the thing pledged
to the pledgor.
18.
Are there any exception to the above rule? None, any stipulation to the
contrary shall be void.
19.
What is the presumption of extinguishment of pledge? The possession by
the debtor of the thing pledged subsequent to the perfection of the pledge gives
rise to a prima facie presumption that the thing has been returned and, therefore,
that the pledge has been extinguished.
20.
What are the requirements for the sale of the thing pledged? (memorize
this!)
(a) the debt is due and unpaid;
(b) the sale must be at a public auction;
(c) there must be notice to the pledgor and owner, stating the amount due;
and
(d) the sale must be made with the intervention of a notary public.
Note: * That Article 2112 does not require posting of the notice of sale and publication
for the selling of the thing pledged.
21.
Can the creditor appropriate the thing pledged for himself? Yes, if after the
first and second auctions, the thing is not sold. This is an exception to the
prohibition against pacto commisorio.
22.
Can the pledge bid in the public auction? Yes, but his offer shall not be valid
if he is the only bidder.
23.
If the thing pledged shall be sold at a public auction in an amount greater
than the debt, will the debtor be entitled to the excess? No, unless there is a
stipulation to that effect.
24.
If the proceeds of the sale is less than the debt, can the creditor recover the
deficiency from debtor? No, there is no exception. Reason: by electing to sell the

thing pledged instead of suing on the principal obligation, he therefore waives any
other remedy and must abide by the results of the sale.

REAL ESTATE MORTGAGE

1. What are the properties that may be the object of a contract of mortgage? Article
2124
2. Define mortgage.
3. Characteristics of a contract of mortgage.
4. Who has the right of possession in a contract of mortgage? The mortgagor-debtor
as a general rule has the right to retain possession of the thing mortgaged.
Reason: because the debtor only subject the thing mortgaged to a lien.
5. Is a mortgage a principal or an accessory contract? It is an accessory contract.
6. What are the kinds of mortgage and define each? (a) Voluntary; (b) legal; and (c)
equitable
7. What is a pacto de retro sale?
8. If there is a land and a building that is erected thereon, can you separately
mortgage the land and the building? Yes, read and digest Prudential Bank vs.
Panis, 153 SCRA 390 [1987].
9. Can future objects be the subject of a mortgage? No, and there is no exception to
the same.
10.
Where do you register a chattel and real estate mortgage? Both in the
register of deeds.
11.
Aside from the essential requisites of mortgage and pledge under article
2085 and 2087, are there any other requisite applicable to mortgage? It is
indispensable that that a mortgage appear in a public document and duly recorded
in the Registry of Deeds.
12.
What is the DOCTRINE OF MORTGAGEE IN GOOD FAITH? Read and digest
MAHINAY vs. GABO, JR. 661 SCRA 274 [2011] -will ask this in your final exam (bar
question)
13.
What are those things deemed included in a mortgage of real property? See
Article 2127. Will ask this in your final exam.
14.
What is a dragnet clause? it is a stipulation to secure future and other
indebtedness is known as a blanket mortgage clause or in American
Jurisprudence as a dragnet clause.
15.
Can the mortgagor-owner sell the property that he mortgaged? Yes,
ownership is still with the mortgagor, ownership does not pass to the mortagee.
There is no exception, any stipulation to that effect is void. See Article 2130.
16.

What are the kinds of foreclosure?

17.
Define redemption. May be defined as a transaction by which the mortgagor
reacquires or buys back the property which may have passed under the mortgage
or divests the property of the lien which the mortgage may have created.
18.
What are the kinds of redemption and define each? Will ask this in the final
exam

ANTICHRESIS

1. Define ANTICHRESIS. See article 2132. Will ask this!

2. Characteristic of antichresis
Read and understand the provisions, it is self explanatory!

CHATTEL MORTGAGE
1. Define a CHATTEL MORTGAGE.
2. Characteristics of Chattel Mortgage.
Read and understand the provisions, it is self explanatory and similar with the rules
regarding Real Estate Mortgage.

CONCURRENCE AND PREFERENCE OF

CREDITS
1. Meaning of Concurrence and Preference of Credits.
CONCURRENCE OF CREDITS implies the possession by two or more creditors of
equal rights or privileges over the same property or all of the property of a debtor.
PREFERENCE OF CREDITS is the right held by a creditor to be preferred in the
payments of his claim above others.
2. What is the two (2) tier order of preference?
The first-tier includes only taxes, duties and fees due on a specific movable
or immovable property. All other special preferred (non-tax) credits stand on
the second-tier to be satisfied pari passu and pro rata, out of any residual
value of the specific property to which such credits relate.
-these are just some of the points I see as relevant. Just read the provisions, its more on
memorization. I will not ask anything from this topic except those above mentioned.
FINAL EXAMINATION: MARCH 12, 4PM to 5:15PM
Goodluck!
That in all things, God may be glorified.