- Ziggurat Realestatecorp
- 2d
- 3 min read
In Philippine obligations and contracts, suretyship and guaranty are often confused because both involve a third person answering for the obligation of another. However, under the Civil Code of the Philippines, they are legally distinct contracts with significantly different consequences—especially for the person who gives the assurance.
Understanding this distinction is crucial for borrowers, lenders, business owners, and anyone asked to “sign as guarantor or surety.”
1. Legal Basis under the Civil Code
The governing provision is Article 2047 of the Civil Code, which expressly distinguishes guaranty from suretyship:
“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.”
This single article sets the foundation for all practical differences between the two.
2. Nature of the Obligation
Guaranty
The guarantor’s obligation is subsidiary.
The guarantor answers only if the principal debtor fails to pay.
The guarantor is not primarily liable.
Suretyship
The surety’s obligation is direct, primary, and solidary with the debtor.
The surety is considered equally liable as the principal debtor.
The creditor may proceed directly against the surety, even without first going after the debtor.
Key difference:A guarantor is a backup. A surety is on equal footing with the debtor.
3. Right to Require Exhaustion of Debtor’s Assets
Guarantor
Under Article 2058, a guarantor may invoke the benefit of excussion, meaning:
The creditor must first exhaust all the assets of the principal debtor before going after the guarantor.
This right is a major legal protection.
Surety
A surety has no right to excussion.
The creditor may sue the surety immediately and directly, without first suing the debtor.
In practice, this is why banks strongly prefer suretyship over guaranty.
4. Extent of Liability
Guarantor
Liability is generally limited to what is stated in the contract.
Under Article 2054, guaranty cannot exceed the principal obligation and may be subject to conditions.
Surety
Liability is typically co-extensive with that of the principal debtor.
The surety may be held liable for the entire debt, including penalties and interest, unless expressly limited.
5. Practical Consequences in Litigation
Aspect | Guaranty | Suretyship |
Nature of liability | Subsidiary | Solidary |
Creditor can sue immediately? | ❌ No | ✅ Yes |
Benefit of excussion | ✅ Available | ❌ Not available |
Common in bank loans | Rare | Very common |
Risk level | Lower | Very high |
Philippine jurisprudence consistently holds that a surety is in effect an insurer of the debt, while a guarantor is merely a fallback obligor.
6. Common Real-World Scenario
Many people sign loan documents believing they are “just guarantors,” when the contract actually states they are “solidarily liable” or uses the term “surety.”
Courts look at:
The wording of the contract, not the label used in conversation
Whether the obligation is stated as solidary
If the contract says “jointly and severally liable”, it is suretyship, not guaranty—regardless of what the parties thought they were signing.
7. Conclusion
While both guaranty and suretyship involve answering for another’s debt, the legal exposure is vastly different:
Guaranty offers protection and secondary liability.
Suretyship imposes immediate, solidary, and often severe liability.
Before signing any contract involving either, it is essential to read the liability clause carefully and understand whether you are assuming a subsidiary or solidary obligation under Philippine law.
When in doubt, seek legal advice—because in suretyship, one signature can make you as liable as the borrower himself.
Source: Ziggurat Real Estate