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PERSONAL SECURITY - Coggle Diagram

- - - - FORM
        
        OBLIGATIONS SECURED
        
        DISTINGUISHED FROM JOINT AND SOLIDARY OBLIGATIONS
        
        DEBTOR MUST INDEMNIFY GUARANTOR WHO PAYS
        Art. 2066. The guarantor who pays for a debtor must be indemnified by the latter. The indemnity comprises:
        COMPOSITION OF INDEMNITY
        
        TOTAL AMOUNT OF DEBT
        The total amount of the debt;
        
        LEGAL INTEREST
        (a) FROM WHEN DEBTOR KNOWS OF PAYMENT
        (b) EVEN IF PAYMENT DID NOT EARN INTEREST FOR THE CREDITOR
        The legal interests thereon from the time the payment was made known to the debtor, even though it did not earn interest for the creditor;
        
        EXPENSES INCCURED BY GUARANTOR AFTER NOTIFYING DEBTOR OF PAYMENT DEMANDED OF HIM(?) The expenses incurred by the guarantor after having notified the debtor that payment had been demanded of him;
        
        DAMAGES, IF DUE Damages, if they are due.
        
        GUARANTOR WHO PAYS = SUBROGEE
        Art. 2067. The guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had against the debtor. If the guarantor has compromised with the creditor, he cannot demand of the debtor more than what he has really paid.
        
        PAYMENT MADE BY ONE SOLIDARY DEBTOR EXTINGUISHES OBLIGATION
        Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation.
        IF TWO SOLIDARY DEBTORS OFFER TO PAY, CREDITOR MAY CHOOSE
        If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
        HE WHO MADE PAYMENT MAY CLAIM FROM HIS CO-DEBTORS ONLY THE SHARE CORRESPONDING TO EACH
        SUCH PAYMENT SHALL INCLUDE INTEREST, EXCEPT IF DEBT IS PAID BEFORE IT IS DUE
        He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded.
        IF A SOLIDARY DEBTOR IS INSOLVENT AND CANNOT REIMBURSE HIS SHARE, SUCH SHARE SHALL BE BORNE BY CO-DEBTORS IN PROPORTION TO DEBT OF EACH
        When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.
        
        IF GUARANTOR COMPROMISES WITH CREDITOR, HE CANNOT DEMAND DEBTOR MORE THAN WHAT HE HAS REALLY PAID
        
        MAY SECURE FUTURE DEBTS
        Art. 2053. A guaranty may also be given as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until the debt is liquidated. A conditional obligation may also be secured.
        
        NO CLAIM AGAINST GUARANTOR UNTIL DEBT IS LIQUIDATED.
        
        AMOUNT MAY NOT BE KNOWN AT TIME WHEN GUARANTY IS EXECUTED, PROVIDED THEY ARE EVENTUALLY LIQUIDATED
      - GUARANTY DEFINED
        Art. 2047. 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.
        
        SOLIDARITY MAY EXIST EVEN IF CREDITORS & DEBTORS ARE NOT BOUND IN THE SAME MANNER AND BY SAME PERIODS & CONDITIONS
        Art. 1211. Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions.
        
        CREDITOR MAY PROCEED AGAINST ANY OF
        THE SOLIDARY DEBTORS OR SIMULTANEOUSLY
        Art. 1216. 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.
        
        BONDSMAN OFFERED BY LAW OR JUDICIAL ORDER MUST BE QUALIFIED
        Art. 2082. The bondsman who is to be offered in virtue of a provision of law or of a judicial order shall have the qualifications prescribed in article 2056 and in special laws.
        
        IF UNABLE TO GIVE BOND,
        MORTGAGE OR SECURITY SUFFICIENT TO COVER OBLIGATION MAY BE ADMITTED IN LIEU THEREOF
        Art. 2083. If the person bound to give a bond in the cases of the preceding article, should not be able to do so, a pledge or mortgage considered sufficient to cover his obligation shall be admitted in lieu thereof.
        
        GUARANTOR PRESENTED
        MUST BE ONE WHO (ICSp:
        
        POSSESSES INTEGRITY
        
        CAPACITY TO BIND HIMSELF
        
        HAS SUFFICIENT PROPERTY TO ANSWER FOR THE OBLIGATION GUARANTEED
        Art. 2056. One who is obliged to furnish a guarantor shall present a person who possesses integrity, capacity to bind himself, and sufficient property to answer for the obligation which he guarantees. The guarantor shall be subject to the jurisdiction of the court of the place where this obligation is to be complied with.
        
        DEMAND AGAINST ONE DOES NOT PRECLUDE DEMAND AGAINST OTHERS, SO LONG AS THE DEBT HAS NOT BEEN FULLY COLLECTED
    - - SOLIDARY-GUARANTOR VS SOLIDARY DEBTOR
        While a guarantor may bind himself solidarily with the principal debtor, the liability of a guarantor is different from that of a solidary debtor. Thus, Tolentino explains:
        A guarantor who binds himself in solidum with the principal debtor under the provisions of the second paragraph does not become a solidary co-debtor to all intents and purposes.
        
        SOLIDARY CO-DEBTOR vs SURETY
        There is a difference between a solidary co-debtor, and a fiador in solidum (surety),
        The latter, outside of the liability he assumes to pay the debt before the property of the principal debtor has been exhausted, retains all the other rights, actions and benefits which pertain to him by reason of the fianza (obligation/suretyship); while a solidary co-debtor has no other rights than those bestowed upon him in Section 4, Chapter 3, title I, Book IV of the Civil Code.
        Carodan v. China Banking Corp., G.R. No. 210542, [February 24, 2016], 781 PHIL 750-770 citing Inciong, Jr. v. Court of Appeals, G.R. No. 96405, [June 26, 1996], 327 PHIL 364-374)
        
        Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint and several obligations. Under Art. 1207 thereof, when there are two or more debtors in one and the same obligation, the presumption is that the obligation is joint so that each of the debtors is liable only for a proportionate part of the debt. There is a solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires. 67 (Citations omitted)
        Carodan v. China Banking Corp., G.R. No. 210542, [February 24, 2016], 781 PHIL 750-770
        
        GUARANTY v. SURETY
        Strictly speaking, guaranty and surety are nearly related, and many of the principles are common to both. However, under our civil law, they may be distinguished thus:
        
        A surety is usually bound with his principal by the same instrument, executed at the same time, and on the same consideration. He is an original promissor and debtor from the beginning, and is held, ordinarily, to know every default of his principal. Usually, he will not be discharged, either by the mere indulgence of the creditor to the principal, or by want of notice of the default of the principal, no matter how much he may be injured thereby.
        
        On the other hand, the contract of guaranty is the guarantor's own separate undertaking, in which the principal does not join. It is usually entered into before or after that of the principal, and is often supported on a separate consideration from that supporting the contract of the principal. The original contract of his principal is not his contract, and he is not bound to take notice of its non-performance. He is often discharged by the mere indulgence of the creditor to the principal, and is usually not liable unless notified of the default of the principal.||| (Carodan v. China Banking Corp., G.R. No. 210542, [February 24, 2016], 781 PHIL 750-770)
  - - - CONSIDERATION
        
        OBLIGATIONS SECURED
        
        PARTIES TO A GUARANTY
        
        BENEFIT OF EXCUSSION
        
        RIGHT TO PROTECTION
        
        RIGHT TO INDEMNIFICATION
        
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        WHEN GUARANTOR MAY PROCEED AGAINST DEBTOR EVEN BEFORE PAYING:
        Art. 2071. The guarantor, even before having paid, may proceed against the principal debtor:
        
        WHEN PD SUED FOR PAYMENT
        When he is sued for the payment;
        
        INSOLVENCY OF PD
        In case of insolvency of the principal debtor;
        
        EXPIRATION OF GUARANTY
        When the debtor has bound himself to relieve him from the guaranty within a specified period, and this period has expired;
        
        WHEN DEBT BECAME DEMANDABLE BY REASON OF EXPIRATION OF PERIOD FOR PAYMENT
        When the debt has become demandable, by reason of the expiration of the period for payment;
        
        AFTER LAPSE OF TEN YEARS IF PO HAS NO FIXED PERIOD FOR MATURITY
        After the lapse of ten years, when the principal obligation has no fixed period for its maturity, unless it be of such nature that it cannot be extinguished except within a period longer than ten years;
        
        REASONABLE FEAR OF ABSCONDMENT
        If there are reasonable grounds to fear that the principal debtor intends to abscond;
        
        IMMINENT INSOLVENCY
        If the principal debtor is in imminent danger of becoming insolvent.
        
        IN ALL THESE CASES, GUARANTOR'S ACTION IS TO OBTAIN RELEASE FROM GUARANTY OR TO DEMAND A SECURITY TO PROTECT HIM FROM CREDITOR AND DEBTOR'S INSOLVENCY
        In all these cases, the action of the guarantor is to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor.
        
        RIGHT TO PROTECTION DEFINED
        The right to protection is the right of the guarantor to
        
        OBTAIN RELEASE - from guaranty
        
        DEMAND SECURITY
        (Somera)
        
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        CREDITOR WHO SUES PRINCIPAL DEBTOR SHALL NOTIFY GUARANTOR OF ACTION
        Art. 2062. In every action by the creditor, which must be against the principal debtor alone, except in the cases mentioned in article 2059, the former shall ask the court to notify the guarantor of the action. The guarantor may appear so that he may, if he so desire, set up such defenses as are granted him by law. The benefit of excussion mentioned in article 2058 shall always be unimpaired, even if judgment should be rendered against the principal debtor and the guarantor in case of appearance by the latter.
        
        BENEFIT OF EXCUSSION
        IF CREDITOR HAS
        
        NOT EXHAUSTED ALL PROPERTIES OF DEBTOR
        
        NOT RESORTED TO ALL LEGAL REMEDIES AGAINST DEBTOR
        Art. 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.
        
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        GUARANTOR MAY APPEAR TO RAISE DEFENSES BY LAW, INCLUDING THE BENEFIT OF EXCUSSION EVEN IF JUDGMENT BE RENDERED AGAINST THE PRINCIPAL DEBTOR
        
        THE DISTINGUISHING ELEMENT OF A GUARANTY
        
        To begin enforcing a guarantee, a creditor must bring an action against principal debtor alone.
        
        GUARANTOR PRESENTED
        MUST BE ONE WHO (ICSp):
        
        POSSESSES INTEGRITY
        
        CAPACITY TO BIND HIMSELF
        
        HAS SUFFICIENT PROPERTY TO ANSWER FOR THE OBLIGATION GUARANTEED
        Art. 2056. One who is obliged to furnish a guarantor shall present a person who possesses integrity, capacity to bind himself, and sufficient property to answer for the obligation which he guarantees. The guarantor shall be subject to the jurisdiction of the court of the place where this obligation is to be complied with.
        
        [IF]
        
        GUARANTOR CONVICTED OF A CRIME
        
        INVOLVING DISHONESTY
        
        [THEN]
        CREDITOR MAY DEMAND ANOTHER WITH QUALIFICATIONS
        Art. 2057. If the guarantor should be convicted in first instance of a crime involving dishonesty or should become insolvent, the creditor may demand another who has all the qualifications required in the preceding article. The case is excepted where the creditor has required and stipulated that a specified person should be the guarantor.
        
        MARRIED WOMAN MAY GUARANTEE OBLIGATION WITHOUT HUSBAND'S CONSENT
        Art. 2049. A married woman may guarantee an obligation without the husband's consent, but shall not thereby bind the conjugal partnership, except in cases provided by law.
        
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        What is "first instance"?
        Google says it's being convicted in the trial court
        
        EXCEPT IF SPECIFIED PERSON REQUIRED AND STIPULATED THAT A SPECIFIED PERSON BE THE GUARANTOR
        
        GUARANTOR SUBJECT TO JURISDICTION OF COURT WHERE OBLIGATION IS TO BE COMPLIED WITH
        
        LOSS OF ONE OF THESE QUALIFICATIONS GIVES CREDITOR RIGHT TO DEMAND NEW GUARANTOR UNLESS CREDITOR STIPULATED A SPECIFIED A PERSON TO BE GUARANTOR
        
        CREDITOR
        
        DEBTOR of the principal obligation
        
        GUARANTOR
        
        REQUIRES A VALID OBLIGATION, BUT INCLUDES VOIDABLE AND UNENFORCEABLE CONTRACTS AND NATURAL OBLIGATION
        Art. 2052. A guaranty cannot exist without a valid obligation. Nevertheless, a guaranty may be constituted to guarantee the performance of a voidable or an unenforceable contract. It may also guarantee a natural obligation.
        
        MAY SECURE FUTURE DEBTS
        Art. 2053. A guaranty may also be given as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until the debt is liquidated. A conditional obligation may also be secured.
        
        GUARANTOR MAY BIND FOR LESS BUT NOT FOR MORE THAN PRINCIPAL DEBTOR
        Art. 2054. A guarantor may bind himself for less, but not for more than the principal debtor, both as regards the amount and the onerous nature of the conditions. Should he have bound himself for more, his obligations shall be reduced to the limits of that of the debtor.
        
        IF FOR MORE, THEN MUST BE REDUCED
        
        NO CLAIM AGAINST GUARANTOR UNTIL DEBT IS LIQUIDATED.
        
        AMOUNT MAY NOT BE KNOWN AT TIME WHEN GUARANTY IS EXECUTED, PROVIDED THEY ARE EVENTUALLY LIQUIDATED
        
        GOVERNS DEALING FOR INDEFINITE TIME
        CONTINUING GUARANTY – type of guaranty that governs a course of dealing for an indefinite time or by a succession of credits
        
        NOT LIMITED to a single transaction
        
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        PHRASES INDICATING CONTINUING GUARANTY
        The use of the phrases "any debt," "any indebtedness," "any sum," "any transaction," or money to be furnished the principal debtor "from time to time," "at any time," or "on such time" that the principal debtor may require, have been construed to indicate a continuing guaranty.
        
        PRESUMED GRATUITOUS
        Art. 2048. A guaranty is gratuitous, unless there is a stipulation to the contrary.
        
        UNLESS STIPULATION TO CONTRARY
      - NOT PRESUMED; MUST BE EXPRESS
        Art. 2055. A guaranty is not presumed; it must be express and cannot extend to more than what is stipulated therein...
        
        MAY BE SIMPLE OR INDEFINITE; AND IF SO,
        IT INCLUDES ALL ITS ACCESSORIES, INCLUDING JUDICIAL COSTS
        If it be simple or indefinite, it shall comprise not only the principal obligation, but also all its accessories, including the judicial costs, provided with respect to the latter, that the guarantor shall only be liable for those costs incurred after he has been judicially required to pay. (Art. 2055)
        
        JUDICIAL COSTS ONLY REQUIRED TO PAY IF GUARANTOR JUDICIALLY REQUIRED TO
        
        MAY BE DEFINITE = ONLY SPECIFIED AMOUNT
        A definite guaranty extends only to a specified amount
        
        STILL LIABLE FOR INTEREST AND EXPENSES IF PROVIDED FOR, EVEN IF THEY EXCEED SPECIFIED AMOUNT
        However, if a guaranty specifies a fixed amount but also provides for liability for interest and expenses, the guarantor will be liable for the interest and expenses even if they exceed the specified fixed amount. (Dino & Uy v. Court of Appeals & Metropolitan Bank & Trust Company, G.R. No. 89775, November 26,1992,216 SCRA 9.)
        
        USE OF TERM "GUARANTEE" DOES NOT MEAN THAT THE CONTRACT IS ONE OF GUARANTY
        The use of the term "guarantee" does not ipso facto mean that the contract is one of guaranty. Authorities recognize that the word "guarantee" is frequently employed in business transactions to describe not the security of the debt but an intention to be bound by a primary or independent obligation. 11 As aptly observed by the trial court, the interpretation of a contract is not limited to the title alone but to the contents and intention of the parties.||| (E. Zobel, Inc. v. Court of Appeals, G.R. No. 113931, [May 6, 1998], 352 PHIL 608-619)
      - MUST BE IN WRITING AND SUBSCRIBED; OTHERWISE, UNENFORCEABLE
        o It unenforceable by action unless in writing and subscribed by the party charged or by his agent
        
        EVIDENCE OF AGREEMENT
        o Evidence of the agreement cannot be received without the writing or secondary evidence of its contents [Art. 1403 (2) (b) – Statute of Frauds]
    - - ALWAYS A CONSEQUENCE OF A CONTRACT
        The guarantor’s obligations always arise as a consequence of contract whether the guaranty is conventional, legal, or judicial.
        
        MAY ALSO BE IN FAVOR OF ANOTHER GUARANTOR
        
        WITH HIS CONSENT OR WITHOUT HIS KNOWLEDGE, EVEN OVER HIS OBJECTION
  - - - SECURES EVEN VOIDABLE, UNENFORCEABLE, NATURAL, OR ANOTHER CONDITIONAL OBLIGATION
        even if the latter is voidable, or unenforceable or a natural obligation or if it is a conditional obligation.
        (Somera)