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4. Debtor absconds or cannot be sued within the

Philippines

5. Resort to all legal remedies is a useless formality

6. Others

i. Non-compliance with Art. 2060

ii. If he is a judicial bondsman or sub-suretyiii. Failure to interpose it as a defense before

judgment is rendered against him

iv. Where a pledge or mortgage has been given

by him as a special security

III. Effects of Compromise

A. General rule

A contract binds only the parties thereto and

not third persons. Hence, a compromise cannot

prejudice the guarantor or the debtor, as the

case may be, when he is not a party to such

compromise.

B. Exception to the rule

However, even if the guarantor or debtor is not

a party to such compromise, the same can

benefit him as it is in the nature of a stipulation

in favor of a third person which the guarantor

or debtor may accept unless it has been

revoked before his acceptance.

IV. Benefit of Division

A. Definition

Right of a co-guarantor, as against the creditor,

to pay only the divided share that it is bound

to pay

B. Application

This article entitles the several guarantors of

only one debtorand for the same debt.

C. Exceptions

1.Express stipulation of solidarity

2.Article 2059

SECTION 2 Effects of Guaranty between the

Debtor and the Guarantor (Art. 2066-2072)

I. Right to Indemnification

It is the debtor that is directly and

principally liable so it is just that the

guarantor who pays must be indemnified.

Indemnity comprises:

a. Total amount of debtbut if the

guarantor paid a smaller amountdue to compromise, he cannot

demand more than he actually

paid

b. Legal interestfrom notice of

payment of the debt.

c. Expenses incurred by the

guarantor expenses as

consequence of the guaranty;

expenses after payment has been

demanded

d. Damages, if they are due

Exceptions to Right of Indemnity

a. A. 2050

b. A. 1238

c. Subject to waiver

A. Effect of payment before/after maturity (2069)

(1) Obligation with a period obligation

demandable only when the day fixed

comes. When guarantor pays before

maturity, he is not entitled to

reimbursement since there is nonecessity

for accelerating payment.

Rationale: Guaranty is subsidiary.

However, the debtor is liable if payment

was made with his consent or the same was

ratified by him.

In any case, guarantor can recover upon

expiration of the period.

(2) Where demand made during term of

guarantee, the fact that payment was

actually made after said term is not

material. What is controlling is that default

and demand on guarantor had taken place

while the guarantee is still in force.

B. Effect of repeat payment

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