71. What is the status of an oral contract of guaranty?

a. Valid and enforceable

b. Valid but unenforceable
c. Voidable
d. Void
To be enforceable, the contract of guaranty (between the guarantor and the creditor) must be in writing,
since this is a special promise to answer for the debt, default, or miscarriage of another. (Art. 1403, Civil
Code). Hence, an oral guaranty is unenforceable. (Nolasco Brothers, Inc. v. Villarino, CA-GR 17616-R,
Aug. 8, 1958).

72. A borrowed from B 1 Million Pesos. C guaranteed and paid the obligation of A even
against the latter's will. Can C recover from A what he has paid to B?
a. Yes, a guarantor can recover from the debtor what the former had to pay the
creditor, even if the guaranty was against the debtor's will.
b. No, a person who pays the obligation of another without the knowledge and
consent of the debtor shall not be entitled to recover what he has paid to the
creditor. His recourse is to demand from the creditor what he has paid.
c. Yes, even a person not interested in the fulfillment of the obligation may pay the
obligation to the creditor for as long as the creditor gives his consent. Otherwise,
this would be a case of unjust enrichment on the part of the debtor.
d. No, a guarantor who pays the obligation of the debtor against the will of the debt
cannot recover the amount he paid because he is only subsidiarily liable and should
wait for the debtor to pay first and in the event of his failure to pay, the guarantor
may cause the payment of the obligation.

A guarantor can recover from the debtor what the former had to pay the creditor, even if the guaranty was
without the debtors consent or against his will, but the recovery will only be to the extent that the debtor
had been benefi ted. (See Arts. 1236 and 1237 and De Guzman v. Santos, 68 Phil. 371).

73. What is meant by continuing guaranty?

a. A continuing guaranty refers to past and future obligations of the debtor to a
creditor and which the guarantor obligates to secure.
b. A continuing guaranty refers to two or more transactions entered into between
a creditor, debtor and the latters guarantors to secure several obligations of the
debtor with the creditor.
c. A continuing guaranty refers to the promise and commitment of the guarantor
to guaranty all future obligations of the debtor for an indefinite period of time or
until revoked.
d. A continuing guaranty is one which is not limited to a single transaction, but
which contemplates a future course of dealing, covering a series of transactions,
generally for an indefinite time or until revoked. (Definition from UST reviewer)

74. A borrowed from B PI Million. No mortgage was constituted. C guaranteed to B the

payment of A's debt, and to show his sincerity, C even mortgaged his land in favor of B. If
A cannot pay, and C cannot pay, may B foreclose the mortgage on C's land?
a. No. The obligation of C being merely accessory to A's debt, it should not be more
onerous than the latter. The mortgage in this case makes the guarantor's liability
more onerous than that of the principal debtor.
 b. Yes, a mortgage is indivisible and inseparable and cannot be cancelled until and
unless the obligation of the debtor has been paid by the debtor or the guarantor.
c. No. The obligation of C being merely accessory to As debt he can only be made
to pay the monetary obligation which was what he guaranteed. It cannot extend to
more than the principal monetary obligation to pay the amount of PI Million pesos.
d. Yes. An obligation may be secured not only by a guaranty but also by a mortgage.
If the principal obligation is not fulfilled the creditor has the legal right to proceed
against any other security constituted otherwise it would infringe on his right to
collect his credit.

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.

75. A borrowed PI Million from B. C guaranteed the obligation. Without C's knowledge,
the obligation was increased to P5Million. What is the effect of this increased as to the
obligation of C?
a. If the indebtedness is increased without the guarantors consent, he is liable only
to the amount he originally guaranteed.
b. When C guaranteed the obligation of the debtor without qualification he is
bound to pay the amount not only agreed upon at the time of the constitution of
the contract of guaranty but the obligation at the time of its maturity.
c. C would be liable for the increased amount if the debtor cannot pay the
obligation. A guarantor is an original promisor to the principal contract and thus
commits to pay if the principal debtor cannot pay whatever the amount is at the
time of the maturity of the obligation.
d. If the indebtedness is increased without the guarantor's consent, he is
completely released from the obligation as guarantor or surety.
Rule if Debt is Increased
If the indebtedness is increased without the guarantors consent, he is completely released from the
obligation as guarantor or surety. (Nat. Bank v. Veraguth, 50 Phil. 253).

76. What are the qualifications of a guarantor?

a. The guarantor must have honesty, capacity to contract and sufficient property.
b. The guarantor must have integrity, capacity to bind and sufficient property.
c. The guarantor must have had no conviction of a crime involving moral turpitude,
must be capacitated and must have properties whether in or out of the Philippines.
d. The guarantor must have sufficient property, honesty and integrity.

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.

77. At what time must a guarantor possess the requirement for integrity?
a. The qualification of integrity in the guarantor or surety is required to be present
only at the time of the perfection of the contract of guaranty.
 b. The qualification of integrity must be present during the entire time that the
contract of guaranty subsists.
c. The qualification of integrity must be present at the time of the perfection of the
contract of guaranty and for a reasonable time thereafter.
d. The qualification of integrity must be present at the time that the gurantor is
called upon to answer the obligation of the debtor.

The qualifications need only be present at the time of perfection of the contract

78. The benefit of division against the co-guarantors ceases in the same cases and for the
same reasons as the:
a. Benefit of exclusion
b. Benefit of excussion
c. Benefit of subrogation
d. Benefit of exemption
Art. 2065. Should there be several guarantors of only one debtor and for the same debt, the
obligation to answer for the same is divided among all. The creditor cannot claim from the guarantors
except the shares which they are respectively bound to pay, unless solidarity has been expressly stipulated.
The benefit of division against the co-guarantors ceases in the same cases and for the same reasons
as the benefit of excussion against the principal debtor.

79. Should there be several guarantors of only one debtor and for the same debt, the
obligation to answer for the same is:
a. Given to any of the guarantors
b. Divided among all of them equally (Art. 2065)
c. Extinguished
d. SolidaryH