Facts

 The National Sporting Club of Manila (Club) issued a promissory note amounting to PHP 9,360
payable in four months in favour of Jose Ma. Cacho for commercial purposes. Below the
signature of the Club appeared: “We guarantee this obligation. (Sgd.) J. A. Valles, J. L. Mateu, G.
J. Heffting, Ed. Chesley, Baldomero Roxas.” The note was not paid on maturity, and an action
was instituted against the Club and the guarantors.
 No defence was interposed by either the Club of any of the guarantors except Roxas who
claimed the right of division as among the co-sureties. Roxas added that, should he be found
liable, he would only be responsible for his proportionate share of the claim after the exhaustion
of the Club’s property.
 The lower court rendered JUDGEMENT 1 against the five guarantors, requiring each of them
to pay his pro rate share of the total debt in case the Club should not satisfy the debt or appear to
be insolvent.
 Subsequently, the trial court modified (JUDGEMENT 1.1) the dispositive portion of its decision
and held that: “In case either of the sureties shall turn out to be insolvent, his part shall fall
proportionately upon the other sureties.” From this order, the defendant Baldomero Roxas
appealed to this court.
 NOTE: The guaranty did not contain any words which made the co-sureties solidarily liable
either with the principal debtor or among themselves. Accordingly, Roxas insists that the judge
erred in declaring him responsible for any part of the debt over his proportion. Basically, he did not
want to pay more than his share.
Issue
 W/N the solvent sureties can be made to pay the entire debt upon the insolvency of a co-surety —
NO.
Held
 The Civil Code provides that one of several sureties becomes liable for his proportionate part of
the share of any of his co-sureties who may be declared bankrupt. But the appealed decision
makes the appellant liable in case any co-surety is found to be insolvent.
 The Court explained that there is a difference between being insolvent and being declared
bankrupt. Several provisions would use either or both.
o INSOLVENCY – Practically means that assets cannot be made out of a person upon
execution; one is unable to meet the financial obligations due for payment.
o BANKRUPTCY – A court of law has declared the insolvency of a person or an entity;
one’s property is subject to voluntary or involuntary administration for the benefit of the
creditors.
o The case didn’t distinguish the two. In case Atty. Lerma asks, the definitions abovementioned are from
Merriam-Webster.
 Presently, none of the sureties have been declared bankrupt. Hence, the benefit of division
therefore has not been lost. The rule declaring each surety liable only for his pro rata share of the
guaranteed debt must hold.
 The trial judge in all probability had in mind the second paragraph of Article 1844, that deals
with the situation wherein one surety has paid the debt to the creditor and is seeking contribution
from his co-sureties. In the present case, the debt has not been paid by any surety.
 Secondly, it is required in Article 1844 that the surety paying the debt should have made payment
by virtue of judicial proceedings or when the principal debtor should have become insolvent or
bankrupt. Nothing of the kind has here happened.
 According to Manresa,
o a co-surety is entitled to the benefit of division from the very moment that he contracts
the obligation, except where there is stipulation to the contrary; but if any of the
circumstances enumerated in article 1831 should take place either because he expressly
waives such a benefit after making the contract of suretyship, or because he later binds
himself solidarily with the debtor or any of the other co-sureties, or any of the co-
sureties becomes bankrupt or insolvent or cannot be sued within the kingdom; and
again, if such right is not availed of in due time, the benefit of division will cease in any
of these cases, as should the benefit of exhaustion of the debtor's property.
 Separate Opinions —
o Malcolm, concurring: Considering Baldomero Roxas is a guarantor of the obligation, I
concur.
o Johns, specially (wow) concurring: Legally speaking, neither of the defendants J. A.
Valles, J. L. Mateu, G. J. Heffting, Ed. Chesley and Baldomero Roxas are makers or
sureties of the promissory note in question. Neither of them signed the note itself. The
only thing which they did was to sign the following writing: We guarantee this obligation.
Hence, their liability was that of guarantors and guarantors only, and, as much, the law
defines and specifies their liability. The parties who signed the writing in question are
guarantors for the payment of the note, and are not makers or sureties. As guarantors,
on default of the payment of the note by the principal, they became jointly and severally
liable for the payment of the note.