V. Guaranty may also guarantee a natural obligation.

A. Arts. 2047 to 2081, Civil Code (1824a)

Art. 2047. By guaranty a person, called the Art. 2053. A guaranty may also be given as
guarantor, binds himself to the creditor to security for future debts, the amount of
fulfill the obligation of the principal debtor which is not yet known; there can be no
in case the latter should fail to do so. claim against the guarantor until the debt is
liquidated. A conditional obligation may
also be secured. (1825a)
If a person binds himself solidarily with the
Art. 2054. A guarantor may bind himself for
principal debtor, the provisions of Section
less, but not for more than the principal
4, Chapter 3, Title I of this Book shall be
debtor, both as regards the amount and the
observed. In such case the contract is
onerous nature of the conditions.
called a suretyship. (1822a)
Should he have bound himself for more, his
Art. 2048. A guaranty is gratuitous, unless obligations shall be reduced to the limits of
there is a stipulation to the contrary. (n) that of the debtor. (1826)
Art. 2055. A guaranty is not presumed; it
must be express and cannot extend to more
Art. 2049. A married woman may guarantee than what is stipulated therein.
an obligation without the husband's
consent, but shall not thereby bind the If it be simple or indefinite, it shall
conjugal partnership, except in cases compromise not only the principal
provided by law. (n) 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
Art. 2050. If a guaranty is entered into he has been judicially required to pay.
without the knowledge or consent, or (1827a)
against the will of the principal debtor, the
provisions of Articles 1236 and 1237 shall Art. 2056. One who is obliged to furnish a
apply. (n) guarantor shall present a person who
possesses integrity, capacity to bind
himself, and sufficient property to answer
Art. 2051. A guaranty may be conventional, for the obligation which he guarantees. The
legal or judicial, gratuitous, or by onerous guarantor shall be subject to the
title. jurisdiction of the court of the place where
this obligation is to be complied with.
It may also be constituted, not only in favor (1828a)
of the principal debtor, but also in favor of
the other guarantor, with the latter's
consent, or without his knowledge, or even
over his objection. (1823)
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
Art. 2057. If the guarantor should be sufficient to cover the amount of the debt.
convicted in first instance of a crime (1832)
involving dishonesty or should become
Art. 2061. The guarantor having fulfilled all
insolvent, the creditor may demand another
the conditions required in the preceding
who has all the qualifications required in
article, the creditor who is negligent in
the preceding article. The case is excepted
exhausting the property pointed out shall
where the creditor has required and
suffer the loss, to the extent of said
stipulated that a specified person should be
property, for the insolvency of the debtor
the guarantor. (1829a)
resulting from such negligence. (1833a)
 
Art. 2062. In every action by the creditor,
CHAPTER 2
which must be against the principal debtor
EFFECTS OF GUARANTY alone, except in the cases mentioned in
Article 2059, the former shall ask the court
SECTION 1. - Effects of Guaranty
to notify the guarantor of the action. The
Between the Guarantor and the Creditor guarantor may appear so that he may, if he
so desire, set up such defenses as are
granted him by law. The benefit of
Art. 2058. The guarantor cannot be excussion mentioned in Article 2058 shall
compelled to pay the creditor unless the always be unimpaired, even if judgment
latter has exhausted all the property of the should be rendered against the principal
debtor, and has resorted to all the legal debtor and the guarantor in case of
remedies against the debtor. (1830a) appearance by the latter. (1834a)
Art. 2059. The excussion shall not take Art. 2063. A compromise between the
place: creditor and the principal debtor benefits
(1) If the guarantor has expressly the guarantor but does not prejudice him.
renounced it; That which is entered into between the
guarantor and the creditor benefits but
(2) If he has bound himself solidarily with does not prejudice the principal debtor.
the debtor; (1835a)
(3) In case of insolvency of the debtor; Art. 2064. The guarantor of a guarantor
(4) When he has absconded, or cannot be shall enjoy the benefit of excussion, both
sued within the Philippines unless he has with respect to the guarantor and to the
left a manager or representative; principal debtor. (1836)

(5) If it may be presumed that an execution Art. 2065. Should there be several
on the property of the principal debtor guarantors of only one debtor and for the
would not result in the satisfaction of the same debt, the obligation to answer for the
obligation. (1831a) same is divided among all. The creditor
cannot claim from the guarantors except
Art. 2060. In order that the guarantor may the shares which they are respectively
make use of the benefit of exclusion, he bound to pay, unless solidarity has been
must set it up against the creditor upon the expressly stipulated.
latter's demand for payment from him, and
point out to the creditor available property The benefit of division against the co-
of the debtor within Philippine territory, guarantors ceases in the same cases and
for the same reasons as the benefit of
excussion against the principal debtor.
(1837) a fortuitous event from advising the debtor
  of the payment, and the creditor becomes
insolvent, the debtor shall reimburse the
SECTION 2. - Effects of Guaranty
guarantor for the amount paid. (1842a)
Between the Debtor and the Guarantor
Art. 2071. The guarantor, even before
having paid, may proceed against the
Art. 2066. The guarantor who pays for a principal debtor:
debtor must be indemnified by the latter.
(1) When he is sued for the payment;
The indemnity comprises:
(2) In case of insolvency of the principal
(1) The total amount of the debt; debtor;

(2) The legal interests thereon from the time (3) When the debtor has bound himself to
the payment was made known to the relieve him from the guaranty within a
debtor, even though it did not earn interest specified period, and this period has
for the creditor; expired;

(3) The expenses incurred by the guarantor (4) When the debt has become demandable,
after having notified the debtor that by reason of the expiration of the period for
payment had been demanded of him; payment;

(4) Damages, if they are due. (1838a) (5) After the lapse of ten years, when the
principal obligation has no fixed period for
Art. 2067. The guarantor who pays is its maturity, unless it be of such nature that
subrogated by virtue thereof to all the rights it cannot be extinguished except within a
which the creditor had against the debtor. period longer than ten years;
If the guarantor has compromised with the (6) If there are reasonable grounds to fear
creditor, he cannot demand of the debtor that the principal debtor intends to
more than what he has really paid. (1839) abscond;
Art. 2068. If the guarantor should pay (7) If the principal debtor is in imminent
without notifying the debtor, the latter may danger of becoming insolvent.
enforce against him all the defenses which
he could have set up against the creditor at In all these cases, the action of the
the time the payment was made. (1840) guarantor is to obtain release from the
guaranty, or to demand a security that shall
Art. 2069. If the debt was for a period and protect him from any proceedings by the
the guarantor paid it before it became due, creditor and from the danger of insolvency
he cannot demand reimbursement of the of the debtor. (1834a)
debtor until the expiration of the period
unless the payment has been ratified by the Art. 2072. If one, at the request of another,
debtor. (1841a) becomes a guarantor for the debt of a third
person who is not present, the guarantor
Art. 2070. If the guarantor has paid without who satisfies the debt may sue either the
notifying the debtor, and the latter not being person so requesting or the debtor for
aware of the payment, repeats the payment, reimbursement. (n)
the former has no remedy whatever against  
the debtor, but only against the creditor.
Nevertheless, in case of a gratuitous SECTION 3. - Effects of Guaranty as
guaranty, if the guarantor was prevented by Between Co-Guarantors
 consent of the others, benefits all to the
Art. 2073. When there are two or more extent of the share of the guarantor to
guarantors of the same debtor and for the whom it has been granted. (1850)
same debt, the one among them who has
Art. 2079. An extension granted to the
paid may demand of each of the others the
debtor by the creditor without the consent
share which is proportionally owing from
of the guarantor extinguishes the guaranty.
him.
The mere failure on the part of the creditor
If any of the guarantors should be to demand payment after the debt has
insolvent, his share shall be borne by the become due does not of itself constitute
others, including the payer, in the same any extention of time referred to herein.
proportion. (1851a)
The provisions of this article shall not be Art. 2080. The guarantors, even though they
applicable, unless the payment has been be solidary, are released from their
made by virtue of a judicial demand or obligation whenever by some act of the
unless the principal debtor is insolvent. creditor they cannot be subrogated to the
(1844a) rights, mortgages, and preference of the
latter. (1852)
Art. 2074. In the case of the preceding
article, the co-guarantors may set up Art. 2081. The guarantor may set up against
against the one who paid, the same the creditor all the defenses which pertain
defenses which would have pertained to the to the principal debtor and are inherent in
principal debtor against the creditor, and the debt; but not those that are personal to
which are not purely personal to the debtor. the debtor. (1853)
(1845)  
Art. 2075. A sub-guarantor, in case of the VI. Suretyship
insolvency of the guarantor for whom he A. Arts. 1207 to 1222, Civil Code
bound himself, is responsible to the co-
guarantors in the same terms as the SECTION 4. - Joint and Solidary Obligations
guarantor. (1846)
  Art. 1207. The concurrence of two or more
creditors or of two or more debtors in one and
CHAPTER 3 the same obligation does not imply that each one
of the former has a right to demand, or that each
EXTINGUISHMENT OF GUARANTY one of the latter is bound to render, entire
compliance with the prestation. There is a
solidary liability only when the obligation
Art. 2076. The obligation of the guarantor is
expressly so states, or when the law or the nature
extinguished at the same time as that of the
of the obligation requires solidarity. (1137a)
debtor, and for the same causes as all other Art. 1208. If from the law, or the nature or the
obligations. (1847) wording of the obligations to which the
Art. 2077. If the creditor voluntarily accepts preceding article refers the contrary does not
appear, the credit or debt shall be presumed to
immovable or other property in payment of
be divided into as many shares as there are
the debt, even if he should afterwards lose
creditors or debtors, the credits or debts being
the same through eviction, the guarantor is considered distinct from one another, subject to
released. (1849) the Rules of Court governing the multiplicity of
Art. 2078. A release made by the creditor in suits. (1138a)
favor of one of the guarantors, without the
Art. 1209. If the division is impossible, the right
of the creditors may be prejudiced only by their He who made the payment may claim from his
collective acts, and the debt can be enforced only co-debtors only the share which corresponds to
by proceeding against all the debtors. If one of each, with the interest for the payment already
the latter should be insolvent, the others shall not made. If the payment is made before the debt is
be liable for his share. (1139) due, no interest for the intervening period may
be demanded.
Art. 1210. The indivisibility of an obligation does
not necessarily give rise to solidarity. Nor does When one of the solidary debtors cannot,
solidarity of itself imply indivisibility. (n) because of his insolvency, reimburse his share to
the debtor paying the obligation, such share shall
Art. 1211. Solidarity may exist although the be borne by all his co-debtors, in proportion to
creditors and the debtors may not be bound in the debt of each. (1145a)
the same manner and by the same periods and
conditions. (1140) Art. 1218. Payment by a solidary debtor shall not
entitle him to reimbursement from his co-
Art. 1212. Each one of the solidary creditors may debtors if such payment is made after the
do whatever may be useful to the others, but not obligation has prescribed or become illegal. (n)
anything which may be prejudicial to the latter.
(1141a) Art. 1219. The remission made by the creditor of
the share which affects one of the solidary
Art. 1213. A solidary creditor cannot assign his debtors does not release the latter from his
rights without the consent of the others. (n) responsibility towards the co-debtors, in case the
debt had been totally paid by anyone of them
Art. 1214. The debtor may pay any one of the before the remission was effected. (1146a)
solidary creditors; but if any demand, judicial or
extrajudicial, has been made by one of them, Art. 1220. The remission of the whole obligation,
payment should be made to him. (1142a) obtained by one of the solidary debtors, does not
entitle him to reimbursement from his co-
Art. 1215. Novation, compensation, confusion or debtors. (n)
remission of the debt, made by any of the
solidary creditors or with any of the solidary Art. 1221. If the thing has been lost or if the
debtors, shall extinguish the obligation, without prestation has become impossible without the
prejudice to the provisions of Article 1219. fault of the solidary debtors, the obligation shall
be extinguished.
The creditor who may have executed any of these
acts, as well as he who collects the debt, shall be If there was fault on the part of any one of them,
liable to the others for the share in the obligation all shall be responsible to the creditor, for the
corresponding to them. (1143) price and the payment of damages and interest,
without prejudice to their action against the
Art. 1216. The creditor may proceed against any guilty or negligent debtor.
one of the solidary debtors or some or all of them
simultaneously. The demand made against one of If through a fortuitous event, the thing is lost or
them shall not be an obstacle to those which may the performance has become impossible after
subsequently be directed against the others, so one of the solidary debtors has incurred in delay
long as the debt has not been fully collected. through the judicial or extrajudicial demand
(1144a) upon him by the creditor, the provisions of the
preceding paragraph shall apply. (1147a)
Art. 1217. Payment made by one of the solidary
debtors extinguishes the obligation. If two or Art. 1222. A solidary debtor may, in actions filed
more solidary debtors offer to pay, the creditor by the creditor, avail himself of all defenses
may choose which offer to accept. which are derived from the nature of the
obligation and of those which are personal to P300,000.00 while Jacinto Uy Diño agreed to be
him, or pertain to his own share. With respect to bound up to the aggregate sum of P800,000.00.
those which personally belong to the others, he
Having paid the obligation under the above letter
may avail himself thereof only as regards that of credit in 1977, UTEFS, through Uy Tiam,
part of the debt for which the latter are obtained another credit accommodation from
responsible. (1148a) METROBANK
■ Common provision applicable to guaranty and It was applied for and obtained by UTEFS
suretyship: Art. 1403, par. 2(b) (Statute of Frauds) without the participation of Norberto Uy... and
Art. 1403. The following contracts are Jacinto Uy Diño as they did not sign the
unenforceable, unless they are ratified: document denominated as 'Commercial Letter of
(1) xxx Credit and Application.' Also, they were not
asked to execute any suretyship to guarantee its
(2) Those that do not comply with the payment.
Statute of Frauds as set forth in this Answering one of the demand letters, Diño, thru
number. In the following cases an counsel, denied his liability for the amount
agreement hereafter made shall be demanded and requested METROBANK to send
unenforceable by action, unless the same, him copies of documents showing the source of
or some note or memorandum, thereof, be his liability. In its reply, the bank informed him
in writing, and subscribed by the party that the source of his liability is... the Continuing
charged, or by his agent; evidence, Suretyship which he executed on February 25,
therefore, of the agreement cannot be 1977.
received without the writing, or a secondary Diño maintained that he cannot be held liable for
evidence of its contents: the 1979 credit accommodation because it is a
new obligation contracted without his
xxx participation.
(b) A special promise to answer for the
debt, default, or miscarriage of another; METROBANK filed a complaint for collection of a
sum of money
and Rule 135 of the Rules of Court They maintained that the obligation which they
B. Cases: guaranteed in 1977 has been extinguished...
since it has already been paid in the same year.
 Malayan Insurance Co. v. Salas (G.R. No.
L-48820, May 25, 1979, 90 SCRA 252) the bank argued that sureties-movants bound
 Diño v. CA (G.R. No. 89775, November 26, themselves as... solidary obligors of defendant
1992, 216 SCRA 9) Uy Tiam to both existing obligations and future
ones. It relied on Article 2053 of the new Civil
JACINTO UY DIÑO v. CA, GR No. 89775, 1992- Code which provides: 'A guaranty may also be
11-26 given as security for future debts, the amount of
which is not yet known; x x x.'
Facts:
They further claim that... they were not advised
Uy Tiam Enterprises and Freight Services... by either METROBANK or Uy Tiam that the
applied for and obtained credit Continuing Suretyship Agreements would stand
accommodations... from the Metropolitan Bank as security for the 1979 obligation.
and
they cannot be held liable for more than what
Trust Company... in the sum of P700,000.00 they guaranteed to pay because it is axiomatic
Norberto Uy and Jacinto Uy Diño executed that the obligations of a surety cannot extend
separate Continuing Suretyships beyond what is stipulated in the agreement.

Under the aforesaid agreements, Norberto Uy Issues:

agreed to pay METROBANK any indebtedness
of UTEFS up to the aggregate sum of
Whether petitioners are liable as sureties for the Article 2052 speaks about a valid obligation, as...
1979 obligations of Uy Tiam to METROBANK by distinguished from a void obligation, and not an
virtue of the Continuing Suretyship Agreements... existing or current obligation.
what is the extent of their liabilities for said 1979
obligations. The limit of the petitioners' respective liabilities
must be determined from the suretyship
Ruling: agreement each had signed... and such interest
as may accrue thereon either before or after any
A continuing guaranty is one which is not limited maturity(ies) thereof and such expenses as may
to a single transaction, but which contemplates a be incurred by the BANK referred to above...
future course of dealing, covering a series of petitioners separately bound themselves to pay
transactions, generally for an indefinite time or interests, expenses, attorney's fees and costs.
until revoked. It is prospective in its operation and The last two items are pegged at not less... than
is generally... intended to provide security with ten percent (10%) of the amount due.
respect to future transactions within certain limits,
and contemplates a succession of liabilities, for Even without such stipulations, the petitioners
which, as they accrue, the guarantor becomes would, nevertheless, be liable for the interest and
liable... a continuing... guaranty is one which judicial costs. Article 2055 of the Civil Code
covers all transactions, including those arising in provides:[21]
the future, which are within the description or
contemplation of the contract of guaranty, until "ART. 2055. A guaranty is not presumed; it must
the expiration or termination thereof. be express and cannot extend to more than what
is stipulated therein.
suretyship agreement executed by petitioner Uy
provides thus:... in order... to induce the BANK, in If it be simple or indefinite, it shall comprise not
its discretion, at any time or from time to time only the principal obligation, but also all its
hereafter, to... make loans or advances or to accessories, including the judicial costs, provided
extend credit in any other... manner to, or at the with respect to the latter, that the guarantor shall
request, or for the account of... the Borrower only be liable for those costs incurred after he
has been... judicially required to pay."
SURETY agrees to guarantee, and... does
hereby guarantee, the punctual payment at Interests and damages are included in the term
maturity to the BANK... of any and all such accessories. However, such interest should run
instruments, loans, advances credits and/or... only from the date when the complaint was filed
other obligations hereinbefore referred to, and in court.
also any and all... other indebtedness of every
kind which is now or may hereafter become due
or owing to... the BANK by the Borrower,... This  Willex Plastic Industries v. CA (G.R. No.
is a continuing guaranty and shall remain in full 103066, April 25, 1996, 256 SCRA 479)
force and effect until... written notice shall have
 South City Homes v. BA Finance
been received by the BANK that it has been
revoked by... the SURETY, but any such notice
Corporation (G.R. No. 135462 - December
shall not release the SURETY... from any liability 7, 2001, 371 SCRA 603)

Neither have they denied the fact that they had

not revoked the suretyship agreements.
Undoubtedly, the purpose of the execution of the
Continuing Suretyships was to induce appellant
to grant any application for credit accommodation CHAPTER 4

Petitioners maintain, however, that their LEGAL AND JUDICIAL BONDS

Continuing Suretyship Agreements cannot be
made applicable to the 1979 obligation because
the latter was not yet in existence when the Art. 2082. The bondsman who is to be
agreements were executed in 1977 offered in virtue of a provision of law or of a
judicial order shall have the qualifications
prescribed in Article 2056 and in special Third persons who are not parties to the
laws. (1854a) principal obligation may secure the latter by
pledging or mortgaging their own property.
Art. 2083. If the person bound to give a
(1857)
bond in the cases of the preceding article,
should not be able to do so, a pledge or Art. 2086. The provisions of Article 2052 are
mortgage considered sufficient to cover his applicable to a pledge or mortgage. (n)
obligation shall be admitted in lieu thereof.
Art. 2087. It is also of the essence of these
(1855)
contracts that when the principal obligation
Art. 2084. A judicial bondsman cannot becomes due, the things in which the
demand the exhaustion of the property of pledge or mortgage consists may be
the principal debtor. alienated for the payment to the creditor.
(1858)
A sub-surety in the same case, cannot
demand the exhaustion of the property of Art. 2088. The creditor cannot appropriate
the debtor of the surety. the things given by way of pledge or
  mortgage, or dispose of them. Any
stipulation to the contrary is null and void.
(1859a)
VII. Pledge
Art. 2089. A pledge or mortgage is
A. Arts. 2085 to 2092, Civil Code
(Provisions Common to Pledge and indivisible, even though the debt may be
Mortgage) divided among the successors in interest of
B. Arts. 2093 to 2123, Civil Code the debtor or of the creditor.

Title XVI. - PLEDGE, MORTGAGE AND Therefore, the debtor's heir who has paid a
ANTICHRESIS part of the debt cannot ask for the
proportionate extinguishment of the pledge
  or mortgage as long as the debt is not
CHAPTER 1 completely satisfied.

PROVISIONS COMMON TO PLEDGE AND Neither can the creditor's heir who received
MORTGAGE his share of the debt return the pledge or
cancel the mortgage, to the prejudice of the
other heirs who have not been paid.
Art. 2085. The following requisites are
essential to the contracts of pledge and From these provisions is expected the case
mortgage: in which, there being several things given in
mortgage or pledge, each one of them
(1) That they be constituted to secure the guarantees only a determinate portion of
fulfillment of a principal obligation; the credit.
(2) That the pledgor or mortgagor be the The debtor, in this case, shall have a right
absolute owner of the thing pledged or to the extinguishment of the pledge or
mortgaged; mortgage as the portion of the debt for
(3) That the persons constituting the pledge which each thing is specially answerable is
or mortgage have the free disposal of their satisfied. (1860)
property, and in the absence thereof, that Art. 2090. The indivisibility of a pledge or
they be legally authorized for the purpose. mortgage is not affected by the fact that the
debtors are not solidarily liable. (n)
Art. 2091. The contract of pledge or
mortgage may secure all kinds of
obligations, be they pure or subject to a
suspensive or resolutory condition. (1861)
Art. 2092. A promise to constitute a pledge
or mortgage gives rise only to a personal
action between the contracting parties,
without prejudice to the criminal
responsibility incurred by him who
defrauds another, by offering in pledge or
mortgage as unencumbered, things which
he knew were subject to some burden, or
by misrepresenting himself to be the owner
of the same. (1862)
 
CHAPTER 2 Art. 2100. The pledgee cannot deposit the
thing pledged with a third person, unless
PLEDGE
there is a stipulation authorizing him to do
so.
Art. 2093. In addition to the requisites
The pledgee is responsible for the acts of
prescribed in Article 2085, it is necessary,
his agents or employees with respect to the
in order to constitute the contract of pledge,
thing pledged. (n)
that the thing pledged be placed in the
possession of the creditor, or of a third Art. 2101. The pledgor has the same
person by common agreement. (1863) responsibility as a bailor in commodatum in
the case under Article 1951. (n)
Art. 2094. All movables which are within
commerce may be pledged, provided they Art. 2102. If the pledge earns or produces
are susceptible of possession. (1864) fruits, income, dividends, or interests, the
creditor shall compensate what he receives
Art. 2095. Incorporeal rights, evidenced by
with those which are owing him; but if none
negotiable instruments, bills of lading,
are owing him, or insofar as the amount
shares of stock, bonds, warehouse receipts
may exceed that which is due, he shall
and similar documents may also be
apply it to the principal. Unless there is a
pledged. The instrument proving the right
stipulation to the contrary, the pledge shall
pledged shall be delivered to the creditor,
extend to the interest and earnings of the
and if negotiable, must be indorsed. (n)
right pledged.
Art. 2096. A pledge shall not take effect
In case of a pledge of animals, their
against third persons if a description of the
offspring shall pertain to the pledgor or
thing pledged and the date of the pledge do
owner of animals pledged, but shall be
not appear in a public instrument. (1865a)
subject to the pledge, if there is no
Art. 2097. With the consent of the pledgee, stipulation to the contrary. (1868a)
the thing pledged may be alienated by the
Art. 2103. Unless the thing pledged is
pledgor or owner, subject to the pledge.
expropriated, the debtor continues to be the
The ownership of the thing pledged is
owner thereof.
transmitted to the vendee or transferee as
soon as the pledgee consents to the Nevertheless, the creditor may bring the
alienation, but the latter shall continue in actions which pertain to the owner of the
possession. (n) thing pledged in order to recover it from, or
defend it against a third person. (1869)
Art. 2098. The contract of pledge gives a
right to the creditor to retain the thing in his Art. 2104. The creditor cannot use the thing
possession or in that of a third person to pledged, without the authority of the owner,
whom it has been delivered, until the debt is and if he should do so, or should misuse
paid. (1866a) the thing in any other way, the owner may
ask that it be judicially or extrajudicially
Art. 2099. The creditor shall take care of the
deposited. When the preservation of the
thing pledged with the diligence of a good
thing pledged requires its use, it must be
father of a family; he has a right to the
used by the creditor but only for that
reimbursement of the expenses made for its
purpose. (1870a)
preservation, and is liable for its loss or
deterioration, in conformity with the Art. 2105. The debtor cannot ask for the
provisions of this Code. (1867) return of the thing pledged against the will
of the creditor, unless and until he has paid
the debt and its interest, with expenses in a received it from the pledgor or owner after
proper case. (1871) the constitution of the pledge. (n)
Art. 2106. If through the negligence or wilful Art. 2111. A statement in writing by the
act of the pledgee, the thing pledged is in pledgee that he renounces or abandons the
danger of being lost or impaired, the pledge is sufficient to extinguish the
pledgor may require that it be deposited pledge. For this purpose, neither the
with a third person. (n) acceptance by the pledgor or owner, nor
the return of the thing pledged is
Art. 2107. If there are reasonable grounds to
necessary, the pledgee becoming a
fear the destruction or impairment of the
depositary. (n)
thing pledged, without the fault of the
pledgee, the pledgor may demand the Art. 2112. The creditor to whom the credit
return of the thing, upon offering another has not been satisfied in due time, may
thing in pledge, provided the latter is of the proceed before a Notary Public to the sale
same kind as the former and not of inferior of the thing pledged. This sale shall be
quality, and without prejudice to the right of made at a public auction, and with
the pledgee under the provisions of the notification to the debtor and the owner of
following article. the thing pledged in a proper case, stating
the amount for which the public sale is to
The pledgee is bound to advise the pledgor,
be held. If at the first auction the thing is
without delay, of any danger to the thing
not sold, a second one with the same
pledged. (n)
formalities shall be held; and if at the
Art. 2108. If, without the fault of the pledgee, second auction there is no sale either, the
there is danger of destruction, impairment, creditor may appropriate the thing pledged.
or diminution in value of the thing pledged, In this case he shall be obliged to give an
he may cause the same to be sold at a acquittance for his entire claim. (1872a)
public sale. The proceeds of the auction
Art. 2113. At the public auction, the pledgor
shall be a security for the principal
or owner may bid. He shall, moreover, have
obligation in the same manner as the thing
a better right if he should offer the same
originally pledged. (n)
terms as the highest bidder.
Art. 2109. If the creditor is deceived on the
The pledgee may also bid, but his offer
substance or quality of the thing pledged,
shall not be valid if he is the only bidder. (n)
he may either claim another thing in its
stead, or demand immediate payment of the Art. 2114. All bids at the public auction shall
principal obligation. (n) offer to pay the purchase price at once. If
any other bid is accepted, the pledgee is
Art. 2110. If the thing pledged is returned by
deemed to have been received the purchase
the pledgee to the pledgor or owner, the
price, as far as the pledgor or owner is
pledge is extinguished. Any stipulation to
concerned. (n)
the contrary shall be void.
Art. 2115. The sale of the thing pledged
If subsequent to the perfection of the
shall extinguish the principal obligation,
pledge, the thing is in the possession of the
whether or not the proceeds of the sale are
pledgor or owner, there is a prima facie
equal to the amount of the principal
presumption that the same has been
obligation, interest and expenses in a
returned by the pledgee. This same
proper case. If the price of the sale is more
presumption exists if the thing pledged is in
than said amount, the debtor shall not be
the possession of a third person who has
entitled to the excess, unless it is otherwise
agreed. If the price of the sale is less, is retained. The public auction shall take
neither shall the creditor be entitled to place within one month after such demand.
recover the deficiency, notwithstanding any If, without just grounds, the creditor does
stipulation to the contrary. (n) not cause the public sale to be held within
such period, the debtor may require the
Art. 2116. After the public auction, the
return of the thing. (n)
pledgee shall promptly advise the pledgor
or owner of the result thereof. (n) Art. 2123. With regard to pawnshops and
other establishments, which are engaged in
Art. 2117. Any third person who has any
making loans secured by pledges, the
right in or to the thing pledged may satisfy
special laws and regulations concerning
the principal obligation as soon as the latter
them shall be observed, and subsidiarily,
becomes due and demandable.(n)
the provisions of this Title. (1873a)
Art. 2118. If a credit which has been
pledged becomes due before it is
redeemed, the pledgee may collect and
receive the amount due. He shall apply the
same to the payment of his claim, and
deliver the surplus, should there be any, to
the pledgor. (n)
Art. 2119. If two or more things are pledged,
the pledgee may choose which he will
cause to be sold, unless there is a
stipulation to the contrary. He may demand
the sale of only as many of the things as are
necessary for the payment of the debt. (n)
Art. 2120. If a third party secures an
obligation by pledging his own movable
property under the provisions of Article
2085 he shall have the same rights as a
guarantor under Articles 2066 to 2070, and
Articles 2077 to 2081. He is not prejudiced
by any waiver of defense by the principal
obligor. (n)
Art. 2121. Pledges created by operation of
law, such as those referred to in Articles
546, 1731, and 1994, are governed by the
foregoing articles on the possession, care
and sale of the thing as well as on the
termination of the pledge. However, after
payment of the debt and expenses, the
remainder of the price of the sale shall be
delivered to the obligor. (n)
Art. 2122. A thing under a pledge by
operation of law may be sold only after
demand of the amount for which the thing