Suretyship (Article 2047)

The statutory definition of suretyship is found in Article 2047 of the Civil Code, thus:

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 solidarity 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. (Emphasis supplied.)

Jurisprudence also defines a contract of suretyship as "an agreement where a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third person called the obligee. Specifically, suretyship is a contractual relation resulting from an agreement whereby one person, the surety, engages to be answerable for the debt, default or miscarriage of another, known as the principal." (Visayan Surety & Insurance Corporation v. Court of Appeals, 417 Phil. 110, 116-117 [2001]) The Court expounds that "a surety's liability is joint and several, limited to the amount of the bond, and determined strictly by the terms of contract of suretyship in relation to the principal contract between the obligor and the obligee. It bears stressing, however, that although the contract of suretyship is secondary to the principal contract, the surety's liability to the obligee is nevertheless direct, primary, and absolute." (The Manila Insurance Company, Inc. v. Amurao, G.R. No. 179628, January 16, 2013)