Effects of merger upon guarantors

For a confusion to take place it must be between the principal debtor and creditor and the same obligation must be involved. The obligation is extinguished from the time the characters of debtor and creditor are merged in the same person.[1] Article 1276 of the Civil Code discusses the effect of merger upon guarantors, to wit:
ART. 1276. Merger which takes place in the person of the principal debtor or creditor benefits the guarantors. Confusion which takes place in the person of any of the latter does not extinguish the obligation. (1193)
 If a merger takes place between the principal debtor or creditor, the principal obligation is extinguished. Thus, it will benefit the guarantor because the obligation of the guarantor is merely an accessory obligation. Since the guarantor's obligation is an accessory one, the extinguishment of principal obligation also results to extinguishment of the accessory obligation. However, when confusion takes place between the principal creditor and the guarantor, only the accessory obligation is extinguished. One of the requisites of a valid confusion is that the very same obligation between principal debtor and creditor should be involved. Here, the obligation of the guarantor is only accessory. Therefore, the principal obligation remains. The reason for this is that the principal obligation may exist without any accessory obligation while the latter cannot.

[1] Article 1275, Civil Code.