Mode of Extinguishment
Imperial Insurance v. Delos Angeles (G.R. No. L-28030, January 18,
1982)
Fernandez, J.
FACTS:
 Private respondents are the plaintiffs in 2 separate cases
where they obtained a writ of preliminary attachment and,
accordingly, levied upon all the properties of the defendant,
Felicisimo V. Reyes.
 For the dissolution of the said attachments, The Imperial
Insurance, Inc., as surety, and Felicisimo, as principal,
posted a bond of P60,000.00 in one case and P40,000.00 in
another.
 Both cases were tried jointly and a decision was rendered in
favor of the plaintiffs. The records of the cases were
remanded to the CFI-Quezon, for execution of judgment.
The lower Court, presided by Judge Delos Angeles, issued
the writs of execution of judgment in said cases. The
Provincial Sheriff of Bulacan returned the writs of execution'
unsatisfied in whole or in part'.
 Private respondents filed a 'motion for recovery on the
surety bonds'. Thereafter, said private respondents, thru
counsel, sent a letter of demand upon petitioner asking the
latter to pay them the accounts on the counter-bonds.
Respondent Judge, in his order, rendered judgment against
the counter-bonds.
 Petitioner filed a petition for certiorari with prayer for for
preliminary injunction with the Court of Appeals to restrain
the enforcement of the writ of execution.
 During the pendency of the case, the defendant, Felicisimo
died. He was duly substituted by his surviving spouse, Emilia
T. David, an administratrix of his intestate estate.
ISSUE: W/N the CA erred in holding that Judge Delos Angeles could
legally issue the writ of execution against the petitioner as surety in
a counterbond (bond to dissolve attachment) on the basis of an ex-
parte motion for execution which was neither served upon the
surety nor set for hearing. NO.
 W/N the counterbonds given by the defendant Felicisimo
and its surety, The Imperial Insurance, should me made
liable after the execution was returned unsatisfied. YES.
HELD:
 Although the counterbond contemplated in the
aforequoted Sec. 17, Rule 57, of the Rules of Court is an
ordinary guaranty where the sureties assume a subsidiary
liability, the rule cannot apply to a counterbond where the
surety bound itself "jointly and severally" (in solidum) with
the defendant as in the present case.
 The Imperial Insurance, Inc. had bound itself solidarily with
the principal, the deceased defendant Felicisimo V. Reyes.
In accordance with Article 2059, par. 2 of the CC of the Phil.,
excussion (previous exhaustion of the property of the
debtor) shall not take place "if he (the guarantor) has bound
himself solidarily with the debtor."
 The judgment having been rendered against the defendant,
Felicisimo V. Reyes, the counter-bonds given by him and the
surety, The Imperial Insurance, Inc., under Sec. 12, Rule 57
are made liable after execution was returned unsatisfied.
Under the said rule, a demand shall be made upon the
surety to pay the plaintiff the amount due on the judgment,
and if no payment is so made, the amount may be
recovered from such surety after notice and hearing in the
same action. A separate action against the sureties is not
necessary. 
 In the present case, the demand upon the petitioner surety
was made with due notice and hearing thereon when the
Mode of Extinguishment
private respondents filed the motion for recovery on the
surety bonds.
 Therefore, all the requisites under Sec. 17, Rule 57, being
present, namely: (1) the writ of execution must be returned
unsatisfied, in whole or in part; (2) the plaintiff must
demand the amount due under the judgment from the
surety or sureties, and (3) notice and hearing of such
demand although in a summary manner, complied with, the
liability of the petitioner automatically attaches.
 As a solidary guarantor, the petitioner, the Imperial
Insurance, Inc., is liable to pay the amount due on such
counter-bonds should the creditors, private respondents
herein, choose to go directly after it.
G.R. No. L-16666 April 10, 1922
ROMULO MACHETTI, plaintiff-appelle,
vs.
HOSPICIO DE SAN JOSE, defendant-appellee, and
FIDELITY & SURETY COMPANY OF THE PHILIPPINE ISLANDS,
defendant-appellant
Ross and Laurence and Wolfson & Scwarzkopf for appellant.
Gabriel La O for appellee Hospicio de San Jose.
No appearance for the other appellee.
OSTRAND, J.:
It appears from the evidence that on July 17, 1916, one Romulo
Machetti, by a written agreement undertook to construct a building
on Calle Rosario in the city of Manila for the Hospicio de San Jose,
the contract price being P64,000. One of the conditions of the
agreement was that the contractor should obtain the "guarantee"
of the Fidelity and Surety Company of the Philippine Islands to the
amount of P128,800 and the following endorsement in the English
language appears upon the contract:
MANILA, July 15, 1916.
For value received we hereby guarantee compliance with the terms
and conditions as outlined in the above contract.
FIDELITY AND SURETY COMPANY OF THE PHILIPPINE ISLANDS.
(Sgd) OTTO VORSTER,
Vice-President.
Machetti constructed the building under the supervision of
architects representing the Hospicio de San Jose and, as the work
progressed, payments were made to him from time to time upon
the recommendation of the architects, until the entire contract
price, with the exception of the sum of the P4,978.08, was paid.
Subsequently it was found that the work had not been carried out in
accordance with the specifications which formed part of the
contract and that the workmanship was not of the standard
required, and the Hospicio de San Jose therefore answered the
complaint and presented a counterclaim for damages for the partial
noncompliance with the terms of the agreement abovementioned,
in the total sum of P71,350. After issue was thus joined, Machetti,
on petition of his creditors, was, on February 27, 1918, declared
insolvent and on March 4, 1918, an order was entered suspending
the proceeding in the present case in accordance with section 60 of
the Insolvency Law, Act No. 1956.
The Hospicio de San Jose on January 29, 1919, filed a motion asking
that the Fidelity and Surety Company be made cross-defendant to
the exclusion of Machetti and that the proceedings be continued as
to said company, but still remain suspended as to Machetti. This
Mode of Extinguishment
motion was granted and on February 7, 1920, the Hospicio filed a
complaint against the Fidelity and Surety Company asking for a
judgement for P12,800 against the company upon its guaranty.
After trial, the Court of First Instance rendered judgment against the
Fidelity and Surety Company for P12,800 in accordance with the
complaint. The case is now before this court upon appeal by the
Fidelity and Surety Company form said judgment.
As will be seen, the original action which Machetti was the plaintiff
and the Hospicio de San Jose defendant, has been converted into an
action in which the Hospicio de San Jose is plaintiff and the Fidelity
and Surety Company, the original plaintiff's guarantor, is the
defendant, Machetti having been practically eliminated from the
case.
But in this instance the guarantor's case is even stronger than that
of an ordinary surety. The contract of guaranty is written in the
English language and the terms employed must of course be given
the signification which ordinarily attaches to them in that language.
In English the term "guarantor" implies an undertaking of guaranty,
as distinguished from suretyship. It is very true that notwithstanding
the use of the words "guarantee" or "guaranty" circumstances may
be shown which convert the contract into one of suretyship but
such circumstances do not exist in the present case; on the contrary
it appear affirmatively that the contract is the guarantor's separate
undertaking in which the principal does not join, that its rests on a
separate consideration moving from the principal and that although
it is written in continuation of the contract for the construction of
the building, it is a collateral undertaking separate and distinct from
the latter. All of these circumstances are distinguishing features of
contracts of guaranty.
Now, while a surety undertakes to pay if the principal does not pay,
the guarantor only binds himself to pay if the principal cannot pay.
The one is the insurer of the debt, the other an insurer of the
solvency of the debtor. (Saint vs. Wheeler & Wilson Mfg. Co., 95
Ala., 362; Campbell, vs. Sherman, 151 Pa. St., 70; Castellvi de Higgins
and Higgins vs. Sellner, 41 Phil., 142; ;U.S. vs. Varadero de la Quinta,
40 Phil., 48.) This latter liability is what the Fidelity and Surety
Company assumed in the present case. The undertaking is perhaps
not exactly that of a fianza under the Civil Code, but is a perfectly
valid contract and must be given the legal effect if ordinarily carries.
The Fidelity and Surety Company having bound itself to pay only the
event its principal, Machetti, cannot pay it follows that it cannot be
compelled to pay until it is shown that Machetti is unable to pay.
Such ability may be proven by the return of a writ of execution
unsatisfied or by other means, but is not sufficiently established by
the mere fact that he has been declared insolvent in insolvency
proceedings under our statutes, in which the extent of the
insolvent's inability to pay is not determined until the final
liquidation of his estate.
The judgment appealed from is therefore reversed without costs
and without prejudice to such right of action as the cross-
complainant, the Hospicio de San Jose, may have after exhausting
its remedy against the plaintiff Machetti. So ordered.
Castellvi de Higgins & Higgins vs. Sellner [G.R. No. L-158025,
November 5, 1920]
MALCOLM, J.
Facts:
 Sellner (defendant) wrote a letter to Mcleod (Castellvi’s
agent) saying that he would bound himself to pay the
promissory note of Mining, Clarke and Maye amounting
10K + interest if not fully paid at maturity, upon the
surrender 3k shares of Keystone Mining Company.
Mode of Extinguishment

 Plaintiffs contend that he is a surety; defendant contends regular party to upon an independent agreement to pay the
that he is a guarantor. Plaintiffs also admit that if defendant obligation if the primary pay or fails to do so. A surety is
is a guarantor, articles 1830, 1831, and 1834 of the Civil charged as an original promissory; the engagement of the
Code govern. guarantor is a collateral undertaking. The obligation of the
surety is primary; the obligation of the guarantor is
Issue: WON Sellner is a guarantor or surety? secondary.
 The civil law suretyship is, accordingly, nearly synonymous
Held: with the common law guaranty; and the civil law
 Sellner is a GUARANTOR. The letter of Mr. Sellner recites relationship existing between codebtors liable in solidum is
that if the promissory note is not paid at maturity, then, similar to the common law suretyship.
within fifteen days after notice of such default and upon
surrender to him of the three thousand shares of Keystone
Mining Company stock, he will assume responsibility.
 Sellner was not bound with Castellvi by the same
instrument executed at the time and the same
consideration, but his responsibility was secondary, one
founded on an independent collateral agreement. Neither
was he jointly and severally liable with Castellvi.
 In the original Spanish of the Civil Code now in force in the
Philippine Islands, Title XIV of Book IV is entitled "De la
Fianza." The Spanish word "fianza" is translated in the
Washington and Walton editions of the Civil Code as
"security." "Fianza" appears in the Fisher translation as
"suretyship." The Spanish world "fiador" is found in all of
the English translations of the Civil Code as "surety." The
law of guaranty is not related of by that name in the Civil
Code, although indirect reference to the same is made in
the Code of Commerce. In terminology at least, no
distinction is made in the Civil Code between the obligation
of a surety and that of a guarantor.
 A surety and a guarantor are alike in that each promises to
answer for the debt or default of another. A surety and a
guarantor are unlike in that the surety assumes liability as a
regular party to the undertaking, while the liability as a