Liability of a Co-Maker: Distinguished from Guarantor

Maybe you’ve been asked by a friend to sign as a co-maker in a loan. You’re then asked to sign a promissory note or a debt instrument which designates you as a co-maker. There should be no problem with this, as the principal is usually someone we know and trust. I’ve seen, however, co-makers being held liable because the principal debtor was not able to pay. We also have a number of queries related to this issue. So let’s have a brief discussion on the extent of a co-maker’s liability.

A co-maker may be asked to sign on a space provided on the main loan agreement. In other instances, the co-maker is asked to sign a promissory note that looks like this:

I, ____, as the co-maker of the above-quoted loan, have fully understood the contents of this Promissory Note for Short-Term Loan. That as Co-maker, I am fully aware that I shall be jointly and severally or solidarily liable with the above principal maker of this note.

In case of breach of contract or non-payment of the loan, the lender may take any of the following options:

  1. Proceed against the principal debtor
  2. Proceed directly against the co-maker even without trying to collect from the principal debtor.
  3. Proceed simultaneously against both the principal and the co-maker.

Of course, the co-maker may also go against the principal debtor for reimbursement, but this is not an excuse against the lender.

A co-maker is generally treated as a surety. In a contract of suretyship, one lends his credit by joining in the principal debtor’s obligation, so as to render himself directly and primarily responsible with the principal debtor. A surety is bound equally and absolutely with the principal, and is deemed an original promisor and debtor from the beginning. This is because in suretyship there is but one contract, and the surety is bound by the same agreement which binds the principal.

In some instances, the co-maker would argue that he/she is merely a guarantor, not a surety. The two concepts, of course, are different. A surety is an insurer of the debt, whereas a guarantor is an insurer of the solvency of the debtor. A suretyship is an undertaking that the debt shall be paid; a guaranty, an undertaking that the debtor shall pay. Stated differently, a surety promises to pay the principal’s debt if the principal will not pay, while a guarantor agrees that the creditor, after proceeding against the principal, may proceed against the guarantor if the principal is unable to pay.  A surety binds himself to perform if the principal does not, without regard to his ability to do so. A guarantor, on the other hand, does not contract that the principal will pay, but simply that he is able to do so. In other words, a surety undertakes directly for the payment and is so responsible at once if the principal debtor makes default, while a guarantor contracts to pay if, by the use of due diligence, the debt cannot be made out of the principal debtor.

Source: Palmares vs. CA, G.R. No. 126490, 31 March 1998

42 thoughts on “Liability of a Co-Maker: Distinguished from Guarantor

  1. winters_galdo

    i would like to ask, what i can do to stop the lending company from asking me to pay the money that my friend borrowed from them? i signed as a co maker for my friend..she resigned from where i am working now ,and became dilinquent in paying her amortization. when i came to see her parents to ask where their daughter is, they said they dont have contact with her anymore, which is unbelievable…i think they are lying…what i can do with the summon that i received, that is asking me to appear in court within ten days of my receipt of that notice?

    should i go? and what would be the process then? what if the principal debtor herself would not appear…does it mean,they can force me to pay in behalf of my friend?

    Reply
    1. rubinson

      i would like to ask i comake my co worker and she was resigned last december 2014 and i been received a notice on our company to pay for the balance
      my question am i liable to paid eventhough almost 1 year and 4 months past

      for your assistance pls

      Reply
    2. SoL

      i would like to ask if i have i can file a case to the principal borrower because the deduction that was suppose to be paid by her was cut off and instead deducted from me she resign from work.and now she has no work how can i get back the moneyni paid for her i will not file a case and what will be the case. Thank you and GODBLESS.

      Reply
  2. anghel

    gusto k rin po humingi ng tulong. i have the same situation with winters_galdo. the bank want me to pay for the debt of my cousins. since co-maker daw po ako. eh she suggested naireloan k daw po ang loan ng cousin k. pra daw po mabayaran. ipapaabugado n daw po kc nila tapos ippasheriff din daw po ako kc mapapadalhan daw po ako ng notice from sheriff. as of now eh wala rin po akong contact s cousin k. umalis po siya dito sa amin kc madami po siyang pinagkakautangan. tama po b n ireloan un. eh hindi k rin po kayang bayaran ang utang ng cousin ko kc may mga binabayaran din po kasi akong utang namin. at saka pag nagre-loan eh sa akin n iyon ipapangalan.

    another thing po is co-obligor din po ako sa isang microfinancing n kung saan po eh weekly ang bayad. eh eto po uling pinsan k ang involve. hay! tama po b na magpull-out sila ng gamit namin para isangla para maipangbayad s kanila weekly? hindi po kc sila naalis ng walang naibibigay ng payment. kahit anong paliwanag k n po na wala akong pambayad eh nun time na un eh gipit ako. pilit po nila akong pinauutang s ibang tao para lng po mapunan un monthly payment ng pinsan ko. so ang nangyari eh nag pull-out po sila ng gamit. tama po b iyon?

    Reply
    1. lucila

      PUEDE PO MANGHINGI NG ADVISE?? my friend po ako na nag guarantor sa utang ng kanyang bilas, in other words, nag issue po ng tseke ang guarantor (pdc)., ngayon, hindi po nagbabayad yong nangutang so walang pondo na pumapasok sa tseke, ( closed account).

      may kaso po ba rito ang nag guarantor sa utang. Umabot na po sa 119 thousand yong utang . YOng guarantor po ang pinipilit na magbayad ng lahat since yun pong umutang e ofw at hindi nag papadala ng pambayad.

      puede po ba syang kasuhan ng estafa dahil sa pag papagamit nya ng tseke nya.

      Reply
  3. nancy

    pwede ba ma renew ang loan without the knowledge and consent of the co maker? what if ang co maker na ang tine-threaten ng lender, pwede ba sila kasuhan?

    Reply
    1. Ben

      Generally, bawat utang may contract na pipirmahan. Ideally dapat present at personal na mag-sign ang maker at co-maker sa contract na iyon. Matatapos ang contract na iyon kapag natapos na makapagbayad ang nagkautang. Kapag mag renew ulit ang nangutang, dapat panibagong contract na iyon, wala nang kinalaman sa dati. Para masagot ang tanong mo, hindi pwede ma renew ang loan at ikaw pa ang co-maker na walang acknowledgement or pirma mo. Pero sa situwasyon mo i verify mo kung ikaw parin ang nakapirma duon. Kasi pwedeng na “reconstruct” lang ang loan at hindi dahil sa nabago ang loan. Reconstruct dahil hindi kinaya ng maker ang tamang pagbayad at na ayos ayon sa kakayahan niya magbayad at dahil dito maaaring aakyat ang babarayan dahil sa interest (ito ay para sa ibang nagpapautang at hindi sa lahat). Tandaan ang role ng pagiging guarantor, na ikaw rin ang magbabayad kapag hindi nagawa ng borrower, kahit na hindi mo nagamit ang perang nahiram. Ang pwedeng gawin ng lender ay idaan sa Barangay para isettle ang utang, o kaya naman diretso sa “Small Claims” para maghain. Maliban duon hindi na sila pwede mag threaten. Sana nakatulong ito.

      Reply
  4. mhayer

    nakakaranas din po ako ng parehas na sitwasyon. ako din po ang siningil sa utang ng friend ko kasi nowhere to be found na ang friend ko na syang principal na me pagkakautang..pati nga po ako ay nautangan at tinakbuhan nya din..pero bilang co-maker nya po ay ako ang sinisingil ng pinag-loanan nya..this is so unfair po para sakin lalo na at biktima din ako..meron po ba akong legal rights para maprotektahan naman po ako sa sitwasyong ito at di po ako mapademanda sa utang na di naman po sa akin?..maraming salamat po

    Reply
  5. what

    parehas din po ang situasyon ko sa iba. Kinakaltasan po ako ng sweldo para mabayaran ang utang n hindi nman po sa akin pero sabi po ng HR namin mo responsibilidad dw po ako bayaran ang utang ng kasamahan ko na tinanggal po sa trabaho dahil ako po ay co-maker. Tanong ko po responsibilidad po ba talaga ng co-maker na magbayad? Meron po kaya akong laban kung irereklamo ko po ito. Salamat po.

    Reply
  6. miggy

    Hi, i have same situation po , ngcomaker din po kasi ako sa isang friend kasi close naman po kami and parehas po kaming my work, but a couple of months hindi na sya pumpsok after nyang makakuha ng pera and dahil dun natanggal sya sa trabaho ang masama po nito hindi na rin po sya ngpapakita sa akin even puntuhan ko family nya hindi na rin da sya umuuwe sa knila, ano po pde kong gawin para lang maayos ko ginaw ng friend ko and pde ba kong magsampa ng kaso sknya? please help naman po,

    Reply
  7. jadii

    hello good day !! matanong ko lang po kahit po ba 5,000 pesos and below ang inutang na pera sa lending is the co-maker liable to pay parin po ba??
    thank you 🙂

    jadii08

    Reply
  8. problemado

    Ang problema ko po ay isinanla ko ang ATM ko sa nagpapautang with only my salary na papasok dun ang kukunin. Ngayon may kaibigan ako na customer din nya nagkasabay kami na nagpunta sa inuutangan namin tapos nag additional sya ng 60k komo nandun ako at kilala na nung ngpapautang pinapirma ako tapos ngayon di na nakakabyad yung friend ko ako na ang hinahabol ng lahat ng utang nya na umabot na ng 380,000.00 lahat na ng benefits na pumapasok sa ATM ko hinihold nya na sa friend ko na lang daw kunin yung pumasok sa ATM ko. Kawawa naman pamilya ko single parent po ako wala na akong natatanggap sa pumapasok sa ATM ko. pwede ko po ba ipaclose ang ATM ko konti lang naman utang ko sa kanya kung tutuusin bayad nako sa kanya sa mga ibinawas nya sakin mga bonus ko for 2 years wala akong nabawi. Ano po ang dapat kong gawin. Kakasuhan daw po ako pag pinaclose ko ATM ko kc yung friend ko walang wok may tindahan lang at nagpapalit ng tseke sa workplace ko sa dinig ko nalugi daw ang business nya. Naapektuhan na po ang health ko 52 na po ako lagi na akong High Blood dahil sa kakaisip ng problema na ito. please help me po. salamat.

    Reply
  9. marilou

    magandang umaga po.tanong kulang po pwede bang makulong ang ang co maker kapag hindi nagbayad ang principal,ang kanyang principal ay aman niya ang aking anak ang co maker.nagkaroon na po g hearing napunta na kami sa mediator nagkaayos na kaso niloko kami ng representative nila sabi nila bbyaran daw ang ganitong halaga 77t magbigay daw kami ng 30t cash at yung kalahati bayaran ng 6 months to pay.pero ng matapos na ang usap sa mediator sabi ng representative yung babayaran namin ay interest lang nila,at babayaran daw namin yung principal loan kapag natapos ang interes namin.kaya hindi kami nakabayad sa kanila.may dumating na subpeona samin nakalagay promulgation of judgment.hindi po namin alam yun .natatakaot kami baka pag sipot namin don ay kasuhan na kami agad ikulong ang anak ko.kanyang ama ay wala nag work sa ibang bansa.ano po ba pwede gawin don.kahit paw na abogado hindi kami matulungan kasi hindi daw mabigat kaso hindi kami nakapatay un lang daw ang inuuna nila.ano po ba pwede gawin.

    Reply
  10. hohshan

    Hi, I would like to ask a more understandable explanation of being a co-maker. I have a workmate who had loan an amount to a lending business and now, I am not seeing her anymore in out company. She even do not answer my calls. And I am bothered if the lending company will ask me to pay the debts or loan she got. Honestly, I do not remember the papers I signed when she loan an amount from the lending company. I even really doesnot understand fully what was written there.

    But with the above article you posted, I assume that as a co maker I am just a person who promises that the person who had debts from them promises that this person will pay the amount compairing it to a surety that has the liability of paying the loan itself incase the person would not able to pay for it.

    Reply
  11. Fely

    What if the principal debtor dies? What’s the co-maker’s obligation? Will he/she be obliged to pay the whole amount?

    Reply
  12. Claire

    hi, may tanong din po ako, kumuha ng tricycle ang pinsan ko sa isang company, 6 months installment, kinuha nya po akong co-maker, kaya lang po nagkasakit bigla yung pinsan ko na stroke po sya. kaya di sya makapagbayad ng monthly installment dun sa company ng tricycle. at ang problema binenta narin nya yung tricycle sa iba. at binayaran na siya ng buo nung binentahan nya.. ginamit nya yung pera sa pagpapagamot. ang problema, ayaw nya pong sabihin sa akin kung kanino nya binenta, kasi pilit pong pinapa surrender ng companya yung unit, which is hindi nya po pwede sbihin kc, bayad na sknya yung bumili,nahihiya sya dun sa bumili sa knya. kaya ngayon ako ang pinipilit ng company na mag bayad o isurrender yung unit which is hindi ko nga alam kung nasaan. pero nangangako naman yung pinsan ko (principal) na babayaran nya sila. kc my mga property pa na man ang pinsan ko na pwedeng ibenta. at yun ang pambabayad.. ako kc ay wala din kakayahan na mag bayad.. pwede ba nila akong (co-maker) iharass na magbayad at sampahan ng kaso dahil hindi ko cla binabayaran, since nakaka usap at nakikipag negociate pa naman sa kanila yung principal na babayran sila , pwede po ba akong makulong? ano po ang pwedeng mangyari sa co-maker kung tlgang di makpag bayad and principal..at yung papel nga pla na tricycle na pinapirmahan nila sa amin at ay walang tatak na naka mortgaged.. na suposed to be dpat may mortaged yun, dahil installment basisi sya. pwede po ba nila itong ikaso?salamat po.

    Reply
  13. joe1234

    Question lang po. kasi kami naman nung apply ako sa lending may pinagpartner sa akin na tao then ginawa kaming dalawa na co-borrower with each other, and then ngeon may nagemail sa akin na ung co-borrower ko eh nakasummon na sa court, and I received a txt message na kelangan ko daw po pumunta dun sa court for preliminary hearing. kasi di ko naman po sya kilala talaga ang ginawa lang ni lending pinagsama kaming dalawa para maging co-borrower. may legal obligation po ba ako dito..

    Reply

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