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

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

  1. emma

    hi good pm po,tanong ko lang po yong kuya ko ay mag-aaply para abroad tapos hiningan kami ng current bill para makapaglending sa corporation ng agency na pinag-aaplyan nya,kaso nangungupahan lang po kami ng bahay at submeter lang din po ang gamit namin.Kaya nanghingi kami ng current sa pinsan ko na may sariling kuryente,hinihingan siya ng 2 valid ID,birth certificate,at1x1/2×2 na picture.Ang tanong hindi ba siya pagbabayarin sa i loloan na pera ng kuya ko,kung sakaling magkaabirya.Salamat po!

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  2. Martha

    Last 2005, My friend’s sister borrowed a huge amount from a lending company and until now her sister still didn’t pay for it. So now a noticed was sent to her by the company’s legal counsel to pay her sister’s debt within 5 days. Because it was stated that she’s the co-maker of her sister. As far as she can remember she didn’t sign for anything regarding that matter. But she can’t clarify that. How can she stay away from paying the debt of her sister? And is there any way she can file for forgery since she really didn’t remember signing anything.

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  3. amme

    tanong ko lang po, naisanla ko po yun atm ko last 2012 pa, that time ang net pay ko pa lang ay 4700, ang principal loan ko po ay 167, 000 until now po ay nsa kanila pa din atm ko at wla ako nakukuha na kahit piso na sukli. nang hingan ko po sila ng statement of account eh nakalagay po dun sa isang kapirasong papel na sulat kamay lang ang inabot na ng loan ko eh 447 800, halos kalahating milyon na po, at mahigit na sa naging loan ko ang nababawas kc mag aapat na taon na sa kanila atm ko,nang tanungin ko sila napakatagal sumagot, pabalik balik pa ang asawa ko makuha lang un listahan nila, at ang sabi ieextend pa daw po un payment ko, matatapos po kc un contract this april 2016.ako lang po ang inaasahan ng aming pamilya, salamat sa diyos nakakaraos kmi kahit wla ako nakukuha sa sweldo,hindi na ho makatarungan ginagawa nila, pati un unng midyear ko nung 2012 kinuha na nila pero di nilista as payments ko. panu po ba ang tamang gawin at kanino po pwede magtanong tungkol dito..,sana po masagot nyo ito.

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  4. Lucia

    I signed s a co maker of a certain debt of a friend but my friend died untimely after several years after her death the creditors sent me a letter demanding from me to pay my dead friends debt.. am I liable to pay a debt of a dead debtor?

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  5. william anthony

    I have a question, me and my officemate are comakers to each other,he already had filed his reloan and mine was approved late..what happened now is that when my loan was about to be approved my comaker called the lending company and asked to disapprove my loan.I talked to him and had an agreement, he is asking me to give him 3000 pesos once my loan is approved and also he will hold my atm card and he will be the one to widraw my monthly salary..I don’t owe any money from him and he even created a personal waiver between him and me about the said agreement which doesn’t include the 3000 pesos he is asking from me. Is there a legal action I can do or file against him to fix this issue? I feel being harassed.thanks!

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  6. trustworthy

    ask ko lang po. Nagco-maker po aq. 2 kami co-maker, then then ung isa ung principal. After a month of payment, nagloko na po ung dalawa, ung isa hindi nagbayad eversince, then saka lang namin nalaman na ibang address ang ibinigay para di sya ma-track. Kaming dalawa ni principal, nagbayad for only a month lang. Sa aming tatlo, si principal ang may pinakamalaki na nakuha worth10k+, ung isa co maker worth 6k, then ako 8k. Nag-usap kami nung principal pero malabo usapan namin nung time n un kung babayaran namin part nung isa, since my mga interest charges na and 32k+ na babayaran since tumagal na ng tumagal. Wala samin gusto maging liable sa utang nung isa. Hanggang sa tinakbuhan nya na din ako and nagtago. Nagpunta ako sa lending, saka q lang nalaman sinasabi nung principal na hindi daw xa nakinabang sa money and kami lang daw umutang nun,na ginamit lang namin ung tenureship nya sa com-pany, which by that time probationary kaming dalawa ni co-maker, Nakipag-usap kami sa lending ng asawa q, then sinabi nung namamahala dun na pag binayaran namin ung amount na 13k+ , i-oout nya kami sa contract, even my existing contract. tinanong namin if magpprocduce ba sila ng iba contract, malinaw na HINDI ang sinabi nila. Sabi namin magpapa abogado kami ng usapan, NO NEED na daw, sya daw bahala sakin, panghahawakan ko nalang daw ung resibo. Nagbayad kami, then after several months, nakareceive nnaman ako ng letter sating need q magbayad, amount due is 32k+ again. Ngaun sinisingil ako ng lending since wala mahagilap sa 2 ko kasama, and dinedeny nila naging usapan namin na i-oout nila ako.Ano po ang magandang solution dito? Uncapable po ako magbayad ngaun ..thank you.

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  7. anna

    nalubog ako sa utang sa mga micro finance,dahil may tindahan ako madalas ako ang ang pinupuntahan para alukin,sa madaling salita nag loloan ako,,taon ang binilang ok nman lahat payment ko lumalaki na din mga loans ko,,dumating yung time na nalugi ang tindahan ko di ko na kinaya hulugan ang araw araw na dumadaan na collector,nawalan pa ng trabaho ang mister ko,umabot na sa 4 na buwan na past due na mga hulugan ko,,hindi ko na din sila maharap dahil sa kapipilit nila na mkabayad ako,eh wala nman ako talaga sapat na pera para mkabayad,ano po ba ang maari ko gawin,hirap na po ako ,hindi nman po ako nanloko dumating lang ang pagsubok,na hindi ko masagot,sana po matulungan ako,salamat

    Reply
  8. Loridel

    Good day!
    Ma’am/ Sir,

    Nag tatra-tabaho po ako sa isang lending company- UNSECURED BUSINESS LOAN po kami., Gusto ko lang po sana malaman kung legal po ba na idemanda pa po namin yung co-borrower at co-maker kung si Borrower ay namatay na. ayaw po kasi mag bayad ng mga guarator nito sa naiwang loan ni Borrower?

    Reply
  9. jen

    lahat ng otang dapat bayaran ng co-maker but hindi kau makukulung wlang nangungutang na makukulong … di po yan ninakaw yang mga padala sa bank na note po is pananakot lamang po ya pra mgbayad ang tao

    Reply
  10. jen

    dapat s borower na namatay dapat fully paid na yan di obligado ang naiwan,po dapat offset nayan pag namatay ang nangutang anog claseng lending ba yan sa inyo..

    Reply
  11. shakey

    question po 1st time k po mag co maker nagtiwala po ako sa isang tao n asawa ng may ari ng bldg. as a teenat dito sa inuupahan nmin n bldg. di ako nkatangi n mag co maker na alm k n makakabayad sya kc asawa ng may ari ng blg. at may mga properties like drive in ang computer shop ngayon nlaman k di pala lam ng asawa n nanagloan sya at nag away eto mula noong di n sx bumalik sa bahay at ung lending ako n po ang sinisingil n di k alam n ganun pla patago sa asawa ang loan nya n dun kumukuha sa negosyo nila ang pagbayad ngayon po di kn makita ang kinomakeran ka patulong po may collateral sya pirmahan pwede po b yun ang kunin para di ako sumagot ng loan nya? pls. help po may inquiry tnx

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  12. benjo

    hi good pm po may sister po ako na ginawang comaker ng mother ko na hindi nya alam ngayon po ang mother ko is umalis ng bahay para magwork and yung lending company po is hinaharass na yung sister ko kc xa daw yung comaker and binigyan ng taning ang pagbabayad ng after one month para isettle daw po iyon which is yung utang wala pang isang buwan and nkalagay po sa contract na and utang is sa loob ng 4months dec po nagloan yung nanay ko dun and january pa lang po pero binibigyan lang ng one month to settle down everything.. i hope matulungan nyo po kami..

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  13. Rodolfo p.

    may loan po ang kapatid ko sa isang lending company at ito po ay insured. ofw po sya at ako po ang co maker nya. nawalan po sya ng work after 2 payments ng loan nya. umuwi sya sa pilipinas at nagtry maghanap ng work pero until now ay wala pa po syang work. ako ang hinahabol ng lending company dahil di nila malocate ang kapatid ko. ano po ba ang dapat kong gawin.

    Reply

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