EXTINGUISHMENT OF GUARANTY
Art. 2076. The obligation of the guarantor is extinguished at the same time as that of the debtor, and for the same causes as all other obligations. (1847)
CAUSES OF EXTINGUISHMENT OF GUARANTY
1. Being subsidiary and accessory, it is also terminated when the principal obligation is extinguished
2. It may itself be extinguished directly although the principal obligation subsists such as in the case of the release of the guarantor by the creditor
MATERIAL ALTERATION OF PRINCIPAL CONTRACT
1. Effect of material alteration—any agreement between the creditor and principal debtor which essentially varies the terms of the principal contract without the consent of the surety will release the surety from liability
2. When alteration is material—the guarantor may not be released if the change doesn’t have the effect of making its obligation more onerous. There must be change which imposes new obligation or added burden to the party promising or which takes away some obligation already imposed, changing the legal effect of the original contract and not merely the form thereof.
Art. 2077. If the creditor voluntarily accepts immovable or other property in payment of the debt, even if he should afterwards lose the same through eviction, the guarantor is released. (1849)
RELEASE BY CONVEYANCE OF PROPERTY
Any substitute paid in lieu of money which is accepted by the creditor extinguishes the obligation and in consequence, the guaranty
Art. 2078. A release made by the creditor in favor of one of the guarantors, without the consent of the others, benefits all to the extent of the share of the guarantor to whom it has been granted. (1850)
Art. 2079. An extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the guaranty. The mere failure on the part of the creditor to demand payment after the debt has become due does not of itself constitute any extension of time referred to herein.
RELEASE BY EXTENSION OF TERM GRANTED BY CREDITOR TO DEBTOR
1. Where the release without consent of guarantor—guarantor is released from his undertaking
2. Where obligation payable in installments—where a guarantor is liable for several payments, such as installments, an extension of time as to one or more will not affect the liability of the surety for the others. But in case of an acceleration clause, the act of the creditor of extending payment of said installment without guarantor’s consent, discharges the guarantor because this constitutes an extension of the principal obligation.
3. Prejudice to guarantor and period of extension is immaterial
4. Extension must be based on new agreement
5. Diligence on the part of the creditor to enforce his claim
Art. 2080. The guarantors, even though they be solidary, are released from their obligation whenever by some act of the creditor they cannot be subrogated to the rights, mortgages, and preference of the latter. (1852)
Art. 2081. The guarantor may set up against the creditor all the defenses, which pertain to the principal debtor and are inherent in the debt; but not those that are personal to the debtor. (1853)