Philippine statutory & jurisprudential survey (updated 1 June 2025)

Concept	Key provisions	Practical take-away
Guaranty (subsidiary)	Arts. 2047–2081 Civil Code	Guarantor answers only after creditor has tried to collect from the debtor (benefit of excussion, Art. 2058).
Suretyship (solidary)	Art. 2047 ¶2 Civil Code	Surety is “in the shoes of the debtor”; creditor may sue it immediately.
Collateral repossession	• Chattel Mortgage Act (Act 1508) • Real-estate foreclosure (Act 3135) • Personal Property Security Act – PPSA (RA 11057, 2018)	After an extrajudicial sale the proceeds are credited against the debt; any deficiency survives unless a statute (e.g., Recto Law) or the contract says otherwise. (Studocu)
Recto Law (installment sale of movable)	Arts. 1484-1486 Civil Code	Seller/assignee that forecloses or repossesses loses the right to any balance — the bar also applies to guarantors/sureties. (Lawphil, Lawphil)

Standard loan or mortgage – deficiency is collectible from the principal debtor and the guarantor/surety.
- BPI Family Savings Bank v. Avenido confirmed that an extrajudicial real-estate foreclosure does not extinguish the unpaid balance; the creditor may sue the surety for it. (Lawphil)
Chattel mortgage of movable property bought not on installment – same rule as above; PPSA likewise preserves the right to sue for any shortfall. (Studocu)
Installment sale of movables (Recto Law cases) – foreclosure or voluntary repossession is an exclusive remedy; no further action (including against a guarantor) lies.
- Citizens Surety & Ins. Co. v. CA annulled a claim on the guaranty because the creditor had already seized the goods. (Lawphil)
- Filinvest Credit Corp. v. CA applied the same doctrine even where the security device was styled a “lease with option to purchase.” (Lawphil)
Collateral released or impaired by the creditor – under Arts. 2077 & 2078 the guarantor is freed to the extent of the impairment; however, an express waiver in the suretyship may prevent release (upheld in China Bank v. Sia). (Lawphil)
PPSA private sales (post-2019) – the secured creditor may sell the collateral privately; any surplus goes to the debtor, any deficiency may still be enforced against debtor and guarantor, unless expressly waived. (DivinaLaw)

Defence	Statutory basis	Illustrative ruling
Excussion	Art. 2058	Creditor must first exhaust debtor’s property unless the guarantor waived the right or the contract is suretyship.
Material alteration / negligent impairment of collateral	Arts. 2077–2079	Release of security without the guarantor’s consent pro-tanto discharges the guarantor (China Bank v. Sia). (Lawphil)
Recto-Law bar	Art. 1484(3)	Even an independent guaranty cannot revive a barred deficiency (Citizens Surety). (Lawphil)
Prescription	Art. 1144 (10 yrs. written contracts)	Action on a guaranty prescribes like any other written contract. (Respicio & Co.)
Unauthorized contract amendments	Art. 2079	Increase in interest or term without guarantor’s consent releases the guarantor to that extent. (Respicio & Co.)

Choice of action Pure guaranty – sue debtor first; if unsatisfied, proceed against guarantor. Suretyship – creditor may sue guarantor immediately or simultaneously with debtor. (Lowenstein Sandler)
Procedure
- Replevin of movable → auction → file ordinary civil action for deficiency (Rule 1, 2020 Interim Rules on Foreclosure not applicable to movables).
- Real-estate foreclosure → register COC; deficiency suit must be brought within the prescriptive period.
Quantum – unless the guaranty names a cap, liability includes principal, contractual interest, penalty and litigation costs. (Lawphil)
Subrogation after payment – guarantor who pays is subrogated to the creditor’s rights over any remaining securities (Art. 2067).

Digital repossession notices under PPSA – Electronic notice in the Collateral Registry is now sufficient; guarantors should monitor the registry to preserve subrogation rights. (DivinaLaw)
BSP-CSP circulars on abusive collection – Circular 1166 (2023) requires banks/financing companies to give guarantors the same post-sale accounting given to borrowers. (CliffsNotes)
Consumer Credit reforms – House Bill 9015 (passed on third reading, March 2025) proposes a 90-day “right to cure” before suing guarantors on consumer auto loans. (Monitor – bill not yet law as of June 2025).

For creditors	For guarantors / sureties
✓ Verify if Recto Law applies before suing for deficiency.	✓ Demand full accounting of foreclosure proceeds; insist on your subrogation rights.
✓ Preserve and perfect collateral rights (registry, insurance, possession) to avoid releasing the guarantor.	✓ Check if the contract waived excussion and other rights; waivers must be express.
✓ Observe BSP consumer-protection notice periods.	✓ If you pay, immediately take steps to recover from the debtor and to annotate your subrogated mortgage, if any.
✓ In PPSA private sales, serve statutory notices on debtor and guarantor (Sec. 30 IRR).	✓ Keep copies of all amendments; unauthorized increases can discharge you (Art. 2079).

Repossession rarely wipes out a guarantor’s exposure—except in Recto-Law installment sales where foreclosure/re-seizure is the creditor’s last bite.
The form of the security (real estate, chattel, PPSA, retained-title sale) dictates whether a deficiency action survives; jurisprudence since BPI Family aligns movables (non-installment) with real-property rules.
Creditors who mishandle collateral—by releasing it, selling it at a grossly low price, or skipping PPSA notice—risk forfeiting their claim against guarantors.
Guarantors should audit the foreclosure file promptly; timely invocation of statutory defences can substantially cut or erase liability.

(All cases and statutes cited are Philippine; decisions up to April 2025 included.)