Short answer. Yes. Your usual right to make the creditor exhaust the borrower's property first falls away here. Article 2059 says excussion does not take place if it may be presumed that an execution on the property of the principal debtor would not result in the satisfaction of the obligation.
What the law says
If it may be presumed that an execution on the property of the principal debtor would not result in the satisfaction of the obligation.
Civil Code, Article 2059 — When Excussion Does Not Apply. Read the full provision →
Excussion is the guarantor's normal shield
Ordinarily a guarantor enjoys the benefit of excussion: the creditor must first go after the borrower's own property, and only what remains unpaid can be collected from the guarantor. That is the rule that makes a guarantor secondary rather than primary. But the benefit is not absolute. Article 2059 lists the situations where the excussion shall not take place — where the guarantor loses the right to insist the borrower be pursued first. When one of those situations exists, the creditor may proceed against the guarantor without the detour through the borrower's assets.
A pointless pursuit is one of the exceptions
Your scenario is exactly the fifth exception. Excussion does not apply if it may be presumed that an execution on the property of the principal debtor would not result in the satisfaction of the obligation. The law does not force the creditor through an empty ritual. If the borrower plainly has nothing that could satisfy the debt, requiring the creditor to sue and levy on him first would waste time and money to reach a foregone conclusion. So where recovery from the borrower is evidently futile, the creditor may turn to the guarantor directly.
The other situations that remove the benefit
This is one of several exceptions in the same article. Excussion also does not apply if the guarantor has expressly renounced it, if he has bound himself solidarily with the debtor, in case of insolvency of the debtor, or when the debtor has absconded or cannot be sued within the Philippines without leaving a manager or representative. Each describes a case where insisting on pursuing the borrower first would be pointless or impossible. The exception about a futile execution simply captures the situation where the borrower is present but has nothing worth levying on.
What this means for you
If you guaranteed a debt and the borrower clearly has no assets to satisfy it, you cannot hold off the creditor by demanding he sue the borrower first — the benefit of excussion is gone in that situation, and the creditor may look to you. That does not erase your other rights as guarantor, including your right to be reimbursed by the borrower for whatever you are made to pay. But it does mean your practical exposure is immediate. Understanding which of these exceptions the creditor is relying on is the first step in knowing where you stand.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Trade and Invesment Development Corporation of the Philippines also known as Philippine Export-Import Credit, G.R. No. 233850, July 1, 2019 — read the decision on LawPhil →