As a guarantor, am I on the hook for the creditor's court costs from suing over the debt?

A guaranty is read strictly, from its own terms

Article 2055 begins with a protective principle: a guaranty is not presumed; it must be express and cannot extend to more than what is stipulated therein. So the first place to look is the guaranty document itself. You are not taken to have guaranteed anything by implication, and your liability cannot be stretched past what you actually agreed to. If the guaranty spells out exactly what it covers, those terms control, and court costs are owed only to the extent the agreement reaches them. The law starts from restraint, not from assuming the guarantor is liable for everything the creditor spends.

A simple or indefinite guaranty sweeps in the accessories

The article then addresses the guaranty that is not carefully limited. If the guaranty is simple or indefinite, it shall compromise not only the principal obligation, but also all its accessories, including the judicial costs. In other words, when you guarantee the debt without narrowing what you are answering for, the law reads your undertaking to include the debt's ordinary accessories — and judicial costs are named among them. That is why an open-ended guaranty can expose you to more than the bare principal: the accessories ride along with the main obligation unless your agreement says otherwise.

But only costs after you are judicially required to pay

There is a crucial cut-off that works in your favor. The article makes the guarantor liable for judicial costs only after he has been judicially required to pay. Costs the creditor ran up earlier — for instance, in first pursuing the borrower — are not automatically thrown onto you. Your exposure to costs starts from the point you yourself are judicially called upon to pay. This keeps you from shouldering litigation expenses generated before you were ever brought into the matter, and confines your responsibility for costs to the period after the demand on you took a judicial form.

What to take from it

So the honest answer is a qualified yes. If your guaranty is simple or indefinite, it can extend to the creditor's judicial costs as an accessory of the debt — but only those incurred after you were judicially required to pay, and never beyond what your guaranty covers. The single most important document is the guaranty you signed, because the law refuses to presume liability and holds you to its terms. Where the guaranty is narrowly worded, your responsibility for court costs may be smaller than the creditor claims, or excluded altogether.

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.

• Marjori Tocao and William T. Belo vs. Court of Appeals and Nenita A. Anay, G.R. No. 127405, October 4, 2000 — read the decision on LawPhil →
• Philippine Airlines, Inc. vs PAL Employees Savings & Loan Association, Inc, G.R. No. 201073, February 10, 2016 — read the decision on LawPhil →
• Fideliza J. Aglibot vs. Ingersol L. Santia, G.R. No. 185945, December 5, 2012 — read the decision on LawPhil →
• Spouses Antonio Consing, et al. vs. Court of Appeals, et al, G.R. No. 143584, March 10, 2004 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 2055 — Guaranty Is Not Presumed