Short answer. Yes. Article 2080 releases guarantors — even solidary ones — whenever, by some act of the creditor, they can no longer be subrogated to the creditor's rights, mortgages and preferences. If the creditor lets the collateral go or destroys the security you would have inherited on paying, the guaranty is released because the recourse you relied on is gone.
What the law says
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
Civil Code, Article 2080 — Guarantor Released by Loss of Subrogation. Read the full provision →
The creditor cannot destroy your recourse and still collect
A guarantor who pays does not simply lose the money — he steps into the creditor's place and pursues the debtor with the creditor's own weapons. Article 2080 protects that expectation: 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. If the creditor's own act has made it impossible for you to inherit those rights on paying — by releasing a mortgage, giving up a preference, letting the collateral slip away — the guaranty is released. The creditor cannot ruin your recovery and then demand you pay anyway.
Subrogation is the whole point of the rule
When a guarantor satisfies the debt, the law subrogates him to the creditor's rights against the debtor, including any mortgages, pledges or preferences that secured the debt. That right of recovery is what makes guaranteeing tolerable: pay now, but chase the debtor with the security the creditor held. Article 2080 exists to keep that promise intact. If the creditor has thrown away the very security the guarantor would have used, the guarantor would be left paying in full with nothing to pursue. The law refuses that outcome and discharges him instead, because the bargain he relied on has been hollowed out by the creditor's own conduct.
Even a solidary guarantor is covered
The article is emphatic that this reaches guarantors even though they be solidary. A solidary guarantor gives up the benefit of excussion and can be pursued like a principal, so one might expect him to lose this protection too. He does not. However direct his liability, he still counts on being subrogated to the creditor's securities when he pays, and an act of the creditor that destroys that subrogation releases him as it would any other guarantor. The key limits are in the words: the loss of subrogation must flow from an act of the creditor, and it must be the creditor's rights, mortgages or preferences that are lost.
What to establish
To rely on Article 2080, the two things to pin down are causation and source. First, that you genuinely can no longer be subrogated — a security that secured this debt is gone or impaired, not merely harder to enforce. Second, that this happened through the creditor's own act, not through the debtor's conduct or an outside event the creditor did not cause. Where the creditor released or squandered a mortgage, pledge or preference you would have inherited on paying, that is the ground the article is written for, and the loan and security documents are where the proof of it lives.
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.
- E. Zobel, Inc. vs. Court of Appeals, et al, G.R. No. 113931, May 6, 1998 — read the decision on LawPhil →
- Tomas Ang vs. Associated Bank, et al, G.R. No. 146511, September 5, 2007 — read the decision on LawPhil →
- The Mercantile Insurance Co., Inc. vs. DMCI-Laing Corporation, Inc, G.R. No. 205007, September 16, 2019 — read the decision on LawPhil →
- Paulino M. Ejercito, et al. vs. Oriental Assurance Corporation, G.R. No. 192099, July 8, 2015 — read the decision on LawPhil →