• Co-maker not liable to shoulder payment of entire amount loaned

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    Dear PAO,
    One of my friends borrowed money from a lending institution. He asked me to be his co-maker and I agreed. He was granted a loan worth P30,000. After several days, he sought for an emergency loan of P5,000 without my knowledge, but this time it was another friend who signed as his co-maker. After a month, he was terminated from his work. We insisted on him to pay his obligations but he failed to do so. I also talked to the manager of the lending institution to force my friend to pay but they did not do anything. Now, the company is forcing me to pay the loan of my friend. They took my ATM card and I am the one paying for the debt of my friend. Am I really obligated to pay? I am thinking of just reporting my ATM card as stolen so that they will no longer get anything from me.
    JE2491

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    Dear JE2491,
    It is safe for us to conclude that the lending institution from which your friend obtained his loan of P30,000 may obligate you to pay considering that you have agreed to be your friend’s co-maker in the said loan.

    However, as to how much you are liable to pay depends on the stipulations provided in your contract. More often than not, when a person is made a co-maker of another in a contract of loan, he shares the responsibility of the other party/parties concerned. But it does not necessarily mean that the co-maker is liable to answer for the entire amount of the loan. The contract itself must clearly state such fact in order to hold the co-maker solidarily liable for the entire amount of the loan. This is in consonance with Article 1207 of the New Civil Code of the Philippines which explicitly provides that, “The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestations. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.”

    Accordingly, it would be best for you to examine once more the provisions of the contract which you and your friend signed so that you can determine exactly the extent of your liability. Once you have determined the extent of your liability, you must settle the same when it becomes due and demandable. This is because obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith (Article 1159, New Civil Code of the Philippines).

    We do not advise you to report with your bank that your ATM card was stolen. Firstly, your card is not stolen. You gave it to the lending institution. Secondly, you should recognize the fact that reporting that your ATM card was stolen will not extinguish your obligation from the lending institution. Rather, it may only complicate your situation. It also bears stressing that the lending institution has other remedies in order to compel you to pay, such as filing before the court a civil action for collection of sum of money.

    We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

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