To secure the payment of his obligation, A pledged to his surety C, his car who sold the car after paying the obligation of A. The obligation was ₱2M but the car was sold for only ₱1M. Can the surety recover the deficiency?
A)Yes, otherwise, there would be solution indebiti.
B)Yes, no law prohibits him from doing so as he is not the direct creditor.
C)No. In the foreclosure of a pledge, if the price of the sale is less than the indebtedness secured by the pledge, the creditor shall not be entitled to recover the deficiency, notwithstanding any stipulation to the contrary.
D)Yes, if there is a stipulation.

Question

Quizplus · Accepted Answer

In the context of a pledge, when the pledged property is sold to cover the debt and the sale proceeds are less than the amount owed, the creditor (in this case, the surety) cannot claim the remaining balance from the debtor. This is based on the principle that the risk of the pledged property not covering the full amount of the debt is borne by the creditor.

To Secure the Payment of His Obligation, a Pledged to His