EFFECT OF SALE OF THE THING PLEDGE (ART.

2115)
The sale of the thing extinguishes the principal obligation whether the price
of sale is more or less than the amount due. In this case, the debtor is not entitled
to the excess of the sale unless there is stipulation to the contrary. The creditor is
also not entitled to recover the deficiency in case the price of sale is less and any
stipulation to the contrary is void. The reason for this is to compel the creditor to
hold an honest public sale and to compensate the creditor for his risk of not being
able to recover the deficiency in case the thing pledged is sold below the amount of
the principal obligation.

Right of creditor to recover deficiency

By electing to sell the thing pledged, instead of suing on the principal

obligation, the creditor waives any other remedy. The creditor may sue on the
principal obligation instead of electing to sell the thing in which he may recover the
deficiency.

OBLIGATION OF PLEDGEE TO ADVISE PLEDGER OR OWNER OF

RESULT OF SALE (Art. 2116)
It is to enable the pledger to take necessary steps for the protection of his
right in case the sale was not an honest one. Notice is required after the public
auction.

RIGHT OF THIRD PERSON TO SATISFY OBLIGATION AND THOSE

WHO PLEDGED THEIR OWN PROPERTY (Art. 2117 and 2120)
General Rule: the creditor is not bound to accept payment or performance by
a third person who has no interest in the fulfillment of the principal obligation.

Exception: a third person who has any right in the thing pledged may pay the
debt if it becomes due and demandable and the creditor cannot refuse such
payment.

By pledging his own property even if he is not a party to the principal

obligation, he shall have the same rights as a guarantor and cannot be prejudiced
by any waiver of defense by the principal debtor.

RIGHT OF PLEDGEE TO COLLECT AND RECEIVE AMOUNT DUE ON

CREDIT PLEDGED (Art. 2118)
If a credit which has been pledged becomes due before it is redeemed,
pledgee may collect and receive the amount and applying the same to the payment
of his claim. Any excess shall be delivered to the pledger. Such act is not obligatory
but merely a right on the part of the pledgee.
RIGHT OF PLEDGEE TO CHOOSE WHICH OF SEVERAL THINGS
PLEDGED SHALL BE SOLD (Art. 2119)
If two or more things are pledged, the pledgee may choose which will be sold
unless there is a stipulation to the contrary. The number of things sold should be
valid which are necessary for the payment of debt. If the obligation is satisfied
through the sale, no more shall be sold.

PLEDGES CREATED BY OPERATION OF LAW (Art. 2121 and 2122)

Examples of pledged by operation of law

1. A possessor in good faith exercising his right of retention for necessary and
useful expenses

2. An usufructuary exercising his right of retention for taxes paid on the

capital and for extraordinary expenses

3. A person exercising his right of retention over a movable for his fee or
compensation for the work executed on the movable

4. An agent exercising his right of retention for advances made of necessary

expenses for the execution of the agency and for damages, which the execution of
the agency may have caused him

5. A bailee exercising his right of retention for damages caused by the flaws
of the thing loaned where the bailor knowing such flaws did not advise he bailee of
the same.

6. A hotel-keeper exercising his right of retention over things brought to the

htel by a guest as security for credits on account of board and lodging.

Rules in cases of legal pledge

In legal pledge, the remainder of the price of the sale after payment of debt
and expenses shall be delivered to the debtor and no definite period for the
payment for the principal obligation. There must be a demand made by the pledgee
for the payment of the amount due him or else, he cannot exercise the right of sale
at public auction. One month after the demand, the pledgee must proceed with the
sale otherwise; the debtor may require the thing retained to be returned.

RULES ON PAWNSHOP AND OTHER ESTABLISHMENT WHALL BE GOVERNED

BY SPECIAL LAWS AND PROVISIONS OF PLEDGE, MORTGAGE AND
ANTICHRESIS (ART. 2123)