Is my co-maker or guarantor liable after the vehicle is repossessed and sold?
Last updated: 2026-07-11 · Educational content; not legal advice.
Short answer
Generally no, for a deficiency, once the financier forecloses and sells an installment-sold vehicle. Philippine courts applying the Recto Law (Civil Code Art. 1484) have held that when the seller forecloses the chattel mortgage on the thing sold, it cannot recover the unpaid balance from the buyer — and it cannot get around that by suing the co-maker or guarantor instead, because allowing the guarantor to pay and then chase the buyer would defeat the very protection Art. 1484 gives. So after a repossess-and-sell, the deficiency is generally barred against the co-maker too. This applies to the deficiency after foreclosure; before any sale, or if the lender instead only demands payment or cancels the sale (rather than foreclosing), a co-maker's solidary liability under the contract may still be in play. Read the contract and see what remedy the lender actually chose.
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Frequently asked
They repossessed and sold it, now they're chasing my co-maker for the balance.
For an installment sale, that deficiency is generally barred — courts have refused to let the seller recover the shortfall from a guarantor after foreclosing, since that would circumvent Art. 1484. Answer with a written demand citing the Recto Law.
Is the co-maker safe before any foreclosure sale?
Not necessarily. Before the seller forecloses-and-sells, it may still pursue its chosen remedy, and a co-maker's contractual solidary liability can apply. The no-deficiency shield attaches to the foreclosure-and-sale scenario.
What should the co-maker do if billed?
Confirm which remedy the lender took. If it repossessed and sold the vehicle, send a demand to stop the deficiency collection citing Art. 1484, and escalate to the SEC under RA 11765 if it persists.
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