Short answer. Yes. Under Article 2108 of the Civil Code, when a pledged thing is in danger of destruction or loss of value and is sold at public sale to prevent the loss, the proceeds of that sale become security for your loan in the same way the original item was. The money simply takes the place of the item.
What the law says
The proceeds of the auction shall be a security for the principal obligation in the same manner as the thing originally pledged.
Civil Code, Article 2108 — Sale to Prevent Loss. Read the full provision →
When the pledgee may sell early
Article 2108 addresses exactly this situation. It allows a sale before the loan is due only in a narrow case: If, without the fault of the pledgee, there is danger of destruction, impairment, or diminution in value of the thing pledged, he may cause the same to be sold at a public sale. Two conditions stand out — the danger to the thing must be real, and it must arise without the fault of the pledgee. The sale must be a public sale, not a quiet private disposal.
The money replaces the item as security
Crucially, the early sale does not end the pledge or free the money. The article states that The proceeds of the auction shall be a security for the principal obligation in the same manner as the thing originally pledged. So the cash from the sale steps into the shoes of your item and continues to secure the loan on the same terms. The lender does not get to treat the proceeds as payment or keep them outright; they remain security until the obligation is settled. By the same logic, when the debt finally falls due the proceeds are set against what you owe: any surplus left after the loan and the legitimate expenses are covered belongs to you, and only a genuine shortfall leaves you answering for the balance. The lender cannot both hold the money as security and refuse you an accounting of it.
What this protects and what it does not
The provision protects the borrower's interest in the value of the collateral: value that would have been lost is preserved as money held as security. It does not license a lender to sell whenever convenient, nor to sell privately, nor to pocket the proceeds. If the loan is later paid, the security — now in the form of proceeds — must be accounted for. If your pledged item was sold and you doubt the danger was genuine, the pledgee was at fault, or the proceeds are unaccounted for, gather the sale records and seek advice, because those facts bear directly on your rights.