Published — September 15, 2017
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Related Topic: Frequently Asked Questions on Credit and Collection Laws
For those who are engaged in the lending business, it cannot be denied that many of them face the difficulties posed by the need to collect from their debtors the amount due, or in going after the security offered for the obligation as in case of mortgages, which would deprive them of their right to use the money in more useful and productive endeavors.
This is particularly true in case of loans secured by chattel mortgages, where the property given as a collateral is a movable property (as opposed to a real estate mortgage where the property involved is an immovable or real property). Most common examples of this are automobiles mortgaged to the creditor to secure auto loans obtained from the latter. Unlike in real estate mortgage where possession of the property is not necessary to effect foreclosure, the creditor in a chattel mortgage is constrained to take possession of the property that was given as security for purposes of selling it in a foreclosure sale.
Repossession of automobiles
In case of auto loans, there would be a lot less complication if the debtor just voluntarily surrenders the possession of the subject automobile to the creditor, as the latter may then proceed with the foreclosure sale after getting hold of it. Some borrowers, however, are simply too stubborn in holding on to their automobiles just to make it more difficult for the lender to recover the amounts due from them.
The writ of replevin
In such cases where the debtor-mortgagor would remain steadfast in not surrendering possession of their automobiles to the creditor-mortgagee, the latter may have no other alternative but to take up legal action against the former. Good thing is that the creditor has an available remedy, and that is to apply to the court for the issuance of a writ of replevin, wherein the court will require the debtor to surrender the automobile to the possession of the applicant creditor.
A creditor who seeks to recover possession of personal property may, aside from filing an action before the court for collection of sum of money, include a prayer for the issuance of a writ of replevin [See: Sec. 1, Rule 60, Rules of Court]. Under the Rules, the application shall be accompanied by an affidavit, which shows:
- That the applicant is entitled to the possession over the property being claimed, particularly describing it;
- That the property is wrongfully possessed by the party being complained of, as well as the reasons for such wrongful possession;
- That the property has not been taken by the government under its control to satisfy a tax assessment or fine, or other indebtedness for which a court judgment had already been previously rendered;
- The actual market value of the property [See: Sec. 2].
The applicant must also post a bond in favor of the current possessor, in double the value of the property (as stated in the affidavit). Upon the filing of such affidavit and approval of the bond, the court shall then issue the corresponding writ of replevin [See: Sec. 3].
Once the court issues a writ of replevin, it shall be served by the sheriff to the possessor for purposes of taking the subject automobile. If said automobile is inside a building or enclosure, the writ of replevin shall function as enough authority for the sheriff to break in without being liable for trespassing. Neither shall the sheriff be liable for the necessary damages caused by such breaking in for purposes of taking the subject automobile [See: Sec. 4].
Criminal action under the Revised Penal Code
Considering that automobiles are used as mode of transportation, they can easily be taken from one place to another. This makes it very convenient for the debtor-mortgagor to simply conceal the automobile by taking it to far away places in order to avoid being repossessed by the creditor. In case the mortgagor conceals the subject automobile to place it beyond the reach of the mortgagee, the latter may file a criminal action under Article 319 of the Revised Penal Code for knowingly removing the mortgaged property to any province or city other than the one in which it was located when the mortgage was constituted. Such act, when done without the consent of the mortgagee, is punishable by arresto mayor, or imprisonment from 1 month and 1 day to 6 months.
The purpose of the law in making the said act criminal is to give the necessary sanction to the provision of the law in the interest of the public at large, so that in all cases where loans are made and secured, the mortgage debtors may be deterred from committing the said act, and the mortgage creditors may be protected against the loss or inconvenience resulting from the wrongful removal and concealment of the mortgaged property [See: G.R. No. 10630].
With such remedies available to an auto loan creditor, it is clear that he has ample opportunity to legally and effectively enforce his claim, taking into consideration the fact that auto loans are usually secured by a chattel mortgage. If ever the creditor finds collecting the amounts due him difficult, it is definitely worth going after the property mortgaged, aside from going after the debtor himself. These remedies by which the creditor’s claim over the property may be enforced are intended to ensure that, in the end, he will not be the one to come up empty handed.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding credit and debt collection laws, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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Good afternoon Atty Arjay,
I have missed 6 months of my car payment because I lost my work and have spent my savings just to pay for the very minimum to live. Last Friday, the bank visited my mother’s home since this is the permanent address I listed with the bank. I do not live there so they were not able to repossess my car. My mother informed me that this happened last Friday and that the maids were the only ones that were home. She asked me to take care of the arrears. I’ve applied for work, which I believe will gain me some income to pay the monthly car payment but need at least another 2 months to make this happen. Please advice what is the best approach when negotiating with the bank.
Dear Maria,
Considering that you’ve been delayed for 6 months already, don’t expect the bank to agree to your terms without getting anything concrete from you. To show sincerity, if you can make partial payments, do it, then start negotiating with them. Since you are the ones who know your means, then you should be the one to submit your payment proposal to the bank (expect the bank to make a counter-offer, though). Hopefully, you get to agree on something acceptable.
-Atty. Arjay
Good morning sir, nag car loan po kmi kaya lang po hndi po kami nakapag monthly payment after na release ung ssakyan (4mos.)kya po voluntarily ko po sinurrender ung unit binigyan po nila kmi ng 10days redemption period kya lang po hindi pa po namin nalilikom ang full amount na hinihingi nila para makuha ulit nmin unit pero nakikiusap kmi sa knila na bigyan pa po kmi ng mga ilang araw pero ayaw na po pumayag ng head sa collection department..atty.gusto po namin mabalik sa amin ang unit dahil isa na dn po sa kadahilanan na ayaw nmin masira o magkaroon ng record ang asawa ko sa bangko o sa kahit saan credit company..mahahabol pa po kaya nmin yun sir?
Dear Carol Fuentes,
Depende na sa policies ng banko kung pagbibigyan ka pa. Since hindi na kayo nakakabayad ng monthly amortization nyo sa sasakyan, may karapatan ang banko na i-repossess yan mula sa inyo, at ibenta sa isang public sale. Mula noong sinurrender mo yung sasakyan mo, malaking bahagi ng bargaining power mo ang sinurrender mo din, dahil yung bank na ang may control ngayon sa kung ano ang gagawin nila sa sasakyan mo.
-Atty. Arjay
Hi Atty cencia na po sa istorbo, nag file po ako ng carnapping case dun sa mistress ng anak ko na kinuha yung sasakyan at naka garahe dun sa compound nila pero na dismiss ng fiscal feeling ko nalagyan yung fiscsl kasi kung babasahin yung resolution walang basehan. Puede po ba ulit ako mag file ng carnapping case pero nasa aboad na po yung babae yung car nakapangalan sakin at hinuhulugan ko pa po. Di namin makuha kasi baka kasuhan daw po kami ng tresspasing.Ano po ba magandang gawin?
Dear Fe V. Goyenechea,
Kasuhan mo sa court ng replevin case kung sino man ang may custody nung kotse dito sa Pilipinas. Gagastos ka nga lang sa pagpo-post ng bond (ipadaan mo sa insurance para makatipid ka), pero once na makakuha ka ng writ of replevin mula sa court, pwede mo na ipahatak sa sheriff ang sasakyan mo para dalhin sayo.
-Atty. Arjay
hi good morning po atty…may question lang po ako…may right pa ba ako maapprove ng banko if nahatakan ako ng sasakyan?since gusto ng bank within 5 days mabayaran 84k wala kami pera ng gnun kdalian lang…naisip namin mgtry nalang ulit mgloan…may chance pa kaya kami maapprove?in my case,nahatakan po kami at sinurrender nmin ng maayos ang sasakyan…first time lang nila pnuntahan sa bahay sabi nila need na isurrender,hindi naman po replevin yun kung wala naman po inabot sa amin na parang warrant…tama po ba?dahil karamihan ng ahente ng kotse sabi may replevin record nako ksi nahatakan ako ng sasakyan…need help po…ty
Dear stitch kirby,
Discretion na yun ng bank kung pauutangin ka pa nila ulit, depende na sa policy nila regarding applicants na nahatakan na ng sasakyan previously. Pero maaaring mahirapan ka na mag-secure ulit ng panibagong loan. You can always try, wala naman mawawala kung susubukan mo parin.
Since voluntary ang pag-surrender mo ng sasakyan, hindi na kailangan pang pumunta ng korte para mag-apply for issuance of a writ of replevin. In fact, pag malaman ng korte na nasa kanila na ang sasakyan, ididismiss lang ng korte yung application for issuance ng replevin. Yung mga agents na nagsasabing may replevin record ka na, baka record lang sa bank or mga auto dealers ang tinutukoy nila. But as far as court records are concerned, wala tayong replevin na pag-uusapan.
-Atty. Arjay
Need advise po. Kasi po naka carloan ung auto ko. Bale April 2019 tapos ko na siya bayaran. Pero 2016 I had a situation in which kulang ung pumasok na payment. Almost 3mos po ata un na ganun. But after that nilalakihan ko na ung ibinabayad ko monthly. Until recently may pumunta dito sa house namin. Third party daw sila and nag inform na hahatakin sasakyan pag di ako nag bayad in full. Nag explain cla na ung binabayad ko monthly halos napupunta lang sa penalties. Tumawag po ako sa bangko kasi baka pwede pa habulin kaso sabi nila nasa legal na daw so dun na daw ako makipag usap. Pero ung pumunta samin nag dedemand na ng full payment. 2thou php na lang po, 1m na naibayad ko and ang bal ko is 200k plus na lang.
Anu po pwede gawin? Thanks in advance and God bless.
Dear Adrianne,
In such case, since meron kang mga bungi sa payments mo noong 2016, which is 2 years ago pa, mag-request ka sa creditor mo (hindi sa 3rd party na kausap mo) ng payment history mo, para ma-determine mo kung paano nag-earn ng interest and penalties yung account mo, at kung paano mismo nila ina-apply sa account mo yung mga payments mo noon kahit nilalakihan mo na ang pagbabayad every month.
It is still possible na tama ang mga computations nila ng balanse mo, pero kailangan mo parin malaman kung paano nangyari yun. Kung tama ang computation nila, all you can really do is to restructure your loan by giving your proposed terms. Kung authorized ng bank yung legal nila to accept restructuring terms, then you may take it up with them directly. Mas maigi nang makipag-usap kaysa mademanda ka pa, lalo na at mas malaki na ang naibayad mo as compared to your remaining balance.
-Atty. Arjay
i need po ng advise. my situation po ay delayed na ng 3 months ang aking payment, my monthly amor ay 30k that should be 90k na . but ang aking ginagawa ay binabawasan ko by depositing sum of money pbasta makaluwag ako. but since pumasok na sa collection agency na sinasabing nag lock-in na at kelangan ng bayaran ng buo. this month i was able to pay 35k at ang balance na lang ay nasa 50k something. after all harrasments at mga pamamahiya ng collecting agency… kasama na ang pagtawag sa kapitan ng barangay para ipasingil sa bahay at mga co-office work ko at head boss sa company para iparating sa akin. emotional stress ang harassment ang ginagawa nila. unprofessional text…. pambabastos…. “kundi mo kayang magbayad isoli mo na”… “kukunin na namin sasakyan bukas kung di ka pa magbabayad”. “ipark mo na sasakayan sa may bangko at kukunin na namin” mga ganitong text sa akin” pati mga konsehal papuntahin sa amin. now that i promised to pay another 30k, that would leave me 25k total balance na lang sa delayed months sana, but hindi ko nakumpleto so hindi ako nakapagadditional payment. now their final text is they are waiting for the car na ipark sa PS bank sa friday kung saan ako nagbabayad ng monthly ammortization. ano po ang advice ninyo sa situation ko na eto. should i comply. gusto kong magwala at sugurin ang agency na to.. to the point na ginagawan naman paraan ang payment hindi man buo ang payment. but nababawasan hanggang sa bumalik na ulit siya sa regular monthly na walang ng delayed. please help po.
Dear dino asunsion,
The best way for them to stop is still to fully pay your past dues. But that does not mean pwede ka na nilang bastusin. You have the option to report the collection agency’s harassment to the Financial Protection Consumer Department of the Banko Sentral ng Pilipinas, or you may opt to simply ignore all their nagging, dahil hindi naman nila pwedeng makuha mula sayo ng sapilitan yung kotse ng ganun-ganun lang without any court order (writ of replevin), unless gusto nilang makasuhan ng carnapping.
Again, I am not saying that harassment is good, but as long as they keep on texting you, malakas ang kutob ko na hindi pa nila inaakyat sa korte ang pagkakautang mo kasi umaasa pa silang titiklop ka. Lalo na at maliit na lang ang natitirang amount due mula sayo, baka mas malaki pa ang gastusin nila pag nagdemanda sila, kaya patitiklupin ka na lang nila.
Tungkol sa sinasabi nilang dapat mo nang i-park sa banko yung kotse sa Friday, I suggest that you don’t do it yet. Hindi na babalik sayo yang sasakyan na yan once i-surrender mo, so as long as you still have the resolve to pay your amortizations, just pay without having to surrender the vehicle. Advisable lang yung pag-surrender kung talagang hindi mo na kaya magbayad, kasi once isoli mo yan, hindi mo na yan makukuha ulit, pero wala ka nang utang.
-Atty. Arjay
Atty may tanong po ako. Nabenta ko kasi sasakyan na nkaloan sa ibang party without written consent ng financing institution na pinagloanan ko pero alam nila kasi sila na naniningil dun sa tao. Biglang hindi nakabayad and di na malocate yung sasakyan. Dinemanda ako pero nadismiss ung paragraph 1ng article 319. Paano pag yung paragrah 2 naman ang isunod makukulong ba ako?
Dear Ruel Braganza,
It is still possible na makulong ka (kung naka-mortgage yung vehicle sa financing institution), pero kailangan parin patunayan ng prosecution yung par. 2 before yun mangyari.
-Atty. Arjay
I need your advise..kc ung kapatid ko po gnmit ung pangalan ng aswa ko PRA mkakuha ng sskyan s psbank.tpos 4mos npo clang Hindi nkpgbyad s bnko pmunta ung mnger s house nmn cnsbi n knasuhan ndw kmi s rtc. At kailangan ndw ibalik ung sskyan bgo mgfile ung court ng summon. Knausap k ung kptid ko nbalik nlng ung sskyan pro SBI nia bbyaran nlng DW NLA ng bio nxtmonth ung sskyan..atty.pwede bng mkulong ung aswa Kong teacher o mtnggal s trbho pgdpa cla mkpgbyad until nxmonth ng kptid ko or PDE b nmn kasuhan dn ung kapatid ko kc cla nmn ang gmgmit ng sskkyan at gnmit LNG pangalan ng aswa ko PRA mkkuha cla ng sskyan?many tnx atty..waiting for ur advise.
Dear Chris,
Hindi makukulong ang misis mo, dahil hindi naman sya masasampahan ng criminal case dahil lang sa hindi nya nabayaran yung car loan. Civil case lang for replevin, or for collection, ang pwedeng idemanda laban sa misis mo. Wala din basis para tanggalin sya sa trabaho nya, dahil wala naman itong kaugnayan sa work.
Assuming na meron naka-file na demanda laban sa misis mo sa RTC, meron kayong option na mag-file ng 3rd party complaint against sa kapatid mo, kasi sya naman talaga ang nakinabang sa loan. But I would not encourage you to do that, kasi kapatid mo parin yun. Kahit pwede mong gawin legally, hindi lang talaga maganda ang mag-demandahan ang magkakapatid. Pag-usapan nyo na lang yan ng maayos.
-Atty. Arjay
Ok salamat ng marami Atty.Arjay mlaking tulong po ung advise nio.Godbless po
Sir gud pm tanong ko lng kung ano pwede gawin ng bangko kng hindi na nila malocate ung owner pati yung due for repossession n sasakyan? Pwede b nila na ideclare na carnap or “hot car” un at ipa alarma sa HPG? Salamat po and god speed..
Dear Mark,
The vehicle cannot be declared as carnapped. May mga narinig na din ako about some repossession agencies na nagte-threaten na ipapaharang sa HPG yung subject vehicle, pero wala pa akong nakitang sasakyan na hinarang ng HPG na ang dahilan ay due for reposession na ang nasabing sasakyan.
Pero option parin ng bank mag-file ng criminal case for violation of Article 319 ng Revised Penal Code, which is premised sa pag-conceal ng mortgaged property. Kung hindi nila ma-locate yung mismong tao na idedemanda nila, that’s another story, though. Ganun pa man, babagsak ng todo ang credit standing nung tao at hindi na basta-basta makakautang kahit sa iba pang mga financial institutions. Mahirap malagay sa ganitong klaseng sitwasyon lalo na sa emergency situations.
-Atty. Arjay
I need advise. Nadelay po yung monthly payment ko sa car loan ko ng 4 months due to some emergencies na Kaylangang iprioritize, I called eastwest to settle an agreement and to inform them regarding the delay meant.Then mid January, may mga representative ng collections office from eastwest bank n nagpunta sa bahay namin para ipull out ung car. pinakiusapan ko sila n give me time and a chance to settle the debt until ipinakausap nila sakin ung nasa collections office na supervisor nila thru cellphone and gave me no choice to sign an agreement for volountary surrender na after feb.15 2018 Kaylangan ko isurender ung car sa office nila sa Mandaluyong, dapat ko po ba Gawain Iyon ng basta ganun nalang?Incase po Gawain ko yun, may chance pa ba n Mabawi ko iyon?kung Plano Kong bayaran yung sinisingil na utang sa 4 months n nadelay sa napakalaking interest kasi ang monthly na hinuhulog ko ay P21k, sa 4 months Kong si nabayaran umabot agad ng P150,000+ na ikinabigla ko. Please advise ASAP.thanks.
Dear Aldwin daclan,
Once you already voluntarily surrendered the vehicle, nasa control na ng banko kung ano ang gusto nilang gawin sa sasakyan mo. As mortgagee, isa sa mga options ng bank ay ang ibenta ang sasakyan mo (collateral) in a public sale, then use the proceeds of the sale as payment for your obligation. Pag ma-repossess na ng banko yung sasakyan mo, malaking leverage ang mawawala sayo sa pakikipag-negotiate sa kanila, kasi hindi na nila kailangan ang bayad mo dahil ma-eenforce na nila yung payment pag binenta nila yung collateral. Subukan mo parin makipag-usap, kasi kung mapagbigyan ng banko ang hiling mong magkaroon ng isa pang chance magbayad without the need to turn the vehicle over to them, then good for you. Hindi masama mag-try.
Pero option din ng bank na mag-apply sa court ng issuance ng writ of replevin, dahil totoo namang may utang ka at naka-mortgage ang sasakyan mo bilang security sa pagkakautang mo. Wala ka pa naman yatang court case sa ngayon, pero pag hindi mo sinurrender yung sasakyan, baka iakyat na ng creditor mo yung matter sa court. Once na ma-issue na ang writ of replevin at yung court na mismo ang mag-utos sayo na isurrender ang sasakyan pero hindi mo ito sinunod, you may be cited in contempt of court (sadly, meron kulong pag na-cite ka in contempt). So wala ka din talagang ibang choice kundi magbayad or makiusap sa kanila. Just remember that as long as the vehicle remains with you, hindi ka totally helpless sa pakikipag-negotiate because you also retain some of your bargaining power.
Manghingi ka ng breakdown mula sa bank para malaman mo kung paano lumaki ng ganyan ang utang mo. Mahirap talagang lunukin ang sitwasyon pag ganyang bigla-biglang lumaki ang utang, but it’s possible na tama parin sila. Kailangan mo lang talagang magpa-explain para maliwanagan ka kung paano nangyari yun.
Depending on the bank’s policy, some may give grace periods within which the debtor may still redeem the car before they sell it in public. Kung dumating man sa puntong ibenta na nila ang sasakyan mo, pwede ka parin naman sumali sa bidding. Malay mo ikaw pa ulit ang makabili nung kotse mo.
-Atty. Arjay