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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Asked ko lang po atty 2 months delayed na ko sa car loan q at may pumunta sa bahay para kunin na yung sasakyan for temporary, habang makipag usap daw aq kay bank to settle my past due, tama po ba na e surrender ko muna??
Dear Hara,
Legally speaking, wala akong nakikitang mali sa pagsurrender mo ng sasakyan. Pero:
1. On your part as debtor – Since sinurrender mo na yung sasakyan, mas malakas na ang pressure sayo na mag-raise ng amount na kailangan mo ibayad sa loob lang ng maikling panahon, dahil anytime pwede na ibenta ng creditor mo ang sasakyan para ma-enforce na yung full payment ng utang mo.
2. On the part of the bank as creditor – Mas maliit na ang pressure sa creditor mo na maningil, dahil alam nila na kung mahihirapan ka magbayad, pwede nila ibenta ang sasakyan bilang pambayad sa utang mo.
Pwede mo pa naman ma-redeem ang sasakyan na sinurrender mo, pero dapat ka nang mas magmadali dahil pag nainip ang creditor mo, ibebenta na nila ang sasakayan. Pag nangyari yun, hindi mo na yan mahahabol pa.
-Atty. Arjay
Good eve, atty.. I’m 3 months behind my payment because I lost my job. I was planning to pay the my unpaid dues by the end of the month once I get my backpay. Today, I received a letter from the legal council of Security Bank that I have 2 days to pay the full amount of the loan or surrender the car. What’s the best thing to do? If i surrender it to them, what’s my chances of still getting the car back? Thank you so much for you help.
Dear Rio,
Once you surrender the car to the bank, you can still get it back, but the chances would be slim because in just a matter of days, the bank will already sell your car to enforce full payment of your unpaid loan. Some banks, however, would allow the debtor to redeem the car within a certain grace period before the vehicle is sold, and the giving of such grace period would depend on their policy.
-Atty. Arjay
Hello
Default ung car loan ko for 3 months but i regularly pay monthly na after 3 months of no payment kaso pang 1 month lang. After several months someone contacted me na sabi 7 months past due na daw ako kasi napupunta lang daw penalty ung regular monthly binabayad ko and they want na i surrender na ung sskyan. I asked for updating amount but they refused and said to pay in full plus penalties or surrender the car. Nasakin pa sskyan and i need legal advice sa best option ko. Ideally gusto ko bayaran updating lang but not payoff bal. Pwd paba gawan paraan po ba? If kaya pa po gawan paraan i will be needing your legal service. Thanks
Dear Oli,
You have to read your loan contract, dahil malamang nakalagay doon na everytime na magbabayad ka, uunahin muna ang interest and penalties before ang principal. So kung nag-incur ka na ng penalties pertaining to 3 months na hindi mo nabayaran, at sakto lang for the principal for 1 month ang palaging ibinabayad mo, kukulangin ka talaga. Yung buong 2 months mong past due, plus yung natitirang principal mo sa third month ay mag-earn pa din yun ng panibagong interest and penalty for the following months kasabay ng pag-due ng mga susunod mo pang monthly amortizations. Yun ang nakikita kong dahilan kung bakit nagpatong-patong ang unpaid amounts mo despite paying regularly every month (na sakto lang for 1 month principal).
Ganun pa man, hindi dapat itinatago sayo ang payment history mo, kung paano nila ina-apply ang payments mo. When you ask for your statement of account, dapat maipakita nila yun sayo.
Since nasa iyo pa ang sasakyan, hindi yan basta-basta pwedeng kuhanin mula sayo unless meron court order or voluntarily sinurrender mo. Kung i-harass ka ng mga collector nila, ireport mo sa Financial Protection Consumer Department ng Bangko Sentral ng Pilipinas yung creditor mo.
-Atty. Arjay
Dear sir,
Gusto ko sana malaman kung ano pwede gawin sa case ko. Nadelay po kami ng bayad ng 3 months due to financial crisis. Pero ok na po kami now and we are willing to pay for everything including penalties as long as it is allowed to be imposed. But sabi ni bank, kailangan n dw isurrender ung ssakyan. Ayaw na nila kunin ung payment ko. Allowed ba un? Totoo po bang discretion nila kung ttanggapin or not ung bayad namin. 1 year na lang natitira sa loan ko kaya gusto ko sana maituloy. Sayang po ung binayad namin. I really hope we cud save our car.
Dear Peng Perez,
Make sure na lahat ng “past due” amounts, including penalties and charges that already fell due, ay kasama na sa payment na ibinibigay mo sa bank, dahil hindi mo pwede i-compel legally ang creditor na i-accept ang payment kung kulang naman ang ibinabayad. In that sense, you can say that the creditor’s refusal to receive your payment is legally allowed. But I must say na kakaiba ang sitwasyon mo, dahil hindi usual sa creditor ang tumanggi sa bayad na inaabot na sa kanya. Most likely meron policy yung bank sa kung paano nila ine-enforce ang payment ng loan (na sinusunod lang ng kung sino man ang nakausap mo), so better talk to the bank and negotiate for a restructuring of your loan, because the solution to your concern involves not the law, but the bank’s policies.
-Atty. Arjay
Hello Atty,
Good day po, nag loan po kasi ako ng kotse sa Security Bank. 3 months ko na po siyang nahuhulugan, kaya lang nagkasakit yung mother ko at kelangan namin ng malaking halaga para sa pagpapagamot. Di na po namin kayang bayaran yung monthly ammortization ng car kaya we decided na i voluntary surrender na. May babayaran pa po ba kami kung sakaling isurrender na namin?
Maraming salamat po and more power.
Dear benben,
Normally, itinuturing na ng bank as full payment ang pagkaka-repossess ng sasakyan ng isang may outstanding loan, dahil pwede na nilang i-enforce ang payment ng loan by selling the vehicle in a public sale. Therefore, most likely, wala na silang sisingilin sayo.
-Atty. Arjay
Maraming salamat po Atty. Mabuhay po kayo!
Atty patulong po…na reposes na po ung car..binigyan po kami ng 7 days to settle the amount ng kulang..humingi po kami ng extension since 1 year na lang ung babayaran namin..ayaw nila pumayag ng extension.and wala po notice na kukuhanin na nila ung sasakyan and notice na delay payment. Any option po ba para ma claim namin ung car kahit settle ung buong amount..
Dear Renan Cunanan,
Since nakuha na nila yung sasakyan mula sayo, nakakalungkot man isipin pero hindi na nila kailangan ang bayad mo para lang ma-enforce ang kabayaran sa pagkakautang mo, kasi allowed naman sila ng batas na ibenta na yung sasakyan in a public sale, and the proceeds of the sale will be used to pay off your outstanding balance. Yung 7 days na binigay sayo to settle, grace period na lang yan na ni-grant sayo just to accommodate you. In fact, hindi sila obligado magbigay ng grace period sayo, but you were still given one, so make the most out of it.
Kung mababayaran mo yung buong amount within that 7-day period, then good for you, dahil wala na silang reason para i-hold pa yung sasakyan mo and eventually ibabalik na nila yan sayo. Kung ready ka na magbayad ng full even after the period given you, pero hindi pa nila nabebenta yung sasakyan in a public sale, then you have a good chance that they will allow you to redeem the vehicle.
To be frank with you, you don’t have a lot of options right now. Kung nasa iyo pa sana yung sasakyan, maaaring iba ang tono ng usapan natin ngayon. But that’s water under the bridge, as they have already repossessed the vehicle from you. All you can do now is to play within the limited options available to you. Ang susi dito ay full payment, dahil yun lang ang nakikita kong magiging katanggap-tanggap para sa creditor mo dahil nandoon na sa kanila ang sasakyan mo. I highly doubt that they will settle for anything less, because if you offer them less, then they will just sell the vehicle and get full payment from the proceeds.
-Atty. Arjay
Hi Atty, bumili po kami ng kotse noong 2015 thru auto loan, nagbabayad po kami monthly thru transfast or padala dahil nasa Qatar kami, sinisingil po kami ng bank collection department ng penalty dahil hindi daw kami nagbabayad ng monthly amortization. Nagpunta ang pamangkin ko sa bank with my authorization letter to inquire about the issue and he found out na hindi pumapasok ang padala namin sa account dahil nagbago sila ng account number. Ni request ng bank na present ako sa Pinas para ivalidate ko ang mga padala ko na hindi nagreflect sa account ko. Hinaharass kami ng collector ng bank na magbayad ng due at ng penalty despite showing them the receipts of my remittances directly to my account. He also threatened to pull out the unit kung hindi mabayaran ang due at penalty within 3 days. Ang point namin bakit kami hinaharass kung sa system ng bank ang problema. Ano ang pwede namin magawa lalo na nangharass ang collector in a weekend when the bank is closed? May legal actions ba kaming pwede ifile sa banko dahil sa negligence nila at sa harassment nila sa pamilya ko na nagcause ng emotional trauma?
Dear Kayne Dolores,
Kung nakaka-experience kayo ng pangha-harass, ireport mo sa Financial Protection Consumer Department ng Banko Sentral ng Pilipinas. Regarding your concern with the bank, I don’t believe they will file a case kung alam naman nilang nasa system nila ang problema, lalo na at hindi rin naman libre ang mag-file ng collection case. Just be sure to keep your proof of payments intact, dahil yan ang gagamitin mo sa depensa mo just in case lang na idemanda ka nila. Just keep in touch with your bank, at mare-resolve nyo rin yan.
-Atty. Arjay
Good evening po atty. I just want to ask po about my case…may sasakyan po kaming hinuhulugan buwan buwan sa car company. Lage po kaming na didelay sa pagbayad kasi sa katapusan ng buwan yung sahod ko. May one month rin po akong hindi nabayaran..sinabi po ng kumpanya, i-dedeposit ko nalang daw po yung sasakyan. Hindi ko naman sinabi na di ako magbabayad, hahanapan ko naman nh solusyon kung paano ko mababayaran yung monthly amortization kahit nagkakaroon kami ngayon ng problema financially. Bale 3 years po yung kontrata at almost 2 years na po akong nagbabayad sa kanila kahit nadedelay..tanong ko po attorney, kung hindi namin ma-i-i-deposit yung sasakyan, pwd ba nila itong kunin sa amin sa bahay? Kahit naman pumunta na ako sa office nila at nag aabeso na babayad naman ako sa katapusan? Maraming salamat po atty. More power po sa inyo.
Dear Lara Mae Badal Gonzales,
Pwede nila kuhanin yung sasakyan mula sa bahay mo, basta ba siguraduhin mo lang na meron silang authority. It’s either ikaw mismo ang nag-authorize sa creditor mo (baka lang meron kang napirmahan noong ikaw ay nagca-car loan pa lang), or yung court ang nag-authorize through a writ of replevin. So kung may pupunta sa bahay mo para mag-repossess ng kotse, hanapan mo sya ng authority. Kung wala syang maipakita, then illegal ang pagkuha nya ng sasakyan mo kung ituloy man nya.
-Atty. Arjay
Hello Atty. Alburo,
Good morning po. Napakalaking tulong po itong link mo lalo na ngayon na nangangailangan talaga ako ng sagot sa problema ko regarding my car loan.
Nagloan po ako ng car (sedan) last 2017 at alam ng agent ng casa that this car is for Grab business. It was under promo deal (free chattel, free comprehensive insurance, free LTO registration, etc.). I issued 12 PDCs to the bank and the last check issued was last month April 2018. The vehicle had an accident (hindi ako yung driver) last January and it was totally damaged. We filed a claim to the insurance and unfortunately it was declined because it was used under Grab.
I reported the situation to the bank and informed them about the situation and expressed my intention to file for a voluntary surrender (which is unlikely to be accepted). It turned out they will not accept the vehicle because it is totally damaged and they want the unit to be repaired instead before I can voluntarily surrender. The problem is I don’t have enough resources to repair the vehicle.
Here is my question:
1. How come I was declined by the insurance when in fact in the first place alam ng agent ng casa na this is for Grab business.
2. I am planning not to continue to pay for my monthly payment to the bank. I already had a conversation with the bank and they said they will not accept the unit and they will file a case against me. Can I be put to prison in this situation?
Please advise po.
Dear Lacorte,
Maaaring alam ng car agent na gagaitin mo sa Grab business yung sasakyan, but it does not necessarily mean that the insurer consented to it. Necessarily, mas malaki ang risk sa insurer mo kung gagamitin mo ito for public transpo instead if just using it privately, so dapat talaga may consent ang insurer mo. Check your insurance policy. That is your contract with your insurer, at yung policy din ang mag-govern sa obligasyon ninyo sa isa’t isa.
2. If the bank is not anymore interested in repossessing the vehicle, it has the option of filing a legal action against you for collection of sum of money, in order to enforce your obligation to pay. Action for collection is civil, and not criminal, in nature. Therefore, hindi ka makukulong.
-Atty. Arjay
gud evening po atty, may problema po ako , nakakuha ako ng bago kotse sa TOYOTA last april 25 kaso after 3 weks gusto ko isauli sa toyota may malaki kasi kami problema at wla pa akong i mo monthly amortization. pwede po ba atty.? may babayaran pa ba kami if hindi nami kayang mag monthly amort. pls. help
Dear annalyn perez,
I would suppose that your vehicle purchase was financed under an approved auto loan sa bank, because this is one of the most common arrangements pag bumibili ng bagong sasakyan.
It would depend upon the bank kung papayag pa silang isoli mo yung sasakyan sa Toyota. Most likely, nabayaran na ng bank yung Toyota ng full amount ng sasakyan, at yung monthly amortization mo na lang ang hahabulin nila mula sayo (sa bank ka may utang, hindi sa Toyota kasi fully paid na ang Toyota).
On Toyota’s part, most likely sinimulan na nila yung processing ng registration ng sasakyan sa LTO under your name, so sayo na maipapangalan yung official documents ng sasakyan. So if you will return it, considered na yung sasakyan as “second hand” sa susunod na buyer, kaya malaki na ang mababawas sa value ng sasakyan at hindi na yan maibebenta ng Toyota for its full price.
Kahit sabihin pa nating 3 weeks pa lang yung sasakyan sayo, I am really doubtful na papayagan ka pa nilang isoli yan. Though wala naman mawawala kung makikipag-usap ka sa kanila, pero ihanda mo na yung sarili mo sa possibility na hindi na nila papyagan ang gusto mo mangyari.
-Atty. Arjay