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June 1, 2022

Repossession of mortgaged automobiles

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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:

  1. That the applicant is entitled to the possession over the property being claimed, particularly describing it;
  2. That the property is wrongfully possessed by the party being complained of, as well as the reasons for such wrongful possession;
  3. 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;
  4. 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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75 thoughts on “Repossession of mortgaged automobiles

  • ask ko lang po attorney meron kaming Dump Truck na naka finance sa First Standard at umabot na hanggang 8 months yung overdue nya. balak nalang po namin na i voluntary repossess.meron pa po ba kaming babayaran sa financing? dahil sa tagal po na hindi nabayaran malaki napo yung over due.

  • Hi Atty,
    Pinahiram ko po ang sasakyan pero hindi na maibalik sakin nung humiram. May balance pa po ako sa bangko at hindi ko na nababayaran ng ilang buwan. Ano po ba ang pwede ko gawin?

  • Ano po ang pwede gawin kung gusto ko na ibenta ang 2nd hand car ko na may MA pa sa Bank pero hindi ako ang 1st owner?

  • Hi, Atty. Arjay!

    How long does it usually take bago ma file-an ng Replevin after mo tanggihan to voluntarily surrender your car? Also, pag po ba naserve-an na ng Replevin case dahil na default na sa car loan, tapos sinurrender mo ung car after lang ma file un case against you, bad record pa din ba un or mawawala na since sinurrender mo naman na ung car per court order? Thanks!

  • Dear Atty. Arjay,

    In my case I have 1 month lapses for the month of June 2018. The collection agency send me a letter “Notice of Formal Criminal and/or Civil complaints”. I call the collection agency and to explained with them kung bakit hindi ko maupdate yung isang month lang. They gave me 1 day only to update my account but I requested na kung pwede for 3 days allowance, dahil hindi ko kaya mabuo yung hinihingi nila dapat from Ph17,202 only to Php32,200. They harrassing me to surrender the unit for 2nd day but I didn’t send to them. On 3rd day I told them na iuupdate ko na yung account ko, but the collection agency told me na “MAGBAYAD HO KAYO, PERO MAGFIFILE KAMI NG BLOTTER REPORT”.

    Is this right attorney?

    Thanks,
    FN

  • Hi Atty,

    Ask lang po ako regarding sa car loan namin magsesettle dapat kami ng partial payment for eastwest autoloan pero ayaw nila tanggalin gusto nila is isurrender yung sasakyan or bayaran yung outstanding balance ng full amount. Sabi ko willing to pay kami ng full amount ng debt pero bigyan nila kami ng 2 weeks to pay gaano po ba kabilis magfile ng replevin case just incase maunahan ko sila sa oag settle ng debt Thanks.

  • Hi good am po. may question lang po ako mag 3rd month napo na walang payment ko sa car loan ko i tried calling them yesterday and expressed to them na i voluntary surrender ko ung unit.so sabi sa akin ng agent ok daw mag email lang daw po ako tas after that intay sa advise kung kelan ko dadalin sa head office ng bank.pero ang sabi ng agent may babayaran pa daw akong deficiency balance sabi ko naman po kaya ko nga isoli ung oto kasi wala na ako pangbayad eh.tama po ba sila?ano po ba ang tama kong gawin pahatak na lang ba?thanks and more power

    • Dear Dadi Arns,

      Wala naman problema kung ipapahatak mo yung sasakyan mo, basta ba desidido ka nang gawin yun. Alamin mo na din muna kung para saan yung “deficiency balance” na sinisingil nila mula sayo, at kung ano ang terms ng kontrata mo. Dahil baka naman meron din kayong pinagkasunduan ng bank sa loan agreement mo na may babayaran kang “deficiency balance” kapag magsosoli ka ng sasakyan.

      -Atty. Arjay

  • Hi atty. Tfs po auto ko. Sa contract xe nkalagay they can get the car without any court order. San mg fafall ang replevin don. I mean needed pa ba replevin po or pde ko pa wait? Tanx po.

    • Dear Jonnah,

      The creditor will have to resort to replevin when the debtor has not given the creditor the authority to take the vehicle. Check mo ulit yung terms ng contract mo, kasi kung ni-authorize mo sila kuhanin yung sasakyan, pwede nila kuhanin yan based on that authority na ikaw mismo ang nagbigay.

      But if you have not given them any authority, then they have to secure a court order before they may take your vehicle by filing a replevin case.

      -Atty. Arjay

  • Ask ko lang po I have 2 mos lapses in paying my monthly car loan payment. The 1st is last January and the 2nd is last March. But all the months aside from the months I’ve mentioned I paid all my monthly car loan payment. Now the collection agency of the car company is harrassing me to surrender the unit and that they will file replevin case. Do I have the right to refuse to surrender my car? Can they just go in our house with 5men in wearing barong & they are looking for the car? Thank you I hope you can enlighten me.

    • Dear Tine Flores,

      Since you’ve already defaulted, your creditor has a right to take up whatever legal remedy available to enforce payment of your debt. It is still your option if you will surrender the car, but if there is already a court order directing you to surrender the car, then you would have no other choice but to comply. If anyone goes to your house asking for the surrender of the car, then require them to present to you a court order (writ of replevin). If they have none, they cannot forcibly get it from you.

      -Atty. Arjay

  • panu kung two years nang hindi nabayaran ang sasakyan, and wala nman nadating na court order or even walang napuntang collector, how to settle those things kung sakali naka file na palang carnap, and the only reason na hindi binabalik ay dahil ore than P200,000 ang down.

    Thank you

    • Dear mr.black,

      Mag-usap kayo ng creditor mo kung kanino mo dapat bayaran ang utang. Hindi mo kailangan maghintay ng collector or court order para magbayad.

      What do you mean “naka file na palang carnap”? Ikaw ba ang kinasuhan ng carnapping? If so, hindi carnapping ang pag-retain mo sa sasakyan kaya malamang hindi na yan lulusot kahit sa preliminary investigation pa lang ng City Prosecutor.

      -Atty. Arjay

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