Equitable Savings Bank v. Rosalinda C. Palces

Summary

This case involves a vehicle financing dispute where respondent Rosalinda Palces defaulted on loan payments to Equitable Savings Bank (now BDO Unibank) for a Hyundai Starex purchase. After missing January and February 2007 installments, respondent made late payments totaling P103,000.00 in March 2007, but the bank still pursued replevin to recover the vehicle. The RTC and CA initially applied different legal theories, with the CA ordering refund of the late payments under Civil Code Article 1484. However, the Supreme Court clarified that this was a loan with chattel mortgage arrangement, not an installment sale, making Article 1484 inapplicable. The Court ordered proper foreclosure proceedings under the Chattel Mortgage Law, with the late payments reducing the outstanding balance from P664,500.00 to P561,500.00, and any excess from foreclosure sale to be returned to the borrower.