G.R. No. 164307 - Spouses Poltan vs. BPI Family Savings Bank, Inc.

The petitioners, Rodelio and Alicia Poltan, purchased a 1991 Nissan Sentra on installment from Mantrade Development Corporation.
The transaction was evidenced by a promissory note secured by a chattel mortgage over the vehicle.
On November 11, 1991, Mantrade assigned all its rights under the promissory note and chattel mortgage, by means of a Deed of Assignment, to BPI Family Savings Bank, Inc. (BPI).
The specific vehicle details included its model, motor and serial numbers, and distinctive features such as air conditioning, stereo, and magwheels.

The petitioners defaulted when they failed to pay five consecutive monthly installments due from January 15, 1994, to May 15, 1994.
BPI demanded the accelerated payment of the entire balance of the promissory note amounting to P286,540.06, including accrued interest.
Alternatively, BPI sought foreclosure of the chattel mortgage by taking possession of the motor vehicle.
The promissory note and chattel mortgage contained an acceleration clause whereby failure to pay any installment rendered all subsequent payments and the entire balance immediately due.

The petitioners admitted the purchase on installment and acknowledged the assignment to BPI.
They contended that BPI required them to secure a motor vehicle insurance policy from FGU Insurance.
The petitioners maintained that after the vehicle was involved in an accident causing it to be a total wreck, the insurance policy stipulated replacement or reimbursement, which was not honored by FGU Insurance.
As a consequence of the insurer’s failure to replace or compensate for the loss, the petitioners ceased payment of the installments.
Despite multiple notices and hearing schedules set by the trial court, the petitioners repeatedly failed to appear, leading to default proceedings and the allowance for ex-parte presentation of evidence by BPI.

The case was initially filed with the RTC of Manila, Branch XVIII, under Civil Case No. 94-70655 for replevin and damages.
After the petitioners’ absence at the pre-trial conferences, they were declared in default, allowing BPI to present its evidence ex parte.
A Motion for Reconsideration by the petitioners was granted on February 27, 1995, leading to further hearings on the merits.
BPI moved for a judgment on the pleadings based on the petitioners’ Answer that admitted material allegations, which led to the RTC rendering a decision awarding BPI the loan balance plus penalty charges and attorney’s fees.
The petitioners appealed and the Court of Appeals set aside the RTC decision, remanding the case for trial on the merits.
Upon remand, despite further postponements and multiple rescheduling of hearings (including on January 10, 2000), the petitioners again failed to appear, resulting in another ex-parte presentation of evidence by BPI.
The trial court subsequently rendered a decision on April 6, 2000, affirming the award in favor of BPI, which was later affirmed in toto by the Court of Appeals in a Decision dated June 30, 2004.

Whether the petitioners were unjustly deprived of their right to procedural and substantive due process when BPI was allowed to present evidence ex parte, given their repeated absences.
Whether the sudden allowance of ex parte evidence, notably on January 10, 2000, due to the absence of their counsel, was a denial of the petitioners’ right to be heard.

Whether the trial court had the lawful jurisdiction and power to conduct proceedings ex parte, particularly considering the prior withdrawal of BPI's counsel.
Whether the counsel who presented evidence on behalf of BPI maintained the requisite authority after a notice of withdrawal was filed, but not immediately acted upon by the trial court.

Whether the contracts (including the promissory note, chattel mortgage, and insurance policy) qualify as contracts of adhesion with unconscionable and onerous terms.
Whether impositions such as a 36% per annum penalty and 25% attorney’s fees constitute unjust, excessive, or iniquitous terms under such contracts.

Whether the provisions in the insurance policy that favored the mortgagee (BPI) automatically extinguished the petitioners’ principal loan obligation upon the vehicle’s total wreck.
Whether the receipt of insurance proceeds should have reduced or settled the outstanding balance of the loan.