Thursday, June 27, 2019

Sanglang-Tira: its meaning and consequences

Seemingly prevalent in Olongapo, people in need of money would often resort to Sanglang-Tira to obtain a loan. Sanglang-Tira simply means that, in exchange for the loan, mortgagee stays in the property of mortgagor free of charge during the duration of the agreement. (NB: Real properties subject to Sanglang-Tira are, more often than not, only covered by tax declarations - they have no titles yet.)  

Here is one case that went all the way up to the Supreme Court.

Petitioner obtained a loan from respondent. To secure the payment of the loan, the petitioner executed in favor of the respondent a real estate mortgage (Sanglang-Tira Agreement) over a one-unit apartment in Olongapo City. Their agreement provided, among others, that the petitioner (mortgagor) will pay the loan within a period of one year, renewable upon the option of both parties. They also agreed that the respondent (mortgagee) shall reside free of rent in the subject property during the duration of the agreement.

The respondent and his family occupied the subject property only for 6 months as they were allegedly forced to leave its premises due to flooding and absence of water supply for 5 months.

Upon maturity of the loan, the petitioner failed to pay his debt despite receipt of the demand letter.

Later, the petitioner forced open the subject property and removed all of the respondent's belongings. The parties subsequently brought their dispute to the Office of the Lupong Tagapamayapa but they failed to reach an amicable settlement.

Respondent then filed against the petitioner a complaint for Judicial Foreclosure of Mortgage with the RTC of Olongapo City. RTC Olongapo granted the judicial foreclosure by summary judgment. The trial court’s decision was affirmed by the Court of Appeals. The Supreme Court then affirmed the decision of the CA.

According to the Supreme Court:

"In an action for judicial foreclosure of mortgage, the factual issues to be resolved are: whether or not the debtor-mortgagor was in default, and whether the mortgagee has the right to foreclose the mortgage.

It is a settled rule that when the debtor is in default in the payment of his obligation, the mortgagee has the right to foreclose the mortgage and to have the property seized and sold with the view of applying the proceeds to the payment of the obligation.

In the present case, the petitioner tacitly admitted his default in the payment of his obligation. Considering that the petitioner's indebtedness and liability were uncontested, a full-blown trial can be totally dispensed with. The submission of further evidence is not necessary since judgment could be rendered judiciously on the basis of the petitioner's admissions. Thus, we find that the RTC was justified in rendering summary judgment based on the parties' testimonies, documentary evidence and admissions.

xxx 

Our examination of the contract reveals that indeed, the respondent's decision to discontinue his stay on the property did not in any way affect his right to foreclose the mortgage. The respondent still has the legal right - whether or not he opts to occupy the mortgaged property's premises - to foreclose the mortgage over a specific property and to have the encumbered property sold to satisfy the outstanding indebtedness. The right to foreclose such mortgage is not dependent on the mortgagee's possession of the property but on the mortgagee's cause of action against the mortgagor." (Mortel v. Brundige [2015])



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