Sanla-tira is a colloquial Tagalog term widely used in informal lending practices, particularly in real estate transactions. Literally meaning “mortgage-stay,” it describes an arrangement where the borrower (sanla) secures a loan by mortgaging immovable property (usually land, house, or condominium unit) and delivers the owner’s duplicate certificate of title or physical possession to the lender (tira), while the borrower is permitted to remain in actual possession and use of the property. The borrower typically pays periodic “rent” or “uso” that functions as interest on the loan. Upon full repayment of the principal plus agreed interest, the lender returns the title and the borrower regains clear ownership.

This arrangement is not a distinct contract under the Civil Code but is legally characterized as a real estate mortgage (sometimes combined with elements of antichresis or a lease-back) or, more commonly when documented as a Deed of Absolute Sale with Right to Repurchase (pacto de retro), an equitable mortgage. Courts consistently look to the substance of the transaction rather than its form (Civil Code, Art. 1602 and Art. 1371).

Governing Laws and Legal Characterization

Real Mortgage (Civil Code, Arts. 2124–2131)
The principal contract is a voluntary real mortgage on immovable property to secure a principal obligation (usually a loan). Essential requisites (Art. 2085):
- It must be constituted to secure fulfillment of a principal obligation.
- The mortgagor must be the absolute owner of the thing mortgaged.
- The mortgagor must have free disposal of the property or legal authority to encumber it.
  The mortgage is a real right that follows the property even if ownership changes, provided it is registered.
Antichresis (Arts. 2132–2139)
When the creditor receives possession of the immovable and applies the fruits or income to the payment of interest and then the principal, the contract is antichresis. In many sanla-tira deals, the “rent” paid by the borrower-occupant is treated as the fruits applied to interest. The creditor must pay taxes and charges on the property unless otherwise stipulated, and must return the property upon full payment.
Equitable Mortgage (Arts. 1602–1605)
The most frequent judicial characterization of sanla-tira occurs when the transaction is cast as a sale with pacto de retro (Art. 1601) but the real intent is to secure a loan. The following circumstances, taken singly or collectively, raise the presumption of equitable mortgage:
- The price is unusually inadequate.
- The vendor remains in possession as lessee or otherwise.
- The vendor binds himself to pay taxes on the thing sold.
- The vendor retains the right to repurchase for a period longer than the usual.
- The vendee assumes payment of the capital gains tax or other charges.
  In such cases, the “buyer” (lender) holds only a security interest; the “seller” (borrower) retains ownership subject to the mortgage.
Chattel Mortgage (Act No. 1508, as amended)
If the subject is movable property (e.g., vehicle or equipment), the arrangement is governed by the Chattel Mortgage Law. Registration with the Registry of Deeds where the debtor resides is required.

Essential Requirements for Validity

Public Instrument – A real mortgage must appear in a public instrument (notarized deed) to be valid against third persons (Art. 2126).
Registration – For binding effect on third parties and priority, the mortgage must be annotated on the title at the Registry of Deeds (Property Registration Decree, PD 1529). Unregistered sanla-tira mortgages are valid only between the parties and their successors-in-interest with notice.
Loan Amount and Interest – The principal obligation must be certain. Although the Usury Law (Act 2655) has been effectively suspended, interest must not be unconscionable (Art. 1306, 1957). Courts may equitably reduce grossly excessive rates under the principle against unjust enrichment.
Delivery of Title/Possession – Delivery of the owner’s duplicate title is common practice but is not strictly required for the mortgage to exist; it merely strengthens the lender’s security.

Rights and Obligations of the Parties

Borrower/Mortgagor

Retains ownership and right to use the property.
Pays the agreed “rent”/interest and eventually the principal.
May alienate or further encumber the property subject to the existing mortgage (Art. 2130 prohibits only stipulation forbidding alienation).
Has the right to redeem the property by full payment at any time before foreclosure or before the expiration of the redemption period.

Lender/Mortgagee

Holds a lien on the property but acquires no ownership.
Cannot use the property without the owner’s consent (unless stipulated).
Must return the title and any documents upon full payment.
Bears the obligation to apply any fruits/income received to interest then principal if antichresis applies.

Prohibited or Void Stipulations

Pactum commissorium (Art. 2088) – Any clause stating that the creditor automatically becomes owner of the property upon the debtor’s failure to pay is null and void. The mortgagee must still foreclose and sell at public auction.
Pactum de non alienando – Absolute prohibition on the mortgagor’s right to sell or encumber is void, although reasonable restrictions may be allowed.
Unconscionable interest or penalties that shock the conscience of the court.
Waiver in advance of the right to redeem or the equity of redemption.

Default and Remedies

Upon default:

Extrajudicial Foreclosure (Act No. 3135, as amended by Act No. 4118) – The most common remedy in sanla-tira cases. Requires a special power of attorney to sell inserted in the mortgage deed or a separate instrument. Notice of sale is posted for 20 days and published in a newspaper of general circulation once a week for three consecutive weeks. The property is sold at public auction; the mortgagor has one year from registration of the certificate of sale to redeem (equity of redemption during the auction period; legal redemption after).
Judicial Foreclosure (Rule 68, Rules of Court) – Filed in the Regional Trial Court where the property is located. Slower but allows deficiency judgment.
Ordinary Action for Collection – The mortgagee may sue for the debt without foreclosing, but loses the right to foreclose later if the action is solely for sum of money.

After foreclosure sale, any deficiency may be recovered by the mortgagee; any surplus belongs to the mortgagor.

Registration, Torrens System, and Third-Party Effects

Under PD 1529, an unregistered mortgage is subordinate to registered interests and does not bind innocent third-party purchasers for value (mirror principle and indefeasibility of title). Buyers who rely on a clean title are protected even if a sanla-tira agreement exists off-record.

Tax and Documentary Requirements

Documentary stamp tax on the mortgage instrument.
If cast as pacto de retro, higher capital gains tax implications may apply unless recharacterized as mortgage.
Creditor may be liable for real property taxes if possession and fruits are received (antichresis).
Upon foreclosure, the winning bidder pays the corresponding taxes and fees.

Special Considerations

Agrarian Reform Lands – Lands covered by CARP or subject to tenancy cannot be mortgaged to non-qualified persons without DAR approval.
Condominium Units – Subject to the Condominium Act (RA 4726); master deed restrictions may apply.
Family Home – The family home is exempt from execution except for specific debts (Family Code, Art. 155); a mortgage for the purchase or improvement of the family home is allowed, but other mortgages require written consent of both spouses.
Illegitimate or Informal Arrangements – Purely oral sanla-tira agreements are enforceable between parties under Art. 1403 (statute of frauds exception for partial performance), but extremely difficult to prove and almost impossible to enforce against third parties.
Criminal Liability – Estafa (Art. 315, RPC) may arise if the borrower misappropriates the loan proceeds or sells the property without disclosing the encumbrance.
Prescription – Action to foreclose prescribes in ten years (Art. 1143) from the date the obligation becomes due.

Sanla-tira arrangements remain popular in the informal credit market because they provide quick liquidity without the costs and delays of formal banking. However, the lack of registration, ambiguous documentation, and frequent use of pacto de retro expose both parties to significant legal risks, especially the borrower who may lose the property through improper foreclosure or sale to a third party. Philippine courts have consistently protected the debtor by recharacterizing such transactions as equitable mortgages when the intent is security rather than genuine sale, thereby preserving the right to redeem and preventing pactum commissorium. Parties entering sanla-tira agreements are strongly advised to execute a notarized real estate mortgage deed, register it, and clearly stipulate the principal, interest rate, and redemption terms to minimize disputes.