Rights After Expiry of a Sanla Tira Contract in the Philippines
A comprehensive doctrinal and practical guide (as of July 2025)
1. What is “Sanla Tira”?
“Sanla Tira” (literally, pawn-and-live-in) is a colloquial Philippine arrangement in which the owner of a dwelling—usually a family home—receives a lump-sum loan or “pasanla” from another person, turns over possession of the property, but keeps a contractual right to buy the property back (or “recover” it) within a fixed period. Formally, parties will often write it as a Deed of Conditional Sale with Right of Repurchase or simply a Pacto de Retro Sale. In many cases, however, the true intent is to create security for a loan; the Civil Code then treats it as an equitable mortgage (Arts. 1602 & 1603).
Because sanla tira overlaps two distinct regimes—pacto de retro sales (Arts. 1601-1618) and mortgages (Arts. 2085-2139)—rights after the redemption period expires depend on how a court classifies the contract.
2. Key Statutory Anchors
| Issue | Core Provisions | Short Effect |
|---|---|---|
| Classification as equitable mortgage | Civil Code Arts. 1602-1603 | If any Art. 1602 circumstance exists (inadequate price, seller retains possession, etc.), the contract is automatically re-characterised as a mortgage, regardless of the title given by the parties. |
| Consolidation of ownership in pacto de retro | Art. 1607 | Buyer’s ownership does not automatically consolidate upon mere lapse of the period; a judicial or notarial act plus registration is necessary. |
| Pactum commissorium ban | Art. 2088 | A mortgagee cannot appropriate the property by mere default; foreclosure is indispensable. |
| Summary ejectment | Rule 70, Rules of Court | Governs unlawful detainer or forcible entry suits after a mortgagor/ seller refuses to vacate. |
| Prescription | Art. 1144 (10 yrs. on written contracts); Art. 1141 (actions to recover registered land: imprescriptible vs. holder in bad faith; 1 yr. vs. good-faith purchaser after registration). |
3. Expiry Scenarios and the Parties’ Rights
A. If the contract is upheld as a true pacto de retro sale
Seller/Mortgagor
- Loses ownership once the repurchase period lapses.
- May still occupy the premises only if the contract provides a lease-back clause; otherwise continued stay becomes unlawful detainer.
- No further right to redeem—except where equity steps in (e.g., grave fraud, minority, or Article 1391 vitiated consent).
Buyer/Mortgagee
Gains vested ownership but must consolidate title:
- Execute an Affidavit of Consolidation (or obtain a court order) under Art. 1607.
- Register with the Register of Deeds; only then can a new Torrens title issue (Sec. 78, PD 1529).
May sue for ejectment if seller refuses to vacate.
May collect reasonable rent or damages for seller’s continued possession after written demand.
B. If the contract is re-characterised as an equitable mortgage
Mortgagor (original owner)
Retains ownership despite expiry; lender merely holds a lien.
Right to redeem endures until the mortgage is legally extinguished, typically by:
- Payment of the debt; or
- Prescription of the action to foreclose (10 years from default if the mortgage is unregistered; 5 years for registered real estate mortgage under Act 3135).
Possession defaults to mortgagee only upon foreclosure, auction sale, and issuance of a writ of possession.
Mortgagee (lender)
Cannot simply keep the property; must foreclose extra-judicially (Act 3135) or judicially (Rule 68) to appropriate.
After foreclosure sale:
- If the property is residential land <5 data-preserve-html-node="true" ha & occupied by the mortgagor, the borrower enjoys a one-year equity of redemption after registration of the sale (Sec. 6, Act 3135).
- Issuance of Final Deed of Sale and Writ of Possession transfers title and possession.
Acceptance of rent or continued possession by mortgagor does not waive the right to foreclosure but can toll prescription.
4. Possessory Rights and Ejectment Paths
| Possessor after expiry | Proper Remedy for Opposing Party | Time bar |
|---|---|---|
| Buyer in pacto de retro has taken possession, seller wants to get back | Action reivindicatoria (reconveyance) if contract voidable; or annulment w/in 4 years; otherwise none | Varies |
| Seller/Mortgagor refuses to vacate after valid consolidation | Unlawful detainer (Rule 70) within 1 year from last demand; damages for use and occupation | 1 yr |
| Mortgagee in equitable mortgage seizes property w/o foreclosure | Mortgagor files accion publiciana or replevin; can invoke Art. 2088 (pactum commissorium) | 4 yrs (Art. 1391) |
| Buyer registers title then sells to 3rd party | Original owner may file accion reivindicatoria vs. buyer in bad faith; vs. buyer in good faith, owner limited to damages after 1 yr. | 1 yr–4 yrs |
5. Tax & Registration Consequences
True sale with pacto de retro
- Subject to Capital Gains Tax (6 %), Documentary Stamp Tax & Transfer Taxes on execution, not upon consolidation.
- Consolidation is treated as mere confirmation—no new CGT.
Equitable mortgage
- Documentary Stamp Tax on loan/mortgage (Sec. 195, NIRC).
- Real estate taxes remain with the owner; mortgagee may advance and tack onto the debt (Art. 2126).
Failure to Register
- Does not affect validity inter partes but renders transaction void against innocent third persons (Sec. 53, PD 1529).
6. Leading Jurisprudence (selected)
| Case | G.R. No. | Ratio / Doctrine |
|---|---|---|
| Spouses Abello v. Abello | 202670 (March 23 2021) | Retention of possession by the vendor and inadequate price are badges of an equitable mortgage under Art. 1602. |
| Conde v. CA | 108365 (Aug 19 1993) | Lapse of the pacto period does not automatically bar redemption when facts show it is a mortgage. |
| Spouses Abalos v. Heirs of Gomez | 158989 (June 29 2005) | Judicial consolidation under Art. 1607 is mandatory; until then, buyer has no registrable title. |
| Spouses Gulles v. Philippine National Bank | 149196 (Jun 4 2004) | Foreclosure, not appropriation, is the exclusive remedy for mortgagee; possession follows ownership only after foreclosure sale becomes absolute. |
| Heirs of Malate v. Gamboa | 181303 (Jan 22 2014) | Continued stay of the mortgagor does not show buyer’s intent to lease; badges favoured seller, thus contract deemed mortgage. |
7. Prescription & Limitation Periods
Action to foreclose mortgage
- Written, unregistered mortgage: 10 yrs. from default (Art. 1144).
- Registered mortgage: 5 yrs. under Act 3135, but case law allows refiling within 10 yrs. if dismissed w/o prejudice.
Action to redeem or annul pacto de retro
- Four (4) years from discovery of fraud or from execution if based on vitiated consent (Art. 1391).
- If re-classified as mortgage, redemption may be exercised until the debt or action to foreclose prescribes.
Actions for ejectment
- Within one (1) year from last demand (unlawful detainer) or entry (forcible entry).
Real actions to recover land
- Registered land: imprescriptible vs. holder in bad faith; one (1) year vs. buyer in good faith after registration.
- Unregistered land: 30 yrs. ordinary acquisitive prescription (Art. 1137).
8. Practical Road-Map After Expiry
For the lender/buyer
- Determine classification: Re-examine the document and facts (possession, price, continuing rentals).
- If pacto de retro, file consolidation promptly; delay risks seller’s equity claims and third-party sales.
- If mortgage, commence foreclosure soon to avoid prescription; ensure compliance with Act 3135 notice & publication.
- Serve written demand to vacate before filing ejectment; attach demand and proof to the complaint for unlawful detainer.
For the borrower/seller
- Assert equitable mortgage badges early (Art. 1602) to keep redemption alive.
- Redeem by tendering payment even after period lapses—courts favour equity. Deposit in court if lender refuses.
- If buyer/lender forecloses, monitor auction sale and exercise equity of redemption within the statutory period.
- To contest consolidation or foreclosure irregularities, file accion reivindicatoria or annulment of title in the proper RTC.
9. Frequently Overlooked Issues
- Pactum commissorium pitfalls: Automatic transfer clauses are void; lenders expose themselves to usury damages.
- Subsequent buyers: Innocent purchasers for value defeat unregistered sanla tira claims—register adverse claim (Sec. 70, PD 1529).
- Heir’s rights: Redemption and mortgage obligations transmit to heirs; redemption period is not interrupted by death.
- Tenancy protection: Where the property is agricultural land, Leasehold and CARP laws (RA 6657, RA 3844) may override ejectment.
10. Conclusion
When a sanla tira redemption period expires, everything turns on classification. If a genuine pacto de retro sale, the buyer’s right to consolidate and to evict is straightforward—subject to statutory formalities. If the transaction is an equitable mortgage—and many are—the borrower retains ownership, and the lender can only foreclose. Best practice is to memorialise intent clearly, register promptly, and act within prescriptive windows. Because judicial doctrine heavily protects homeowners against disguised mortgages, lenders must tread carefully; conversely, borrowers who delay asserting equitable-mortgage shields risk losing both title and home.
This article is for informational purposes only and is not a substitute for individualized legal advice. Consult a Philippine lawyer for specific situations.