Dear PAO,

My husband’s officemate (V) borrowed from us, payable within a period of one year. To secure the payment of the loan, V executed a real estate mortgage (“Sanglang-Tira” Agreement) over a condominium unit. We also agreed that my husband and I will reside on the subject property for free, for the duration of the loan agreement. However, under certain circumstances, we were forced to vacate the premises on the 6th month. Would this fact affect our right to foreclose the mortgage in case V fails to pay his loan?

Kring

Dear Kring,

Please be informed of the case of Dennis Mortel vs. Michael Brundige, GR 190236, June 15, 2015, where the Supreme Court, through Associate Justice Arturo Brion, upheld the validity of the real estate mortgage regardless of whether or not the mortgagor occupies the mortgaged property, to wit:

“We also find, as the CA did, that the issue of the respondent’s alleged breach of the mortgage contract patently lacks merit and real substance. The parties’ real estate mortgage contract provided, among others, the following:

‘That the MORTGAGOR does hereby convey by way of SANGLANG-TIRA AGREEMENT (Real Estate Mortgage) unto the mortgagee the following described property, to wit: x x x

‘That the MORTGAGOR hereby promise to pay the above-mentioned amount within a period of one (1) year from July 14, 2001 up to July 14, 2002 renewable upon the option of both parties. That the parties hereby agree that the MORTGAGEE shall reside on the above-mentioned premises during the lifetime of this agreement free of rent xxx xxx 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. x x x” (Emphasis supplied)

Accordingly, your decision to discontinue occupying the mortgaged property did not in any way affect the validity of the loan and the mortgage agreement. You may still foreclose the mortgage should V fail to perform his obligation. After all, having a right does not mean that a person is forced to use it, he or she has the prerogative whether or not to exercise such right. In your case, your right to occupy the mortgaged property under your mortgage agreement, includes the right to decide whether to enforce such right or waive it.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated on.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]