Can a Creditor Take Possession of a Mortgaged Property?
The basis of an action for ejectment is provided under the Rules of Court, specifically, Rule 70. In this regard, Section 1 of Rule 70 provides:
“Forcible Entry and Unlawful Detainer
“Section 1. Who may institute proceedings and when. — Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.”
To determine whether a mortgagee-creditor has a right to institute an ejectment suit, it is necessary to settle the question of possession in a mortgage contract. Succinctly, in Recebido vs People (GR 141931. Dec. 4, 2000), penned by Associate Justice Santiago Kapunan, the Supreme Court held that in a mortgage contract, the mortgagor retains the right to possession, viz:
“Neither could his status as mortgagee be the basis of possession since it is the mortgagor in a contract of mortgage who is entitled to the possession of the property.”
Thus, in Lao vs Court of Appeals (GR 115307 July 8, 1997), ponencia of Chief Justice Artemio Panganiban, it was held that as a mere mortgagee, the latter has no right to eject the mortgagor from its possession:
“Based on the previous discussion, there was no sale of the disputed property. Hence, it still belongs to petitioner’s family corporation, N. Domingo Realty & Development Corporation. Private respondent, being a mere mortgagee, has no right to eject petitioner.
A creditor and mortgagee.”…cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void.”
Applying the foregoing precedents, it is indubitable that a mortgagee does not have the right to eject the mortgagor from possession since a mortgage contract does not create a right of possession in favor of the former.