Mahinay vs. Dura Tire & Rubber Industries, Inc.

The one (1)-year period of redemption under Act No. 3135 is fixed, non-extendible, and cannot be tolled or interrupted by the filing of an action to annul the foreclosure sale or to enforce the right of redemption.

A property was mortgaged to secure credit purchases, extrajudicially foreclosed upon default, and sold at public auction. The buyer of the property, who stepped into the shoes of the mortgagor, sought to redeem the property long after the statutory 1-year period had lapsed, claiming his prior lawsuit to annul the sale suspended the deadline.

• Original Filing (First Case): RTC Cebu City, Civil Case No. CEB-17248 (Complaint for specific performance and annulment of auction sale)
• Lower Court Decision (First Case): RTC dismissed. CA affirmed dismissal on June 16, 2006 (CA-G.R. CV No. 00662). SC denied petition (G.R. No. 173117) and MR. Decision became final on August 8, 2007.
• Original Filing (Second Case): RTC Cebu City, Branch 20, Civil Case No. CEB-33639 (Complaint for judicial declaration of right to redeem)
• Lower Court Decision (Second Case): Judgment on the Pleadings dated April 13, 2010, dismissing the Complaint. MR denied on September 2, 2010.
• SC Action: Direct Petition for Review on Certiorari filed by Mahinay under G.R. No. 194152.

• The Mortgage: A&A Swiss mortgaged a property to Dura Tire to secure credit purchases of Move Overland. The mortgage gave Dura Tire express authority to extrajudicially foreclose upon default.
• Sale to Mahinay: On June 5, 1992, A&A Swiss sold the property to Mahinay. In the Deed of Absolute Sale, Mahinay acknowledged the prior mortgage and held himself liable for Dura Tire's claims against Move Overland.
• Attempt to Pay & Foreclosure: On August 21, 1994, Mahinay asked Dura Tire for Move Overland's statement of account to release the mortgage, but Dura Tire ignored him. Upon Move Overland's default, Dura Tire applied for extrajudicial foreclosure on January 6, 1995.
• The Foreclosure Sale: Despite Mahinay's protest and third-party claim, the Sheriff sold the property to Dura Tire (highest bidder) for P950,000. The Certificate of Sale was registered on February 20, 1995.
• First Case (Annulment): On March 23, 1995, Mahinay filed a Complaint for specific performance and annulment of auction sale, claiming Dura Tire had no right to foreclose. The case was eventually dismissed by the RTC, CA, and SC. The CA decision became final on August 8, 2007, with the CA noting Mahinay was a "substitute mortgagor."
• Second Case (Redemption): On August 24, 2007, Mahinay filed a Complaint for judicial declaration of right to redeem, arguing the 1-year period was tolled by his first case or started from the CA's final decision. The RTC dismissed the case via Judgment on the Pleadings, recognizing Mahinay as a successor-in-interest entitled to redeem, but ruling the 1-year period had already lapsed.

• The 1-year redemption period was tolled when he filed the Complaint for annulment of foreclosure sale on March 23, 1995, and resumed when the CA decision became final on August 8, 2007. Cites Consolidated Bank & Trust Corp. v. Intermediate Appellate Court.
• Alternatively, the 1-year period should be counted from August 8, 2007, when the CA judicially declared him a "substitute mortgagor" entitled to redeem. Since he filed the redemption case on August 24, 2007, he is within the 1-year period under Act No. 3135.

• Nothing prevented Mahinay from exercising his right of redemption within 1 year from the registration of the Certificate of Sale.
• Filing an action for annulment of foreclosure sale does not toll the running of the redemption period because the law does not allow its extension.
• The 1-year period already lapsed, so Mahinay can no longer redeem the property.

• Procedural Issues: N/A
• Substantive Issues: Whether the one (1)-year period of redemption was tolled when Mahinay filed his Complaint for annulment of foreclosure sale.

• Procedural: N/A
• Substantive: No. The right to redeem arises by force of law (Section 6, Act No. 3135) when the property is extrajudicially foreclosed and sold, not from a judicial declaration. The "date of the sale" refers to the date the certificate of sale is registered with the Register of Deeds. The 1-year period is fixed and non-extendible to avoid prolonged economic uncertainty over ownership. Filing cases to annul the sale or enforce redemption does not toll the period; allowing it would set a dangerous precedent encouraging frivolous suits merely to extend redemption time. Mahinay should have tendered payment to the Sheriff instead of insisting on paying Dura Tire directly. Consolidated Bank is inapplicable because it relied on a case involving conventional redemption (Ong Chua v. Carr) and involved active fraud/conspiracy to deny redemption, which is absent here. Later cases (CMS Stock Brokerage, Spouses Pahang) control, affirming that the pendency of an action does not toll the redemption period.

• Non-tolability of Redemption Period — The 1-year period of redemption under Act No. 3135 is fixed and non-extendible. It cannot be tolled or interrupted by the filing of an action to annul the foreclosure sale or to enforce the right of redemption.
• Commencement of Redemption Period — The 1-year redemption period begins from the date the certificate of sale is registered with the Register of Deeds, because the sale of registered land does not take effect as a conveyance until registered.
• Mode of Exercising Redemption — If the purchaser at the foreclosure sale refuses to sell back the property, the mortgagor may tender payment to the Sheriff who conducted the foreclosure sale.

• Section 6, Act No. 3135 — Provides that the debtor, successors in interest, or any person having a lien subsequent to the mortgage may redeem the property within one year from and after the date of the sale. Applied to establish that Mahinay's right to redeem arose upon the sale/registration, and the 1-year period is fixed and non-extendible.
• Article 13, Civil Code — Rules for computing periods (years = 365 days; first day excluded, last day included). Applied to compute Mahinay's 1-year redemption period from Feb 20, 1995, expiring on Feb 20, 1996.