Mahinay v. Dura Tire
REITERATIONFacts
The Antecedents: Makilito B. Mahinay purchased a parcel of land from A&A Swiss International Commercial, Inc. This property was previously mortgaged by A&A Swiss to Dura Tire & Rubber Industries, Inc. (Dura Tire) to secure credit purchases made by Move Overland Venture and Exploring, Inc. Mahinay acknowledged this mortgage and his liability for any claims Dura Tire might have against Move Overland. When Move Overland failed to pay its credit purchases, Dura Tire initiated an extrajudicial foreclosure sale of the mortgaged property. Mahinay protested this sale, asserting he was deprived of the opportunity to settle the obligation due to Dura Tire's failure to provide him with a statement of account. Despite his protest, the property was sold at auction to Dura Tire, with the Certificate of Sale registered on February 20, 1995. Procedural History: Mahinay filed a Complaint for specific performance and annulment of the auction sale, arguing the foreclosure was void. This case underwent multiple dismissals and reinstatements across various Regional Trial Court branches. The Court of Appeals eventually affirmed the dismissal of Mahinay's initial complaint, holding that he had no right to question the foreclosure as he was aware of the mortgage and Move Overland's default. Mahinay's subsequent Petition for Review on Certiorari to the Supreme Court was denied, and the Court of Appeals' decision became final. Subsequently, Mahinay filed a new Complaint for judicial declaration of right to redeem, asserting his right as the property's owner at the time of foreclosure. Dura Tire raised the defense of res judicata and argued that the redemption period had lapsed. The Regional Trial Court dismissed Mahinay's second complaint, acknowledging his right to redeem but finding it had expired. The Petition: Mahinay filed a Petition for Review on Certiorari directly with the Supreme Court, arguing that the one-year period for redemption was tolled by his filing of the Complaint for annulment of the foreclosure sale. He contended that this period should have resumed only after the Court of Appeals' decision became final and executory. Alternatively, he argued that the redemption period should be counted from the finality of the Court of Appeals' decision, asserting he exercised his right within the statutory period by filing his second complaint shortly thereafter. Dura Tire countered that the redemption period is non-extendible and is not tolled by the filing of actions to annul the sale, as established by prior jurisprudence.
Issue(s)
Whether the one (1)-year period of redemption from an extrajudicial foreclosure sale was tolled by the filing of a complaint for annulment of the foreclosure sale. Whether the one (1)-year period of redemption should be counted from the time the Court of Appeals' decision became final and executory.
Ruling
The Petition is denied. The Judgment on the Pleadings dated April 13, 2010, and Order dated September 2, 2010, rendered by Branch 20 of the Regional Trial Court of Cebu City in Civil Case No. CEB-33639 are affirmed.
Ratio Decidendi
On the issue of whether the one (1)-year period of redemption was tolled by the filing of a complaint for annulment of the foreclosure sale: The Supreme Court held that the one (1)-year period of redemption provided under Section 6 of Act No. 3135 is fixed and non-extendible. The Court emphasized that the right of redemption is statutory and must be exercised within the prescribed period to avoid prolonged economic uncertainty over the ownership of the property. The pendency of an action to annul the foreclosure sale or to enforce the right of redemption does not toll or interrupt the running of this period. To rule otherwise would create a dangerous precedent, potentially encouraging the filing of frivolous suits solely to extend the redemption period. The Court distinguished this case from Consolidated Bank & Trust Corp. v. Intermediate Appellate Court, noting that the latter involved a situation where the respondents actively denied the petitioner its right of redemption, amounting to fraud, which is not present in this case. Furthermore, the Court pointed out that CMS Stock Brokerage, Inc. v. Court of Appeals and Spouses Pahang v. Judge Vestil, promulgated later than Consolidated Bank, established the controlling doctrine that actions questioning the foreclosure sale do not toll the redemption period. On the issue of whether the one (1)-year period of redemption should be counted from the time the Court of Appeals' decision became final and executory: The Supreme Court clarified that Mahinay's right to redeem arose not from a judicial declaration but by force of law, specifically Section 6 of Act No. 3135, upon the extrajudicial foreclosure and sale of the property. The "date of the sale" is the date the certificate of sale is registered with the Register of Deeds, which was February 20, 1995. Therefore, Mahinay had one year from this date, or until February 20, 1996, to exercise his right of redemption. The Court reiterated that the statutory period for redemption is fixed and cannot be extended by the filing of subsequent cases. Mahinay's argument that his right of redemption only arose when he was judicially declared "entitled to redeem" was rejected, as his right was already established by law upon the foreclosure sale. His failure to exercise this right within the one-year period from the registration of the certificate of sale meant that his right to redeem had lapsed.
Main Doctrine
The one (1)-year period to redeem a property sold in an extrajudicial foreclosure sale under Act No. 3135 is fixed and non-extendible; a pending action to annul the foreclosure sale does not toll the running of this period.