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[A.M. No. 99-10-05-0.August 7, 2001]
RE: PROCEDURE IN EXTRA-JUDICIAL FORECLOSURE OF MORTGAGES
EN BANC
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated AUG 7 2001.
A.M. No. 99-10-05-0 (Re: Procedure in Extra-Judicial Foreclosure of Mortgages.)
For consideration are various letters received by the Court regarding this subject matter.
(1) Atty. Michael G. Jornales of the Bank of the Philippine Islands, requests, in a letter dated January 11, 2001, that the Court issue a circular to reflect a later change introduced by �47 of R.A. No. 8791 (The General Banking Law of 2000) to Act No. 3135 concerning the period of redemption of properties sold in extrajudicial foreclosures so far as juridical persons are concerned.
(2) Atty. Jeoffrey
S. Joaquino, Clerk of Court VII, RTC of Cebu, and Mr. Tomas P. Arejola, manager
of the LBC Bank, Naga City, in separate letters, dated May 28, 2001 and May 11,
2001, respectively, inquire (a) whether the ceiling of P100,000.00 for
sheriff's fees provided for in paragraph 2(d) of A.M. No. 99-10-05-0 applies as
well to the fees assessed in extrajudicial foreclosure held under the direction
of a notary public and (b) whether, in addition to the fee under Rule 141, �20(d),
as amended, the payment of sheriff's fees under Rule 141, �9(l) is a condition
for the issuance of the certificate of sale in extrajudicial foreclosure.
(3) A "taxpayers" letter, dated March 5, 2001, which Director Emilio A. Gonzalez III, Office of the Ombudsman, indorses, seeks a review of Circular A.M. No. 99-10-05-0, and other administrative issuances pertaining to extrajudicial foreclosure under Act No. 3135.
The Court, taking note of the foregoing letters, RESOLVED as follows:
(1) The proposal of Atty. Jornales is well taken. Under Act No. 3135, �6, as amended, any person having interest or lien on the property sold ,in extrajudicial foreclosure sale may redeem the same "at any time within the term of one year from and after the date of the sale." The one-year period is counted from the date of the registration of the certificate of sale with the Register of Deeds. Thus, paragraph 2(e) of Circular A.M. No. 99-10-05-0 provides:
Upon receipt of an application for extrajudicial foreclosure of mortgage, it shall be the duty of the Clerk of Court to:
..
e) after the certificate of sale has been issued to the highest bidder, keep the complete records, while awaiting redemption within a period of one (1) year from the date of registration of the certificate of sale with the Register of Deeds concerned, after which the records shall be archived. (emphasis added)
However, R.A. No. 8791, �47, which took effect on June 13, 2000, after the promulgation of Circular A.M. No. 99-10-052-0 on December 14, 1999, provides:
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial foreclosure shall have the right to redeem the property in accordance with this provision until, but not after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds which in no case shall be more than three (3) months after foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their redemption rights until their expiration. (emphasis added)
An exception is thus made in the case of juridical persons which are allowed to exercise the right of redemption only "until, but not after, the registration of the certificate of foreclosure sale" and in no case more than three (3) months after foreclosure, whichever comes first. This exception must be duly reflected in A.M. No. 99-10-05-0.
Accordingly, Circular A.M. No. 99-10-05-0, paragraph 2(e), as amended, is further amended so as to make it read as follows:
e) after the certificate of sale has been issued to the highest bidder, keep the complete records, while awaiting any redemption within a period of one (1) year from date of registration of the certificate of sale with the Register of Deeds concerned, after which, the records shall be archived. NOTWITHSTANDING THE FOREGOING PROVISION, JURIDICAL PERSONS WHOSE PROPERTY IS SOLD PURSUANT TO AN EXTRA-JUDICIAL FORECLOSURE, SHALL HAVE THE RIGHT TO REDEEM THE PROPERTY UNTIL, BUT NOT AFTER, THE REGISTRATION OF THE CERTIFICATE OF FORECLOSURE SALE WHICH IN NO CASE SHALL BE MORE THAN THREE (3) MONTHS AFTER FORECLOSURE, WHICHEVER IS EARLIER, AS PROVIDED IN SECTION 47 OF REPUBLIC ACT NO. 8791.
(2) With respect to the query posed in the letter of Atty. Joaquino, paragraph 2(d) of Circular A.M. No. 99-10-0-5-0, states:
Upon receipt of an application for extrajudicial foreclosure of mortgage, it shall be the duty of the Clerk of Court to:
..
(d) sign and issue
the certificate of sale, subject to the approval of the Executive Judge, or in
his absence, the Vice-Executive Judge. No certificate of sale shall be issued
in favor of the highest bidder until "all fees provided for in the
aforementioned sections and in Rule 141, Section 9(l) as amended by A.M. No.
00-2-0 1-SC, shall have been paid;
Provided
,
that in no case shall the amount payable under Rule 141, Section 9(l), as
amended, exceed P100,000.00;
The imposition of the P100,000.00
ceiling on the sheriff's fees, as provided in Rule 141, �9(l), has been
explained as follows:
Considering that the
amount paid for the sheriff's commission, as in the other fees which are
required to be paid, will be included in the computation of the redemption
price, the imposition of a cap or ceiling thereon works to the benefit both of
the creditor-mortgagee as well as the debtor-mortgagor. Accordingly, while
sheriff's fees in extrajudicial foreclosure are to be computed in accordance
with Rule 141, �9(l), the total amount of the fees should not exceed P100,000.00.
(Minute Res., A.M. No. 99-10-05-0, January 30, 2001.)
There is no reason why the ceiling in par. 2(d) of Circular A.M. No. 99-10-05-0 should not be applied to the fees collected in extrajudicial foreclosure sales conducted by notaries public under Rule 141, �20(e) which provides:
Other fees The following fees shall also be collected by the clerks of Regional Trial Courts or courts of the first level, as the case may be:
..
(e) For applications for and certificates of sale in notarial foreclosures:
1. On the first
four thousand (P4,000) pesos, five (5%) per cent;
2. On all sums in
excess of four thousand (P4,000) pesos, two and one half (2.5%) per
cent. (A.M. No. 99-8-01-SC, September 14, 1999).
Thus whether the sale is
conducted by the sheriff under Rule 141, �9(l) or by a notary public under
�20(e), the limit of P100,000.00 on the amount of fees which may be
collected should be applied.
(3) Anent Mr. Arejola's query, the payment not only of the sheriff's fees under �9(l) but also of the filing fees under �7(c) is a condition for the issuance of the certificate of sale as provided in Administrative Circular No. 3-98, dated February 5,. 1998, and now reiterated in paragraph 2(d) of Circular A.M. No. 99-10-05-0. The fee provided in Rule 141, �20(d) pertains to applications for and entries of certificates of sale and final deeds of sale in extra-judicial foreclosures of mortgagees. Such fee is separate and distinct from the filing and sheriff's fees under Rule 141, ��7(c) and 9(l).
4) The points raised in the letter of the unnamed "taxpayers" have no merit. Circular A.M. No. 99-10-05-0, like Administrative Order No. 3 and Administrative Circular No. 3-98, was issued to implement Act No. 3135. Under Administrative Order No. 6, dated June 30, 1975, executive Judges are responsible for the management of Courts within their administrative areas, including the supervision of the work of Clerks of Court, as Ex-officio Sheriffs, in the conduct of extrajudicial foreclosure of mortgages under Act No. 3135.
On the other hand, the Court's authority to impose the payment of fees incident to the implementation of Act No. 3135 is derived from Presidential Decree No. 1949 which authorizes the judiciary to generate its own funds and resources for the discharge of its functions and duties. The unnarred "taxpayers" challenge to the constitutionality of P.D. No. 1949 on the ground that it authorizes the Court to exercise taxing powers can only be raised in a proper case.
There is likewise no merit in the contention that the participation of the Executive Judge in approving the certificate of sale is "uncalled for" as he may later on preside over a case questioning the validity of the foreclosure sale. Such possibility can easily be avoided by re-assigning the case to another branch of the court. Nor do the cases of China Banking Corporation v. Court of Appeals, 265 SCRA 327 (1996), and Supena v. De la Rosa, 26 SCRA 1 (1997), cited by the unnamed letter writers, support their contention. In China Banking, the Court ruled that in case of conflict between Act No. 3135 and the administrative issuance implementing such, which, at that time, was Administrative Order No. 3, the former prevails. That proposition is riot in dispute. No conflict exists between Act No. 3135 and Circular A.M. No. 99-10-05-0. Similarly, the case of Supena, which concerns an administrative complaint against a judge for having applied in an extrajudicial foreclosure of mortgage the rules on venue of actions under the Rules of Court instead of that under Act No. 3135, is irrelevant to the question raised by the unnamed parties. Gutierrez, J., on leave.
Very truly yours,
LUZMINDA D. PUNO
Clerk of Court
(Sgd.) MA. LUISA D.VILLARAMA
Asst. Clerk of Court
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