In United Coconut Planters Bank vs. Hon. Vicente L. Yap, the Supreme Court addressed when new fees for extrajudicial foreclosure apply. The Court ruled that the increased fees apply based on the date the proceeds are received and the certificate of sale is issued, not the date the foreclosure application is filed. This means even if a foreclosure process begins before new fees take effect, the updated rates apply if the sale and certificate issuance occur afterward. This decision clarifies the timing of fee application in foreclosure proceedings, impacting banks and individuals involved in real estate transactions.

Auction Timing is Everything: UCPB’s Battle Over Notarial Fees

This case arose from a dispute over notarial fees during the extrajudicial foreclosure of real estate mortgages by United Coconut Planters Bank (UCPB). UCPB initiated foreclosure proceedings before the effectivity of Circular A.M. No. 00-2-01-SC, which increased the fees for sheriffs and notaries public. However, the auction sale and issuance of the certificate of sale occurred after the circular took effect. The central legal question was whether the old or the new fee rates should apply to UCPB’s foreclosure.

The factual backdrop involves UCPB filing a petition for extrajudicial foreclosure on February 28, 2000. The auction sale took place on April 13, 2000, where UCPB emerged as the highest bidder. The Clerk of Court withheld the certificate of sale pending UCPB’s payment of P18,089,900.00, representing the notarial commission calculated under the new rates prescribed by Circular A.M. No. 00-2-01-SC. This circular, effective March 1, 2000, amended Rule 141 of the Rules of Court, increasing the fees for sheriffs and other persons serving processes. The relevant sections of Rule 141, as amended, provide:

SEC. 9. Sheriffs and other persons serving processes. –

. . . .

(l) For money collected by him by order, execution, attachment, or any other process, judicial or extrajudicial, the following sums, to wit:

1. On the first four thousand (P4,000.00) pesos, five (5%) per centum.
2. On all sums in excess of four thousand (P4,000.00) pesos, two and one-half (2.5%) per centum.

. . . .

SEC. 20. 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 (P4,000.00) pesos, five (5%) per cent;
2. On all sums in excess of four thousand (P4,000.00) pesos, two and one-half (2.5%) per cent.  (A.M. No. 99-8-01-SC, September 14, 1999)

UCPB argued that because the foreclosure application was filed before March 1, 2000, the old rates should apply. The bank sought judicial intervention to compel the release of the certificate of sale without paying the increased commission. The Regional Trial Court denied UCPB’s request, prompting the bank to file a petition for certiorari and mandamus. The Court of Appeals dismissed UCPB’s petition, holding that Circular A.M. No. 00-2-01-SC was procedural and applicable to pending cases.

The Supreme Court affirmed the Court of Appeals’ decision. The Court emphasized that the operative event for determining the applicable fees is the date of the receipt of the proceeds from the sale and the issuance of the certificate of sale, not the filing date of the foreclosure application. The Court reasoned that the collection of fees under Section 9(l) and Section 20(e) of Rule 141 is contingent upon a party becoming the highest bidder in the auction sale. Until the money is received and the certificate of sale is issued, there is no basis for collecting the commission.

This approach contrasts with the fees payable for filing the application for extrajudicial foreclosure, which are determined by the rates in effect at the time of filing. Thus, the Court distinguished between different types of fees within the foreclosure process: filing fees, fees for the receipt of money from the sale, and fees for issuing the certificate of sale. Each fee is governed by the rates in effect when each respective event occurs. The court rejected UCPB’s argument that foreclosure is a single process, asserting that different stages trigger different fee obligations.

Further, the Court addressed the subsequent amendment to Circular A.M. No. 99-10-05-0, effective March 1, 2001, which capped the sheriff’s fees at P100,000.00. While this cap was applicable to notarial foreclosures under Rule 141, §20(e), the Court held that it could not be retroactively applied to the case. The Court reasoned that applying the cap retroactively would adversely affect collections already made between March 1, 2000, and March 1, 2001. Therefore, amounts collected during this period in excess of P100,000.00 for each foreclosure sale were valid and not subject to refund.

The Supreme Court’s decision in this case underscores the importance of timing in legal processes involving fees. While procedural rules generally apply to pending cases, their application must consider the specific events that trigger the fee obligations. In foreclosure proceedings, the critical events are the receipt of proceeds and the issuance of the certificate of sale. This ruling provides clarity for banks, notaries public, and individuals involved in real estate transactions regarding the determination of applicable fees.

FAQs

What was the key issue in this case?	The primary issue was determining whether the old or new rates of fees for extrajudicial foreclosure should apply when the process started before the new rates took effect but concluded afterward.
When do the increased fees take effect in an extrajudicial foreclosure?	The increased fees take effect on the date the proceeds of the sale are received and the certificate of sale is issued, not the date the application for foreclosure is filed.
What is Circular A.M. No. 00-2-01-SC?	Circular A.M. No. 00-2-01-SC is an administrative circular that amended Rule 141 of the Rules of Court, increasing the fees for sheriffs and other persons serving processes, including those related to extrajudicial foreclosure.
Can the P100,000.00 cap on sheriff’s fees be applied retroactively?	No, the P100,000.00 cap on sheriff’s fees, which took effect on March 1, 2001, cannot be applied retroactively to cases where the auction sale occurred before that date.
What are the different types of fees involved in extrajudicial foreclosure?	The fees include filing fees, fees for the receipt of money from the sale of properties, and fees for the issuance of the certificate of sale. Each fee is determined by the rates in effect at the time the respective event occurs.
Who is affected by this ruling?	This ruling affects banks, notaries public, and individuals involved in real estate transactions, particularly those concerning extrajudicial foreclosure proceedings.
What was UCPB’s argument in this case?	UCPB argued that because it filed its application for extrajudicial foreclosure before the new fees took effect, the old rates should apply to the entire process.
How did the Supreme Court justify its decision?	The Supreme Court justified its decision by emphasizing that the collection of fees is contingent on the receipt of proceeds and the issuance of the certificate of sale, which occurred after the new fees were in effect.

In conclusion, the Supreme Court’s decision in United Coconut Planters Bank vs. Hon. Vicente L. Yap clarifies the timing for the application of fees in extrajudicial foreclosure proceedings. The ruling emphasizes that the date of the auction sale and issuance of the certificate of sale are the determining factors for the applicable fee rates. This ensures that fees are applied based on the rates in effect when the services are rendered, providing clarity and stability in real estate transactions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: United Coconut Planters Bank vs. Hon. Vicente L. Yap, G.R. No. 149715, May 29, 2002