The Supreme Court in Ravago v. Metropolitan Bank & Trust Company clarified that prior to January 15, 2000, extrajudicial foreclosures conducted by a notary public were not required to be filed with the court, and thus, were exempt from paying docket fees. This ruling hinged on the interpretation of Administrative Order No. 3 and its subsequent amendments, specifically A.M. No. 99-10-05-0. The Court emphasized that the obligation to pay legal fees for notarial foreclosures only arose after the effectivity of A.M. No. 99-10-05-0. This means that foreclosures completed before this date, where a notary public was involved, are not rendered invalid simply for the non-payment of docket fees.
Docket Fees and Foreclosure: Did the Bank Skip a Step?
Benjamin Ravago and his wife took loans from Metropolitan Bank & Trust Company amounting to P25,000,000.00. These loans were secured by a mortgage on their property. When the couple defaulted, the bank initiated extrajudicial foreclosure proceedings through a notary public. Ravago argued that the foreclosure was invalid because the bank did not comply with Administrative Order No. 3 by failing to pay the required docket fees. The core legal question was whether Administrative Order No. 3, before its amendment, applied to extrajudicial foreclosures conducted by a notary public.
The Supreme Court, siding with the bank, referenced the earlier case of China Banking Corporation v. Court of Appeals, stating that extrajudicial foreclosures handled by a notary public do not fall under Administrative Order No. 3 because they are not filed with the court. The Court underscored that Administrative Order No. 3 was designed to guide executive judges and clerks of court in managing court affairs, particularly those related to the sheriff’s duties. The decision emphasized a key distinction: prior to the amendments introduced by A.M. No. 99-10-05-0, notarial foreclosures operated outside the purview of this administrative order.
To fully grasp the Court’s reasoning, a comparison between Administrative Order No. 3 and A.M. No. 99-10-05-0 is essential. Administrative Order No. 3 focused on the responsibilities of the Executive Judge in managing the courts and supervising the Clerk of Court, who also acts as the Ex-Officio Sheriff. It specifically directed that applications for extra-judicial foreclosure be filed with the Executive Judge through the Clerk of Court. The order did not mention notaries public or foreclosures conducted under their direction. A.M. No. 99-10-05-0 expanded the scope to include the issuance of commissions to notaries public and the enforcement of their duties. It mandated that all applications for extra-judicial foreclosure, whether under the direction of the sheriff or a notary public, be filed with the Executive Judge.
The significance of this amendment is that, prior to January 15, 2000, the prevailing rule did not require the filing of notarial foreclosures with the court. Therefore, the payment of legal fees, as prescribed under Section 7(c), Rule 141 of the Rules of Court, did not apply to these types of foreclosures. The Court in RPRP Ventures Management & Development Corporation v. Judge Guadiz, Jr., et. al. affirmed this interpretation. The Court clarified that Section 7(c), Rule 141 pertains to petitions filed before the Office of the Ex-Officio Sheriff, not those filed before a notary public. However, after the effectivity of A.M. No. 04-2-04-SC on August 16, 2004, the requirement for payment of legal fees now applies to both sheriffs and notaries public.
FAQs
| What was the central issue in the Ravago case? | The core issue was whether a notarial foreclosure conducted before 2000 was invalid due to non-payment of docket fees. |
| What is Administrative Order No. 3? | Administrative Order No. 3 is a directive outlining procedures for extrajudicial foreclosure, initially focused on sheriff-led proceedings. |
| What is A.M. No. 99-10-05-0? | A.M. No. 99-10-05-0 is an amendment to Administrative Order No. 3, expanding its coverage to include foreclosures by notaries public. |
| When did A.M. No. 99-10-05-0 take effect? | A.M. No. 99-10-05-0 took effect on January 15, 2000. |
| Did the Ravago case involve a foreclosure before or after the amendment? | The foreclosure in the Ravago case occurred in 1999, before the effectivity of A.M. No. 99-10-05-0. |
| Who is responsible for paying legal fees for foreclosures now? | Under current rules, both sheriffs and notaries public are responsible for collecting legal fees for foreclosures. |
| What was the impact of the China Banking case on this issue? | The China Banking case established that Administrative Order No. 3 did not initially apply to notarial foreclosures. |
| How does this ruling affect current foreclosure proceedings? | The Ravago ruling clarifies the rules before 2000; current foreclosures are subject to different rules requiring fee payment regardless of who handles it. |
The Ravago case provides crucial insight into the application of foreclosure regulations before the year 2000, highlighting that notarial foreclosures were not subject to the same requirements as sheriff-led proceedings concerning payment of fees. This distinction, rooted in the historical evolution of administrative orders, impacts the validity of foreclosures completed during that period. Understanding this history is essential for legal professionals dealing with older 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: Ravago v. Metropolitan Bank & Trust Company, G.R. No. 188739, August 5, 2015
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