Ravago v. Metropolitan Bank
REITERATIONFacts
The Antecedents: Petitioner Benjamin E. Ravago and his wife obtained loans totaling ₱25,000,000.00 from respondent Metropolitan Bank & Trust Company (MBTC) between October and December 1997, secured by a real estate mortgage. They failed to pay their loan obligations. In February 1999, MBTC initiated extrajudicial foreclosure proceedings through a notary public. The foreclosure sale was conducted on June 3, 1999, with MBTC as the highest bidder for ₱30,484,500.00, and MBTC subsequently obtained title. Procedural History: On October 12, 2001, petitioner and his wife filed a Complaint with the Regional Trial Court (RTC) of Pasig City, seeking the annulment of the foreclosure proceedings, certificate of sale, and consolidated title, alleging non-compliance with Administrative Order No. 3 and Act No. 3135. The RTC dismissed the complaint, ruling that Administrative Order No. 3 did not apply to notarial foreclosures and thus non-compliance did not render the foreclosure void. The Court of Appeals (CA) affirmed the RTC's decision. The Petition: Petitioner filed a petition for review on certiorari, raising issues regarding the exemption of notarial foreclosures from docket fees, particularly those conducted prior to 1991. The core contention was that the foreclosure was null and void due to the non-payment of docket fees.
Issue(s)
Whether a petition for extra-judicial foreclosure conducted by a Notary Public pursuant to Act 3135 is exempt from the payment of docket fee, considering the timing of the foreclosure and relevant administrative orders. Whether a notarial foreclosure which took place prior to 1991 is exempt from the payment of docket fee, considering the absence of a requirement to file with the court at that time.
Ruling
The petition is denied. The Decision of the Court of Appeals, dated February 17, 2009, and its Resolution dated July 8, 2009, in CA-G.R. CV No. 88410 are affirmed.
Ratio Decidendi
On the issue of exemption from docket fees for notarial foreclosures: The Court reiterated its ruling in China Banking Corporation v. Court of Appeals that extrajudicial foreclosures conducted by a notary public do not fall under the purview of Administrative Order No. 3 because they are not filed with the court. Administrative Order No. 3 was a directive for executive judges concerning court management and applied to foreclosures handled by the sheriff, not by a notary public. A statute, such as Act No. 3135, is superior to an administrative directive, and the latter cannot repeal or amend the former. Therefore, the requirement for sheriffs to receive and docket applications and collect filing fees under Administrative Order No. 3 did not apply to notarial foreclosures prior to the amendment of Administrative Order No. 3 by A.M. No. 99-10-05-0. On the applicability of docket fees to notarial foreclosures prior to A.M. No. 99-10-05-0: The Court affirmed that prior to the effectivity of A.M. No. 99-10-05-0 on January 15, 2000, applications for extrajudicial foreclosures under the direction of a notary public were not required to be filed with the court. Consequently, the legal fees prescribed under Section 7(c), Rule 141 of the Rules of Court, which pertained to petitions filed before the Office of the Ex-Officio Sheriff, were inapplicable to applications for extrajudicial foreclosure of real estate mortgages filed with a notary public. This was consistent with the ruling in RPRP Ventures Management & Development Corporation v. Judge Guadiz, Jr., et. al., where a notarial foreclosure conducted on December 9, 1999, prior to A.M. No. 99-10-05-0, was also found to be exempt from docket fees. The requirement for payment of legal fees for foreclosures by both sheriff and notary public was later incorporated under the present Section 7(c), Rule 141, as amended by A.M. No. 04-2-04-SC.
Main Doctrine
Extrajudicial foreclosures conducted by a notary public prior to the effectivity of A.M. No. 99-10-05-0 were not required to be filed with the court and were thus exempt from the payment of docket fees, as Administrative Order No. 3, which mandated such filing and fees, applied only to foreclosures conducted by the sheriff.