Baguio Market Vendors Multi-Purpose Cooperative v. Cabato-Cortes
REITERATIONFacts
1. The Antecedents: The Baguio Market Vendors Multi-Purpose Cooperative (BAMARVEMPCO), a credit cooperative organized under Republic Act No. 6938, sought to extrajudicially foreclose a mortgage. BAMARVEMPCO claimed exemption from foreclosure fees based on Article 62(6) of RA 6938, which exempts cooperatives from paying court and sheriff's fees in actions brought under the Cooperative Code or by the Cooperative Development Authority to enforce obligations. 2. Procedural History: BAMARVEMPCO filed a petition for extrajudicial foreclosure with the Clerk of Court of the Regional Trial Court of Baguio City. The Executive Judge, Hon. Iluminada Cabato-Cortes, denied the cooperative's request for exemption from foreclosure fees. The Executive Judge reasoned that the fees collected under Rule 141 of the Rules of Court are not fees payable to the Philippine Government, as they accrue to a special fund under the Court's control, and that Section 22 of Rule 141 only exempts the Republic, its agencies, and instrumentalities. 3. The Petition: BAMARVEMPCO filed a petition for review under Rule 45 of the Rules of Civil Procedure, arguing that Article 62(6) of RA 6938 mandates their exemption from foreclosure fees. The Office of the Solicitor General joined BAMARVEMPCO's cause, asserting that the substantive law (RA 6938) prevails over the procedural rule (Rule 141) and that judicial fees are indeed payable to the Philippine Government. The Court's Office of the Chief Attorney, however, recommended denial, opining that the Supreme Court's exclusive rule-making power under the 1987 Constitution supersedes legislative exemptions concerning court fees.
Issue(s)
Whether Article 62(6) of RA 6938 exempts cooperatives from payment of legal fees in petitions for extrajudicial foreclosure of mortgages under Act 3135. Whether legislative exemptions like Article 62(6) of RA 6938 can override Supreme Court rules on legal fees under Rule 141 in light of the 1987 Constitution.
Ruling
The petition is DENIED. The Orders dated 30 August 2004 and 6 October 2004 of the Executive Judge of the RTC Baguio City are AFFIRMED. Article 62(6) of RA 6938 does not exempt the petitioner's extrajudicial foreclosure proceeding from legal fees.
Ratio Decidendi
On Issue 1: Article 62(6) of RA 6938 narrowly exempts cooperatives from court and sheriff's fees only in (1) actions brought under RA 6938, or (2) actions by the CDA to enforce obligations contracted in favor of cooperatives, as explicitly delimited by the provision's text. The petitioner's filing is a petition for extrajudicial foreclosure under Act 3135, not an action under RA 6938, nor is the petitioner the CDA acting to collect debts on behalf of cooperatives. By plain statutory construction via expressio unius est exclusio alterius, the exemption does not extend to independent foreclosure proceedings governed by special laws like Act 3135, which require compliance with Rule 141, Section 7(c) legal fees based on claim value. The trial court's initial denial under Section 22 of Rule 141 was thus correct, as cooperatives are unlisted among exempt entities like the Republic or its instrumentalities. Even assuming arguendo broader application, the provision's reference to 'fees payable to the Philippine Government' does not encompass Rule 141 collections directed to the Judiciary Development Fund, a special fund under exclusive Court control per PD 1949. This interpretation aligns with the purpose of RA 6938 exemptions to facilitate cooperative-specific litigation, not general creditor remedies. The respondent judge's reconsideration order properly distinguished these fees from national treasury accruals. On Issue 2: The 1987 Constitution's Section 5(5), Article VIII vests the Supreme Court with exclusive power to promulgate rules on pleading, practice, procedure, and legal fees, deleting Congress' prior concurrent authority to repeal, alter, or supplement such rules present in the 1935 (Article VIII, Sec. 13) and 1973 (Article X, Sec. 5(5)) Constitutions. This 'glaring and fundamental omission,' as noted in Echegaray v. Secretary of Justice (361 Phil. 73, 1999), enhanced judicial independence, rendering legislative enactments like RA 6938's Article 62(6) or GSIS Charter Section 39 incapable of modifying Rule 141. The En Banc ruling in Re: Petition for Recognition of the Exemption of GSIS (A.M. No. 08-2-01-0, 11 February 2010) reaffirmed this, holding fee payment as a 'vital component' of procedural rules insulating the judiciary from fiscal interference. OCAT's position—that fee imposition is 'eminently judicial'—is upheld, rejecting OSG's substantive-over-procedural hierarchy where rules concern practice like fees. Historical context from In Re Cunanan (94 Phil. 534, 1954) illustrates prior shared powers, now absolute post-1987. Thus, Section 22, Rule 141 explicitly exempts only specified government entities, excluding cooperatives. The Court circulated this decision via the Office of the Court Administrator to ensure uniform application across judiciary.
Main Doctrine
Article 62(6) of RA 6938 exempts cooperatives from court and sheriff's fees only in two specific scenarios: (1) actions brought under RA 6938 itself, or (2) actions initiated by the Cooperative Development Authority to enforce obligations owed to cooperatives. This exemption does not extend to petitions for extrajudicial foreclosure of mortgages under Act 3135, as such proceedings fall outside the enumerated categories, rendering cooperatives liable for legal fees under Section 7(c) of Rule 141 based on the mortgagee's claim value. The Supreme Court's power to promulgate rules on pleading, practice, and procedure, including the imposition of legal fees, is exclusively vested under Section 5(5), Article VIII of the 1987 Constitution, with the omission of Congress' amendatory power from prior constitutions signifying no legislative interference is permissible. This exclusive domain safeguards judicial independence, as affirmed in Echegaray v. Secretary of Justice and reiterated in the GSIS exemption case, where even statutory exemptions for government entities were invalidated against Rule 141. Consequently, procedural rules like Section 22 of Rule 141, exempting only the Republic and its agencies, prevail over general statutory claims of exemption by cooperatives or similar entities.