Baguio Market Vendors MPC v. Hon. Iluminada Cabato-Cortes [G.R. No. 165922, February 26, 2010]

 CASE DIGEST

Baguio Market Vendors MPC  v. Hon. Iluminada Cabato-Cortes

[G.R. No. 165922, February 26, 2010]

SECOND DIVISION, CARPIO, J.

 

Cooperatives; Exemption from Court and Sheriff’s Fees; Extrajudicial Foreclosure; Rule 141; Exclusive Rule-Making Power of the Supreme Court

 

The exemption from court and sheriff’s fees granted to cooperatives under Article 62(6) of Republic Act No. 6938 is limited to: (1) actions brought under the Cooperative Code; and (2) actions brought by the Cooperative Development Authority to enforce obligations in favor of cooperatives. It does not extend to a cooperative’s petition for extrajudicial foreclosure under Act No. 3135. Moreover, the imposition and regulation of legal fees form part of pleading, practice, and procedure, over which the Supreme Court has exclusive rule-making authority under the 1987 Constitution. Congress may no longer repeal, alter, or supplement such procedural rules.

 

Baguio Market Vendors Multi-Purpose Cooperative (BAMARVEMPCO) is a credit cooperative organized under Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines. In 2004, BAMARVEMPCO, acting as mortgagee, filed with the Clerk of Court of the Regional Trial Court of Baguio City a petition for the extrajudicial foreclosure of a real estate mortgage under Act No. 3135, as amended. Under Section 7(c), Rule 141 of the Rules of Court, petitions for extrajudicial foreclosure are subject to the payment of legal fees computed on the basis of the mortgagee’s claim. 

BAMARVEMPCO invoked Article 62(6) of Republic Act No. 6938 and claimed exemption from the payment of foreclosure fees. The provision exempts cooperatives from the payment of court and sheriff’s fees payable to the Philippine Government in connection with actions brought under the Cooperative Code or actions brought by the Cooperative Development Authority to enforce obligations contracted in favor of cooperatives. 

Executive Judge Iluminada Cabato-Cortes denied the request for exemption. She relied on Section 22, Rule 141, which exempts only the Republic of the Philippines, its agencies and instrumentalities, and certain actions instituted by local government treasurers or assessors. Since cooperatives were not included among the exempt entities, the trial court held that BAMARVEMPCO remained liable for the prescribed foreclosure fees. 

The Office of the Solicitor General supported BAMARVEMPCO’s position. It argued that Article 62(6), being substantive law, should prevail over Section 22, Rule 141, which it characterized as procedural. It also maintained that legal fees collected by the Judiciary remained fees payable to the Philippine Government because the Judiciary forms part of the government. 

The Court’s Office of the Chief Attorney opposed the petition. It maintained that the power to impose and regulate judicial fees is an exclusively judicial function under the 1987 Constitution and that Congress may no longer interfere with the Supreme Court’s rule-making authority over pleading, practice, and procedure. 

 

Whether or not BAMARVEMPCO’s petition for extrajudicial foreclosure was exempt from the payment of legal fees under Article 62(6) of Republic Act No. 6938.

NO. The Supreme Court denied the petition and held that Article 62(6) did not apply to BAMARVEMPCO’s extrajudicial foreclosure proceeding. The Court ruled that the exemption under Article 62(6) is expressly confined to two classes of actions:

1. actions brought under the Cooperative Code; and
2. actions brought by the Cooperative Development Authority to enforce the payment of obligations contracted in favor of cooperatives. 

BAMARVEMPCO’s petition did not fall under either category. The proceeding was not an action brought under Republic Act No. 6938 but a petition for extrajudicial foreclosure under Act No. 3135. Neither was it an action instituted by the Cooperative Development Authority on behalf of a cooperative. Thus, the statutory exemption could not be invoked.

The Court emphasized that exemptions must be applied strictly according to the terms of the law. Since the language of Article 62(6) was specific and limited, it could not be expanded to include all judicial or quasi-judicial proceedings initiated by cooperatives. 

The Supreme Court further discussed the constitutional allocation of rule-making powers. Article VIII, Section 5(5) of the 1987 Constitution removed Congress’ authority to repeal, alter, or supplement procedural rules promulgated by the Supreme Court. Consequently, the power to issue rules concerning pleading, practice, procedure, and legal fees became the exclusive domain of the Judiciary. 

Thus, even assuming that Article 62(6) of the Cooperative Code (RA 9520) could be interpreted broadly as exempting cooperatives from legal fees, such legislative exemption could not override Rule 141 insofar as it concerns court fees imposed pursuant to the Supreme Court’s exclusive constitutional authority. 

The Court rejected the distinction drawn by the trial court regarding whether the fees accrued to the National Treasury or to a special fund. The decisive point was not the destination of the fees but the nature of legal fees as an integral component of judicial procedure governed by the Supreme Court’s constitutional rule-making power. 

Accordingly, the Supreme Court DENIED the petition and AFFIRMED the Orders of the Executive Judge of the Regional Trial Court of Baguio City requiring BAMARVEMPCO to pay the prescribed extrajudicial foreclosure fees.




CLICK HERE TO READ FULL TEXT