Understanding Sheriffs Fees and Improper Solicitation in Extrajudicial Foreclosures

When a bank forecloses on mortgaged properties, sheriffs play a critical role in conducting the auction sale. But what fees can a sheriff legally collect? A recent Supreme Court decision clarifies this question, ruling that a sheriff who demanded P5,000 per title from a bank committed improper solicitation—a grave offense warranting dismissal from service.

The Case: A Billing for Sheriff's Fees

In Malabanan v. Ruiz (A.M. No. P-20-4090, March 16, 2021), the complainant was a paralegal officer of UCPB Savings Bank. The bank had filed a petition for extrajudicial foreclosure against properties covered by 98 titles. After the auction sale, where UCPB emerged as the highest bidder, the respondent sheriff issued a "Billing for Sheriff's Fee" stating that the fee was P5,000.00 per title for the 98 titles covered by the foreclosure.

This amounted to P490,000.00. The sheriff claimed the amount reflected what he described as the prevailing rate being paid by petitioners in similar cases.

The Issue: What Fees Can a Sheriff Collect?

The sole issue was whether the sheriff committed improper solicitation under the 2017 Rules on Administrative Cases in the Civil Service (2017 RACCS).

The sheriff defended himself by saying the billing was merely a guide for the bank to estimate fees, and that no specific amount was indicated because the fee would depend on the bank's discretion. He also claimed that banks commonly paid fees per title, citing Land Bank of the Philippines as paying P1,000 per title as a tolerated practice.

The Ruling: No Discretion, No Shortcuts

The Supreme Court rejected these defenses. The Court held that the fees sheriffs may collect are strictly governed by Rule 141 of the Rules of Court and the procedure for extrajudicial foreclosure of mortgages established by the Court.

Under Rule 141, as amended, the sheriff's fee for money collected is based on a fixed percentage: 5.5% on the first P4,000.00 and 3% on amounts in excess of P4,000.00. For sheriff's expenses in executing writs, the sheriff must estimate the amount, but that estimate requires court approval before the interested party deposits the money with the clerk of court.

The Court emphasized that these rules "are clear-cut and do not provide procedural shortcuts." A sheriff cannot unilaterally demand money from a party-litigant without following proper procedure—doing so "would amount to dishonesty and extortion."

Key Principles Established

First, the payor has no discretion in determining sheriff's fees. All authorized fees are based on fixed amounts and rates set by the rules.

Second, a customary practice cannot ripen into a legal act. The sheriff's claim that banks routinely paid per-title fees was unavailing—a tolerated practice without legal basis cannot justify unauthorized collections.

Third, mere demand is sufficient for liability. The sheriff argued he never received any money, but the Court ruled that receipt is not necessary to establish improper solicitation—the demand itself was enough.

Fourth, length of service is not a mitigating circumstance. The sheriff had served for 24 years, but the 2017 RACCS provides that mitigating circumstances cannot be appreciated when the offense is punishable by dismissal.

The Penalty

The Court found the sheriff guilty of improper solicitation under the 2017 RACCS, which also violates Section 7(d) of R.A. 6713 (the Code of Conduct and Ethical Standards for Public Officials and Employees) and the Code of Conduct for Court Personnel. He was dismissed from service with forfeiture of all retirement benefits (excluding accrued leave credits) and with prejudice to re-employment in government.

Practical Takeaways

• Sheriffs' fees are fixed by rule, not by negotiation. In extrajudicial foreclosures, the sheriff's fee after auction is computed under Rule 141—a percentage of the amount collected, subject to limits set by the Court.
• Any estimate of sheriff's expenses requires court approval. A sheriff cannot unilaterally set or demand amounts; the court must approve estimated expenses before any deposit is made with the clerk of court.
• "Common practice" is not a defense. If a practice has no legal basis, it cannot justify a sheriff's unauthorized demands, regardless of how widespread or tolerated it may be.
• Mere demand creates liability. A sheriff need not actually receive money to be administratively liable for improper solicitation.
• For parties dealing with sheriffs: If a sheriff demands fees beyond what Rule 141 authorizes, the demand itself may be grounds for an administrative complaint before the Office of the Court Administrator.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.