When Do New Court Fees Apply in Extrajudicial Foreclosures? UCPB Case Explained

The question of which fees apply in an extrajudicial foreclosure can be confusing, especially when the rules change mid-process. In United Coconut Planters Bank v. Yap (G.R. No. 149715, May 29, 2002), the Supreme Court settled this issue: the fees that apply depend on when the specific service is performed, not when the foreclosure application was filed. This ruling is essential reading for banks, borrowers, and property owners involved in foreclosures.

The Facts of the Case

On February 28, 2000, United Coconut Planters Bank (UCPB) filed a petition for extrajudicial foreclosure of real estate mortgages with the Regional Trial Court of Pasay City. The auction sale was held on April 13, 2000, and UCPB emerged as the highest bidder.

However, the court withheld the certificate of sale. The reason: UCPB had to pay P18,089,900.00 as notarial commission under the new rates introduced by Circular A.M. No. 00-2-01-SC, which took effect on March 1, 2000 — two days after UCPB filed its application.

UCPB argued that since it filed before the new rates took effect, the old, lower fees should apply. The Court of Appeals disagreed, and so did the Supreme Court.

The Issue

The core question was whether the increased fees under Circular A.M. No. 00-2-01-SC should apply to a foreclosure application filed before the circular's effectivity but whose auction sale and certificate of sale issuance happened after.

The Ruling: Fees Are Determined by When Each Service Is Rendered

The Supreme Court affirmed the Court of Appeals' decision, ruling against UCPB. The Court explained that a foreclosure is not a single, indivisible process. Different fees attach to different stages:

• Filing fees are determined by the rates in effect on the date the application is filed.
• Sheriff's or notary's commission on money collected is determined by the rates in effect when the proceeds of the sale are actually received.
• Fees for the certificate of sale are determined by the rates in effect when the certificate is issued.

The Court reasoned that the collection of the commission under Section 9(l) and Section 20(e) of Rule 141 of the Rules of Court only becomes possible once a party becomes the highest bidder. Until money is received and the certificate of sale is to be issued, there is no basis for collecting the commission. Since the auction sale and the issuance of the certificate happened after March 1, 2000, the new, higher rates applied.

The P100,000 Cap: Not Retroactive

UCPB also argued that a later amendment capping sheriff's fees at P100,000.00 should apply. This cap took effect on March 1, 2001, through an amendment to Circular A.M. No. 99-10-05-0.

The Court rejected this argument. The cap could not be applied retroactively because doing so would disrupt collections already validly made between March 1, 2000 (when the higher rates took effect) and March 1, 2001 (when the cap was introduced). Since collections during that period were valid, no refunds could be made for amounts paid in excess of P100,000.00.

Practical Takeaways

• Check the date of the specific event. In extrajudicial foreclosures, the applicable fee rate depends on when the particular service is rendered — filing, auction sale, or issuance of the certificate of sale — not on when the foreclosure application was filed.
• New rules generally apply to pending proceedings. Procedural rules, like fee regulations, apply to cases pending at the time they take effect.
• The P100,000 cap is not retroactive. The cap on sheriff's fees under Rule 141, Section 9(l), as amended, applies only to collections made after March 1, 2001. Payments made before that date, even if exceeding the cap, are valid.
• Plan for fee changes. Parties involved in foreclosures should anticipate that fee regulations may change mid-process and budget accordingly.
• Different fees, different dates. Filing fees, commissions on sale, and certificate of sale fees are each governed by the rates in effect when each becomes due.

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