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    Baguio Market Vendor

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    Baguio Market Vendor

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    mau
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    Baguio market vendor

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    Baguio Market Vendor

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    of 3

    G.R. No.

    165922

    BAGUIO MARKET VENDORS MULTI-PURPOSE COOPERATIVE (BAMARVEMPCO),


    represented by RECTO INSO, Operations Manager, Petitioner,
    vs.
    HON. ILUMINADA CABATO-CORTES, Executive Judge, Regional Trial Court, Baguio
    City, Respondent.

    DECISION

    CARPIO, J.:

    The Case

    For review1 are the Orders2 of the Executive Judge of the Regional Trial Court of Baguio City finding
    petitioner Baguio Market Vendors Multi-Purpose Cooperative liable for payment of foreclosure fees.

    The Facts

    Petitioner Baguio Market Vendors Multi-Purpose Cooperative (petitioner) is a credit cooperative


    organized under Republic Act No. 6938 (RA 6938), or the Cooperative Code of the
    Philippines.3 Article 62(6) of RA 6938 exempts cooperatives:

    from the payment of all court and sheriff's fees payable to the Philippine Government for and in
    connection with all actions brought under this Code, or where such action is brought by the
    Cooperative Development Authority before the court, to enforce the payment of obligations
    contracted in favor of the cooperative.4

    In 2004, petitioner, as mortgagee, filed with the Clerk of Court of the Regional Trial Court of Baguio
    City (trial court) a petition to extrajudicially foreclose a mortgage under Act 3135, as
    amended.5 Under Section 7(c) of Rule 141, as amended,6 petitions for extrajudicial foreclosure are
    subject to legal fees based on the value of the mortgagee’s claim. Invoking Article 62 (6) of RA 6938,
    petitioner sought exemption from payment of the fees.

    The Ruling of the Trial Court

    In an Order dated 30 August 2004, Judge Iluminada Cabato-Cortes (respondent), Executive Judge
    of the trial court, denied the request for exemption, citing Section 22 of Rule 141 of the Rules of
    Court, as amended, exempting from the Rule’s coverage only the "Republic of the Philippines, its
    agencies and instrumentalities" and certain suits of local government units. 7

    Petitioner sought reconsideration but respondent denied its motion in the Order dated 6 October
    2004. This time, respondent reasoned that petitioner’s reliance on Article 62(6) of RA 6938 is
    misplaced because the fees collected under Rule 141 are not "fees payable to the Philippine
    Government" as they do not accrue to the National Treasury but to a special fund 8 under the Court’s
    control.9

    Hence, this petition.

    Petitioner maintains that the case calls for nothing more than a simple application of Article 62(6) of
    RA 6938.
    The Office of the Solicitor General (OSG), in its Manifestation (in lieu of Comment), joins causes with
    petitioner. The OSG submits that as the substantive rule, Article 62(6) of RA 6938 prevails over
    Section 22 of Rule 141, a judicial rule of procedure. The OSG also takes issue with respondent’s
    finding that the legal fees collected under Rule 141 are not "fees payable to the Philippine
    Government" as the judiciary forms part of the Philippine government, as defined under the Revised
    Administrative Code.10

    Although not a party to this suit, we required the Court’s Office of the Chief Attorney (OCAT) to
    comment on the petition, involving as it does, issues relating to the Court’s power to promulgate
    judicial rules. In its compliance, the OCAT recommends the denial of the petition, opining that
    Section 22, Rule 141, as amended, prevails over Article 62(6) of RA 6938 because (1) the power to
    impose judicial fees is eminently judicial and (2) the 1987 Constitution insulated the Court’s rule-
    making powers from Congress’ interference by omitting in the 1987 Constitution the provision in the
    1973 Constitution allowing Congress to alter judicial rules. The OCAT called attention to the Court’s
    previous denial of a request by a cooperative group for the issuance of "guidelines" to implement
    cooperatives’ fees exemption under Article 62(6) of RA 6938.11 Lastly, the OCAT recommends the
    amendment of Section 22, Rule 141 to make explicit the non-exemption of cooperatives from the
    payment of legal fees.

    The Issue

    The question is whether petitioner’s application for extrajudicial foreclosure is exempt from legal fees
    under Article 62(6) of RA 6938.

    The Ruling of the Court

    We hold that Article 62(6) of RA 6938 does not apply to petitioner’s foreclosure proceeding.

    Petitions for Extrajudicial Foreclosure


    Outside of the Ambit of Article 62(6) of RA 6938

    The scope of the legal fees exemption Article 62(6) of RA 6938 grants to cooperatives is limited to
    two types of actions, namely: (1) actions brought under RA 6938; and (2) actions brought by the
    Cooperative Development Authority to enforce the payment of obligations contracted in favor of
    cooperatives. By simple deduction, it is immediately apparent that Article 62(6) of RA 6938 is no
    authority for petitioner to claim exemption from the payment of legal fees in this proceeding because
    first, the fees imposable on petitioner do not pertain to an action brought under RA 6938 but to a
    petition for extrajudicial foreclosure of mortgage under Act 3135. Second, petitioner is not the
    Cooperative Development Authority which can claim exemption only in actions to enforce payments
    of obligations on behalf of cooperatives.

    The Power of the Legislature


    vis a vis the Power of the Supreme Court
    to Enact Judicial Rules

    Our holding above suffices to dispose of this petition. However, the Court En Banc has recently ruled
    in Re: Petition for Recognition of the Exemption of the Government Service Insurance System from
    Payment of Legal Fees12 on the issue of legislative exemptions from court fees. We take the
    opportunity to reiterate our En Banc ruling in GSIS.
    Until the 1987 Constitution took effect, our two previous constitutions textualized a power sharing
    scheme between the legislature and this Court in the enactment of judicial rules. Thus, both the
    193513 and the 197314 Constitutions vested on the Supreme Court the "power to promulgate rules
    concerning pleading, practice, and procedure in all courts, and the admission to the practice of law."
    However, these constitutions also granted to the legislature the concurrent power to "repeal, alter or
    supplement" such rules.15

    The 1987 Constitution textually altered the power-sharing scheme under the previous charters by
    deleting in Section 5(5) of Article VIII Congress’ subsidiary and corrective power. 16 This glaring and
    fundamental omission led the Court to observe in Echegaray v. Secretary of Justice 17 that this
    Court’s power to promulgate judicial rules "is no longer shared by this Court with Congress":

    The 1987 Constitution molded an even stronger and more independent judiciary. Among others, it
    enhanced the rule making power of this Court [under] Section 5(5), Article VIII 18 x x x .

    The rule making power of this Court was expanded. This Court for the first time was given the power
    to promulgate rules concerning the protection and enforcement of constitutional rights. The Court
    was also granted for the first time the power to disapprove rules of procedure of special courts and
    quasi-judicial bodies. But most importantly, the 1987 Constitution took away the power of Congress
    to repeal, alter, or supplement rules concerning pleading, practice and procedure. In fine, the power
    to promulgate rules of pleading, practice and procedure is no longer shared by this Court with
    Congress, more so with the Executive. x x x x (Italicization in the original; boldfacing supplied)

    Any lingering doubt on the import of the textual evolution of Section 5(5) should be put to rest with
    our recent En Banc ruling denying a request by the Government Service Insurance System (GSIS)
    for exemption from payment of legal fees based on Section 39 of its Charter, Republic Act No. 8291,
    exempting GSIS from "all taxes, assessments, fees, charges or dues of all kinds." 19 Reaffirming
    Echegaray’s construction of Section 5(5), the Court described its exclusive power to promulgate
    rules on pleading, practice and procedure as "one of the safeguards of this Court’s institutional
    independence":

    [T]he payment of legal fees is a vital component of the rules promulgated by this Court concerning
    pleading, practice and procedure, it cannot be validly annulled, changed or modified by Congress.
    As one of the safeguards of this Court’s institutional independence, the power to promulgate rules of
    pleading, practice and procedure is now the Court’s exclusive domain.20 x x x (Emphasis supplied)

    WHEREFORE, we DENY the petition. We AFFIRM the Orders dated 30 August 2004 and 6 October
    2004 of the Executive Judge of the Regional Trial Court of Baguio City.

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