Dismissal for Sheriff’s Neglect: The Importance of Following Foreclosure Rules

A.M. No. P-10-2825, December 07, 2010

Imagine losing your property due to a sheriff’s failure to follow the correct procedures. This case highlights the serious consequences for law enforcement officers who neglect their duties in extrajudicial foreclosure proceedings, emphasizing the need for strict adherence to legal guidelines to protect the rights of all parties involved.

This case involves a complaint against a Clerk of Court and a Sheriff for Grave Misconduct, Dereliction of Duty, and Conduct Prejudicial to the Best Interest of the Government. The Development Bank of the Philippines (DBP) filed the complaint after experiencing delays and irregularities in an extrajudicial foreclosure proceeding due to the Sheriff’s insistence on outdated rules.

Understanding Extrajudicial Foreclosure in the Philippines

Extrajudicial foreclosure is a process where a lender can seize and sell a property without going to court, provided the borrower has defaulted on their loan payments. This process is governed by Act No. 3135, as amended. The law outlines specific requirements that must be followed to ensure fairness and protect the borrower’s rights.

Key to understanding this case is the amendment to Administrative Order No. 3, Series of 1984, through Circular No. 7-2002. This amendment shifted the duty of examining applications for extrajudicial foreclosure from the Sheriff to the Clerk of Court. Additionally, the old “two-bidder rule,” requiring at least two bidders for an auction sale to proceed, was explicitly dispensed with by the Supreme Court’s Resolution of January 30, 2001, amending paragraph 5 of A.M. No. 99-10-05-0.

Act No. 3135, Section 4 states: “The sale shall be made at public auction, between the hours of nine in the morning and four in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of the peace of the municipality in which such sale has to be made, or a notary public of said municipality.”

The DBP Foreclosure Case: A Sheriff’s Misunderstanding

DBP initiated extrajudicial foreclosure proceedings against RMC Telecommunications Consultants, Inc. When the Sheriff, Tobillo, insisted on the outdated “two-bidder rule” and the need for separate petitions for real estate and chattel mortgages, DBP’s lawyer reminded him of the amendments to the rules. Despite this, Tobillo refused to proceed with the auction sale, causing significant delays. He even failed to appear on the rescheduled auction date.

Here’s a breakdown of the events:

• DBP filed for extrajudicial foreclosure against RMC.
• Tobillo scheduled the auction sale but informed DBP of a possible postponement due to the “two-bidder rule.”
• DBP reminded Tobillo and the Clerk of Court, Atty. Centron, that the “two-bidder rule” was no longer in effect.
• Tobillo postponed the auction, citing the “two-bidder rule” and the need for separate petitions.
• Tobillo failed to appear on the rescheduled auction date.

In his defense, Tobillo admitted his reliance on the “two-bidder rule” and argued that the postponement was justified due to the need for separate petitions and the lack of custody over the chattel. Atty. Centron claimed she directed Tobillo to proceed, reminding him of the rule changes.

The Supreme Court, however, sided with DBP, emphasizing the Sheriff’s duty to stay informed of current rules and regulations. The Court quoted Tobillo’s own words to demonstrate his lack of awareness of the updated rules:

“a) x x x. It is my position that it is our policy and rule based on Paragraph 5 of the Circular A.M. No. 99-10-05-0 provides: No auction sale shall be held unless there are at least two (2) participating bidders otherwise the sale shall be postponed to another date. If on the new date set for the sale there shall not be at least two (2) bidders, the sale shall then proceed. x x x.”

“b) x x x. Although it was filed with the Office of the Clerk of Court and Ex-officio sheriff which examined whether the applicant has complied with all requirements, it remains my duty as sheriff to check whether the requirements have been complied with as to application of petition with two (2) different and separate actions.   x x x.”

Consequences of Neglect: Dismissal and Admonishment

The Supreme Court found Tobillo guilty of Gross Neglect of Duty and ordered his dismissal from service with forfeiture of all benefits, except accrued leave benefits. The Court noted that this was not Tobillo’s first offense, highlighting his incorrigible character and breach of duty. Atty. Centron, while initially found guilty of Simple Neglect of Duty by the OCA, was ultimately admonished to closely supervise her subordinates.

The Court stated, “His actuations amounted to no less than Gross Neglect of Duty.”

This case underscores the importance of diligence and adherence to current regulations for those involved in legal proceedings. The Court’s decision serves as a strong warning against negligence and highlights the serious consequences for failing to uphold the law.

Practical Implications: Staying Informed and Avoiding Delays

This ruling has significant implications for sheriffs, clerks of court, lenders, and borrowers involved in extrajudicial foreclosures. It reinforces the need for all parties to stay informed of current rules and regulations to ensure a fair and efficient process.

For lenders, it is crucial to ensure that all foreclosure proceedings comply with the latest legal requirements. For borrowers, understanding their rights and the applicable procedures can help them protect their interests. Sheriffs and clerks of court must prioritize continuous learning and adaptation to legal changes to avoid costly errors and potential disciplinary actions.

Key Lessons

• Stay Updated: Sheriffs and Clerks of Court must remain current with all amendments and circulars affecting their duties.
• Proper Supervision: Clerks of Court have a responsibility to supervise their subordinates effectively.
• Consequences of Neglect: Neglecting duties in foreclosure proceedings can lead to severe penalties, including dismissal from service.
• Protecting Rights: Understanding the foreclosure process is vital for both lenders and borrowers to protect their respective rights.

Frequently Asked Questions (FAQs)

Q: What is extrajudicial foreclosure?

A: Extrajudicial foreclosure is a process where a lender can seize and sell a property without going to court, provided the borrower has defaulted on their loan payments and the mortgage contract allows for it. This process is governed by Act No. 3135.

Q: What is the role of the Sheriff in extrajudicial foreclosure?

A: The Sheriff’s role includes conducting the public auction and ensuring that the sale is conducted according to the law. However, the examination of the foreclosure application is now the responsibility of the Clerk of Court.

Q: What is the “two-bidder rule,” and is it still in effect?

A: The “two-bidder rule” required at least two bidders for an auction sale to proceed. However, this rule was abolished by the Supreme Court in 2001.

Q: What happens if the Sheriff fails to follow the correct procedures?

A: If the Sheriff fails to follow the correct procedures, the foreclosure sale may be challenged in court, and the Sheriff may face administrative penalties, including dismissal.

Q: What should I do if I believe the Sheriff is not following the law?

A: If you believe the Sheriff is not following the law, you should immediately consult with a lawyer to discuss your options and protect your rights. You can also file a complaint with the Office of the Court Administrator.

Q: Where can I find the updated rules on extrajudicial foreclosure?

A: The updated rules can be found in Act No. 3135, as amended, and in relevant Supreme Court circulars and administrative orders. Consult the Supreme Court E-Library or a qualified lawyer to ensure you have the most current information.

ASG Law specializes in foreclosure and real estate law. Contact us or email hello@asglawpartners.com to schedule a consultation.