Anyone who has ever struggled with poverty
knows how extremely expensive it is to be poor.
–  James Baldwin

This is the opening phrase of a recent decision penned by Justice Velasco involving the rules on indigent parties, summarized as follows:

The rules on indigent litigants, therefore, if the applicant for exemption meets the salary and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. On the other hand, when the application does not satisfy one or both requirements, then the application should not be denied outright; instead, the court should apply the “indigency test” under Section 21 of Rule 3 and use its sound discretion in determining the merits of the prayer for exemption.

This is the meat of the decision, which is long overdue. The decision clarifies an issue that confronts us on a daily basis at the U.P. College of Law, Office of Legal Aid. If you have more time, you may opt to read the following details.

In this case, the court denied the petitioner’s motion to litigate as indigent litigants, on the ground that the petitioner’s gross income is P10,474, beyond the amount of P3,000 mentioned in the first paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro Manila.

Discussing the history on suits in forma pauperis (pauper litigant), the Supreme Court noted that when the Rules of Court took effect in 1964, the rule on pauper litigants was found in Rule 3, Section 22 which provided that:

SECTION 22. Pauper litigant.—Any court may authorize a litigant to prosecute his action or defense as a pauper upon a proper showing that he has no means to that effect by affidavits, certificate of the corresponding provincial, city or municipal treasurer, or otherwise. Such authority[,] once given[,] shall include an exemption from payment of legal fees and from filing appeal bond, printed record and printed brief. The legal fees shall be a lien to any judgment rendered in the case [favorable] to the pauper, unless the court otherwise provides.

From the same Rules of Court, Rule 141 on Legal Fees, on the other hand, did not contain any provision on pauper litigants. Rule 141 was revised in 1984 through Administrative Matter No. 83-6-389-0 (formerly G.R. No. 64274), which inserted this provision (quoted in part):

SECTION 16. Pauper-litigants exempt from payment of court fees.—Pauper-litigants include wage earners whose gross income do not exceed P2,000.00 a month or P24,000.00 a year for those residing in Metro Manila, and P1,500.00 a month or P18,000.00 a year for those residing outside Metro Manila, or those who do not own real property with an assessed value of not more than P24,000.00, or not more than P18,000.00 as the case may be.

There are 2 requirements under the old Section 16, Rule 141: a) income requirement, the applicants should not have a gross monthly income of more than P1,500, and b) property requirement, they should not own property with an assessed value of not more than P18,000.

When the Rules of Court on Civil Procedure were amended by the 1997 Rules of Civil Procedure, inclusive of Rules 1 to 71 (Supreme Court Resolution in Bar Matter No. 803 dated 8 April 1997, which became effective on 1 July 1997), Rule 3, Section 22 of the Revised Rules of Court was superseded by Rule 3, Section 21 of said 1997 Rules of Civil Procedure, as follows:

SECTION 21. Indigent party.—A party may be authorized to litigate his action, claim or defense as an indigent if the court, upon an ex parte application and hearing, is satisfied that the party is one who has no money or property sufficient and available for food, shelter and basic necessities for himself and his family.

Such authority shall include an exemption from payment of docket and other lawful fees, and of transcripts of stenographic notes which the court may order to be furnished him. The amount of the docket and other lawful fees which the indigent was exempted from paying shall be a lien on any judgment rendered in the case favorable to the indigent, unless the court otherwise provides.

Any adverse party may contest the grant of such authority at any time before judgment is rendered by the trial court. If the court should determine after hearing that the party declared as an indigent is in fact a person with sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the clerk of court. If payment is not made within the time fixed by the court, execution shall issue for the payment thereof, without prejudice to such other sanctions as the court may impose.

At the time the Rules on Civil Procedure were amended by the Court in Bar Matter No. 803, however, there was no amendment made on Rule 141, Section 16 on pauper litigants. On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in A.M. No. 00-2-01-SC, whereby certain fees were increased or adjusted. In this Resolution, the Court amended Section 16 of Rule 141, making it Section 18, which now reads:

SECTION 18. Pauper-litigants exempt from payment of legal fees.—Pauper litigants (a) whose gross income and that of their immediate family do not exceed four thousand (P4,000.00) pesos a month if residing in Metro Manila, and three thousand (P3,000.00) pesos a month if residing outside Metro Manila, and (b) who do not own real property with an assessed value of more than fifty thousand (P50,000.00) pesos shall be exempt from the payment of legal fees.

The legal fees shall be a lien on any judgment rendered in the case favorably to the pauper litigant, unless the court otherwise provides.

To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his immediate family do not earn the gross income abovementioned, nor do they own any real property with the assessed value aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the litigant’s affidavit.

Any falsity in the affidavit of a litigant or disinterested person shall be sufficient cause to strike out the pleading of that party, without prejudice to whatever criminal liability may have been incurred.

It can be readily seen that the rule on pauper litigants was inserted in Rule 141 without revoking or amending Section 21 of Rule 3, which provides for the exemption of pauper litigants from payment of filing fees. Thus, on March 1, 2000, there were two existing rules on pauper litigants; namely, Rule 3, Section 21 and Rule 141, Section 18.

On August 16, 2004, Section 18 of Rule 141 was further amended in Administrative Matter No. 04-2-04-SC, which became effective on the same date. It then became Section 19 of Rule 141, to wit:

SEC. 19. Indigent litigants exempt from payment of legal fees.–INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT OF THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT DOUBLE THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX DECLARATION OF MORE THAN THREE HUNDRED THOUSAND (P300,000.00) PESOS SHALL BE EXEMPT FROM PAYMENT OF LEGAL FEES.

The legal fees shall be a lien on any judgment rendered in the case favorable to the indigent litigant unless the court otherwise provides.

To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his immediate family do not earn a gross income abovementioned, and they do not own any real property with the fair value aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the litigant’s affidavit. The current tax declaration, if any, shall be attached to the litigant’s affidavit.

Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause to dismiss the complaint or action or to strike out the pleading of that party, without prejudice to whatever criminal liability may have been incurred.

Amendments to Rule 141 (including the amendment to Rule 141, Section 18) were made to implement Republic Act 9227 which brought about new increases in filing fees. Specifically, in the 16 August 2004 amendment, the ceiling for the gross income of litigants applying for exemption and that of their immediate family was increased from P4,000 a month in Metro Manila and P3,000 a month outside Metro Manila, to double the monthly minimum wage of an employee; and the maximum value of the property owned by the applicant was increased from an assessed value of P50,000 to a maximum market value of P300,000, to be able to accommodate more indigent litigants and promote easier access to justice by the poor and the marginalized in the wake of these new increases in filing fees.

Even if there was an amendment to Rule 141 on 16 August 2004, there was still no amendment or recall of Rule 3, Section 21 on indigent litigants.

The Supreme Court decided that Rule 3, Section 21 and Rule 141, Section 16 (as amended) are still valid and enforceable rules on indigent litigants. The 2 rules can stand together and are compatible with each other. When an application to litigate as an indigent litigant is filed, the court shall scrutinize the affidavits and supporting documents submitted by the applicant to determine if the applicant complies with the income and property standards prescribed in the present Section 19 of Rule 141 – that is, the applicant’s gross income and that of the applicant’s immediate family do not exceed an amount double the monthly minimum wage of an employee; and the applicant does not own real property with a fair market value of more than P300,000. If the trial court finds that the applicant meets the income and property requirements, the authority to litigate as indigent litigant is automatically granted and the grant is a matter of right.

However, if the trial court finds that one or both requirements have not been met, then it would set a hearing to enable the applicant to prove that the applicant has “no money or property sufficient and available for food, shelter and basic necessities for himself and his family.” In that hearing, the adverse party may adduce countervailing evidence to disprove the evidence presented by the applicant; after which the trial court will rule on the application depending on the evidence adduced. In addition, Section 21 of Rule 3 also provides that the adverse party may later still contest the grant of such authority at any time before judgment is rendered by the trial court, possibly based on newly discovered evidence not obtained at the time the application was heard. If the court determines after hearing, that the party declared as an indigent is in fact a person with sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the clerk of court. If payment is not made within the time fixed by the court, execution shall issue or the payment of prescribed fees shall be made, without prejudice to such other sanctions as the court may impose.

Source: Algura vs. Local Government Unit of the City of Naga (G.R. No. 150135, 30 October 2006).