Spouses Algura vs Local Gov't of City of Naga

G. R. No. 150135, Oct. 30, 2006

SPOUSES ANTONIO F. ALGURA and LORENCITA S.J. ALGURA, Petitioners,

- versus - 

THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY. MANUEL TEOXON, ENGR. LEON PALMIANO, NATHAN SERGIO and BENJAMIN NAVARRO, SR., Respondents. 

Spouses Antonio F. Algura and Lorencita S.J. Algura filed a Verified Complaint  for damages against the Naga City Government and its officers, arising from the alleged illegal demolition of their residence and boarding house and for payment of lost income derived from fees paid by their boarders amounting to PhP 7,000.00 monthly.

Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants, to which petitioner Antonio Alguras pay showing a gross monthly income of PhP 10,474.00 and a net pay PhP 3,616.99.

Finding that petitioners’ motion to litigate as indigent litigants was meritorious RTC granted petitioners plea for exemption from filing fees.

Meanwhile, as a result of respondent Naga City Governments demolition of a portion of petitioners’ house, the Alguras allegedly lost a monthly income of PhP 7,000.00 from their boarders’ rentals. With the loss of the rentals, the meager income from Lorencita Alguras sari-sari store and Antonio Alguras small take home pay became insufficient for the expenses of the Algura spouses and their six (6) children for their basic needs including food, bills, clothes, and schooling, among others.

Respondents filed an Answer with Counterclaim arguing that the defenses of the petitioners in the complaint had no cause of action, the spouses’ boarding house blocked the road right of way, and said structure was a nuisance per se.

Respondents filed a Motion to Disqualify the Plaintiffs for Non-Payment of Filing Fees. They asserted that in addition to the more than PhP 3,000.00 net income of petitioner Antonio Algura, who is a member of the Philippine National Police, spouse Lorencita Algura also had a mini-store and a computer shop on the ground floor of their residence. Also, respondents claimed that petitioners second floor was used as their residence and as a boarding house, from which they earned more than PhP 3,000.00 a month. In addition, it was claimed that petitioners derived additional income from their computer shop patronized by students and from several boarders who paid rentals to them. Hence, respondents concluded that petitioners were not indigent litigants.

 The Naga City RTC issued an Order disqualifying petitioners as indigent litigants on the ground that they failed to substantiate their claim for exemption from payment of legal fees and to comply with the third paragraph of Rule 141, Section 18 of the Revised Rules of Court directing them to pay the requisite filing fees.

Petitioners submitted their Compliance attaching the affidavits of petitioner Lorencita Algura and Erlinda Bangate, to comply with the requirements of then Rule 141, Section 18 of the Rules of Court and in support of their claim to be declared as indigent litigants. Petitioner Lorencita Algura claimed that the demolition of their small dwelling deprived her of a monthly income amounting to PhP 7,000.00.  Also, they did not own any real property as certified by the assessor’s office of Naga City. More so, according to her, the meager net income from her small sari-sari store and the rentals of some boarders, plus the salary of her husband, were not enough to pay the family’s basic necessities.

To buttress their position as qualified indigent litigants, petitioners also submitted the affidavit of Erlinda Bangate, who attested under oath, that petitioners derived substantial income from their boarders; that they lost said income from their boarders rentals when the Local Government Unit of the City of Naga, through its officers, demolished part of their house because from that time, only a few boarders could be accommodated; that the income from the small store, the boarders, and the meager salary of Antonio Algura were insufficient for their basic necessities like food and clothing, considering that the Algura spouses had six (6) children; and that she knew that petitioners did not own any real property.

Issue: Whether petitioners should be considered as indigent litigants who qualify for exemption from paying filing fees?

Held:

The position of petitioners on the need to use Rule 3, Section 21 on their application to litigate as indigent litigants brings to the fore the issue on whether a trial court has to apply both Rule 141, Section 16 and Rule 3, Section 21 on such applications or should the court apply only Rule 141, Section 16 and discard Rule 3, Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees.

The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended as Rule 141, Section 18 on March 1, 2000 and subsequently amended by Rule 141, Section 19 on August 16, 2003, which is now the present rule) are still valid and enforceable rules on indigent litigants.

Furthermore, Rule 141 on indigent litigants was amended twice and yet, despite these two amendments, there was no attempt to delete Section 21 from said Rule 3. This clearly evinces the desire of the Court to maintain the two (2) rules on indigent litigants to cover applications to litigate as an indigent litigant.

The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is a settled principle that when conflicts are seen between two provisions, all efforts must be made to harmonize them. Hence, every statute [or rule] must be so construed and harmonized with other statutes [or rules] as to form a uniform system of jurisprudence.

  

 In the light of the foregoing considerations, therefore, the two (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 applicants gross income and that of the applicants 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 PhP 300,000.00. 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.

The Court concedes that Rule 141, Section 19 provides specific standards while Rule 3, Section 21 does not clearly draw the limits of the entitlement to the exemption. Knowing that the litigants may abuse the grant of authority, the trial court must use sound discretion and scrutinize evidence strictly in granting exemptions, aware that the applicant has not hurdled the precise standards under Rule 141. The trial court must also guard against abuse and misuse of the privilege to litigate as an indigent litigant to prevent the filing of exorbitant claims which would otherwise be regulated by a legal fee requirement.

Thus, the trial court should have applied Rule 3, Section 21 to the application of the Alguras after their affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on gross monthly income and ownership of real property under Rule 141. Instead of disqualifying the Alguras as indigent litigants, the trial court should have called a hearing as required by Rule 3, Section 21 to enable the petitioners to adduce evidence to show that they didn’t have property and money sufficient and available for food, shelter, and basic necessities for them and their family. In that hearing, the respondents would have had the right to also present evidence to refute the allegations and evidence in support of the application of the petitioners to litigate as indigent litigants. Since this Court is not a trier of facts, it will have to remand the case to the trial court to determine whether petitioners can be considered as indigent litigants using the standards set in Rule 3, Section 21.

Recapitulating 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.