EN BANC
[ A.M. No. 08-2-01-0, February 11, 2010 ]RE: PETITION FOR RECOGNITION OF EXEMPTION OF GOVERNMENT SERVICE INSURANCE SYSTEM FROM PAYMENT OF LEGAL FEES. GOVERNMENT SERVICE INSURANCE SYSTEM +
RE: PETITION FOR RECOGNITION OF THE EXEMPTION OF THE GOVERNMENT SERVICE INSURANCE SYSTEM FROM PAYMENT OF LEGAL FEES. GOVERNMENT SERVICE INSURANCE SYSTEM, PETITIONER.
R E S O L U T I O N
RE: PETITION FOR RECOGNITION OF EXEMPTION OF GOVERNMENT SERVICE INSURANCE SYSTEM FROM PAYMENT OF LEGAL FEES. GOVERNMENT SERVICE INSURANCE SYSTEM +
RE: PETITION FOR RECOGNITION OF THE EXEMPTION OF THE GOVERNMENT SERVICE INSURANCE SYSTEM FROM PAYMENT OF LEGAL FEES. GOVERNMENT SERVICE INSURANCE SYSTEM, PETITIONER.
R E S O L U T I O N
CORONA, J.:
May the legislature exempt the Government Service Insurance System (GSIS) from legal fees imposed by the Court on government-owned and controlled corporations and local government units? This is the central issue in this administrative matter.
The GSIS seeks exemption from the payment of legal fees imposed on government-owned or controlled corporations under Section 22,[1] Rule 141 (Legal Fees) of the Rules of Court. The said provision states:
The GSIS anchors its petition on Section 39 of its charter, RA[2] 8291 (The GSIS Act of 1997):
The GSIS then avers that courts still assess and collect legal fees in actions and proceedings instituted by the GSIS notwithstanding its exemption from taxes, assessments, fees, charges, or duties of all kinds under Section 39. For this reason, the GSIS urges this Court to recognize its exemption from payment of legal fees.
According to the GSIS, the purpose of its exemption is to preserve and maintain the actuarial solvency of its funds and to keep the contribution rates necessary to sustain the benefits provided by RA 8291 as low as possible. Like the terms "taxes," "assessments," "charges," and "duties," the term "fees" is used in the law in its generic and ordinary sense as any form of government imposition. The word "fees," defined as "charge[s] fixed by law for services of public officers or for the use of a privilege under control of government," is qualified by the phrase "of all kinds."[3] Hence, it includes the legal fees prescribed by this Court under Rule 141. Moreover, no distinction should be made based on the kind of fees imposed on the GSIS or the GSIS' ability to pay because the law itself does not distinguish based on those matters.
The GSIS argues that its exemption from the payment of legal fees would not mean that RA 8291 is superior to the Rules of Court. It would merely show "deference" by the Court to the legislature as a co-equal branch.[4] This deference will recognize the "compelling and overriding" State interest in the preservation of the actuarial solvency of the GSIS for the benefit of its members.[5]
The GSIS further contends that the right of government workers to social security is an aspect of social justice. The right to social security is also guaranteed under Article 22 of the Universal Declaration of Human Rights and Article 9 of the International Covenant on Economic, Social and Cultural Rights. The Court has the power to promulgate rules concerning the protection and enforcement of constitutional rights, including the right to social security, but the GSIS is not compelling the Court to promulgate such rules. The GSIS is merely asking the Court to recognize and allow the exercise of the right of the GSIS "to seek relief from the courts of justice sans payment of legal fees."[6]
Required to comment on the GSIS' petition,[7] the Office of the Solicitor General (OSG) maintains that the petition should be denied.[8] According to the OSG, the issue of the GSIS' exemption from legal fees has been resolved by the issuance by then Court Administrator Presbitero J. Velasco, Jr.[9] of OCA[10] Circular No. 93-2004:
On this Court's order,[12] the Office of the Chief Attorney (OCAT) submitted a report and recommendation[13] on the petition of the GSIS and the comment of the OSG thereon. According to the OCAT, the claim of the GSIS for exemption from the payment of legal fees has no legal basis. Read in its proper and full context, Section 39 intends to preserve the actuarial solvency of GSIS funds by exempting the GSIS from government impositions through taxes. Legal fees imposed under Rule 141 are not taxes.
The OCAT further posits that the GSIS could not have been exempted by Congress from the payment of legal fees. Otherwise, Congress would have encroached on the rule-making power of this Court.
According to the OCAT, this is the second time that the GSIS is seeking exemption from paying legal fees.[14] The OCAT also points out that there are other government-owned or controlled corporations and local government units which asked for exemption from paying legal fees citing provisions in their respective charters that are similar to Section 39 of RA 8291.[15] Thus, the OCAT recommends that the petition of GSIS be denied and the issue be settled once and for all for the guidance of the concerned parties.
Faced with the differing opinions of the GSIS, the OSG and the OCAT, we now proceed to probe into the heart of this matter: may Congress exempt the GSIS from the payment of legal fees? No.
The GSIS urges the Court to show deference to Congress by recognizing the exemption of the GSIS under Section 39 of RA 8291 from legal fees imposed under Rule 141. Effectively, the GSIS wants this Court to recognize a power of Congress to repeal, amend or modify a rule of procedure promulgated by the Court. However, the Constitution and jurisprudence do not sanction such view.
Rule 141 (on Legal Fees) of the Rules of Court was promulgated by this Court in the exercise of its rule-making powers under Section 5(5), Article VIII of the Constitution:
The power to promulgate rules concerning pleading, practice and procedure in all courts is a traditional power of this Court.[16] It necessarily includes the power to address all questions arising from or connected to the implementation of the said rules.
The Rules of Court was promulgated in the exercise of the Court's rule-making power. It is essentially procedural in nature as it does not create, diminish, increase or modify substantive rights. Corollarily, Rule 141 is basically procedural. It does not create or take away a right but simply operates as a means to implement an existing right. In particular, it functions to regulate the procedure of exercising a right of action and enforcing a cause of action.[17] In particular, it pertains to the procedural requirement of paying the prescribed legal fees in the filing of a pleading or any application that initiates an action or proceeding.[18]
Clearly, therefore, the payment of legal fees under Rule 141 of the Rules of Court is an integral part of the rules promulgated by this Court pursuant to its rule-making power under Section 5(5), Article VIII of the Constitution. In particular, it is part of the rules concerning pleading, practice and procedure in courts. Indeed, payment of legal (or docket) fees is a jurisdictional requirement.[19] It is not simply the filing of the complaint or appropriate initiatory pleading but the payment of the prescribed docket fee that vests a trial court with jurisdiction over the subject-matter or nature of the action.[20] Appellate docket and other lawful fees are required to be paid within the same period for taking an appeal.[21] Payment of docket fees in full within the prescribed period is mandatory for the perfection of an appeal.[22] Without such payment, the appellate court does not acquire jurisdiction over the subject matter of the action and the decision sought to be appealed from becomes final and executory.[23]
An interesting aspect of legal fees is that which relates to indigent or pauper litigants. In proper cases, courts may waive the collection of legal fees. This, the Court has allowed in Section 21, Rule 3 and Section 19, Rule 141 of the Rules of Court in recognition of the right of access to justice by the poor under Section 11, Article III of the Constitution.[24] Mindful that the rule with respect to indigent litigants should not be ironclad as it touches on the right of access to justice by the poor,[25] the Court acknowledged the exemption from legal fees of indigent clients of the Public Attorney's Office under Section 16-D of the Administrative Code of 1987, as amended by RA 9406.[26] This was not an abdication by the Court of its rule-making power but simply a recognition of the limits of that power. In particular, it reflected a keen awareness that, in the exercise of its rule-making power, the Court may not dilute or defeat the right of access to justice of indigent litigants.
The GSIS cannot successfully invoke the right to social security of government employees in support of its petition. It is a corporate entity whose personality is separate and distinct from that of its individual members. The rights of its members are not its rights; its rights, powers and functions pertain to it solely and are not shared by its members. Its capacity to sue and bring actions under Section 41(g) of RA 8291, the specific power which involves the exemption that it claims in this case, pertains to it and not to its members. Indeed, even the GSIS acknowledges that, in claiming exemption from the payment of legal fees, it is not asking that rules be made to enforce the right to social security of its members but that the Court recognize the alleged right of the GSIS "to seek relief from the courts of justice sans payment of legal fees."[27]
However, the alleged right of the GSIS does not exist. The payment of legal fees does not take away the capacity of the GSIS to sue. It simply operates as a means by which that capacity may be implemented.
Since the 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. That power is no longer shared by this Court with Congress, much less with the Executive.[28]
Speaking for the Court, then Associate Justice (now Chief Justice) Reynato S. Puno traced the history of the rule-making power of this Court and highlighted its evolution and development in Echegaray v. Secretary of Justice:[29]
The separation of powers among the three co-equal branches of our government has erected an impregnable wall that keeps the power to promulgate rules of pleading, practice and procedure within the sole province of this Court. The other branches trespass upon this prerogative if they enact laws or issue orders that effectively repeal, alter or modify any of the procedural rules promulgated by this Court. Viewed from this perspective, the claim of a legislative grant of exemption from the payment of legal fees under Section 39 of RA 8291 necessarily fails.
Congress could not have carved out an exemption for the GSIS from the payment of legal fees without transgressing another equally important institutional safeguard of the Court's independence -- fiscal autonomy.[30] Fiscal autonomy recognizes the power and authority of the Court to levy, assess and collect fees,[31] including legal fees. Moreover, legal fees under Rule 141 have two basic components, the Judiciary Development Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF).[32] The laws which established the JDF and the SAJF[33] expressly declare the identical purpose of these funds to "guarantee the independence of the Judiciary as mandated by the Constitution and public policy."[34] Legal fees therefore do not only constitute a vital source of the Court's financial resources but also comprise an essential element of the Court's fiscal independence. Any exemption from the payment of legal fees granted by Congress to government-owned or controlled corporations and local government units will necessarily reduce the JDF and the SAJF. Undoubtedly, such situation is constitutionally infirm for it impairs the Court's guaranteed fiscal autonomy and erodes its independence.
WHEREFORE, the petition of the Government Service Insurance System for recognition of its exemption from the payment of legal fees imposed under Section 22 of Rule 141 of the Rules of Court on government-owned or controlled corporations and local government units is hereby DENIED.
The Office of the Court Administrator is hereby directed to promptly issue a circular to inform all courts in the Philippines of the import of this resolution.
SO ORDERED.
Puno, C.J., Carpio, Corona, Carpio Morales, Velasco, Jr., Nachura, Leonardo-De Castro, Brion, Peralta, Bersamin, Del Castillo, Abad, Villarama, Jr., Perez, and Mendoza, JJ., concur.
[1] The present Section 22 of Rule 141 was originally a single-sentence provision:
SEC. 17. Government exempt. - The Republic of the Philippines is exempt from paying the legal fees provided in this Rule.
When Rule 141 was amended effective November 2, 1990, the provision was re-numbered as Section 19 which read as follows:
SEC. 19. Government exempt. - The Republic of the Philippines is exempt from paying the legal fees provided in this Rule. Local governments and government-owned or controlled corporations with or without independent charters are not exempt from paying such fees.
[2] Republic Act.
[3] Petition, p. 5. Rollo, p. 5.
[4] Id. p. 8.
[5] Id.
[6] Id., p. 11.
[7] Per resolution dated February 19, 2008.
[8] Comment of the OSG. Rollo, pp. 34-46.
[9] Now a member of this Court.
[10] Office of the Court Administrator.
[11] Emphasis in the original.
[12] Per resolution dated July 8, 2008.
[13] Report of the OCAT. Rollo, pp. 81-101.
[14] In 1991, the Clerk of Court of the Regional Trial Court of Makati sought clarification of Section 19 (precursor of the present Section 22) of Rule 141 due to the assertion of the GSIS that it did not have to pay legal fees in extrajudicial foreclosure of mortgages. The OCAT, thru then Assistant Chief Attorney (now Associate Justice of this Court) Jose P. Perez, in a memorandum dated April 16, 1985 noted and approved by then Chief Attorney Damasita M. Aquino, rejected the claim of GSIS.
[15] These include the National Home Mortgage Finance Corporation, the National Irrigation Administration and local government units, such as the Province of Batangas.
[16] Bernas, S.J., Joaquin G., The 1987 Constitution of the Republic of the Philippines: A Commentary, 969 (2003).
[17] The term "right of action" is the right to commence and maintain an action. In the law of pleadings, right of action is distinguished from a cause of action in that the former is a remedial right belonging to some persons, while the latter is a formal statement of the operational facts that give rise to such remedial right. The former is a matter of right and depends on the substantive law, while the latter is a matter of statute and is governed by the law of procedure. The right of action springs from the cause of action, but does not accrue until all the facts that constitute the cause of action have occurred (Multi-Realty Development Corporation v. Makati Tuscany Condominium Corporation, G.R. No. 146726, 16 June 2006, 491 SCRA 9).
[18] In this connection, Section 1, Rule 141 of the Rules of Court provides:
SEC. 1. Payment of fees. - Upon the filing of the pleading or other application which initiates an action or proceeding, the fees prescribed therefor shall be paid in full.
[19] See Manchester Development Corporation v. Court of Appeals, 233 Phil. 579 (1987) and Nestle Philippines, Inc. v. FY Sons, Inc., G.R. No. 150780, 05 May 2006, 489 SCRA 624.
[20] Sun Insurance Office, Ltd., (SIOL) v. Asuncion, G.R. Nos. 79937-38, 13 February 1989, 170 SCRA 274.
[21] See Section 4, Rule 41 of the Rules of Court:
SEC. 4. Appellate court docket and other lawful fees. - Within the period for taking an appeal, the appellant shall pay to the clerk of court which rendered the judgment or final order appealed from, the full amount of the appellate court docket and other lawful fees. Proof of payment of said fees shall be transmitted to the appellate court together with the original record or the record on appeal.
[22] Enriquez v. Enriquez, G.R. No. 139303, 25 August 2005, 468 SCRA 77.
[23] Id.
[24] Section 11, Aricle III of the Constitution provides:
Sec. 11. Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty.
[25] This is an example of a substantive matter embodied in a rule of procedure. (See Republic v. Gingoyon, G.R. No. 166429, 01 February 2006, 481 SCRA 457).
[26] SEC. 16-D. Exemption from Fees and Costs of the Suit. - The clients of the PAO shall be exempt from payment of docket and other fees incidental to instituting an action in court and other quasi-judicial bodies, as an original proceeding or on appeal. The costs of the suit, attorney's fees and contingent fees imposed upon the adversary of the PAO clients after a successful litigation shall be deposited in the National Treasury as trust fund and shall be disbursed for special allowances of authorized officials and lawyers of the PAO.
(In this connection, see resolution dated June 12, 2007 in A. M. No. 07-5-15-SC [Re: RA 9406, Exempting Clients of PAO From Payment of Docket and Other Fees] and OCA Circular No. 121-2007 dated December 11, 2007 [Re: Exemption of the Indigent Clients of the Public Attorney's Office From the Payment of Docket and Other Fees].)
[27] Supra note 3.
[28] Echegaray v. Secretary of Justice, 361 Phil. 76 (1999).
[29] Id.
[30] Under Section 3, Article VIII of the Constitution, "[t]he Judiciary shall enjoy fiscal autonomy."
[31] Bengzon v. Drilon, G.R. No. 103524, 15 April 1992, 208 SCRA 133.
[32] See Amended Administrative Circular No. 35-2004 dated August 20, 2004 (Guidelines in the Allocation of the Legal Fees Collected Under Rule 141 of the Rules of Court, as Amended, between the [SAJF] and the [JDF]).
[33] PD 1949 and RA 9227, respectively.
[34] Section 1 of PD 1949 provides:
The GSIS seeks exemption from the payment of legal fees imposed on government-owned or controlled corporations under Section 22,[1] Rule 141 (Legal Fees) of the Rules of Court. The said provision states:
SEC. 22. Government exempt. - The Republic of the Philippines, its agencies and instrumentalities are exempt from paying the legal fees provided in this Rule. Local government corporations and government-owned or controlled corporations with or without independent charter are not exempt from paying such fees.
However, all court actions, criminal or civil, instituted at the instance of the provincial, city or municipal treasurer or assessor under Sec. 280 of the Local Government Code of 1991 shall be exempt from the payment of court and sheriff's fees. (emphasis supplied)
The GSIS anchors its petition on Section 39 of its charter, RA[2] 8291 (The GSIS Act of 1997):
SEC. 39. Exemption from Tax, Legal Process and Lien. - It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employers. Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including accruals thereto, and benefits paid, shall be exempt from all taxes, assessments, fees, charges or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessment against the GSIS as of the approval of this Act are hereby considered paid.Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect.
Moreover, these exemptions shall not be affected by subsequent laws to the contrary unless this section is expressly, specifically and categorically revoked or repealed by law and a provision is enacted to substitute or replace the exemption referred to herein as an essential factor to maintain and protect the solvency of the fund, notwithstanding and independently of the guaranty of the national government to secure such solvency or liability.
The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or work except when his monetary liability, contractual or otherwise, is in favour of the GSIS. (emphasis supplied)
The GSIS then avers that courts still assess and collect legal fees in actions and proceedings instituted by the GSIS notwithstanding its exemption from taxes, assessments, fees, charges, or duties of all kinds under Section 39. For this reason, the GSIS urges this Court to recognize its exemption from payment of legal fees.
According to the GSIS, the purpose of its exemption is to preserve and maintain the actuarial solvency of its funds and to keep the contribution rates necessary to sustain the benefits provided by RA 8291 as low as possible. Like the terms "taxes," "assessments," "charges," and "duties," the term "fees" is used in the law in its generic and ordinary sense as any form of government imposition. The word "fees," defined as "charge[s] fixed by law for services of public officers or for the use of a privilege under control of government," is qualified by the phrase "of all kinds."[3] Hence, it includes the legal fees prescribed by this Court under Rule 141. Moreover, no distinction should be made based on the kind of fees imposed on the GSIS or the GSIS' ability to pay because the law itself does not distinguish based on those matters.
The GSIS argues that its exemption from the payment of legal fees would not mean that RA 8291 is superior to the Rules of Court. It would merely show "deference" by the Court to the legislature as a co-equal branch.[4] This deference will recognize the "compelling and overriding" State interest in the preservation of the actuarial solvency of the GSIS for the benefit of its members.[5]
The GSIS further contends that the right of government workers to social security is an aspect of social justice. The right to social security is also guaranteed under Article 22 of the Universal Declaration of Human Rights and Article 9 of the International Covenant on Economic, Social and Cultural Rights. The Court has the power to promulgate rules concerning the protection and enforcement of constitutional rights, including the right to social security, but the GSIS is not compelling the Court to promulgate such rules. The GSIS is merely asking the Court to recognize and allow the exercise of the right of the GSIS "to seek relief from the courts of justice sans payment of legal fees."[6]
Required to comment on the GSIS' petition,[7] the Office of the Solicitor General (OSG) maintains that the petition should be denied.[8] According to the OSG, the issue of the GSIS' exemption from legal fees has been resolved by the issuance by then Court Administrator Presbitero J. Velasco, Jr.[9] of OCA[10] Circular No. 93-2004:
The OSG contends that there is nothing in Section 39 of RA 8291 that exempts the GSIS from fees imposed by the Court in connection with judicial proceedings. The exemption of the GSIS from "taxes, assessments, fees, charges or duties of all kinds" is necessarily confined to those that do not involve pleading, practice and procedure. Rule 141 has been promulgated by the Court pursuant to its exclusive rule-making power under Section 5(5), Article VIII of the Constitution. Thus, it may not be amended or repealed by Congress.
Pursuant to the Resolution of the Third Division of the Supreme Court dated 05 April 2004 and to give notice to the concern raised by the [GSIS] to expedite extrajudicial foreclosure cases filed in court, we wish to remind all concerned [of] the pertinent provisions of Administrative Circular No. 3-98, to wit:
2. No written request/petition for extrajudicial foreclosure of mortgages, real or chattel, shall be acted upon by the Clerk of Court, as Ex-Officio Sheriff, without the corresponding filing fee having been paid and the receipt thereof attached to the request/petition as provided for in Sec. 7(c), of Rule 141 of the Rules of Court.
3. No certificate of sale shall be issued in favor of the highest bidder until all fees provided for in the aforementioned sections and paragraph 3 of Section 9 (I) of Rule 141 of the Rules of Court shall have been paid.The sheriff shall attach to the records of the case a certified copy of the Official Receipt [O.R.] of the payment of the fees and shall note the O.R. number in the duplicate of the Certificate of Sale attached to the records of the case.
Moreover, to settle any queries as to the status of exemption from payment of docket and legal fees of government entities, Section 21, Rule 141 of the Rules of Court explicitly provides:
SEC. 21. Government exempt. - The Republic of the Philippines, its agencies and instrumentalities are exempt from paying the legal fees provided in this Rule. Local governments and government-owned or controlled corporations with or without independent charters are not exempt from paying such fees.[11]x x x x x x x x x
On this Court's order,[12] the Office of the Chief Attorney (OCAT) submitted a report and recommendation[13] on the petition of the GSIS and the comment of the OSG thereon. According to the OCAT, the claim of the GSIS for exemption from the payment of legal fees has no legal basis. Read in its proper and full context, Section 39 intends to preserve the actuarial solvency of GSIS funds by exempting the GSIS from government impositions through taxes. Legal fees imposed under Rule 141 are not taxes.
The OCAT further posits that the GSIS could not have been exempted by Congress from the payment of legal fees. Otherwise, Congress would have encroached on the rule-making power of this Court.
According to the OCAT, this is the second time that the GSIS is seeking exemption from paying legal fees.[14] The OCAT also points out that there are other government-owned or controlled corporations and local government units which asked for exemption from paying legal fees citing provisions in their respective charters that are similar to Section 39 of RA 8291.[15] Thus, the OCAT recommends that the petition of GSIS be denied and the issue be settled once and for all for the guidance of the concerned parties.
Faced with the differing opinions of the GSIS, the OSG and the OCAT, we now proceed to probe into the heart of this matter: may Congress exempt the GSIS from the payment of legal fees? No.
The GSIS urges the Court to show deference to Congress by recognizing the exemption of the GSIS under Section 39 of RA 8291 from legal fees imposed under Rule 141. Effectively, the GSIS wants this Court to recognize a power of Congress to repeal, amend or modify a rule of procedure promulgated by the Court. However, the Constitution and jurisprudence do not sanction such view.
Rule 141 (on Legal Fees) of the Rules of Court was promulgated by this Court in the exercise of its rule-making powers under Section 5(5), Article VIII of the Constitution:
Sec. 5. The Supreme Court shall have the following powers:
x x x x x x x x x(5) Promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice, and procedure in all courts, the admission to the practice of law, the Integrated Bar, and legal assistance to the underprivileged. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court.
x x x x x x x x x (emphasis supplied)
The power to promulgate rules concerning pleading, practice and procedure in all courts is a traditional power of this Court.[16] It necessarily includes the power to address all questions arising from or connected to the implementation of the said rules.
The Rules of Court was promulgated in the exercise of the Court's rule-making power. It is essentially procedural in nature as it does not create, diminish, increase or modify substantive rights. Corollarily, Rule 141 is basically procedural. It does not create or take away a right but simply operates as a means to implement an existing right. In particular, it functions to regulate the procedure of exercising a right of action and enforcing a cause of action.[17] In particular, it pertains to the procedural requirement of paying the prescribed legal fees in the filing of a pleading or any application that initiates an action or proceeding.[18]
Clearly, therefore, the payment of legal fees under Rule 141 of the Rules of Court is an integral part of the rules promulgated by this Court pursuant to its rule-making power under Section 5(5), Article VIII of the Constitution. In particular, it is part of the rules concerning pleading, practice and procedure in courts. Indeed, payment of legal (or docket) fees is a jurisdictional requirement.[19] It is not simply the filing of the complaint or appropriate initiatory pleading but the payment of the prescribed docket fee that vests a trial court with jurisdiction over the subject-matter or nature of the action.[20] Appellate docket and other lawful fees are required to be paid within the same period for taking an appeal.[21] Payment of docket fees in full within the prescribed period is mandatory for the perfection of an appeal.[22] Without such payment, the appellate court does not acquire jurisdiction over the subject matter of the action and the decision sought to be appealed from becomes final and executory.[23]
An interesting aspect of legal fees is that which relates to indigent or pauper litigants. In proper cases, courts may waive the collection of legal fees. This, the Court has allowed in Section 21, Rule 3 and Section 19, Rule 141 of the Rules of Court in recognition of the right of access to justice by the poor under Section 11, Article III of the Constitution.[24] Mindful that the rule with respect to indigent litigants should not be ironclad as it touches on the right of access to justice by the poor,[25] the Court acknowledged the exemption from legal fees of indigent clients of the Public Attorney's Office under Section 16-D of the Administrative Code of 1987, as amended by RA 9406.[26] This was not an abdication by the Court of its rule-making power but simply a recognition of the limits of that power. In particular, it reflected a keen awareness that, in the exercise of its rule-making power, the Court may not dilute or defeat the right of access to justice of indigent litigants.
The GSIS cannot successfully invoke the right to social security of government employees in support of its petition. It is a corporate entity whose personality is separate and distinct from that of its individual members. The rights of its members are not its rights; its rights, powers and functions pertain to it solely and are not shared by its members. Its capacity to sue and bring actions under Section 41(g) of RA 8291, the specific power which involves the exemption that it claims in this case, pertains to it and not to its members. Indeed, even the GSIS acknowledges that, in claiming exemption from the payment of legal fees, it is not asking that rules be made to enforce the right to social security of its members but that the Court recognize the alleged right of the GSIS "to seek relief from the courts of justice sans payment of legal fees."[27]
However, the alleged right of the GSIS does not exist. The payment of legal fees does not take away the capacity of the GSIS to sue. It simply operates as a means by which that capacity may be implemented.
Since the 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. That power is no longer shared by this Court with Congress, much less with the Executive.[28]
Speaking for the Court, then Associate Justice (now Chief Justice) Reynato S. Puno traced the history of the rule-making power of this Court and highlighted its evolution and development in Echegaray v. Secretary of Justice:[29]
Under the 1935 Constitution, the power of this Court to promulgate rules concerning pleading, practice and procedure was granted but it appeared to be co-existent with legislative power for it was subject to the power of Congress to repeal, alter or supplement. Thus, its Section 13, Article VIII provides:
Sec. 13. The Supreme Court shall have the power to promulgate rules concerning pleading, practice and procedure in all courts, and the admission to the practice of law. Said rules shall be uniform for all courts of the same grade and shall not diminish, increase, or modify substantive rights. The existing laws on pleading, practice and procedure are hereby repealed as statutes, and are declared Rules of Court, subject to the power of the Supreme Court to alter and modify the same. The Congress shall have the power to repeal, alter or supplement the rules concerning pleading, practice and procedure, and the admission to the practice of law in the Philippines.
The said power of Congress, however, is not as absolute as it may appear on its surface. In In re Cunanan, Congress in the exercise of its power to amend rules of the Supreme Court regarding admission to the practice of law, enacted the Bar Flunkers Act of 1953 which considered as a passing grade, the average of 70% in the bar examinations after July 4, 1946 up to August 1951 and 71% in the 1952 bar examinations. This Court struck down the law as unconstitutional. In his ponencia, Mr. Justice Diokno held that "x x x the disputed law is not a legislation; it is a judgment - a judgment promulgated by this Court during the aforecited years affecting the bar candidates concerned; and although this Court certainly can revoke these judgments even now, for justifiable reasons, it is no less certain that only this Court, and not the legislative nor executive department, that may do so. Any attempt on the part of these departments would be a clear usurpation of its function, as is the case with the law in question." The venerable jurist further ruled: "It is obvious, therefore, that the ultimate power to grant license for the practice of law belongs exclusively to this Court, and the law passed by Congress on the matter is of permissive character, or as other authorities say, merely to fix the minimum conditions for the license." By its ruling, this Court qualified the absolutist tone of the power of Congress to "repeal, alter or supplement the rules concerning pleading, practice and procedure, and the admission to the practice of law in the Philippines.
The ruling of this Court in In re Cunanan was not changed by the 1973 Constitution. For the 1973 Constitution reiterated the power of this Court "to promulgate rules concerning pleading, practice and procedure in all courts, x x x which, however, may be repealed, altered or supplemented by the Batasang Pambansa x x x." More completely, Section 5(2)5 of its Article X provided:
x x x x x x x x x
Sec. 5. The Supreme Court shall have the following powers.
x x x x x x x x x
(5) Promulgate rules concerning pleading, practice, and procedure in all courts, the admission to the practice of law, and the integration of the Bar, which, however, may be repealed, altered, or supplemented by the Batasang Pambansa. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights.
Well worth noting is that the 1973 Constitution further strengthened the independence of the judiciary by giving to it the additional power to promulgate rules governing the integration of the Bar.
The 1987 Constitution molded an even stronger and more independent judiciary. Among others, it enhanced the rule making power of this Court. Its Section 5(5), Article VIII provides:
x x x x x x x x x
Section 5. The Supreme Court shall have the following powers:
x x x x x x x x x
(5) Promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice and procedure in all courts, the admission to the practice of law, the Integrated Bar, and legal assistance to the underprivileged. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court.
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.
The separation of powers among the three co-equal branches of our government has erected an impregnable wall that keeps the power to promulgate rules of pleading, practice and procedure within the sole province of this Court. The other branches trespass upon this prerogative if they enact laws or issue orders that effectively repeal, alter or modify any of the procedural rules promulgated by this Court. Viewed from this perspective, the claim of a legislative grant of exemption from the payment of legal fees under Section 39 of RA 8291 necessarily fails.
Congress could not have carved out an exemption for the GSIS from the payment of legal fees without transgressing another equally important institutional safeguard of the Court's independence -- fiscal autonomy.[30] Fiscal autonomy recognizes the power and authority of the Court to levy, assess and collect fees,[31] including legal fees. Moreover, legal fees under Rule 141 have two basic components, the Judiciary Development Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF).[32] The laws which established the JDF and the SAJF[33] expressly declare the identical purpose of these funds to "guarantee the independence of the Judiciary as mandated by the Constitution and public policy."[34] Legal fees therefore do not only constitute a vital source of the Court's financial resources but also comprise an essential element of the Court's fiscal independence. Any exemption from the payment of legal fees granted by Congress to government-owned or controlled corporations and local government units will necessarily reduce the JDF and the SAJF. Undoubtedly, such situation is constitutionally infirm for it impairs the Court's guaranteed fiscal autonomy and erodes its independence.
WHEREFORE, the petition of the Government Service Insurance System for recognition of its exemption from the payment of legal fees imposed under Section 22 of Rule 141 of the Rules of Court on government-owned or controlled corporations and local government units is hereby DENIED.
The Office of the Court Administrator is hereby directed to promptly issue a circular to inform all courts in the Philippines of the import of this resolution.
SO ORDERED.
Puno, C.J., Carpio, Corona, Carpio Morales, Velasco, Jr., Nachura, Leonardo-De Castro, Brion, Peralta, Bersamin, Del Castillo, Abad, Villarama, Jr., Perez, and Mendoza, JJ., concur.
[1] The present Section 22 of Rule 141 was originally a single-sentence provision:
SEC. 17. Government exempt. - The Republic of the Philippines is exempt from paying the legal fees provided in this Rule.
When Rule 141 was amended effective November 2, 1990, the provision was re-numbered as Section 19 which read as follows:
SEC. 19. Government exempt. - The Republic of the Philippines is exempt from paying the legal fees provided in this Rule. Local governments and government-owned or controlled corporations with or without independent charters are not exempt from paying such fees.
[2] Republic Act.
[3] Petition, p. 5. Rollo, p. 5.
[4] Id. p. 8.
[5] Id.
[6] Id., p. 11.
[7] Per resolution dated February 19, 2008.
[8] Comment of the OSG. Rollo, pp. 34-46.
[9] Now a member of this Court.
[10] Office of the Court Administrator.
[11] Emphasis in the original.
[12] Per resolution dated July 8, 2008.
[13] Report of the OCAT. Rollo, pp. 81-101.
[14] In 1991, the Clerk of Court of the Regional Trial Court of Makati sought clarification of Section 19 (precursor of the present Section 22) of Rule 141 due to the assertion of the GSIS that it did not have to pay legal fees in extrajudicial foreclosure of mortgages. The OCAT, thru then Assistant Chief Attorney (now Associate Justice of this Court) Jose P. Perez, in a memorandum dated April 16, 1985 noted and approved by then Chief Attorney Damasita M. Aquino, rejected the claim of GSIS.
[15] These include the National Home Mortgage Finance Corporation, the National Irrigation Administration and local government units, such as the Province of Batangas.
[16] Bernas, S.J., Joaquin G., The 1987 Constitution of the Republic of the Philippines: A Commentary, 969 (2003).
[17] The term "right of action" is the right to commence and maintain an action. In the law of pleadings, right of action is distinguished from a cause of action in that the former is a remedial right belonging to some persons, while the latter is a formal statement of the operational facts that give rise to such remedial right. The former is a matter of right and depends on the substantive law, while the latter is a matter of statute and is governed by the law of procedure. The right of action springs from the cause of action, but does not accrue until all the facts that constitute the cause of action have occurred (Multi-Realty Development Corporation v. Makati Tuscany Condominium Corporation, G.R. No. 146726, 16 June 2006, 491 SCRA 9).
[18] In this connection, Section 1, Rule 141 of the Rules of Court provides:
SEC. 1. Payment of fees. - Upon the filing of the pleading or other application which initiates an action or proceeding, the fees prescribed therefor shall be paid in full.
[19] See Manchester Development Corporation v. Court of Appeals, 233 Phil. 579 (1987) and Nestle Philippines, Inc. v. FY Sons, Inc., G.R. No. 150780, 05 May 2006, 489 SCRA 624.
[20] Sun Insurance Office, Ltd., (SIOL) v. Asuncion, G.R. Nos. 79937-38, 13 February 1989, 170 SCRA 274.
[21] See Section 4, Rule 41 of the Rules of Court:
SEC. 4. Appellate court docket and other lawful fees. - Within the period for taking an appeal, the appellant shall pay to the clerk of court which rendered the judgment or final order appealed from, the full amount of the appellate court docket and other lawful fees. Proof of payment of said fees shall be transmitted to the appellate court together with the original record or the record on appeal.
[22] Enriquez v. Enriquez, G.R. No. 139303, 25 August 2005, 468 SCRA 77.
[23] Id.
[24] Section 11, Aricle III of the Constitution provides:
Sec. 11. Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty.
[25] This is an example of a substantive matter embodied in a rule of procedure. (See Republic v. Gingoyon, G.R. No. 166429, 01 February 2006, 481 SCRA 457).
[26] SEC. 16-D. Exemption from Fees and Costs of the Suit. - The clients of the PAO shall be exempt from payment of docket and other fees incidental to instituting an action in court and other quasi-judicial bodies, as an original proceeding or on appeal. The costs of the suit, attorney's fees and contingent fees imposed upon the adversary of the PAO clients after a successful litigation shall be deposited in the National Treasury as trust fund and shall be disbursed for special allowances of authorized officials and lawyers of the PAO.
(In this connection, see resolution dated June 12, 2007 in A. M. No. 07-5-15-SC [Re: RA 9406, Exempting Clients of PAO From Payment of Docket and Other Fees] and OCA Circular No. 121-2007 dated December 11, 2007 [Re: Exemption of the Indigent Clients of the Public Attorney's Office From the Payment of Docket and Other Fees].)
[27] Supra note 3.
[28] Echegaray v. Secretary of Justice, 361 Phil. 76 (1999).
[29] Id.
[30] Under Section 3, Article VIII of the Constitution, "[t]he Judiciary shall enjoy fiscal autonomy."
[31] Bengzon v. Drilon, G.R. No. 103524, 15 April 1992, 208 SCRA 133.
[32] See Amended Administrative Circular No. 35-2004 dated August 20, 2004 (Guidelines in the Allocation of the Legal Fees Collected Under Rule 141 of the Rules of Court, as Amended, between the [SAJF] and the [JDF]).
[33] PD 1949 and RA 9227, respectively.
[34] Section 1 of PD 1949 provides:
Section 1.There is hereby established a [JDF], hereinafter referred to as the Fund, for the benefit of the members and personnel of the Judiciary to help ensure and guarantee the independence of the Judiciary as mandated by the Constitution and public policy and required by the impartial administration of justice. x x x (emphasis supplied)
Section 1 of RA 9227 provides:
Section 1.Declaration of Policy. - It is hereby declared a policy of the State of adopt measures to guarantee the independence of the Judiciary as mandated by the Constitution and public policy, and to ensure impartial administration of justice, as well as an effective and efficient system worthy of public trust and confidence. (emphasis supplied)