Exemption of Cooperatives from Payment of Court and Sheriff's Fees Payable to the Gov't. in Actions Brought under R.A. 6938

September 1, 2009

[A.M. No. 03-4-01-0]

Sirs/Mesdames :

Quoted hereunder, for your information, is a resolution of the Court En Banc dated September 1, 2009

"A.M. No. 03-4-01-0 — EXEMPTION OF COOPERATIVES FROM PAYMENT OF COURT & SHERIFF'S FEES PAYABLE TO THE GOV'T. IN ACTIONS BROUGHT UNDER R.A. 6938

The officers of REMPCO Multi-Purpose Cooperative (REMPCO), an employee-based cooperative that previously filed collection claims against its members, wrote Chief Justice Reynato S. Puno on June 30, 2009 a letter-query that states:

REMPCO has filed cases for collection of sums of money with the Small Claims Court in Makati against its delinquent members. Initially, we were not required to pay any court and sheriff fees as provided for by RA 6938, as amended by RA 9526, otherwise known as the Philippine Cooperative Code of 2008.

Section 6, Article 61 of said RA 9520 provides:

"Cooperatives shall be exempt from the payment of all court and sheriff fees payable to the Philippine Government for and in connection with all action brought under this Code, or where such action is brought by the Authority (Cooperative Development Authority) before the Court, to enforce the payment of obligations contracted in favor of the Cooperative. . . ." HaTDAE

When the small claims court started assessing REMPCO P1,000.00 per case as "service fee", we sought a clarification from the Office of the Court Administrator of the Supreme Court. . . .

In his reply dated June 3, 2009. . . . Court Administrator Jose P. Perez opines that the exemption granted to cooperative refers to the payment of docket and other legal fees; that the P1,000 assessment is to "defray the actual travel expenses of the sheriff, process server or other court-authorized person. . . .

With due respect, we beg to disagree with the position of the OCA. This particular OCA opinion is in conflict with the Court En Banc Resolution dated July 15, 2003 in A.M. No. 03-4-01 as enunciated in OCA Circular No. 44-2007 dated April 10, 2007 . . . Said circular of the OCA enjoins all executive, presiding judges and clerks of Court, accountable officers of the first and second level courts to grant to all cooperatives the exemption of all court and sheriff fees payable to the Philippine Government. [Emphasis theirs] AEDHST

REMPCO thus poses the issue of whether the P1,000.00 service fee collected for the actual travel expenses of the sheriff, process server or other court-authorized person is covered by the exemption — enjoyed by the cooperatives under Republic Act No. 9520 or R.A. 9520 (The Philippine Cooperative Code of 2008) and the Supreme Court En Banc Resolution dated July 15, 2003 in A.M. No. 03-4-01 — from the payment of all court fees and sheriff's fees payable to the Philippine Government.

We answer in the negative.

Section 6, Article 61 of R.A. 9520 exempting cooperatives from the payment of all court fees and sheriff's fees payable to the Philippine Government is the same exemption given to cooperatives then provided under Article 62, paragraph 6 of R.A. 6938 (An Act to Ordain a Cooperative Code of the Philippines) that became the basis of A.M. No. 03-4-01 we issued on July 15, 2003. Article 62, paragraph 6 of R.A. 6938 reads:

ARTICLE 62. Tax and Other Exemptions. —

xxx xxx xxx

(6) Cooperatives shall be exempt 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. [Emphasis supplied]

This same provision was also the basis for OCA Circular No. 44-2007 dated April 10, 2007 which states:

Four you ^* information and guidance, the Court in its resolution dated July 15, 2003 issued in A.M. No. 03-4-01-0, Resolved to EXEMPT the 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 Republic Act No. 6938 or the Cooperative Code of the Philippines, 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. . . . [Emphasis supplied] aSHAIC

Our reading of the express wordings of Article 62, paragraph 6 of R.A. 6938 and Article 61 of R.A. 9520 proceeds from the statutory construction rule that words used in statutes are to be given their usual and commonly understood meanings unless different meanings are plainly intended. 1 In the provision under consideration, the term "all court fees" refers to the totality of "legal fees" imposed under Rule 141 of the Rules of Court as an incident of instituting an action in court. 2 These fees include filing or docket fees, appeal fees, fees for issuance of provisional remedies, mediation fees, sheriff's fees, stenographer's fees and commissioner's fees. 3 These legal fees are all payable to the Philippine Government, not to sheriffs or process servers for their travel expenses. As correctly pointed out by the Office of the Court Administrator (OCA), the P1,000.00 service fee being assessed against the petitioners is not in the nature of court and sheriff's fees within the contemplation of the exemption granted to cooperatives under the law and OCA Circular No. 44-2007.

Section 10, 4 Rule 141 of the 1997 Revised Rules of Procedure (Rules) distinguishes between the terms sheriff's fees (as enumerated in items (a) to (l)) 5 and sheriff's expenses (as found in the second paragraph of Section 10). Section 10, Rule 141 of the Rule relating to sheriff's expenses provides:

SEC. 10. Sheriffs, PROCESS SERVERS and other persons serving processes. —

xxx xxx xxx

In addition to the fees hereinabove fixed, the amount of ONE THOUSAND (P1,000.00) PESOS shall be deposited with the Clerk of Court upon filing of the complaint to defray the actual travel expenses of the sheriff, process server or other court-authorized persons in the service of summons, subpoena and other court processes that would be issued relative to the trial of the case. In case the initial deposit of ONE THOUSAND (P1,000.00) PESOS is not sufficient, then the plaintiff or petitioner shall be required to make an additional deposit. The sheriff, process server or other court authorized person shall submit to the court for its approval a statement of the estimated travel expenses for service of summons and court processes. Once approved, the Clerk of Court shall release the money to said sheriff or process server. After service, a statement of liquidation shall be submitted to the court for approval. After rendition of judgment by the court, any excess from the deposit shall be returned to the party who made the deposit. [Emphasis supplied]

Thus, the sheriff's expenses specifically refers to expenses incurred by a party to defray the actual travel expenses of the sheriff, process server or other court-authorized persons in the service of summons, subpoena and other court processes issued relative to the trial of the case. The sheriff's fees, on the other hand, are those imposed by the court for the services rendered to a party incident to the proceedings before it.

The difference in the treatment between the sheriff's fees and the sheriff's expenses in relation with the exemption enjoyed by cooperatives is further demonstrated by the wording of Section 10, Rule 141, which uses "fees" in delineating the enumeration in the first paragraph, and "expenses" in qualifying the subsequent paragraphs of this provision. The intention to make a distinction between the two charges is clear; otherwise, the Rules would not have used different designations. Likewise, the difference between the two terms is highlighted by a consideration of the phraseology in the first sentence of the second paragraph of Section 10, Rule 141, which uses the clause "in addition to the fees hereinabove fixed", thereby unequivocally indicating that sheriff's expenses are separate charges on top of the sheriff's fees.

This difference between the sheriff's fees and the sheriff's expenses is also apparent from a reading of the second and last paragraphs of Section 10, Rule 141 which lay down the procedure on the assessment, collection, disbursement and refund, as the case may be, of the sheriff's expenses. The last paragraph of Section 10, Rule 141 states: SAHEIc

With regard to sheriff's expenses in executing writs issued pursuant to court orders or decisions or safeguarding the property levied upon, attached or seized, including kilometrage for each kilometer of travel, guards' fees, warehousing and similar charges, the interested party shall pay said expenses in an amount estimated by the sheriff, subject to the approval of the court. Upon approval of said estimated expenses, the interested party shall deposit such amount with the clerk of court and ex-officio sheriff, who shall disburse the same to the deputy sheriff assigned to effect the process, subject to liquidation within the same period for rendering a return on the process. The liquidation shall be approved by the court. Any unspent amount shall be refunded to the party making the deposit. A full report shall be submitted by the deputy sheriff assigned with his return, and the sheriff's expenses shall be taxed as costs against the judgment debtor.

The procedure may be summarized as follows:

(1) estimate of expenses by the sheriff;

(2) approval by the court of the sheriff's estimate;

(3) deposit by the interested party of the amount with the Clerk of Court and ex-officio sheriff;

(4) disbursement by the Clerk of Court and ex-officio sheriff to the deputy sheriff assigned to effect the process; aIcSED

(5) liquidation of the amount received within the same period for rendering a return on the process;

(6) report by the deputy sheriff, with his return; and 

(7) refund of excess amount, if any. 6

Section 10, Rule 141 does not provide a similar procedure with respect to the sheriff's fees. Moreover, unlike the deposit made to answer for sheriff's expenses, which the sheriff estimates and are subsequently approved by the court, the sheriff's fees are fixed in the Rules and are not subject to any refund.

The distinction between the sheriff's fees and the sheriff's expenses is additionally reinforced by a consideration of how the Court handles these two charges. Note that a party pays a fixed amount as the sheriff's fees, which amount is remitted to the Supreme Court and accrues to the general fund. 7 In other words, once payment of the sheriff's fees is made by a party, the amount paid becomes part of the government's general fund. This explains why Section 10, Rule 141 does not provide for any refund of the fixed sheriff's fees. ATICcS

On the other hand, an initial deposit to the Court of P1,000.00 is required to defray the sheriff's expenses, and additional amounts are assessed under the procedure laid down in Section 10, Rule 141 in case the P1,000.00 initial deposit is insufficient. Under this arrangement, the amount deposited continues to belong to the depositing party and is held in trust by the court; the sheriff assigned to the case draws his expenses from the deposit and subsequently renders a liquidation of the amounts spent. The excess amount, if any, is then returned by the court to the depositing party. Thus, the sheriff's expenses are not payable to the Philippine Government — the condition imposed to warrant exemption from the payment of legal fees for cooperatives under the law and OCA Circular No. 44-2007.

To recapitulate, we return to the basic rule in statutory construction that when the words and phrases of a statute are clear and unequivocal, their meaning must be determined from the language employed, and the statute is understood based on what it plainly states. 8 The law only encompasses what it clearly provides and excludes matters that are not within its plain terms. 9

In this case, Article 62, paragraph 6 of RA 6938; Section 6, Article 61 of RA 9520; and OCA Circular No. 44-2007 explicitly state that cooperatives shall only be exempted from the payment of all court sheriff's fees payable to the Philippine Government for and in connection with all actions brought under the Cooperative 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. The amount required to defray the sheriff's expenses is clearly not covered by the exemption; they are not considered as court and sheriff's fees and nor are they amounts payable to the Philippine Government. Accordingly, REMPCO is not exempted from the deposit/payment of the sheriff's expenses assessed by small claims courts in collection actions filed before these courts.

WHEREFORE, premises considered, we rule that the REMPCO Multi-Purpose Cooperative is NOT EXEMPT from the deposit/payment of sheriff's expenses under Section 10, Rule 141 of the Rules of Court in collection actions filed with the Small Claims Court of Makati City.

The Court further Resolved to DECONSOLIDATE this matter with A.M. No. 09-7-110-MCTC (Query of COC Caroline Saldo Midel, MCTC-Nabua, Camarines Sur Regarding the Exemption of Provincial Water Utilities from Payment of Legal Fees)." (adv137)

Very truly yours,

(SGD.) MA. LUISA D. VILLARAMAClerk of Court

Footnotes

1.Rodriguez, Statutory Construction, p. 96 (1999 edition).

2.This definition is taken from that of "legal fees" under Section 1, paragraph (d) of Article II of A.M. No. 08-11-7-SC (IRR) Rule on the Exemption from the Payment of Legal Fees of the Clients of the National Committee on Legal Aid (NCLA) and of the Legal Aid Offices in the Local Chapters of the Integrated Bar of the Philippines (IBP) as approved by the Supreme Court on August 25, 2009.

3.Ibid.

4.As amended by A.M. No. 04-2-04-SC, which took effect on August 16, 2004. This used to be Section 9, Rule 141 of the Rules.

5.SEC. 10. Sheriffs, PROCESS SERVERS and other persons serving processes. —

(a) For serving summons and copy of complaint, for each defendant, TWO HUNDRED (P200.00) PESOS;

(b) For serving subpoenas in civil action or OTHER proceedings, for each witness to be served, ONE HUNDRED (P100.00) PESOS;

(c) For executing a writ of attachment against the property of defendant, FIVE HUNDRED (P500.00) PESOS per defendant;

(d) For serving and implementing a temporary restraining order, or writ of injunction, preliminary or final, of any court, THREE HUNDRED (P300.00) PESOS per defendant;

(e) For executing a writ of replevin, FIVE HUNDRED (P500.00) PESOS;

(f) For filing bonds or other instruments of indemnity or security in provisional remedies, for each bond or instrument, ONE HUNDRED (P100.00) PESOS;

(g) For executing a writ or process to place a party in possession of real PROPERTY OR estates, THREE HUNDRED (P300.00) PESOS per property;

(h) For SERVICES RELATING TO THE POSTING AND PUBLICATION REQUIREMENTS UNDER RULE 39 (EXECUTION, SATISFACTION AND EFFECT OF JUDGMENTS) AND IN EXTRAJUDICIAL FORECLOSURE OF MORTGAGE BY SHERIFF OR NOTARY PUBLIC besides the cost of publication, ONE HUNDRED AND FIFTY (P150.00) PESOS;

(i) For taking inventory of goods levied upon when the inventory is ordered by the court, THREE HUNDRED (P300.00) PESOS per day or actual inventory;

(j) For levying on execution on personal or real property, THREE HUNDRED (P300.00) PESOS;

(k) For issuing a notice of garnishment, for each notice, ONE HUNDRED (P100.00) PESOS;

(l) For money collected by him ACTUAL OR CONSTRUCTIVE (WHEN HIGHEST BIDDER IS THE MORTGAGEE AND THERE IS NO ACTUAL COLLECTION OF MONEY) by order, execution, attachment, or any other process, judicial or extrajudicial which shall immediately be turned over to the Clerk of Court.

6.Pilipiña v. Roxas, A.M. No. P-08-2423, March 6, 2008, 547 SCRA 676.

7.Section 3, Rule 141 of the Rules.

8.Agpalo, Statutory Construction, p. 94 (1990 edition).

9.Id., pp. 94-95.