RBAP MABS v. 101111

Small Claims Cases

A Quick Guide for Banks and their Representatives

Foreword

This Small Claims Court (SCC) Quick Guide was developed to provide a practical guide for bank representatives who are new to small claims court system. Complementary to the Handbook on the Rule of Procedure for Small Claims Cases issued by the Supreme Court of the Philippines, this quick guide explains in layman’s terms the chronological steps to follow in filing a small claims case. To further provide understanding, this quick guide includes samples of actual documents from rural banks to provide visual assistance of how the form looks like when it is filled up.

This quick guide contains the list of documents needed when filing a case, what forms to fill up, where to file the case, court decorum, post filing responsibilities up to the final decision from the judge.

We would like to acknowledge the rural banks that have agreed to supply the actual documents and contributed their experiences with small claims cases.

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Table of Contents

1. WHAT ARE SMALL CLAIMS? Page 4

2. WHERE DO YOU START? 4

a. Exhibit A – Statement of Claim 6-10b. Exhibit B – Certificate of Non-Forum Shopping 11c. Exhibit C - Additional Documents 12-14d. Exhibit D - Special Power of Attorney 15

3. WHO SHOULD SIGN THE FORMS? 16

4. HOW DO YOU FILE A CASE AT THE COURT? 16

5. WHAT HAPPENS AFTER FILING? 17

a. Exhibit E – Summons 18b. Exhibit F - Notice of Hearing 19

6. WHAT HAPPENS AFTER THE SUMMONS IS RECEIVED? 20

7. WHAT HAPPENS AT THE HEARING? 21

8. COURT DECORUM AND PROTOCOL? 21

9. HOW IS SETTLEMENT ACHIEVED? 22

10. HOW LONG BEFORE THE JUDGE DECIDES? 23

a. Exhibit G – Court Decision, No response – No show 24b. Exhibit H – Compromise Agreement 27 c. Exhibit I – Motion for Execution 29d. Exhibit J – Writ of Execution 30

11. THINGS TO REMEMBER 31

12. References 34

13. Annex 1 – Complete SCC Forms 35

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When a loan account becomes past due and you find it difficult to collect from your client, despite all efforts, you may file a small claim against that client, as a last resort.

WHAT ARE SMALL CLAIMS?

Small claims are civil lawsuits for the collections of sums of money wherein the principal amount to be collected does not exceed P100,000. Interest and penalties do not form part of the principal amount. For cases where the principal amount is higher than P100,000, the claim should be reduced to P100,000 or the claimant should waive their right to any claims above P100,000.

WHERE DO YOU START?

1. Is the borrower still around? Before you decide to file a case against a borrower, make sure that the borrower can be located and is

at the address you provide the court. This is important. If the summons cannot be served to the defendant and

the sheriff files a sheriff return with the court, the plaintiff will have 2 months to locate the defendant

and submit a new address to the court. If you cannot comply with this, then the case is dismissed, and time, effort and the amount of filing fee are wasted.

2. Are the loan documents case-ready? You should also review the loan’s legal documents – promissory note (PN), disclosure statement, co-maker’s statement, deed of assignment or chattel mortgage, 3 demand letters, etc. Make sure that all data is complete and signatures affixed where required.

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Review the action your bank had taken to collect from the client. Have these past action steps been documented? Has the bank complied with the 3 reminder letters and have they been received by the borrower/co-makers?

When you find that Mr. Borrower still resides in the address indicated in the loan document and that all the possible collection methods have been exhausted, and the loan documents are case-ready, the bank may proceed with filing the case.

3. You are now ready to fill out the forms required for Small Claims. Before filing the case for small claims, make sure all forms that the court requires should be duly accomplished. If you file a case with incomplete documents your claim can be dismissed. You would have wasted your time, bank resources, and chances of collection.

What are these forms? a. Statement of Claim (Form1–SCC);b. Verification and Certification of Non-forum Shopping (Form1A-

SCC);c. Additional claim documents;d. Special Power of Attorney.

Together with these, all actionable documents, additional evidence, and affidavits should be attached.

Note that no additional evidences will be accepted once the claim has been docketed. To docket a claim means that all actionable documents have been complied with and verified, filing and docket fees paid, and accepted by the clerk of court. Once docketed, the case is scheduled for raffling.

Examples of these forms actually filled out and filed by a rural bank are shown as Exhibits A to C.

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Exhibit A – Statement of Claims, p. 1

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Exhibit A – Statement of Claims, p. 2

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Exhibit A – Statement of Claims, p. 3

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Exhibit A – Statement of Claims, p. 4

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Exhibit A – Statement of Claims, p. 5

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Exhibit B – Certificate of Non-forum Shopping

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Exhibit C – Additional documents: Defendant’s Statement of Account

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Exhibit C – Additional documents: Collection Letter

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Exhibit C – Additional documents: Lawyer’s Collection Letter

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Exhibit D – Special Power of Attorney

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WHO SHOULD SIGN THE FORMS?

1. The Bank has now prepared all the forms and is ready to file the case. The bank may appoint a senior officer, branch manager, supervisor, loans officer, or account officer to represent the bank. Here, a board resolution designating the representative and signatory for small claims in behalf of the bank is needed.

2. Remember that the client is the DEFENDANT (the person against whom the case is filed) and the bank is the PLAINTIFF (the one who is filing the case).

HOW DO YOU FILE A CASE AT THE COURT?

1. When all documents are complete, you must file the claim with the Clerk of Court (CoC) in the appropriate court in your area. This can be any of the following: Metropolitan Trial Court; Municipal Trial Court; Municipal Circuit Trial Courts; or Municipal Trial Courts in Cities (MTCC).

2. The Clerk of Court (CoC) then examines the documents and computes for the appropriate filing and docket fees on the same day it is filed. The filing fee is P1,000 per claim. When more than 10 claims are filed in the same year, the following charges are applied on top of P1,000.

Additional Filing Fees 11th – 20th claim P500 per claim21st – 30th claim P600 per claim31st – 40th claim P700 per claim41st – 50th claim P800 per claim

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3. When all the fees have been paid, the CoC shall docket the case and schedule it for raffle. When the case has been raffled, the docket will contain the raffle date and branch where the case has been raffled.

4. Raffling a case means that the CoC will randomly select a Judge who will handle your case through a “bunot-bunot” system. When the Branch Clerk of Court (BCC) where the case has been raffled to receives the case, it is docketed in a special book exclusively for small claims.

WHAT HAPPENS AFTER FILING?

1. After the case has been docketed and raffled, the assigned Judge shall examine the case and determine if it qualifies under small claims. When the case is determined not falling under small claims, the case will not dismissed but rather re-docketed under the appropriate procedure and the filing fee re-assessed.

2. After examining the case and the Judge finds grounds for dismissal, the Judge may do it outright. Otherwise, the Judge schedules the hearing and issues to the defendant the following documents within 24 hours after receipt of the Statement of Claim:

a. Summons (Form 2-SCC);b. Notice of hearing (Form 4-SCC) with the plaintiff copy

furnished;c. Information for the defendant; d. Response form (Form 3-SCC);e. Special Power of Attorney (Form 5-SCC); and,f. A copy of the Statement of Claim with all attached

documents.

3. What is a Summons and what does it look like? The summons notifies the defendant/s that failure to respond within ten (10)

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days and appear at the scheduled hearing may render judgment in favor of the plaintiff. Exhibit D shows what a Summons look like.

Exhibit E – Summons

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4. The Notice of Hearing indicates the date and time of the hearing, which is within 30 days after the case has been filed. If the defendants/s reside outside the judicial region, the hearing is set within 60 days after the case is filed. Both documents are served within five (5) days from date of issuance, but not to exceed thirty (30) days.

Exhibit F – Notice of Hearing

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5. These documents are served either by a court sheriff, the deputy sheriff, process server, or any appointed proper court officer.

6. Whether the Summons and Notice of Hearing are received or not by the defendant, a Sheriff’s Return is filed with the court within five (5) days. The plaintiff is also served a copy of the Sheriff’s Return. If the plaintiff cannot locate the defendant within two (2) months, the case is then dismissed.

WHAT HAPPENS NEXT AFTER THE SUMMONS IS RECEIVED?

1. When the defendant receives the Summons and Notice of Hearing, he/she must file a duly accomplished response form (Form 3-SCC) within ten (10) days. Similar to the plaintiff, the defendant also submits his/her certified photocopies of actionable documents, evidences, and affidavits for his/her defense with his/her response.

2. If the defendant does not submit his/her response but appears at the hearing, he/she may still offer a defense and negotiate a settlement.

3. If the defendant fails to respond and does not appear at the hearing, then Judgment will be rendered in favor of the plaintiff.

4. The defendant may also file a counterclaim for as long as it is a small claim; arises out of the same transaction, and is not the subject of another pending action.

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WHAT HAPPENS AT THE HEARING?

1. On the scheduled day of the hearing, all parties should appear personally. Be in court before the time designated in the notice of hearing. Wear your bank uniform to the hearing as you are an appointed representative of the bank. Bring all pertinent documents on the day of the hearing.

2. No lawyer is allowed at the hearings and may not represent any of the parties. The defendant may be represented by a relative (who is not a lawyer) with the Special Power of Attorney (Form 5-SCC) issued by the defendant.

3. If a party fails to appear, the Judge will decide the case in favor of the party present at the scheduled hearing and dismiss the case.

4. If there are multiple defendants and only one of them appears at the hearing, the court will proceed with the hearing.

5. When both parties fail to appear, the case will be dismissed.

COURT DECORUM AND PROTOCOL

1. Dress appropriately for the hearing. If you have a bank issued uniform such as a short sleeved barong tagalog, wear it to the hearing. If not, wear a semi formal polo with collar. Do not use jeans or “maong” to the hearing. Leather or semi formal shoes should be worn.

2. When inside the courtroom or the sala of the Judge, remember to keep quiet until you are called by the Judge. As much as possible, avoid going in and out of the courtroom or sala repeatedly so as not to distract the Judge and other people present in the

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courtroom or sala. Always address the Judge as “Your Honor” and call the defendant by their formal given name.

3. When it is your turn to face the Judge, English is the preferred language but you may request the Judge for his approval to use a language or dialect you are more comfortable with and can be understood by the defendant. Always talk to the Judge in a soft tone of voice and in a very respectful manner.

4. More importantly, always keep your cell phone off or in silent mode. The Judge and the Clerk of Court are very particular about this.

HOW IS SETTLEMENT ACHIEVED?

1. There are two ways by which both parties may resolve the case. You may come up with a compromise agreement before the

hearing or at the hearing. In the former, both parties fill-up the Settlement (Form 7-SCC) and present it to the court before the hearing starts. Judgment is based on

the presented compromise agreement. If no prior compromise agreement is

presented, the court orders both parties to come up with a compromise, which should be submitted within the day to the court for resolution by the Judge. If you cannot agree with the defendant on a compromise, then the case is decided based on its merits.

2. In some cases where settlement cannot be reached within the day, any party may file for a motion to have another Judge hear and decide on the case (Form 10-SCC). The original Judge shall refer the case (form 11-SCC) to the Executive Judge who in turn raffles the case to another Judge on the same day it was referred. The new Judge shall hear and decide on the case within 5 working days.

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HOW LONG BEFORE THE JUDGE DECIDES?

1. ONE (1) DAY. The Judge must make a decision (Form 13-SCC) within the day of the hearing. If

the decision is in favor of the plaintiff then the decision shall be executed upon motion (Form

9-SCC). This means that the court’s decision will take effect soon as the motion is filed.

2. When the decision is rendered, it is entered into a book of Judgments and docketed by the CoC.

3. In most cases, the Judge reduces interest on the collectible amount to 12% p.a. and usually excludes the penalty charges.

4. Exhibits G thru J show samples of actual decisions by a Judge for a small claims case.

5. In Exhibit G, defendants did not respond within 10 days from receipt of the summons and did not attend the hearing. Decision was rendered in favor of the plaintiff on the same day.

6. In Exhibit H, defendant did not submit his/her response within the 10 day period but appeared on the day of the hearing. Both parties arrived at a compromise agreement during the hearing.

7. In Exhibit I, plaintiff files for a Motion for Execution of the decision by the Judge. This was done because the defendant still refuses to comply with the court’s decision.

8. In Exhibit J, the Judge approves the motion for execution (exhibit H) and issues a Writ of Execution authorizing the Sheriff to levy or seize any goods or properties of the defendant equal to the awarded amount.

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Exhibit G – Sample Court Decision, p. 1: No-response no-show defendant

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Exhibit G – Sample Court Decision, p.2: No-response no-show

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Exhibit G – Sample Court Decision, p. 3: No-response no-show

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Exhibit H – Sample Compromise Agreement, p. 1

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Exhibit H – Sample Compromise Agreement, p. 2

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Exhibit I – Motion for Execution

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Exhibit J – Writ of Execution

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Things to remember:

1. Make sure that you have located the defendant and that he/she can be reached

at the address you provided the court.

2. Bank can still file a case even when the loan account has been written off.

3. The amount for collection is P100,000 or lower, excluding penalties and interests.

4. The basic filing fee is P1,000 per claim. Additional amount is paid per claim in excess of ten (10) claim cases within a year.

5. The bank is the plaintiff. The client is the defendant.

6. Know your rights before you file. For a more detailed procedure, you may seek assistance from the CoC in the place where you intend to file the case.

7. Gather and complete all documents needed for the case. You cannot submit new evidence at the hearing.

8. Make xerox copies of all these documents: a) Statements of Claim, Certificates of Non-Forum

Shopping, Promissory Notes, VOSAS, Oaths of Undertaking, Disclosure Statements, Deeds of Assignment, and other pertinent documents;

b) Received copies of the three (3) demand letters;c) Affidavit of Witnesses; d) Board Resolution authorizing you to act as

representative of the bank.

9. Accomplish Form 1-SCC and attach all evidences.

10. Present your claim to the Clerk of Court and have it notarized and certified.

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11. Pay the filing fees.

12. Go to the court on the scheduled hearing day.

13. Observe proper court decorum and protocol.

14. No lawyers, please, to the hearing.

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References

1. Handbook on the Rule of Procedure for Small Claims Cases, developed by the Supreme Court of the Philippines and the American BAR Association – Rule of Law Initiative, through funding support from the United States Agency for International Development, 2010

2. Supreme Court of the Philippines website, for Annex 1, complete blank set of SCC forms.

3. Excerpts from actual small claims cases of Bangko Kabayan, Rural Bank of Oroquieta, Cantilan Bank, and Greenbank, for Exhibits A-J.

4. Interviews with representatives of Cantilan Bank, Greenbank, and Rural Bank of Oroquieta, for experiences with actual small claims cases.

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