G.R. No. 194412 & G.R. No. 194566, November 16, 2016
SAMSODEN PANGCATAN, PETITIONER, V. ALEXANDRO “DODONG” MAGHUYOP AND BELINDO BANKIAO, RESPONDENTS. [G.R. No. 194566] ALEXANDRO “DODONG” MAGHUYOP AND BELINDO BANKIAO, PETITIONERS, V. SAMSODEN PANGCATAN, RESPONDENT.

FACTS

Samsoden Pangcatan filed a complaint for damages (Civil Case No. 1888-02) in the Regional Trial Court (RTC) of Marawi City against Alexandro “Dodong” Maghuyop and Belindo Bankiao, among others, arising from a vehicular accident. Pangcatan simultaneously filed an “Ex Parte Motion for Leave to File Case as Pauper Litigant,” which the RTC granted in an order dated September 4, 2002, on the condition that the filing fees would constitute a first lien on any judgment he might recover. Maghuyop and Bankiao moved to dismiss the complaint, arguing, inter alia, that Pangcatan was not an indigent litigant. The RTC denied the motion. Maghuyop and Bankiao did not file an answer and were declared in default. Pangcatan presented evidence ex parte. The RTC later dismissed the case against the other defendants due to a compromise and rendered a decision on February 9, 2007, in favor of Pangcatan, ordering Maghuyop and Bankiao to pay various damages. On appeal, the Court of Appeals (CA) annulled and set aside the RTC decision, finding that the RTC improperly allowed Pangcatan to file as an indigent litigant without receiving evidence of his indigency pursuant to the Rules of Court. The CA remanded the case to the RTC to hear and resolve the motion to file as a pauper litigant. Both parties filed petitions before the Supreme Court: Pangcatan ( G.R. No. 194412 ) assailed the CA’s annulment, while Maghuyop and Bankiao (G.R. No. 194566) assailed the remand, arguing the RTC never acquired jurisdiction due to non-payment of docket fees.

ISSUE

Did the Court of Appeals err in setting aside the judgment of the RTC and in remanding the case to the RTC for the determination of whether or not Pangcatan was exempt from the payment of filing and docket fees as an indigent litigant?

RULING

The Supreme Court GRANTED Pangcatan’s petition ( G.R. No. 194412 ) and DENIED the petition of Maghuyop and Bankiao (G.R. No. 194566). The Court held that the CA erred in annulling the RTC judgment and remanding the case. The ruling was based on the following points:
1. Jurisdiction Acquired Upon Grant of Indigency Motion: The RTC acquired jurisdiction over the case when it granted Pangcatan’s ex parte motion to sue as an indigent litigant. The grant of such a motion is a judicial determination that allows the action to proceed without prepayment of fees, which then become a lien on any judgment.
2. Failure to Timely Challenge Indigency Status: Maghuyop and Bankiao, despite raising Pangcatan’s non-indigency in their motion to dismiss, did not substantiate this ground during the hearing, leading to the motion’s denial. Their subsequent failure to file an answer and their being declared in default constituted a waiver of their right to contest the factual issue of Pangcatan’s indigency. A party in default is deemed to have admitted the material allegations of the complaint and forfeits the right to present evidence or be heard.
3. Propriety of Remand: The remand ordered by the CA was unnecessary. Since the defendants were in default, the RTC was authorized under the Rules to render judgment based on the pleading’s allegations without requiring evidence, which it did. Furthermore, the issue of Pangcatan’s indigency had been rendered moot by the enactment of Republic Act No. 9406 and the issuance of OCA Circular No. 121-2007, which exempt indigent clients of the Public Attorney’s Office (PAO) from payment of docket and other fees. Pangcatan was represented by the PAO.
Consequently, the Supreme Court reversed the CA decision and reinstated the RTC’s judgment dated February 9, 2007.