FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
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<'U 
-A 
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I 
First Regular Session 
) 
Introduced by Senator Loren Legarda 
EXPLANATORY NOTE 
It is an undeniable frustration of every aggrieved Filipino to have his/her share 
of justice delayed and denied. For a measly amount unduly snatched by another, one 
has to go through the rigorous and lengthy process of court litigation which, in the end, 
will prove to be more expensive than the amount of money originally taken away from 
him. This bill aims to remedy such unfortunate occurrences. 
This bill provides for the creation and establishment of a Small Claims Court the 
main purpose of which is to resolve disputes involving small amounts of money and/or 
property in the most speedy, concise and inexpensive.process. It aims to establish a 
court which will deliver remedies without strict application of the rules of evidence and 
its processes conducted in a language or dialect known to the parties, without the usual 
expenses of legal counsel. It aims to establish a judicial forum where disputes will be 
promptly and fairly resolved. 
The establishment of a Small Claims Court will certainly unclog our lower courts 
with cases involving measly claims and will address the perennial problem of delay in 
the resolution of cases which is widely known to be the cause of the erosion of the 
people's confidence in our judicial system. With the inexpensive and speedy disposition 
of cases, we will be able to make court-accessibility and justice-attainability within the 
reach of every Filipino especially the poorer ones who nonetheless deserve justice. And 
by making them more accessible, it is likewise aimed by this bill to bring back the 
confidence of the people in the courts of justice. 
In view of the foregoing, approval of this bill is earnestly urged. 
Senator 
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., 
FOURTEENTH CONGRESS OF THE 
) 
First Regular Session 
) 
) 
7 
JQl. -4 , .> .(~; 
REPUBLIC OF THE PHILPPINES 
S E N A T E  
S.B. No. 1095 
Introduced by Senator Loren Legarda 
AN ACT 
PROVIDING FOR THE CREATION AND ESTABLISHMENT OF SMALL CLAIMS 
COURTS IN THE PHILIPPINES, APPROPRIATING FUNDS THEREFOR, AND 
FOR OTHER PURPOSES 
Be it enacted by the Scnate and House of Representatives of the Philippines in Congress 
assembled. 
Section 1. Short Title. - This Act shall be known as the Philippine Slriull Claims 
Court Act of 2007. 
Section 2. Declaration of Policy. - The State recognizes that minor civil disputes 
are of special importance to the parties and of significant social and economic 
consequence collectively. The State therefore makes it a policy to provide a mechanism 
where such minor civil disputes can be resolved expeditiously, inexpensively and fairly. 
For the attainment of this objective, a judicial forum that will enable the parties to 
directly and personally resolve minor civil disputes shall be established. 
Section 3. Definition of Terms. - As used in this Act, unless the context indicates 
otherwise, the term - 
a. "Plaintiff" means the party who has filed a small claims action; the term 
includes a defendant who has filed a small claims action against a plaintiff. 
b. "Defendant" means the party against whom the plaintiff has filed a small 
claims action; the term includes a plaintiff against whom a defendant has 
filed a small claims action. 
c. "Judgment Creditor" means the party, whether plaintiff or defeitdant, in 
whose favor a money judgment has been rendered. 
d. "Judgment Debtor" means the party, whether plaintiff or defendant, against 
whom a money judgment has been rendered. 
e. 
Person" means an individual, corporation, partnership, firm, association, or 
other entity. "Individual" means a natural person. 
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Section 4. Creation of Small Claims Courts. - There shall be established for every 
two Metropolitan Trial Court, Municipal Trial Court and Municipal Circuit Trial Courts 
a Small Claims Court to be presided by a Small Claims Court Judge-Arbitrator. 
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Section 5. Qualifications. - No person shall be appointed as a Small Claims Court 
Judge-Arbitrator unless he/she is a natural-born citizen of the Philippines, at least thirty 
(30) years of age, member of the Philippine Bar, and for at least five (5) years, has been 
engaged in the practice of law in the Philippines, or has held a public office in the 
Philippines requiring admission to the practice of law as an indispensable requisite. 
Section 6. Jurisdiction. - The Small Claims Court shall exercise exclusive original 
jurisdiction over all civil actions where the value of the personal property or amount of 
the demand does not exceed Fifty Thousand Pesos (P50,OOO.OO): Provided, That where 
there are several claims or causes of actions between the same parties or different 
parties, embodied in the same complaint, the amount of the demand shall be the totality 
of the claims in all causes of action, irrespective of whether the causes of action arose 
out of the same or different transactions: Provided, further, That a plaintiff can only 
institute small claims actions to recover a total of One Hundred Thousand Pesos 
(PlOO,OOO.OO) per annum, but in no case exceeding five (5) small claims actions per 
annum. 
In the exercise of its jurisdiction, the Court may grant equitable relief in the form 
or rescission, restitution, and specific performance whether in lieu of or in addition to 
awards for money or damages. The Court shall exercise jurisdiction over the small 
claims action until there has been full payment, performance or satisfaction of its 
judgment or order. 
Section 7. Parties. - Any person who is at least eighteen (18) years of zge may be 
a party to a small claims action. A minor or incompetent person may be represented by 
a guardian ad litem appointed by a court of competent jurisdiction or by the judge of 
the Small Claims Court where the action is filed. 
Section 8. Representafion. - Except as permitted under this Act, no attorney-at- 
law or any individual other than the plaintiff or defendant may take part in the filing, 
conduct or defense of a small claims action: Provided, that an attorney-at-law may, for 
and in his/her own behalf, defend himself/herself against any small claims action that 
has been filed against him/her: Provided, Further, that the judgment creditor may avail 
the services of an attorney-at-law for the enforcement of the judgment. Husbands and 
wives who sue or are sued with his or her spouse may represent the other in their claim 
or defense. 
Section 9. Nature of Proceedings. - The hearing and disposition of small claims 
actions shall be informal without strict application of the rules of evidence, the object 
being to dispense justice promptly between the parties. The Rules of Procedure in Small 
Claims Courts, including the time and duration of sessions, shall be determined by the 
Supreme Court. 
Section 10. Mediation Center. - In each Small Claims Court, there shall be a 
Mediation Center to be presided over by the Small Claims Court Judge-Arbitrator or by 
his duly authorized Mediation Officer: Provided, That no person shall be designated as 
Mediation Officer unless he/she holds a Bachelor of Laws degree. 
Section 11. Mandatoy Mediation Conference. - Prior to any hearing of any small 
claims action, the Small Claims Court Judge-Arbitrator shall order and schedule a 
mandatory mediation conference between or among 'the parties for the purpose of 
resolving the dispute, or arriving at an amicable settlement, under the supervision of 
the Small Claims Court Judge or Mediation Officer. Any settlement or resolution of the 


dispute arising from the mediation conference shall be reduced to writing and be 
embodied in a legally enforceable resolution to be signed by the Small Claims Court 
Judge. 
In case the mediation efforts fail, the Small Claims Court Judge shall immediately 
set the case for hearing. 
Section 12. Judgments and Processes. - All judgments determinative of the merits 
of the case shall be in writing, stating clearly the facts and the grounds on vAich they 
are based, signed by the Judge and filed with the Clerk of Court. The judgments or 
orders of the Court shall not be appealable, except upon the ground of grave abuse of 
discretion. 
Section 13. Honoraria and Allomances. - Judge-Arbitrators of the Small Claims 
Courts shall receive such honoraria and allowances as may be authorized and 
determined by the Supreme Court. 
Section 1.4. Stafing Pattern and Pilot Test Areas. - The Supreme Court shall submit 
to the President, within thirty (30) days from the effectivity of this Act, a staffing pattern 
for all courts constituted pursuant to this Act, including plans for the establishment of 
pilot Small Claims Courts in areas as may be determined by the Suprdme Court. 
Section 15. Appropriations. - To carry out the provisions of this Act, there is 
hereby appropriated the sum of Twenty Five Million Pesos (P25,000,000.00) from the 
General Appropriations Act for the current year. Thereafter, the appropriation for such 
funds as may be necessary for the purpose shall be provided for in the General 
Appropriation Acts. 
Section 16. Separability Clause. - If any provision of this Act shall be held to be 
unconstitutional or not valid, no other provisions shall be affected thereby. 
Section 17. Eflectivity. - This Act shall take effect after fifteen (15) days following 
its publication in the Official Gazette or in two (2) newspapers of general circulation. 
Approved, 
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