Friday, March 11, 2011

Costs of suit: coverage and applicability to intra-corporate controversies

Usually, when one files a suit in court, whether civil or criminal in nature, he asks the court for the payment of damages, attorney’s fees and costs of suit by the other party. A person who files a responsive pleading to a complaint can also ask for the same. This article will focus on “costs of suit.”

The party that finally prevails is entitled to the costs of suit as a matter of course, unless the court for special reasons adjudged otherwise. The Revised Rules of Court states that:

“Unless otherwise provided in these rules, cost shall be allowed to the prevailing party as a matter of course, but the court shall have power, for special reasons, to adjudge that either party shall pay the costs of an action, or that the same be divided, as may be equitable. No costs shall be allowed against the Republic of the Philippines unless otherwise provided by law.”(Section 1, Rule 142)

In first level courts (e.g., Metropolitan Trial Courts, Municipal Trial Court in Cities, Municipal Trial Court), the costs shall be taxed by the justice of the peace or municipal judge and included the judgment. In superior courts (Regional Trial Courts, Court of Appeals, Supreme Court), costs shall be taxed by the clerk of the corresponding court on five days' written notice given by the prevailing party to the adverse party.

With this notice shall be served a statement of the items of the cost claimed by the prevailing party, verified by his oath or that of his attorney. Objections to the taxation shall be made in writing, specifying the items objected to. Either party may appeal to the court from the clerk's taxation. The costs shall be inserted in the judgment if taxed before its entry, and payment thereof shall be enforced by execution. (Section 8, Rule 142)

What costs may be recovered then? The specific items and rates may be found under Sections 9, 10 & 11, of Rule 142.

May costs of suit be recovered in intra-corporate controversies? Intra-corporate controversies are not mentioned under Rule 143 and Section 2 of Rule 1. Both say that the Rules is inapplicable to cases involving land registration, cadastral and election cases, naturalization and insolvency proceedings, and other cases.

Also, the Rules of Procedure for Intra-Corporate Controversies expressly provides that: “The Rules of Court, in so far as they may be applicable and are not inconsistent with these Rules, are hereby adopted to form an integral part of these Rules.” (Section 2)

But note that while costs of suit may be allowed to the prevailing party in cases concerning intra-corporate controversies, it is not immediately executory as it must be implemented in accordance with Section 8 of Rule 142. (See also Heirs of Divinagracia vs. Ruiz, et. al., GR No. 172508 [2011])

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