I. What “Small Claims” Means in the Philippine System
In the Philippines, there is no separate physical “Small Claims Court.” Instead, first-level courts – Metropolitan Trial Courts (MeTC), Municipal Trial Courts in Cities (MTCC), Municipal Trial Courts (MTC), and Municipal Circuit Trial Courts (MCTC) – hear small claims cases by applying a special set of procedural rules.
A small claim is a purely civil, money claim for a relatively modest amount, meant to be resolved:
- Quickly (one-day hearing; decision within 24 hours)
- Cheaply (simplified forms, no lawyers at the hearing)
- Informally (relaxed evidence rules, streamlined procedure) (Supreme Court of the Philippines)
The monetary threshold is the maximum amount of the money claim that can be handled under this special small-claims procedure.
II. Current Monetary Threshold (Present Rules)
Under the Rules on Expedited Procedures in the First Level Courts (A.M. No. 08-8-7-SC, as amended), which now govern small claims:
- The monetary threshold for small claims cases is ₱1,000,000.00,
- This is uniform nationwide – no more distinction between Metro Manila and areas outside Metro Manila. (Supreme Court of the Philippines)
The Supreme Court itself states that:
The Rules increase the threshold amount of small claims cases to ₱1,000,000.00 and no longer make a distinction whether the claim is filed within or outside Metro Manila. (Supreme Court of the Philippines)
1. What kinds of claims are covered by this ₱1,000,000 cap?
The small claims rules cover purely civil money claims where the relief is only the payment or reimbursement of a sum of money, such as: (Supreme Court of the Philippines)
Money owed under:
- Contract of lease
- Contract of loan or other credit accommodations
- Contract of services
- Contract of sale of personal property
Liquidated damages arising from contracts
Enforcement of barangay amicable settlement or arbitration awards involving money claims not exceeding ₱1,000,000, where no execution has been made within the period allowed by law (Supreme Court of the Philippines)
Excluded:
- Recovery of personal property, unless the parties have made it subject of a compromise agreement;
- Cases not purely for money (e.g., actions to declare nullity of contract, partition of property, etc.). (Supreme Court of the Philippines)
III. How the Threshold Is Computed
The ₱1,000,000 limit is computed in a particular way that is often misunderstood:
1. Principal claim only
For purposes of determining whether a case qualifies as a small claim, you count only the principal amount claimed, excluding: (RESPICIO & CO.)
- Interest
- Penalties and surcharges
- Moral, exemplary, or other damages
- Attorney’s fees
- Costs of suit and litigation expenses
Those extra amounts may still be claimed, but they do not affect whether the case falls within or beyond the ₱1,000,000 small-claims ceiling.
Example: You sue for ₱950,000 principal + ₱200,000 interest + ₱50,000 damages. For jurisdictional purposes, only ₱950,000 is counted. The case still qualifies as small claims.
2. Joinder of claims in one case
You can join multiple small claims by one plaintiff against the same defendant in a single small claims case, but:
- The total principal amount of all joined claims must not exceed ₱1,000,000.00. (Supreme Court of the Philippines)
If the total exceeds ₱1,000,000, the case is not a small claim and must proceed under summary or regular procedure.
3. Counterclaims
The small claims rules also regulate counterclaims:
- Counterclaims can be filed within the same small claims case if they are themselves within the small claims coverage (i.e., within the ₱1,000,000 cap and of the proper nature).
- Any amount in a counterclaim exceeding ₱1,000,000.00 is deemed waived – only up to ₱1,000,000 can be adjudicated in that small claims case. (Scribd)
This encourages parties to keep their cross-claims modest and streamlined, in line with the philosophy of small claims.
4. Multiple cases by the same party
The threshold applies per case, not per litigant. A party can file several small claims cases so long as each individual case does not exceed ₱1,000,000 in principal.
However, to discourage abuse, the rules impose additional filing fees once a party files more than five (5) small claims in a calendar year, with increasing increments after the 10th and 15th cases. (Supreme Court of the Philippines)
IV. Evolution of the Monetary Threshold
The small claims monetary threshold has been deliberately increased several times to keep up with economic conditions and to decongest courts:
2016 Revised Rules of Procedure for Small Claims Cases
- Threshold: ₱200,000.00, exclusive of interest and costs. (Supreme Court of the Philippines)
Subsequent amendments (pre-2022)
- The threshold was later raised (phased) to ₱300,000.00 and then ₱400,000.00, ultimately becoming ₱400,000 nationwide, according to later commentaries summarizing the amendments to A.M. No. 08-8-7-SC. (Respicio & Co.)
2022 Rules on Expedited Procedures in the First Level Courts
- The Supreme Court issued the Rules on Expedited Procedures in the First Level Courts (still under A.M. No. 08-8-7-SC), expressly amending both the 1991 Revised Rule on Summary Procedure and the 2016 Revised Small Claims Rules.
- These rules, in coordination with Republic Act No. 11576 (2021) – which expanded first-level courts’ general monetary jurisdiction up to ₱2,000,000.00 for civil monetary claims – raised the small claims threshold to ₱1,000,000.00 and removed the Metro Manila / non-Metro Manila distinction. (Supreme Court of the Philippines)
The ₱1,000,000 cap thus represents about half of the ₱2,000,000 jurisdictional ceiling of first-level courts for civil money claims, leaving larger cases to summary or regular procedures while routing mid-range cases into faster tracks.
V. Relationship with Other Procedures and Jurisdiction
1. First-level court jurisdiction vs. small claims threshold
Jurisdiction and procedure are related but not identical:
Republic Act No. 11576 expanded the jurisdiction of first-level courts in civil money claims up to ₱2,000,000.00. (Supreme Court of the Philippines)
Within that jurisdiction, the Supreme Court then divided cases procedurally:
- Up to ₱1,000,000.00 (principal): proceeds under the Rule on Small Claims;
- Above ₱1,000,000.00 up to ₱2,000,000.00 (under certain categories): often routed to the Revised Rule on Summary Procedure;
- Beyond that: typically falls under regular procedure in the Regional Trial Courts.
So the ₱1,000,000 “small claims” threshold is a procedural cut-off, not the outer limit of the court’s power to hear civil cases.
2. Barangay conciliation and small claims
For many small money disputes, before you even get to court, the Katarungang Pambarangay system (barangay conciliation) may require:
- Filing first with the Punong Barangay or the Lupong Tagapamayapa, if parties reside in the same city or municipality and the dispute is not among the exceptions.
The small claims rules themselves recognize barangay-based settlements by including in their coverage:
- Enforcement of barangay amicable settlements and arbitration awards involving money claims up to ₱1,000,000.00, where no execution has been implemented within the period allowed by law. (Supreme Court of the Philippines)
VI. Practical Effects of the ₱1,000,000 Threshold
1. Access to justice for mid-sized disputes
The increased threshold dramatically widened the scope of disputes that can be resolved cheaply and quickly:
- Typical personal loans, small business receivables, professional fees, and unpaid rentals now often fall within small claims.
- This is particularly important for SMEs, freelancers, and ordinary consumers whose claims are too large to ignore but too small to justify a slow, expensive full-blown trial.
2. Speed and finality
Once a case qualifies as a small claim:
- The hearing is usually one day, informal but recorded;
- The decision must be rendered within 24 hours from end of hearing;
- The judgment is final, executory, and unappealable – there is no ordinary appeal. (Supreme Court of the Philippines)
The trade-off:
- Parties get speed and low cost,
- But they give up the right to appeal, except through extraordinary remedies in rare situations (e.g., grave abuse of discretion).
3. Strategic filing considerations
Because of the ₱1,000,000 cap based on principal:
- A creditor with a claim slightly above ₱1,000,000 may (a) proceed under summary/regular procedure, or (b) in some situations, consciously waive the excess so the principal fits within ₱1,000,000 and the case can be filed as small claims.
- Defendants filing counterclaims must decide whether to stay within the cap (so the counterclaim can be heard immediately) or to pursue a separate, larger action under regular procedure (but that obviously has cost and time consequences). (Scribd)
4. Banks and lenders
The small claims rules allow cases filed by banks, lending companies, and similar businesses, but the rules impose stricter fee treatment:
- For such plaintiffs, the filing and legal fees are generally the same as those under the regular rules, even if the case uses the small claims procedure. (Supreme Court of the Philippines)
This reflects a policy choice: procedural speed is extended to institutional lenders, but financial subsidies (like reduced fees) are reserved mainly for ordinary litigants.
VII. Key Takeaways
Current cap:
- The monetary threshold for small claims in the Philippines is ₱1,000,000.00, principal amount only, exclusive of interest, penalties, damages, attorney’s fees, and costs. (Supreme Court of the Philippines)
Scope:
- Applies to purely civil money claims arising from contracts (lease, loan, services, sale of personal property, etc.) and enforcement of certain barangay settlements and arbitration awards.
Uniform nationwide:
- No more Metro Manila vs. non-Metro Manila distinction – the ₱1,000,000 cap is the same everywhere in the country.
Procedural implications:
- Small claims cases are fast, inexpensive, and non-appealable, but constrained by the ₱1,000,000 limit and the requirement that the relief be only money.
Dynamic framework:
- The threshold has risen several times (from ₱200,000 to ₱400,000 to ₱1,000,000) as the Supreme Court continuously recalibrates procedures in light of inflation, court congestion, and the expanded jurisdiction of first-level courts under RA 11576.
Because specific rules can still be fine-tuned by later Supreme Court issuances, anyone about to file or defend a case near the ₱1,000,000 line should check the latest text of A.M. No. 08-8-7-SC and related circulars, or consult counsel, to confirm that the amount and nature of the claim still fall within the current small claims monetary threshold.