THIRD DIVISION

Pascual vs Pascual

CARPIO MORALES, J.:


On challenge via Petition for Review on Certiorari is the February 10,
2003 Order of the Regional Trial Court (RTC) of Isabela, Branch 23 at Roxas
dismissing, on motion of herein respondent Marilou M. Pascual, the
complaint filed against her by her brother-herein petitioner Dante M.
Pascual, represented by his attorney-in-fact Reymel R. Sagario (Sagario),
for non-compliance with the conciliation provision-pre condition to filing
of complaint in court under R.A. 7160 (the Local Government Code).

Petitioner, a permanent resident of the United States of America,
appointed Sagario as his attorney-in-fact by a Special Power of Attorney
(SPA) dated April 10, 2002:
1. To file a case for the cancellation of
Transfer Certificate of Title No. T-271656 issued in
the name of Marilou M. Pascual as well as the Deed
of Sale of Registered Land (Dec. No. 639; Page No.
52; Book No. XXI; Series of 1994) and/or
Reconveyance at the appropriate court;

2. To collect the monthly rentals from the
tenant;

3. To enter into amicable settlement with
Marilou M. Pascual or any other mode of
payment/and/or dispute resolution;

4. To execute and sign any and all papers,
contracts/documents which may be necessary
relative to the above acts.

x x x
[1]



Pursuant to the SPA, Sagario filed on October 14, 2002 before the
Isabela RTC at Roxas a complaint entitled Dante M. Pascual, plaintiff v.
Marilou M. Pascual and Register of Deeds, Defendants, docketed as Civil
Case No. Br. 23-713-02, for Annulment of Transfer Certificate of Title No.
T-271657 of Isabela and Deed of Absolute Sale of Registered Land and/or
Reconveyance with Damages.
[2]


To the Complaint the defendant-herein respondent Marilou M.
Pascual filed a Motion to Dismiss
[3]
on two grounds one of which was non-
compliance with the requirement under Section 412 of the Local
Government Code,
[4]
she contending that there is no showing that the
dispute was referred to the barangay court before the case was filed in
court.

By the assailed Order of February 10, 2003,
[5]
Branch 23 of the
Isabela RTC at Roxas granted respondents Motion to Dismiss in this wise:

. . . RA 7160 repealing P.D. 1508 otherwise known as
the Revised Katarungang Pambarangay provides
under Section 409 All disputes involving real
property or any interest therein shall be brought in
the barangay where the real property or the larger
portion thereof is situated. Hence, the reliance of
the plaintiff on Section 408 of R.A. 7160 is incorrect.
When real property or any interest therein is
involved, the dispute shall be filed before the
barangay where the property is located, regardless
of the residence of the parties. Besides, it is
incorrect to say that the parties are not residents of
the same place, Vira, Roxas, Isabela. The Attorney-
in-fact of the plaintiff in the person of Reymel R.
Sagario is a resident of Vira, Roxas, Isabela, and he
substitute (sic) Dante Pascual by virtue of said
Special Power of Attorney. Hence, said Attorney-in-
fact should have brought the dispute before
barangay Vira, Roxas, Isabela, where the property is
located. In the case of Royales vs. Intermediate
Appellate Court 127 SCRA 470, Ordinarily, non-
compliance with the condition precedent prescribed
by P.D. 1508 could affect the sufficiency of the
plaintiffs cause of action and make his complaint
vulnerable to dismissal on ground of lack of cause of
action or prematurity.
[6]
(Emphasis and
underscoring supplied)


Petitioners Motion for Reconsideration
[7]
of the above-said order
was denied by Order of March 24, 2003:
[8]


x x x

Consequently, the Court is [of] the opinion
that the said Attorney-in-fact shall be deemed to be
the real party in interest, reading from the tenor of
the provisions of the Special Power of
Attorney. Being a real party in interest, the
Attorney-in-fact is therefore obliged to bring this
case first before the Barangay Court. Sec. 3, Rule 3
of the Rules of Court provides that Where the
action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title
of the case and shall be deemed to be the real party
in interest.

x x x

Being the real party in interest, the Attorney-
in-fact may therefore bring the necessary complaint
before the Lupon Tagapayapa and appear in person
as if he is the owner of the land.
[9]
(Emphasis and
underscoring supplied)

Hence, the present petition questioning the palpable legal errors
of the RTC.

Petitioner argues that since he, not his attorney-in-fact Sagario, is the
real party in interest, and since he actually resides abroad,
the lupon would have no jurisdiction to pass upon the dispute involving
real property, he citing Agbayani v. Belen.
[10]


Respondent submits, on the other hand, that Section 408, paragraph
(f), of the Local Government Code, is qualified by paragraph (c) of Section
409 of the same Code the latter of which provides that *a+ll disputes
involving real property or any interest therein shall be brought in the
barangay where the real property is located, hence, the use of the word
shall makes it mandatory for the bringing of the dispute before
the lupon.
That attorney-in-fact Sagario is a resident of the same barangay as
that of hers, respondent argues in any event, brings the matter under the
jurisdiction of thelupon, for Sagario, following Section 3 of Rule 3 of the
1997 Rules of Civil Procedure which provides:

Sec. 3. Representative as parties. - Where
the action is allowed to be prosecuted or defended
by a representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title
of the case and shall be deemed to be the real party
in interest. A representative may be a trustee of an
express trust, a guardian, an executor or
administrator, or a party authorized by law or these
Rules. An agent acting in his own name for the
benefit of an undisclosed principal may sue or be
sued without joining the principal except when the
contract involves things belonging to the principal,


being a substitute, becomes the real party-in-interest.

Respondents submissions do not lie.

The pertinent provisions of the Local Government Code read:


SEC. 408. Subject Matter for Amicable
Settlement; Exception Thereto. The lupon of each
barangay shall have authority to bring together the
parties actually residing in the same city or
municipality for amicable settlement of all disputes
except:

(a) Where one party is the government or
any subdivision or instrumentality thereof;

(b) Where one party is a public officer or
employee, and the dispute relates to the
performance of his official functions;

(c) Offenses punishable by imprisonment
exceeding one (1) year or a fine exceeding Five
Thousand pesos (P5,000.00);

(d) Offenses where there is no private
offended party;

(e) Where the dispute involves real
properties located in different cities or
municipalities unless the parties thereto agree to
submit their differences to amicable settlement by
an appropriate lupon;

(f) Disputes involving parties who actually
reside in barangays of different cities or
municipalities, except where such barangay units
adjoin each other and the parties thereto agree to
submit their differences to amicable settlement by
an appropriate lupon; and

(g) Such other classes of disputes which the
President may determine in the interest of justice or
upon the recommendation of the Secretary of
Justice.

The court in which non-criminal cases not
falling within the authority of the lupon under this
Code are filed may, at any time before trial, motu
proprio refer the case to the lupon concerned for
amicable settlement. (Emphasis supplied)

SEC. 409. Venue. (a) Disputes between
persons actually residing in the same barangay shall
be brought for amicable settlement before the lupon
of said barangay .

(b) Those involving actual residents of
different barangays within the same city or
municipality shall be brought in the barangay where
the respondent or any of the respondents actually
resides, at the election of the complainant.

(c) All disputes involving real property or any
interest therein shall be brought in the barangay
where the real property or the larger portion thereof
is situated.

(d) Those arising at the workplace where the
contending parties are employed or at the
institution where such parties are enrolled for study
shall be brought in the barangay where such
workplace or institution is located.

Objections to venue shall be raised in the
mediation proceedings before the punong barangay;
otherwise, the same shall be deemed waived. Any
legal question which may confront the punong
barangay in resolving objections to venue herein
referred to may be submitted to the Secretary of
Justice or his duly designated representative whose
ruling thereon shall be binding. (Emphasis supplied)

In the 1982 case of Tavora v. Veloso,
[11]
this Court held that where
the parties are not actual residents in the same city or municipality or
adjoining barangays, there is no requirement for them to submit their
dispute to the lupon as provided for in Section 6 vis a vis Sections 2 and 3
of P.D. 1508 (Katarungang Pambarangay Law).

[B]y express statutory inclusion and exclusion, the
Lupon shall have no jurisdiction over disputes
where the parties are not actual residents of the
same city or municipality, except where the
barangays in which they actually reside adjoin each
other. (Underscoring supplied)


In the 2000 case of Vercide v. Hernandez,
[12]
this Court, noting that
the Tavora ruling, reiterated in other cases including the 1996 case
of Agbayani
[13]
cited by petitioner, was decided under the provisions of
P.D. No. 1508 (Katarungang Pambarangay) Law which were, except for
some modifications, echoed in Sections 408-409 of the Local Government
Code which took effect on January 1, 1992, held that the Tavora ruling
remained.

To construe the express statutory requirement of actual residency as
applicable to the attorney-in-fact of the party-plaintiff, as contended by
respondent, would abrogate the meaning of a real party in interest as
defined in Section 2 of Rule 3
[14]
of the 1997 Rules of Court vis a vis Section
3 of the same Rule which was earlier quoted but misread and
misunderstood by respondent.

In fine, since the plaintiff-herein petitioner, the real party in interest,
is not an actual resident of the barangay where the defendant-herein
respondent resides, the local lupon has no jurisdiction over their dispute,
hence, prior referral to it for conciliation is not a pre-condition to its filing
in court.

The RTC thus erred in dismissing petitioners complaint.

WHEREFORE, the petition is granted. The assailed February 10, 2003
Order, as well as the March 24, 2003 Order denying reconsideration of the
first, of Branch 23 of the Regional Trial Court of Isabela at Roxas is SET
ASIDE. Said court is accordingly directed to reinstate Civil Case No. 23-
713-02 to its docket and take appropriate action thereon with dispatch.

SO ORDERED.



SECOND DIVISION
[A.M. No. MTJ-00-1265. April 6, 2000]

VALENCIDES VERCIDE, complainant, vs. JUDGE PRISCILLA T. HERNANDEZ,
Fifth Municipal Circuit Trial Court, Clarin and Tudela, Misamis
Occidental, respondent. francis
D E C I S I O N
MENDOZA, J.:
This is a complaint filed against Judge Priscilla T. Hernandez of the Fifth
Municipal Circuit Trial Court, Clarin and Tudela, Misamis Occidental,
charging her with grave abuse of authority and ignorance of the law for
her dismissal of a case which complainant Valencides Vercide and his wife
had filed against Daria Lagas Galleros for recovery of possession of a piece
of land. The land is located in Upper Centro, Tudela, Misamis Occidental.
Defendant Galleros is a resident of the same municipality, while
complainant and his wife are residents of Dipolog City. Because of this
fact, the case was filed in court without prior referral to the Lupong
Tagapamayapa.
However, this matter was raised by defendant in her answer as an
affirmative defense, and respondent, in her order of July 15, 1997,
ordered the dismissal of the case without prejudice to the prosecution of
the counterclaim pleaded by the defendant in her answer. In support of
her order, respondent cited P.D. No. 1508, 3 of which provides:
Venue. - Disputes between or among persons actually residing
in the same barangay shall be brought for amicable settlement
before the Lupon of said barangay. Those involving actual
residents of different barangays within the same city or
municipality shall be brought in the barangay where the
respondent or any of the respondents actually resides, at the
election of the complainant. However, all disputes which
involve real property or any interest therein shall be brought in
the barangay where the real property or any part thereof is
situated. (Emphasis added)
Complainant and his wife moved for a reconsideration, citing the following
provisions of R.A. 7160, "The Local Government Code of 1991":
SEC. 408. Subject matter for Amicable Settlement; Exception
Thereto. The lupon of each barangay shall have authority to
bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:
(a) Where one party is the government of any subdivision or
instrumentality thereof;
(b) Where one party is a public officer or employee, and the
dispute relates to the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1)
year or a fine exceeding Five Thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real property located in
different cities or municipalities unless the parties thereto
agree to submit their differences to amicable settlement by
an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays
of different cities or municipalities, except where such
barangay units adjoin each other and the parties thereto
agree to submit their differences to amicable settlement by
an appropriate lupon;
(g) Such other classes of disputes which the President may
determine in the interest of justice or upon recommendation
of the Secretary of Justice. marie
The court in which the non-criminal cases not falling within
the authority of the lupon under this Code are filed may, at
any time before trial, motu proprio refer the case to the lupon
concerned for amicable settlement.
SEC. 409. Venue. - (a) Disputes between persons actually
residing in the same barangay shall be brought for amicable
settlement before the lupon of said barangay.
(b) Those involving actual residents of different barangays
within the same city of municipality shall be brought in the
barangay where the respondent or any of the respondents
actually resides, at the election of the complainant.
(c) All disputes involving real property or any interest therein
shall be brought in the barangay where the real property or
the larger portion thereof is situated.
(d) Those arising at the workplace where the contending
parties are employed or at the institution where such parties
are enrolled for study shall be brought in the barangay where
such workplace or institution is located.
Objections to venue shall be raised in the mediation
proceedings before the punong barangay; otherwise, the
same shall be deemed waived. Any legal question which may
confront the punong barangay in resolving objections to
venue herein referred to may be submitted to the Secretary
of Justice or his duly designated representative whose ruling
thereon shall be binding.
They argued that under 408(f), in relation to 409(c), where the parties
to a dispute involving real property or any interest therein are not actual
residents of the same city or municipality or of adjoining barangays, prior
resort to barangay conciliation is not required.
However, respondent denied the motion. In her order dated September 9,
1997, respondent stated:
The Court after taking into consideration the Motion for
Reconsideration and the ground relied upon by the counsel
finds that counsel for the plaintiffs failed to correlate Sections
408 and 409 of Republic Act No. 7160 and to consider Rule VIII,
paragraph (a) of the Katarungang Pambarangay Rules, the rules
and regulations [of] which were promulgated to implement
Sections 399 to 422, Chapter 7, Title One Book III and Section
515, Book IV of R.A. No. 7160, otherwise known as the
Katarungang Pambarangay Law, to wit:
"RULE VIII - PRE-CONDITION FOR FORMAL ADJUDICATION
Conciliation, pre-condition for filing of complaint in court or
government office. novero
(a) No individual may go directly to court or to any government
office for adjudication of his dispute with another individual
upon any matter falling within the authority of the Punong
Barangay or Pangkat ng Tagapagkasundo to settle under these
Rules, unless, after personal confrontation of the parties before
them earnest efforts to conciliate have failed to result in a
settlement or such settlement has been effectively
repudiated."
and also Rule VI, Section 3 paragraph (c) of the same
Katarungang Pambarangay Rules which provides:
"Rule VI - Amicable Settlement of Disputes
Section 3. Venue. The place of settlement shall be subject to
the following rules:
. . . .
(c) Dispute involving real property shall be brought for
settlement in the Barangay where the real property or larger
portion thereof is situated.
From the provisions of the above-cited Rules it was very clear
that parties whose disputes involved real property should first
br[ing] the said dispute before the barangay where the
property was located, and that [because of] failure to bring the
dispute before the Barangay for conciliation no action may be
filed in court for final adjudication of the said dispute.
That parties should first comply with the provisions of the
Katarungang Pambarangay Law before the Court can acquire
jurisdiction over the complaint. That non-compliance of the
plaintiff to the requirement of the Katarungang Pambarangay
Law was admitted by her in paragraph 3 of the complaint. Her
allegation of non-compliance with the mandatory requirement
of Lupon Conciliation before the filing of the complaint, in a
way divest[s] the Court of its jurisdiction over the case. In the
1997 Rules of Civil Procedure, Rule 16, Section 1, paragraph (j)
provides:
"That a condition precedent for filing the claim has not been
complied with"
WHEREFORE, in view of the foregoing, the Motion for Reconsideration is
hereby denied.
Complainant alleges that in dismissing Civil Case No. 295, respondent
judge committed "(a) Grave abuse of authority by knowingly rendering an
unjust and unlawful order; (b) Ignorance of the law in its highest order, she
being a judge; (c) Grave disobedience to the jurisprudence laid down by
the Supreme Court of the Philippines on the matter of exemption of lupon
conciliation of contending parties who are not residen[ts] of the same city
or municipality." He states that respondent "practically threw several
decisions of the Supreme Court on the matter out of the window and
obviously followed hook, line and sinker the arguments of the [defendant]
Daria Galleros."
In answer, respondent judge claims that she merely followed the law in
dismissing the case. She prays that the complaint against her be dismissed
and that complainant be ordered to stop harassing her just because he
had not been able to obtain the relief he wanted in Civil Case No.
295. nigel
In its memorandum dated February 29, 2000, the Office of the Court
Administrator recommends the dismissal of this case on the ground that
the "issue [raised] is purely judicial and is best resolved by a court of
competent jurisdiction" and that, even if respondent had erred, she should
not be held administratively liable since there is no allegation that she
acted in bad faith or knowingly rendered an unjust judgment.
In Tavora v. Veloso,
[1]
this Court already ruled that where parties do not
reside in the same city or municipality or in adjoining barangays, there is
no requirement for them to submit their dispute involving real property to
the Lupong Tagapamayapa. As explained in that case:
The sole issue raised is one of law: Under the given facts, is the respondent
judge barred from taking cognizance of the ejectment case pursuant to
Sec. 6 of PD 1508 establishing a system of amicably settling disputes at the
barangay level? The section reads:
"SECTION. 6. Conciliation, precondition to filing of complaint. -
No complaint, petition, action or proceeding involving any
matter within the authority of the Lupon as provided in Section
2 hereof shall be filed or instituted in court or any other
government office for adjudication unless there has been a
confrontation of the parties before the Lupon Chairman or the
Pangkat and no conciliation or settlement has been reached as
certified by the Lupon Secretary or the Pangkat Secretary,
attested by the Lupon or Pangkat Chairman, or unless the
settlement has been repudiated. . . ." (Italics supplied)
For the above provision to be operative, the controversy must
be within the jurisdiction of the Lupong Tagapayapa (Lupon or
Barangay court). On this point, the relevant provisions of PD
1508 are:
"SECTION 2. Subject matters for amicable settlement. - The
Lupon of each barangay shall have authority to bring together
the parties actually residing in the same city or municipality for
amicable settlement of all disputes except:
(1) Where one party is the government, or any subdivision or
instrumentality thereof;
(2) Where one party is a public officer or employee, and the
dispute relates to the performance of his official functions;
(3) Offenses punishable by imprisonment exceeding 30 days, or
a fine exceeding P200.00;
(4) Offenses were there is no private offended party;
(5) Such other classes of disputes which the Prime Minister may
in the interest of justice determine, upon recommendation of
the Minister of Justice and the Minister of Local
Government. ella
"SECTION 3. Venue. Disputes between or among persons
actually residing in the same barangay shall be brought for
amicable settlement before the Lupon of said barangay. Those
involving actual residents of different barangays within the
same city or municipality shall be brought in the barangay
where the respondent or any of the respondents actually
resides, at the election of the complainant. However, all
disputes which involve real property or any interest therein
shall be brought in the barangay where the real property or any
part thereof is situated.
"The Lupon shall have no authority over disputes:
(1) involving parties who actually reside in barangays of
different cities or municipalities, except where such barangays
adjoin each other; and
(2) involving real property located in different municipalities."
(Italics supplied)
The foregoing provisions are quite clear. Section 2 specifies the
conditions under which the Lupon of a barangay "shall have
authority" to bring together the disputants for amicable
settlement of their dispute: The parties must be "actually
residing in the same city or municipality." At the same time,
Section 3 while reiterating that the disputants must be
"actually residing in the same barangay" or in "different
barangays within the same city or municipality"
unequivocably declares that the Lupon shall have "no
authority" over disputes "involving parties who actually reside
in barangays of different cities or municipalities," except where
such barangays adjoin each other.
Thus, by express statutory inclusion and exclusion, the Lupon
shall have no jurisdiction over disputes where the parties are
not actual residents of the same city or municipality, except
where the barangays in which they actually reside adjoin each
other.
It is true that immediately after specifying the barangay whose
Lupon shall take cognizance of a given dispute, Sec. 3 of PD
1508 adds:
"However, all disputes which involve real property or any
interest therein shall be brought in the barangay where the real
property or any part thereof is situated."
Actually, however, this added sentence is just an
ordinary proviso and should operate as such. marinella
The operation of a proviso, as a rule, should be limited to its
normal function, which is to restrict or vary the operation of
the principal clause, rather than expand its scope, in the
absence of a clear indication to the contrary.
[2]

To be sure, the Court was interpreting in that case the
provisions of P.D. No. 1508 which, except for some
modifications, are applicable to the case before respondent
judge because they are now found in 408-409 of R.A. No.
7160 which took effect on January 1, 1992. The ruling in Tavora
v. Veloso, reiterated in other cases,
[3]
should be familiar to the
bench and the bar. As we have held in Espiritu v.
Jovellanos,
[4]
the phrase "Ignorance of the law excuses no one"
has a special application to judges who, under the injunction of
Canon 1.01 of the Code of Judicial Conduct, "should be the
embodiment of competence, integrity, and independence." In
Bacar v. De Guzman,
[5]
it was held that when the law violated is
basic, the failure to observe it constitutes gross ignorance.
Reiterating this ruling, it was emphasized in Almeron v.
Sardido
[6]
that the disregard of an established rule of law
amounts to gross ignorance of the law and makes the judge
subject to disciplinary action.
In the case at bar, respondent showed patent ignorance if not disregard
of this Courts rulings on the jurisdiction of the Lupong Tagapamayapa
by her erroneous quotations of the provisions of the Katarungang
Pambarangay Rules implementing R.A. No. 7160. While a judge may not
be held administratively accountable for every erroneous order or decision
he renders, his error may be so gross or patent that he should be
administratively disciplined for gross ignorance of the law and
incompetence.
In this case, respondent at first cited P.D. No. 1508, 3 as basis of her
action. When her attention was called to the fact that this had been
repealed by 409(c) of R.A. No. 7160, respondent, who obviously was
more intent in justifying her previous order than correcting her error,
quoted out of context the provisions of the Katarungang Pambarangay
Rules implementing the Katarungang Pambarangay provisions of R.A. No.
7160. She thus violated Canon 3 of the Code of Judicial Conduct which
provides that "In every case, a judge shall endeavor diligently to ascertain
the facts and the applicable law unswayed by partisan interest, public
opinion or fear of criticism."
Contrary to respondents interpretation, it is clear even from the
Katarungang Pambarangay Rules that recourse to barangay conciliation
proceedings is not necessary where the parties do not reside in the same
municipality or city or in adjoining barangays. Rule VI of the same states in
pertinent part:
SECTION 2. Subject matters for settlement. - All disputes may
be the subject of proceedings for amicable settlement under
these rules except the following enumerated cases:
(a) Where one party is the government, or any subdivision or
instrumentality thereof; alonzo
(b) Where one party is a public officer or employee, and the
dispute relates to the performance of his official functions;
(c) Offenses for which the law prescribes a maximum penalty
of imprisonment exceeding one (1) year or a fine exceeding
Five Thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in
different cities or municipalities unless the parties thereto
agree to submit their differences to amicable settlement by
an appropriate lupon;
(f) Disputes involving parties who actually reside in
barangays of different cities or municipalities, except where
such barangay units adjoin each other and the parties
thereto to agree to submit their differences to amicable
settlement by an appropriate lupon;
(g) Such other classes of disputes which the President may
determine in the interest of justice or upon the
recommendation of the Secretary of Justice.
The foregoing exceptions notwithstanding, the court in
which non-criminal cases not falling within the authority of
the lupon under these Katarungang Pambarangay Law and
Rules are filed may, at any time before trial, motu proprio
refer the case to the lupon concerned for amicable
settlement.
SECTION 3. Venue. The place of settlement shall be subject
to the following rules:
(a) Where the parties reside in the same barangay, the
dispute shall be brought for settlement in said barangay;
(b) Where the parties reside in different barangays in the
same city or municipality, the dispute shall be settled in the
barangay where the respondent or any one of the
respondents actually resides, at the choice of the
complainant;
(c) Dispute involving real property shall be brought for
settlement in the barangay where the real property or larger
portion thereof is situated;
(d) Disputes arising at the workplace where the contending
parties are employed or at the institution where such parties
are enrolled for study, shall be brought in the barangay
where such workplace or institution is located;
(e) Any objection relating to venue shall be raised before the
Punong Barangay during the mediation proceedings before
him. Failure to do so shall be deemed a waiver of such
objection;
(f) Any legal question which may confront the
Punong Barangay in resolving objections to venue
herein referred to may be submitted to the
Secretary of Justice, or his duly designated
representative, whose ruling thereon shall be
binding. brando
(Emphasis added)
Indeed, these provisions, which are also found in P.D. No. 1508, have
already been authoritatively interpreted by this Court, and the duty of
respondent judge was to follow the rulings of this Court. Her insistence on
her own interpretation of the law can only be due either to an ignorance
of this Courts ruling or to an utter disregard thereof. We choose to believe
that her failure to apply our rulings to the case before her was simply due
to gross ignorance which, nevertheless, is inexcusable. In accordance with
the ruling in Ting v. Atal,
[7]
in which a judge who was similarly found guilty
of gross ignorance of the law was fined P2,000.00, respondent judge
should likewise be fined the same amount.
WHEREFORE, respondent is hereby found guilty of gross ignorance of the
law and is hereby ordered to pay a FINE of TWO THOUSAND (P2,000.00)
PESOS with a WARNING that repetition of the same or similar acts will be
dealt with more severely.
SO ORDERED.



FACTS:

Petitioner Uy subleased from respondent Susanna Ataydethe other half of
the second floor of a building Makati. The sublease contract expired on 15
April 1993. However, Uy was not able to remove all her
movable properties.

On 17 April 1993, an argument arose between Uy and Atayde when the
former sought to withdraw from the subleased premises her remaining
movable properties. The argument degenerated into a scuffle between Uy,
on the one hand, and Atayde and several of Atayde's employees, including
private respondent Winnie Javier, on the other.

The private respondents then filed a complaint with the barangay captain
of Valenzuela, Makati, however, during their scheduled confrontation
before the barangay captain, only the petitioner appeared.
The prosecutor then filed two informations for slight
physical injuries against the petitioner with the MTC of Makati.

Petitioner filed a motion to dismiss alleging the prematurity of the filing of
thecriminal cases for failure to undergo conciliation proceedings.

On the other hand, private respondents contend that prior referral of the
dispute to the lupon is not applicable since she and petitioner are not
residents of barangays in the same city or municipality or of adjoining
barangays in different cities or municipalities and that referral to the lupon
is not likewise required if the case may otherwise be barred by the statute
of limitations. Moreover, even assuming arguendo that prior referral to
the lupon applies to the case of private respondent, the latter had,
nevertheless, substantially complied with the requirement with the
subsequent certification of the barangay to file the action.

Judge Contreras denied the motion to dismiss. The MR was likewise
denied. Hence, Uy filed a petition for certiorari.


ISSUE:

Whether or not the case should be dismissed


HELD:

While P.D. No. 1508 has been repealed by the L GC of 1991, the
jurisprudence built thereon regarding prior referral to the lupon as a pre-
condition to the filing of an action in court remains applicable because its
provisions on prior referral were substantially reproduced in the Code.

In view of the respondents' failure to appear at the scheduled mediation,
nocomplaint for slight physical injuries could be validly filed with the MTC
of Makati at any time before such date. The filing then of criminal
cases was premature andrespondent Judge Contreras should have granted
the motion to dismiss thecriminal cases. He cannot justify its denial by
taking refuge under Section 6 of P.D. No. 1508 (more properly, Section
412(b)(4) of the Local Government Code of 1991) which states that the
parties may go directly to court where the action isabout to prescribe. This
is because pursuant to paragraph (c), Section 410 of the Code, the
prescriptive period was automatically suspended for a maximum period of
sixty days from 23 April 1993 when the private respondents filed their
complaints with the lupon of Valenzuela Makati.

Accordingly, since the slight physical injuries charged in Criminal
Cases were allegedly inflicted on 17 April 1993, the prescriptive period
therefor would have expired two months thereafter. Nevertheless, its
running was tolled by the filingof the private respondents' complaints with
the lupon of Valenzuela, Makati, on 23 April 1993 and automatically
suspended for a period of sixty days, or until 22 June 1993. If no mediation
or conciliation could be reached within the said period of suspension and,
accordingly, a certification to file action is issued, the private respondents
would still have fifty-six days within which to file their
separatecriminal complaints for such offense. Evidently, there was no
basis for the invocation by the respondent judge of the exception provided
for in paragraph (b), Section 412 of the Local Government Code.

Moreover, having brought the dispute before the lupon of barangay
Valenzuela, Makati, the private respondents are estopped from
disavowing the authority of the body which they themselves had sought.
Their act of trifling with the authority of the lupon by unjustifiably failing
to attend the scheduled mediation hearings and instead filing
the complaint right away with the trial court cannot be countenanced for
to do so would wreak havoc on the barangay conciliation system.

Neither is the argument that petitioner "had already waived the right to a
reconciliation proceedings before the barangay, persuasive. The petitioner
did not waive the reconciliation proceedings before the lupon of
Valenzuela, Makati; she submitted to it and attended the scheduled
conciliation and invoked the pre-condition of referral to the lupon in her
counter-affidavit.

Lastly, nor could the Court accept the contention of the respondent that
the parties could not agree on a compromise and that they had to request
the barangay captain to issue a certification to file action. The request was
nearly one and a half months after criminal cases were filed with the court
a quo. Evidently, this was done to support their contention that, in any
event, there was substantial compliance with the requirement of referral
to the lupon. It must be stressed that the private respondents, after failing
to appear at the initial confrontation and long after the criminal
cases were filed, had no right to demand the issuance of a certification to
file action.

Petition granted. Respondent judge was ordered to dismiss the case.


THIRD DIVISION
Santos vs SAntos

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N


CHICO-NAZARIO, J.:


Before this Court is a Petition for Review on Certiorari under Rule 45
of the 1997 Revised Rules of Civil Procedure seeking to annul and set aside
the Decision
[1]
and Resolution
[2]
of the Court of Appeals in CA-G.R. CV No.
60450 entitled, Spouses Jose Lumbao and Proserfina Lumbao v.
Spouses Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos
and Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos, dated 8
June 2005 and 29 July 2005, respectively, which granted the appeal filed
by herein respondents Spouses Jose Lumbao and Proserfina Lumbao
(Spouses Lumbao) and ordered herein petitioners Spouses Virgilio F.
Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F.
Santos, Ernesto F. Santos and Tadeo F. Santos to reconvey to respondents
Spouses Lumbao the subject property and to pay the latter attorneys fees
and litigation expenses, thus, reversing the Decision
[3]
of the Regional Trial
Court (RTC) of Pasig City, dated 17 June 1998 which dismissed the
Complaint for Reconveyance with Damages filed by respondents Spouses
Lumbao for lack of merit.

Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all
surnamed Santos, are the legitimate and surviving heirs of the late Rita
Catoc Santos (Rita), who died on 20 October 1985. The other petitioners
Esperanza Lati and Lagrimas Santos are the daughters-in-law of Rita.

Herein respondents Spouses Jose Lumbao and Proserfina Lumbao
are the alleged owners of the 107-square meter lot (subject property),
which they purportedly bought from Rita during her lifetime.

The facts of the present case are as follows:

On two separate occasions during her lifetime, Rita sold to
respondents Spouses Lumbao the subject property which is a part of her
share in the estate of her deceased mother, Maria Catoc (Maria), who died
intestate on 19 September 1978. On the first occasion, Rita sold 100
square meters of her inchoate share in her mothers estate through a
document denominated as Bilihan ng Lupa, dated 17 August
1979.
[4]
Respondents Spouses Lumbao claimed the execution of the
aforesaid document was witnessed by petitioners Virgilio and Tadeo, as
shown by their signatures affixed therein. On the second occasion, an
additional seven square meters was added to the land as evidenced by a
document also denominated as Bilihan ng Lupa, dated 9 January 1981.
[5]


After acquiring the subject property, respondents Spouses Lumbao
took actual possession thereof and erected thereon a house which they
have been occupying as exclusive owners up to the present. As the
exclusive owners of the subject property, respondents Spouses Lumbao
made several verbal demands upon Rita, during her lifetime, and
thereafter upon herein petitioners, for them to execute the necessary
documents to effect the issuance of a separate title in favor of
respondents Spouses Lumbao insofar as the subject property is
concerned. Respondents Spouses Lumbao alleged that prior to her death,
Rita informed respondent Proserfina Lumbao she could not deliver the
title to the subject property because the entire property inherited by her
and her co-heirs from Maria had not yet been partitioned.

On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting
fraudulently and in conspiracy with one another, executed a Deed of
Extrajudicial Settlement,
[6]
adjudicating and partitioning among themselves
and the other heirs, the estate left by Maria, which included the subject
property already sold to respondents Spouses Lumbao and now covered
by TCT No. 81729
[7]
of the Registry of Deeds of Pasig City.

On 15 June 1992, respondents Spouses Lumbao, through
counsel, sent a formal demand letter
[8]
to petitioners but despite receipt of
such demand letter, petitioners still failed and refused to reconvey the
subject property to the respondents Spouses Lumbao. Consequently, the
latter filed a Complaint for Reconveyance with Damages
[9]
before the RTC
of Pasig City.

Petitioners filed their Answer denying the allegations that the
subject property had been sold to the respondents Spouses Lumbao. They
likewise denied that the Deed of Extrajudicial Settlement had been
fraudulently executed because the same was duly published as required
by law. On the contrary, they prayed for the dismissal of the Complaint for
lack of cause of action because respondents Spouses Lumbao failed to
comply with the Revised Katarungang Pambarangay Law under Republic
Act No. 7160, otherwise known as the Local Government Code of 1991,
which repealed Presidential Decree No. 1508
[10]
requiring first resort to
barangay conciliation.

Respondents Spouses Lumbao, with leave of court, amended
their Complaint because they discovered that on 16 February 1990,
without their knowledge, petitioners executed a Deed of Real Estate
Mortgage in favor of Julieta S. Esplana for the sum of P30,000.00. The said
Deed of Real Estate Mortgage was annotated at the back of TCT No. PT-
81729 on 26 April 1991. Also, in answer to the allegation of the
petitioners that they failed to comply with the mandate of the Revised
Katarungang Pambarangay Law, respondents Spouses Lumbao said that
the Complaint was filed directly in court in order that prescription or the
Statute of Limitations may not set in.

During the trial, respondents Spouses Lumbao presented
Proserfina Lumbao and Carolina Morales as their witnesses, while the
petitioners presented only the testimony of petitioner Virgilio.

The trial court rendered a Decision on 17 June 1998, the
dispositive portion of which reads as follows:

Premises considered, the instant
complaint is hereby denied for lack of merit.

Considering that [petitioners] have
incurred expenses in order to protect their interest,
[respondents spouses Lumbao] are hereby directed
to pay [petitioners], to wit: 1) the amount
of P30,000.00 as attorneys fees and litigation
expenses, and 2) costs of the suit.
[11]



Aggrieved, respondents Spouses Lumbao appealed to the Court of
Appeals. On 8 June 2005, the appellate court rendered a Decision, thus:

WHEREFORE, premises considered, the
present appeal is hereby GRANTED. The appealed
Decision dated June 17, 1998 of the Regional Trial
Court of Pasig City, Branch 69 in Civil Case No. 62175
is hereby REVERSED and SET ASIDE. A new
judgment is hereby entered ordering [petitioners] to
reconvey 107 square meters of the subject
[property] covered by TCT No. PT-81729 of the
Registry of Deeds of Pasig City, Metro Manila, and to
pay to [respondents spouses Lumbao] the sum
of P30,000.00 for attorneys fees and litigation
expenses.

No pronouncement as to costs.
[12]



Dissatisfied, petitioners filed a Motion for Reconsideration of
the aforesaid Decision but it was denied in the Resolution of the appellate
court dated 29 July 2005 for lack of merit.

Hence, this Petition.

The grounds relied upon by the petitioners are the following:

I. THE APPELLATE COURT COMMITTED
A REVERSIBLE ERROR IN REVERSING THE
DECISION OF THE TRIAL COURT, THEREBY
CREATING A VARIANCE ON THE FINDINGS
OF FACTS OF TWO COURTS.

II. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN ORDERING THE
PETITIONERS TO RECONVEY THE SUBJECT
[PROPERTY] TO THE RESPONDENTS
[SPOUSES LUMBAO] AND IN NOT RULING
THAT THEY ARE GUILTY OF LACHES,
HENCE THEY CANNOT RECOVER
THE LOT ALLEGEDLY SOLD TO THEM.

III. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING
HEREIN PETITIONER[S] TO BE IN GOOD
FAITH IN EXECUTING THE DEED OF
EXTRAJUDICIAL SETTLEMENT DATED *2
MAY 1986].

IV. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING
THAT PETITIONERS ARE NOT LEGALLY
BOUND TO COMPLY WITH THE
SUPPOSED BILIHAN NG LUPA DATED [17
AUGUST 1979] AND [9 JANUARY 1981]
THAT WERE SUPPOSEDLY EXECUTED BY
THE LATE RITA CATOC.

V. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING
THAT RESPONDENTS [SPOUSES
LUMBAOS+ ACTION FOR RECONVEYANCE
WITH DAMAGES CANNOT BE SUPPORTED
WITH AN UNENFORCEABLE DOCUMENTS,
SUCH AS THE BILIHAN NG LUPA DATED
[17 AUGUST 1979] AND [9 JANUARY
1981].

VI. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING
THAT RESPONDENTS [SPOUSES
LUMBAOS+ COMPLAINT FOR
RECONVEYANCE IS DISMISSABLE (SIC)
FOR NON COMPLIANCE OF THE
MANDATE OF [P.D. NO.] 1508, AS
AMENDED BY Republic Act No. 7160.

VII. THE APPELLATE COURT COMMITTED A
REVERSIBLE ERROR IN NOT FINDING
THAT RESPONDENTS [SPOUSES LUMBAO]
SHOULD BE HELD LIABLE FOR
PETITIONERS CLAIM FOR DAMAGES AND
ATTORNEY*+S FEES.


Petitioners ask this Court to scrutinize the evidence presented
in this case, because they claim that the factual findings of the trial court
and the appellate court are conflicting. They allege that the findings of fact
by the trial court revealed that petitioners Virgilio and Tadeo did not
witness the execution of the documents known as Bilihan ng Lupa;
hence, this finding runs counter to the conclusion made by the appellate
court. And even assuming that they were witnesses to the aforesaid
documents, still, respondents Spouses Lumbao were not entitled to the
reconveyance of the subject property because they were guilty of laches
for their failure to assert their rights for an unreasonable length of
time. Since respondents Spouses Lumbao had slept on their rights for a
period of more than 12 years reckoned from the date of execution of the
second Bilihan ng Lupa, it would be unjust and unfair to the petitioners if
the respondents will be allowed to recover the subject property.

Petitioners allege they are in good faith in executing the Deed
of Extrajudicial Settlement because even respondents Spouses Lumbaos
witness, Carolina Morales, testified that neither petitioner Virgilio nor
petitioner Tadeo was present during the execution of the Bilihan ng
Lupa, dated 17 August 1979 and 9 January 1981. Petitioners affirm that
the Deed of Extrajudicial Settlement was published in a newspaper of
general circulation to give notice to all creditors of the estate subject of
partition to contest the same within the period prescribed by law. Since
no claimant appeared to interpose a claim within the period allowed by
law, a title to the subject property was then issued in favor of the
petitioners; hence, they are considered as holders in good faith and
therefore cannot be barred from entering into any subsequent
transactions involving the subject property.

Petitioners also contend that they are not bound by the
documents denominated as Bilihan ng Lupa because the same were null
and void for the following reasons: 1) for being falsified documents
because one of those documents made it appear that petitioners Virgilio
and Tadeo were witnesses to its execution and that they appeared
personally before the notary public, when in truth and in fact they did not;
2) the identities of the properties in the Bilihan ng Lupa, dated 17 August
1979 and 9 January 1981 in relation to the subject property in litigation
were not established by the evidence presented by the respondents
Spouses Lumbao; 3) the right of the respondents Spouses Lumbao to lay
their claim over the subject property had already been barred through
estoppel by laches; and 4) the respondents Spouses Lumbaos claim over
the subject property had already prescribed.

Finally, petitioners claim that the Complaint for Reconveyance
with Damages filed by respondents Spouses Lumbao was dismissible
because they failed to comply with the mandate of Presidential Decree
No. 1508, as amended by Republic Act No. 7160, particularly Section 412
of Republic Act No. 7160.

Given the foregoing, the issues presented by the petitioners
may be restated as follows:

I. Whether or not the Complaint for
Reconveyance with Damages filed by
respondents spouses Lumbao is
dismissible for their failure to comply
with the mandate of the Revised
Katarungang Pambarangay Law under
R.A. No. 7160.

II. Whether or not the documents known
as Bilihan ng Lupa are valid and
enforceable, thus, they can be the bases
of the respondents spouses Lumbaos
action for reconveyance with damages.

III. Whether or not herein petitioners are
legally bound to comply with the Bilihan
ng Lupa dated 17 August 1979 and 9
January 1981 and consequently,
reconvey the subject property to herein
respondents spouses Lumbao.


It is well-settled that in the exercise of the Supreme Courts
power of review, the court is not a trier of facts and does not normally
undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings
of fact of the Court of Appeals are conclusive and binding on the
Court.
[13]
But, the rule is not without exceptions. There are several
recognized exceptions
[14]
in which factual issues may be resolved by this
Court. One of these exceptions is when the findings of the appellate court
are contrary to those of the trial court. This exception is present in the
case at bar.

Going to the first issue presented in this case, it is the argument of
the petitioners that the Complaint for Reconveyance with Damages filed
by respondents Spouses Lumbao should be dismissed for failure to comply
with the barangay conciliation proceedings as mandated by the Revised
Katarungang Pambarangay Law under Republic Act No. 7160. This
argument cannot be sustained.

Section 408 of the aforesaid law and Administrative Circular No. 14-
93
[15]
provide that all disputes between parties actually residing in the
same city or municipality are subject to barangay conciliation. A prior
recourse thereto is a pre-condition before filing a complaint in court or any
government offices. Non-compliance with the said condition precedent
could affect the sufficiency of the plaintiffs cause of action and make his
complaint vulnerable to dismissal on ground of lack of cause of action or
prematurity; but the same would not prevent a court of competent
jurisdiction from exercising its power of adjudication over the case before
it, where the defendants failed to object to such exercise of jurisdiction.
[16]


While it is true that the present case should first be referred to the
Barangay Lupon for conciliation because the parties involved herein
actually reside in the same city (Pasig City) and the dispute between them
involves a real property, hence, the said dispute should have been brought
in the city in which the real property, subject matter of the controversy, is
located, which happens to be the same city where the contending parties
reside. In the event that respondents Spouses Lumbao failed to comply
with the said condition precedent, their Complaint for Reconveyance with
Damages can be dismissed. In this case, however, respondents Spouses
Lumbaos non-compliance with the aforesaid condition precedent cannot
be considered fatal. Although petitioners alleged in their answer that the
Complaint for Reconveyance with Damages filed by respondents spouses
Lumbao should be dismissed for their failure to comply with the condition
precedent, which in effect, made the complaint prematurely instituted
and the trial court acquired no jurisdiction to hear the case, yet, they did
not file a Motion to Dismiss the said complaint.

Emphasis must be given to the fact that the petitioners could
have prevented the trial court from exercising jurisdiction over the case
had they filed a Motion to Dismiss. However, instead of doing so, they
invoked the very same jurisdiction by filing an answer seeking an
affirmative relief from it. Worse, petitioners actively participated in the
trial of the case by presenting their own witness and by cross-examining
the witnesses presented by the respondents Spouses Lumbao. It is
elementary that the active participation of a party in a case pending
against him before a court is tantamount to recognition of that courts
jurisdiction and a willingness to abide by the resolution of the case which
will bar said party from later on impugning the courts jurisdiction.
[17]
It is
also well-settled that the non-referral of a case for barangay conciliation
when so required under the law is not jurisdictional in nature and may
therefore be deemed waived if not raised seasonably in a motion to
dismiss.
[18]
Hence, herein petitioners can no longer raise the defense of
non-compliance with the barangay conciliation proceedings to seek the
dismissal of the complaint filed by the respondents Spouses Lumbao,
because they already waived the said defense when they failed to file a
Motion to Dismiss.

As regards the second issue, petitioners maintain that the
Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981 are null and
void for being falsified documents as it is made to appear that petitioners
Virgilio and Tadeo were present in the execution of the said documents
and that the identities of the properties in those documents in relation to
the subject property has not been established by the evidence of the
respondents Spouses Lumbao. Petitioners also claim that the
enforceability of those documents is barred by prescription of action and
laches.

It is the petitioners incessant barking that the Bilihan ng Lupa
documents dated 17 August 1979 and 9 January 1981 were falsified
because it was made to appear that petitioners Virgilio and Tadeo were
present in the executions thereof, and their allegation that even
respondents Spouses Lumbaos witness Carolina Morales proved that said
petitioners were not present during the execution of the aforementioned
documents. This is specious.

Upon examination of the aforesaid documents, this Court finds
that in the Bilihan ng Lupa, dated 17 August 1979, the signatures of
petitioners Virgilio and Tadeo appeared thereon. Moreover, in
petitioners Answer and Amended Answer to the Complaint for
Reconveyance with Damages, both petitioners Virgilio and Tadeo made
anadmission that indeed they acted as witnesses in the execution of the
Bilihan ng Lupa, dated 17 August 1979.
[19]
However, in order to avoid
their obligations in the said Bilihan ng Lupa, petitioner Virgilio, in his
cross-examination, denied having knowledge of the sale transaction and
claimed that he could not remember the same as well as his appearance
before the notary public due to the length of time that had
passed. Noticeably, petitioner Virgilio did not categorically deny having
signed the Bilihan ng Lupa, dated17 August 1979 and in support thereof,
his testimony in the cross-examination propounded by the counsel of the
respondents Spouses Lumbao is quoted hereunder:

ATTY. CHIU:

Q. Now, you said, Mr. WitnessVirgilio Santos,
that you dont know about this document
which was marked as Exhibit A for the
[respondents spouses Lumbao]?

ATTY. BUGARING:

The question is misleading, your
Honor. Counsel premised the question
that he does not have any knowledge but
not that he does not know.

ATTY. CHIU:
Q. Being you are one of the witnesses of this
document? [I]s it not?

WITNESS:

A. No, sir.
Q. I am showing to you this document, there is a
signature at the left hand margin of this
document Virgilio Santos, will you please
go over the same and tell the court
whose signature is this?

A. I dont remember, sir, because of the length
of time that had passed.

Q. But that is your signature?

A. I dont have eyeglasses My signature is
different.

Q. You never appeared before this notary public
Apolinario Mangahas?

A. I dont remember.
[20]



As a general rule, facts alleged in a partys pleading are deemed
admissions of that party and are binding upon him, but this is not an
absolute and inflexible rule. An answer is a mere statement of fact which
the party filing it expects to prove, but it is not evidence.
[21]
And in spite of
the presence of judicial admissions in a partys pleading, the trial court is
still given leeway to consider other evidence presented.
[22]
However, in
the case at bar, as the Court of Appeals mentioned in its Decision, *herein
petitioners] had not adduced any other evidence to override the
admission made in their [A]nswer that [petitioners Virgilio and Tadeo]
actually signed the [Bilihan ng Lupa dated 17 August 1979] except that
they were just misled as to the purpose of the document, x x
x.
[23]
Virgilios answers were unsure and quibbled. Hence, the general
rule that the admissions made by a party in a pleading are binding and
conclusive upon him applies in this case.

On the testimony of respondents Spouses Lumbaos witness
Carolina Morales, this Court adopts the findings made by the appellate
court. Thus -
[T]he trial court gave singular focus on her reply to a
question during cross-examination if the [petitioners
Virgilio and Tadeo] were not with her and the
vendor [Rita] during the transaction. It must be
pointed out that earlier in the direct examination of
said witness, she confirmed that [respondents
spouses Lumbao] actually bought the lot from [Rita]
(nagkabilihan). Said witness positively identified
and confirmed the two (2) documents evidencing
the sale in favor of [respondents spouse
Lumbao]. Thus, her subsequent statement that the
[petitioners Virgilio and Tadeo] were not with them
during the transaction does not automatically imply
that [petitioners Virgilio and Tadeo] did not at any
time sign as witnesses as to the deed of sale
attesting to their mothers voluntary act of selling a
portion of her share in her deceased mothers
property. The rule is that testimony of a witness
must be considered and calibrated in its entirety and
not by truncated portions thereof or isolated
passages therein.
[24]



Furthermore, both Bilihan ng Lupa documents dated 17
August 1979 and 9 January 1981 were duly notarized before a notary
public. It is well-settled that a document acknowledged before a notary
public is a public document
[25]
that enjoys the presumption of regularity. It
is a prima facie evidence of the truth of the facts stated therein and a
conclusive presumption of its existence and due execution.
[26]
To
overcome this presumption, there must be presented evidence that is
clear and convincing. Absent such evidence, the presumption must be
upheld.
[27]
In addition, one who denies the due execution of a deed where
ones signature appears has the burden of proving that contrary to the
recital in the jurat, one never appeared before the notary public and
acknowledged the deed to be a voluntary act. Nonetheless, in the present
case petitioners denials without clear and convincing evidence to support
their claim of fraud and falsity were not sufficient to overthrow the above-
mentioned presumption; hence, the authenticity, due execution and the
truth of the facts stated in the aforesaid Bilihan ng Lupa are upheld.

The defense of petitioners that the identities of the properties
described in the Bilihan ng Lupa, dated 17 August 1979 and 9 January
1981 in relation to the subject property were not established by
respondents Spouses Lumbaos evidence is likewise not acceptable.

It is noteworthy that at the time of the execution of the
documents denominated as Bilihan ng Lupa, the entire property owned
by Maria, the mother of Rita, was not yet divided among her and her co-
heirs and so the description of the entire estate is the only description that
can be placed in the Bilihan ng Lupa, dated 17 August 1979 and 9 January
1981 because the exact metes and bounds of the subject property sold to
respondents Spouses Lumbao could not be possibly determined at that
time. Nevertheless, that does not make the contract of sale between Rita
and respondents Spouses Lumbao invalid because both the law and
jurisprudence have categorically held that even while an estate remains
undivided, co-owners have each full ownership of their respective aliquots
or undivided shares and may therefore alienate, assign or mortgage
them.
[28]
The co-owner, however, has no right to sell or alienate a specific
or determinate part of the thing owned in common, because such right
over the thing is represented by an aliquot or ideal portion without any
physical division. In any case, the mere fact that the deed purports to
transfer a concrete portion does not per se render the sale void. The sale
is valid, but only with respect to the aliquot share of the selling co-
owner. Furthermore, the sale is subject to the results of the partition
upon the termination of the co-ownership.
[29]


In the case at bar, when the estate left by Maria had been
partitioned on 2 May 1986 by virtue of a Deed of Extrajudicial Settlement,
the 107- square meter lot sold by the mother of the petitioners to
respondents Spouses Lumbao should be deducted from the total lot,
inherited by them in representation of their deceased mother, which in
this case measures 467 square meters. The 107-square meter lot already
sold to respondents Spouses Lumbao can no longer be inherited by the
petitioners because the same was no longer part of their inheritance as it
was already sold during the lifetime of their mother.

Likewise, the fact that the property mentioned in the two
Bilihan ng Lupa documents was described as a portion of a parcel of
land covered in Tax Declarations No. A-018-01674, while the subject
matter of the Deed of Extrajudicial Settlement was the property described
in Transfer Certificate of Title (TCT) No. 3216 of the Registry of Deeds of
the Province of Rizal in the name of Maria is of no moment because in the
Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981, it is clear
that there was only one estate left by Maria upon her death. And this fact
was not refuted by the petitioners. Besides, the property described in Tax
Declaration No. A-018-01674 and the property mentioned in TCT No. 3216
are both located in Barrio Rosario, Municipality of Pasig, Province of Rizal,
and almost have the same boundaries. It is, thus, safe to state that the
property mentioned in Tax Declaration No. A-018-01674 and in TCT No.
3216 are one and the same.

The defense of prescription of action and laches is likewise
unjustifiable. In an action for reconveyance, the decree of registration is
respected as incontrovertible. What is sought instead is the transfer of the
property or its title which has been wrongfully or erroneously registered in
another persons name to its rightful or legal owner, or to the one with a
better right. It is, indeed, true that the right to seek reconveyance of
registered property is not absolute because it is subject to extinctive
prescription. However, when the plaintiff is in possession of the land to
be reconveyed, prescription cannot set in. Such an exception is based on
the theory that registration proceedings could not be used as a shield for
fraud or for enriching a person at the expense of another.
[30]


In the case at bar, the right of the respondents Spouses
Lumbao to seek reconveyance does not prescribe because the latter have
been and are still in actual possession and occupation as owners of the
property sought to be reconveyed, which fact has not been refuted nor
denied by the petitioners. Furthermore, respondents Spouses Lumbao
cannot be held guilty of laches because from the very start that they
bought the 107-square meter lot from the mother of the petitioners, they
have constantly asked for the transfer of the certificate of title into their
names but Rita, during her lifetime, and the petitioners, after the death of
Rita, failed to do so on the flimsy excuse that the lot had not been
partitioned yet. Inexplicably, after the partition of the entire estate of
Maria, petitioners still included the 107-square meter lot in their
inheritance which they divided among themselves despite their knowledge
of the contracts of sale between their mother and the respondents
Spouses Lumbao.

Under the above premises, this Court holds that the Bilihan
ng Lupa documents dated 17 August 1979 and 9 January 1981 are valid
and enforceable and can be made the basis of the respondents
Spouses Lumbaos action for reconveyance. The failure of respondents
Spouses Lumbao to have the said documents registered does not affect its
validity and enforceability. It must be remembered that registration is not
a requirement for validity of the contract as between the parties, for the
effect of registration serves chiefly to bind third persons. The principal
purpose of registration is merely to notify other persons not parties to a
contract that a transaction involving the property had been entered
into. Where the party has knowledge of a prior existing interest which is
unregistered at the time he acquired a right to the same land, his
knowledge of that prior unregistered interest has the effect of registration
as to him.
[31]
Hence, the Bilihan ng Lupa documents dated 17 August
1979 and 9 January 1981, being valid and enforceable, herein petitioners
are bound to comply with their provisions. In short, such documents are
absolutely valid between and among the parties thereto.

Finally, the general rule that heirs are bound by contracts
entered into by their predecessors-in-interest applies in the present
case. Article 1311
[32]
of the NCC is the basis of this rule. It is clear from the
said provision that whatever rights and obligations the decedent have over
the property were transmitted to the heirs by way of succession, a mode
of acquiring the property, rights and obligations of the decedent to the
extent of the value of the inheritance of the heirs.
[33]
Thus, the heirs
cannot escape the legal consequence of a transaction entered into by their
predecessor-in-interest because they have inherited the property subject
to the liability affecting their common ancestor. Being heirs, there is privity
of interest between them and their deceased mother. They only succeed
to what rights their mother had and what is valid and binding against her
is also valid and binding as against them. The death of a party does not
excuse nonperformance of a contract which involves a property right and
the rights and obligations thereunder pass to the personal representatives
of the deceased. Similarly, nonperformance is not excused by the death of
the party when the other party has a property interest in the subject
matter of the contract.
[34]


In the end, despite the death of the petitioners mother, they
are still bound to comply with the provisions of the Bilihan ng Lupa,
dated 17 August 1979 and 9 January 1981. Consequently, they must
reconvey to herein respondents Spouses Lumbao the 107-square meter lot
which they bought from Rita, petitioners mother. And as correctly ruled
by the appellate court, petitioners must pay respondents Spouses Lumbao
attorneys fees and litigation expenses for having been compelled to
litigate and incur expenses to protect their interest.
[35]
On this matter, we
do not find reasons to reverse the said findings.

WHEREFORE, premises considered, the instant Petition is
hereby DENIED. The Decision and Resolution of the Court of Appeals
dated 8 June 2005 and 29 July 2005, respectively, are
hereby AFFIRMED. Herein petitioners are ordered to reconvey to
respondents Spouses Lumbao the subject property and to pay the latter
attorneys fees and litigation expenses. Costs against petitioners.

SO ORDERED.

EN BANC
[G.R. No. 156228. December 10, 2003]
MA. TERESA VIDAL, LULU MARQUEZ, and CARLOS SOBREMONTE,
petitioners, vs. MA. TERESA O. ESCUETA, represented by
HERMAN O. ESCUETA, respondent.
D E C I S I O N
CALLEJO, SR., J.:
This is a petition for review of the Decision
[1]
dated July 23, 2002 of
the Court of Appeals in CA-G.R. SP NO. 68895 which affirmed the
decision
[2]
of the Regional Trial Court (RTC) ofMandaluyong City, Branch
208, which reversed and set aside the decision
[3]
of the Metropolitan Trial
Court of Mandaluyong City (MTC), Branch 60; and granted the motion for
execution filed by private respondent Ma. Teresa O. Escueta in Civil Case
No. 17520.
The petition at bar stemmed from the following antecedents:
When Abelardo Escueta died intestate on December 3, 1994, he
was survived by his widow Remedios Escueta and their six children,
including Ma. Teresa O. Escueta and her brother Herman O. Escueta. Part
of his estate was a parcel of land located at No. 14 Sierra Madre corner
Kanlaon Streets, Barangay Highway Hills, Mandaluyong City, covered by
Transfer Certificate of Title (TCT) No. (77083) - 27568, and the house
thereon. The property was leased to Rainier Llanera, who sublet the same
to 25 persons. The heirs executed an extra-judicial settlement of estate
over the property. They also executed a special power of attorney
authorizing Ma. Teresa Escueta to sell the said property.
[4]

Sometime in 1999, Ma. Teresa Escueta, as a co-owner of the
property, filed an ejectment case against Llanera and the sub-lessees
before the Lupon of Barangay Highway Hills, docketed as Barangay Case
No. 99-09.
[5]

In the meantime, on April 15, 1999, the heirs of Abelardo Escueta
executed a deed of conditional sale
[6]
over the property including the
house thereon, to Mary Liza Santos for P13,300,000.00 payable as follows:
Down payment ONE MILLION FIVE HUNDRED THOUSAND
(P1,500,000.00) which the HEIRS-SELLERS acknowledged receipt thereof
with complete and full satisfaction;
Second payment - TEN MILLION EIGHT HUNDRED THOUSAND
(P10,800,000.00) after publication of the Extra-Judicial Settlement of the
Estate of the late Abelardo Escueta and payment of the taxes with the
Bureau of Internal Revenue by the Attorney-in-Fact; and
The balance of ONE MILLION (P1,000,000.00) upon vacation of all the
occupants of the subject property within SIX (6) months from date
hereof.
[7]

The parties further agreed that:
Ms. Maria Teresa Escueta shall deliver unto the BUYER the Owners
Duplicate Copy of the title upon receipt of the down payment while the
original copies of the Special Power of Attorney shall be delivered upon
payment of the Second Payment stated above.
The ATTORNEY-IN-FACT-SELLER shall be responsible for the ejectment of
all the tenants in the said subject property.
The ATTORNEY-IN-FACT-SELLER shall pay the estate tax, capital gains tax
and documentary stamp tax including the telephone, water and Meralco
bills and the publication for the Extra-Judicial Settlement of the estate of
the late ABELARDO ESCUETA while the registration and transfer fees shall
be shouldered by the BUYER.
[8]

On May 5, 1999, Escueta and Llanera, and the sub-lessees, executed
an Amicable Settlement,
[9]
where they agreed that (a) the owners of the
property would no longer collect the rentals due from the respondents
therein (lessee and sub-lessees) starting May 1999, with the concomitant
obligation of the respondents to vacate the property on or before
December 1999; (b) time was the essence of the agreement, and that
consequently, if the lessee and sub-lessees fail or refuse to vacate the
property on or before December 1999, the barangay chairman was
authorized without any court order to cause the eviction and removal of
all the respondents on the property.
[10]
The amicable settlement was
attested by Pangkat Chairman Jose Acong. The parties did not repudiate
the amicable settlement within ten days from the execution thereof.
Neither did any of the parties file any petition to repudiate the settlement.
The vendees having paid the down payment and second installment
of the price of the property, the vendors caused the cancellation on
December 17, 1999, of TCT No. 27568 and the issuance of TCT No.
15324 to and under the names of the vendees Mary Liza Santos, Susana
Lim and Johnny Lim.
[11]
However, Escueta and the other vendors had yet to
receive the balance of the purchase price of P1,000,000.00 because the
respondents were still in the property.
Llanera vacated the leased premises. Later, twenty of the sub-
lessees also vacated the property. By January 2000, five sub-lessees,
namely, Ma. Teresa Vidal, Lulu Marquez, Marcelo Trinidad, Carlos
Sobremonte,
[12]
and Jingkee Ang remained in the property, and requested
Escueta for extensions to vacate the property. Escueta agreed, but despite
the lapse of the extensions granted them, the five sub-lessees refused to
vacate the property.
Escueta opted not to have the sub-lessees evicted through
the Punong Barangay as provided for in the amicable settlement. Neither
did she file a motion with the Punong Barangay for the enforcement of
the settlement. Instead, she filed on May 12, 2000, a verified Motion for
Execution against the recalcitrant sub-lessees with the MTC for the
enforcement of the amicable settlement and the issuance of a writ of
execution. The pleading was docketed as Civil Case No. 17520, with Teresa
Escueta as plaintiff, and the sub-lessees as defendants.
[13]

The defendants opposed the motion
[14]
alleging that they were
enveigled into executing the amicable settlement despite the fact that
they had not violated any of the terms and conditions of the verbal lease
of the property; they were coerced and forced to enter into such amicable
settlement as it was the only way of prolonging their stay in the leased
premises; and that they had been paying faithfully and religiously the
monthly rentals in advance.
They also contended that the plaintiff came to court with unclean
hands, as the property had been sold by the co-owners thereof on June 8,
1999, without notifying them. The real parties-in-interest as plaintiffs,
would be the new owners of the property, and not the Escuetas. The
defendants further asserted that the amicable settlement was not
elevated to or approved by the MTC as required by Section 419 of the
Local Government Code (LGC), nor approved by a competent court; hence,
there was no judgment to enforce by a new motion for a writ of execution.
As such, the plaintiffs motion was premature and procedurally improper.
The defendants asserted that the plaintiff must first secure a certification
to file action from the barangay and thereafter, file an action for
ejectment against them as required by Section 417 of the LGC. The
amicable settlement of the parties before the Lupon cannot be a
substitute for an action for ejectment. Finally, they averred that they had
been sub-lessees for more than ten years already; hence, had the right of
first refusal under Section 6 of the Urban Land Reform Law (P.D. No.
1517). For her part, the plaintiff asserted that there having been no
execution of the amicable settlement on or before November 6, 1999 by
the Lupon, the settlement may now be enforced by action in the proper
city or municipal court.
On February 22, 2001, the court issued an Order
[15]
denying the
Motion for Execution. The court held that the plaintiff was not the real
party-in-interest as the subject property had already been sold and titled
to Susana Lim, Johnny Lim and Mary Liza Santos. Only the vendees had the
right to demand the ejectment of the defendants from the said
property. The court further ruled that the defendants had the right of first
refusal to purchase the property under Presidential Decree No. 1517. The
MTC, however, did not rule on the issue of whether or not the plaintiffs
motion for execution was premature.
Aggrieved, the plaintiff, now the appellant, appealed the order to
the RTC where she contended that:
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN FINDING AND IN CONCLUDING THAT PLAINTIFF IS NO LONGER THE
REAL PARTY-IN-INTEREST.
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN FINDING AND IN CONCLUDING THAT DEFENDANTS CANNOT BE EJECTED
AND CAN EXERCISE THE RIGHT OF FIRST REFUSAL.
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN NOT FINDING AND IN NOT MAKING THE CONCLUSION THAT
DEFENDANTS HAVE VIOLATED THE FINAL AND EXECUTORY THE WRITTEN
AMICABLE SETTLEMENT BETWEEN PARTIES EXECUTED IN THEIR
BARANGAY CONFRONTATION.
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN NOT ORDERING THE EJECTMENT OF THE DEFENDANTS AND IN NOT
ORDERING SAID DEFENDANTS TO PAY THEIR ARREARAGES IN RENTAL
PAYMENTS FROM MAY 1999 UP TO THE DAY THEY ACTUALLY LEAVE THE
PREMISES AS WELL AS ATTORNEYS FEES AND DAMAGES.
[16]

On August 31, 2001, the RTC rendered a decision holding that the
plaintiff-appellant was still the owner of the property when the ejectment
case was filed in the office of the barangay captain, and, as such, was the
real party-in-interest as the plaintiff in the MTC. Moreover, under the
deed of conditional sale between her and the buyers, it was stipulated
therein that the purchase price ofP1,000,000.00 would be delivered to the
vendors only upon the vacation of all the occupants of the subject
property within six (6) months from date hereof. She was duty-bound to
cause the eviction of the defendant from the property; hence, the
appellant, as a co-owner, had a substantial interest in the property. The
MTC further held that the sale, having been executed while the appellants
complaint was pending with the Lupon, the action in the MTC may be
continued by the plaintiff-appellant.
As to the right of first refusal being asserted by the appellees, the
court ruled that there was no showing that the land leased had been
proclaimed to be within a specific Urban Land Reform Zone. In fact, the
Housing and Land Use Regulatory Board had certified that the subject
property was outside the area for priority development; thus, the
appellees may not claim that they had been deprived of their preemptive
right when no such right existed in the first place. The court did not rule
on the third and fourth issues on the ground that the said issues were
never raised by the parties. The decretal portion of the RTC decision reads
as follows:
PREMISES CONSIDERED, the appeal is GRANTED. The Order
dated February 2, 2001 issued by
the Metropolitan Trial Court of Mandaluyong City, Branch 60, in Civil Case
No. 17520 is hereby REVERSED and SET ASIDE, and a new one is entered
granting the Motion for Execution.
Let the Record of this case be remanded to the court a quo for proper
disposition.
SO ORDERED.
[17]

A petition for review under Rule 42 was filed with the Court of
Appeals by three of the appellees, now petitioners Ma. Teresa Vidal, Lulu
Marquez and Carlos Sobremonte. The court, however, dismissed the
petition on (1) procedural grounds, and (2) for lack of merit.
[18]

On procedural grounds, the CA ruled that the petitioners failed to
indicate the specific material dates, showing that their petition was filed
on time as required by the rules, and in declaring that they failed to justify
their failure to do so.
On the merits of the petition, the appellate court upheld the ruling
of the RTC. The decretal portion of the decision of the CA reads:
WHEREFORE, the instant petition is hereby DISMISSED. The assailed
Decision of the Regional Trial Court of Mandaluyong City, Branch 208,
rendered in Civil Case No. MC01-333-A, dated August 31, 2001 is hereby
AFFIRMED.
SO ORDERED.
[19]

In their petition at bar, the petitioners assert that the CA erred as
follows: (1) in not applying the rules of procedure liberally; (2) in declaring
that there was no need for the respondents to file an ejectment case for
the eviction of the petitioners; (3) that the real parties-in-interest as
plaintiffs in the MTC were the new owners of the property, Susana Lim,
Johnny Lim and Mary Liza Santos; (4) in not finding that the Amicable
Settlement was obtained through deceit and fraud; and (5) in ruling that
the petitioners had no right of first refusal in the purchase and sale of the
subject property under Presidential Decree No. 1517.
The petition is bereft of merit.
On the procedural issue, the CA dismissed the petition before it for the
petitioners failure to comply with Section 2, par. 1, Rule 42 of the 1997
Rules of Civil Procedure.
[20]
The CA ratiocinated that there was no
justification for a relaxation of the Rules, thus:
Petitioners cited decisions of the Supreme Court where a relaxation of
procedural rules was allowed. However, a reading of those cases shows
that they are not exactly similar with the present case. In the case of
Mactan Cebu International Airport Authority vs. Francisco Cuizon
Mangubat, the Supreme Court allowed the late payment of docket fee by
the Solicitor General on the ground that the 1997 Rules of Civil Procedure
regarding payment of docket fees was still new at that time. The same
cannot be said in the present case. The petition was filed on February 28,
2002, almost five years from the issuance of the 1997 Rules of Civil
Procedure. The circumstances of typhoon and holiday for failure to obtain
a certified true copy of the DOJs Decision, in the case of Hagonoy Market
Vendor Association vs. Municipality of Hagonoy, Bulacan, were present in
the instant petition. The case of Salazar vs. Court of Appeals is also not
similar with the present case.
[21]

The petitioners aver in this case that the failure of their counsel to
include the material dates in their petition with the CA was, as stated in
their Amended Manifestation, because the said counsel was suffering
from a slight heart attack. The Court finds the petitioners pretext flimsy. If
the petitioners counsel was able to prepare their petition despite her
condition, there was no valid reason why she failed to include the material
dates required under the Rules of Court. Besides, the petitioners stated in
their petition that they had appended a copy of their Amended
Manifestation, but failed to do so. If the rules were to be applied strictly,
the CA could not be faulted for dismissing the petition.
However, in order to promote their objective of securing a just,
speedy and inexpensive dispensation of every action and proceedings, the
Rules are to be liberally construed.
[22]
Rules of procedure are intended to
promote, not to defeat substantial justice and, therefore, should not be
applied in a very rigid and technical sense. This Court ruled in Buenaflor
vs. Court of Appeals, et al.
[23]
that appeal is an essential part of our judicial
system and trial courts and the Court of Appeals are advised to proceed
with caution so as not to deprive a party of the right to appeal and that
every party litigant should be afforded the amplest opportunity for the
proper and just disposition of his cause, free from the constraints of
technicalities. The Court has given due course to petitions where to do so
would serve the demands of substantial justice and in the exercise of its
equity jurisdiction.
[24]
In this case, the Court opts to apply the rules liberally
to enable it to delve into and resolve the cogent substantial issues posed
by the petitioners.
We agree with the contention of the petitioners that under Section
416 of the LGC, the amicable settlement executed by the parties before
the Lupon on the arbitration award has the force and effect of a final
judgment of a court upon the expiration of ten (10) days from the date
thereof, unless the settlement is repudiated within the period therefor,
where the consent is vitiated by force, violence or intimidation, or a
petition to nullify the award is filed before the proper city or municipal
court.
[25]
The repudiation of the settlement shall be sufficient basis for the
issuance of a certification to file a complaint.
[26]

We also agree that the Secretary of the Lupon is mandated to
transmit the settlement to the appropriate city or municipal court within
the time frame under Section 418 of the LGC and to furnish the parties
and the Lupon Chairman with copies thereof.
[27]
The amicable settlement
which is not repudiated within the period therefor may be enforced by
execution by the Lupon through the Punong Barangay within a time line of
six months, and if the settlement is not so enforced by the Lupon after the
lapse of the said period, it may be enforced only by an action in the proper
city or municipal court as provided for in Section 417 of the LGC of 1991,
as amended, which reads:
SEC. 417. Execution. The amicable settlement or arbitration award may
be enforced by execution by the Lupon within six (6) months from the date
of the settlement. After the lapse of such time, the settlement may be
enforced by action in the proper city or municipal court. (Underlining
supplied).
Section 417 of the Local Government Code provides a mechanism
for the enforcement of a settlement of the parties before
the Lupon. It provides for a two-tiered mode of enforcement of an
amicable settlement executed by the parties before the Lupon, namely, (a)
by execution of the Punong Barangay which is quasi-judicial and summary
in nature on mere motion of the party/parties entitled thereto;
[28]
and (b)
by an action in regular form, which remedy is judicial. Under the first
remedy, the proceedings are covered by the LGC and the Katarungang
Pambarangay Implementing Rules and Regulations. The Punong
Barangay is called upon during the hearing to determine solely the fact of
non-compliance of the terms of the settlement and to give the
defaulting party another chance at voluntarily complying with his
obligation under the settlement. Under the second remedy, the
proceedings are governed by the Rules of Court, as amended. The cause
of action is the amicable settlement itself, which, by operation of law, has
the force and effect of a final judgment.
Section 417 of the LGC grants a party a period of six months to
enforce the amicable settlement by the Lupon through the Punong
Barangay before such party may resort to filing an action with the MTC to
enforce the settlement. The raison d etre of the law is to afford the
parties during the six-month time line, a simple, speedy and less expensive
enforcement of their settlement before the Lupon.
The time line of six months is for the benefit not only of the
complainant, but also of the respondent. Going by the plain words of
Section 417 of the LGC, the time line of six months should be computed
from the date of settlement. However, if applied to a particular case
because of its peculiar circumstance, the computation of the time line
from the date of the settlement may be arbitrary and unjust and contrary
to the intent of the law. To illustrate: Under an amicable settlement
made by the parties before the Lupon dated January 15, 2003, the
respondents were obliged to vacate the subject property on or before
September 15, 2003. If the time line of six months under Section 417 were
to be strictly and literally followed, the complainant may enforce the
settlement through the Lupon only up to July 15, 2003. But under the
settlement, the respondent was not obliged to vacate the property on or
before July 15, 2003; hence, the settlement cannot as yet be
enforced. The settlement could be enforced only after September 15,
2003, when the respondent was obliged to vacate the property. By then,
the six months under Section 417 shall have already elapsed. The
complainant can no longer enforce the settlement through the Lupon, but
had to enforce the same through an action in the MTC, in derogation of
the objective of Section 417 of the LGC. The law should be construed and
applied in such a way as to reflect the will of the legislature and attain its
objective, and not to cause an injustice. As Justice Oliver Wendell Holmes
aptly said, courts are apt to err by sticking too closely to the words of the
law where these words support a policy that goes beyond them. The Court
should not defer to the latter that killeth but to the spirit that vivifieth.
[29]

In light of the foregoing considerations, the time line in Section 417
should be construed to mean that if the obligation in the settlement to
be enforced is due and demandable on the date of the settlement, the
six-month period should be counted from the date of the settlement;
otherwise, if the obligation to be enforced is due and demandable on a
date other than the date of the settlement, the six-month period should
be counted from the date the obligation becomes due and demandable.
Parenthetically, the Katarungang Pambarangay Implementing Rules
and Regulations, Rule VII, Section 2 provides:
SECTION 2. Modes of Execution. - The amicable settlement or arbitration
award may be enforced by execution by the Lupon within six [6] months
from date of the settlement or date of receipt of the award or from the
date the obligation stipulated in the settlement or adjudged in the
arbitration award becomes due and demandable. After the lapse of such
time, the settlement or award may be enforced by the appropriate local
trial court pursuant to the applicable provisions of the Rules of Court . An
amicable settlement reached in a case referred by the Court having
jurisdiction over the case to the Lupon shall be enforced by execution by
the said court. (Underlining supplied).
By express provision of Section 417 of the LGC, an action for the
enforcement of the settlement should be instituted in the proper
municipal or city court. This is regardless of the nature of the complaint
before the Lupon, and the relief prayed for therein. The venue for such
actions is governed by Rule 4, Section 1 of the 1997 Rules of Civil
Procedure, as amended. An action for the enforcement of a settlement is
not one of those covered by the Rules on Summary Procedure in civil
cases;
[30]
hence, the rules on regular procedure shall apply, as provided for
in Section 1, Rule 5 of the Rules of Civil Procedure, as amended.
[31]

As to the requisite legal fees for the filing of an action in the first
level court under Section 417 of the Local Government Code, indigents-
litigants (a) whose gross income and that of their immediate family do not
exceed ten thousand (P10,000.00) pesos a month if residing in Metro
Manila, and five thousand (P5,000.00) pesos a month if residing outside
Metro Manila, and (b) who do not own real property with an assessed
value of more than fifty thousand (P50,000.00) pesos shall be exempt from
the payment of legal fees. Section 18, Rule 141 of the Revised Rules of
Court, as amended by A.M. No. 00-2-01-SC, is hereby further amended
accordingly.
In this case, the parties executed their Amicable Settlement on May
5, 1999. However, the petitioners were obliged to vacate the property
only in January 2000, or seven months after the date of the settlement;
hence, the respondent may enforce the settlement through the Punong
Barangay within six months from January 2000 or until June 2000, when
the obligation of the petitioners to vacate the property became due. The
respondent was precluded from enforcing the settlement via an action
with the MTC before June 2000. However, the respondent filed on May
12, 2000 a motion for execution with the MTC and not with the Punong
Barangay. Clearly, the respondent adopted the wrong remedy. Although
the MTC denied the respondents motion for a writ of execution, it was for
a reason other than the impropriety of the remedy resorted to by the
respondent. The RTC erred in granting the respondents motion for a writ
of execution, and the CA erred in denying the petitioners petition for
review.
Normally, the Court would remand the case to the Punong
Barangay for further proceedings. However, the Court may resolve the
issues posed by the petitioners, based on the pleadings of the parties to
serve the ends of justice. It is an accepted rule of procedure for the Court
to strive to settle the existing controversy in a single proceeding, leaving
no root or branch to bear the seeds of future litigation.
[32]

In this case, there is no question that the petitioners were obliged
under the settlement to vacate the premises in January 2000. They
refused, despite the extensions granted by the respondent, to allow their
stay in the property. For the court to remand the case to the Lupon and
require the respondent to refile her motion for execution with
the Lupon would be an idle ceremony. It would only unduly prolong the
petitioners unlawful retention of the premises.
[33]

The RTC and the CA correctly ruled that the respondent is the real party-
in-interest to enforce amicable settlement. Rule 3, Section 2 of the Rules
of Court, as amended, reads:
SEC. 2. Parties in interest. - A real party in interest is the party who stands
to be benefited or injured by the judgment in the suit, or the party entitled
to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the
real party in interest.
The party-in-interest applies not only to the plaintiff but also to the
defendant. Interest within the meaning of the rules means material
interest, an interest in issue and to be affected by the decree as
distinguished from mere interest in the question involved, or a mere
incidental interest.
[34]
A real party in interest is one who has a legal
right.
[35]
Since a contract may be violated only by the parties thereto as
against each other, in an action upon that contract, the real parties-in-
interest, either as plaintiff or as defendant, must be parties to the said
contract.
[36]
The action must be brought by the person who, by substantive
law, possesses the right sought to be enforced.
[37]
In this case, the
respondent was the party in the amicable settlement. She is the real
party-in-interest to enforce the terms of the settlement because unless
the petitioners vacate the property, the respondent and the other vendors
should not be paid the balance of P1,000,000.00 of the purchase price of
the property under the Deed of Conditional Sale.
The petitioners are estopped from assailing the amicable
settlement on the ground of deceit and fraud. First. The petitioners failed
to repudiate the settlement within the period therefor. Second. The
petitioners were benefited by the amicable settlement. They were
allowed to remain in the property without any rentals therefor until
December 1998. They were even granted extensions to continue in
possession of the property. It was only when the respondent filed the
motion for execution that the petitioners alleged for the first time that the
respondents deceived them into executing the amicable settlement.
[38]

On the petitioners claim that they were entitled to the right of first
refusal under P.D. No. 1517, we agree with the disquisition of the trial
court, as quoted by the Court of Appeals:
We likewise find no reversible error on the part of [the] RTC in rejecting
that the petitioners have a right of first refusal in the purchase and sale of
the subject property. As ratiocinated by the court:
xxx. Presidential Decree No. 1517 (The Urban Land Reform Law) does not
apply where there is no showing that the land leased has been proclaimed
to be within a specific Urban Land Reform Zone. In the instant case, the
annex attached to the Proclamation 1967 creating the areas declared as
priority development and urban land reform zone ... does not indicate that
the barangay where the subject property is located is included
therein. This is bolstered by the certification issued by the Housing and
Land Regulatory Board to the effect that the location of the property is
outside the area of Priority Development. It is therefore a reversible error
for the lower court to conclude that defendants-appellees were deprived
of their preemptive right when no right exists in the first place.
Indeed, before a preemptive right under PD 1517 can be exercised, the
disputed land should be situated in an area declared to be both an APD
(Areas for Priority Development) and a ULRZ (Urban Land Reform
Zones). Records show, and as not disputed by the petitioners, the disputed
property is not covered by the aforementioned areas and zones.
[39]

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The
petitioners and all those acting for and in their behalf are directed to
vacate, at their own expense, the property covered by Transfer Certificate
of Title No. 15324 of the Register of Deeds of Muntinlupa City and deliver
possession of the property to the vendees Mary Liza Santos, Susana Lim
and Johnny Lim. This is without prejudice to the right of the vendees to
recover from the petitioners reasonable compensation for their
possession of the property from January 2000 until such time that they
vacate the property. Costs against the petitioners.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 86683 January 21, 1993
PHILIP S. YU, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE PRESIDING
JUDGE, RTC OF MANILA, BRANCH XXXIV (34) and UNISIA
MERCHANDISING CO., INC., respondents.

MELO, J.:
Petitioner, the exclusive distributor of the House of Mayfair wallcovering
products in the Philippines, cried foul when his former dealer of the same
goods, herein private respondent, purchased the merchandise from the
House of Mayfair in England through FNF Trading in West Germany and
sold said merchandise in the Philippines. Both the court of origin and the
appellate court rejected petitioner's thesis that private respondent was
engaged in a sinister form of unfair competition within the context of
Article 28 of the New Civil Code (pp. 23 and 64, Rollo). Hence, the petition
at bar.
There is no dispute that petitioner has had an exclusive sales agency
agreement with the House of Mayfair since 1987 to promote and procure
orders for Mayfair wallcovering products from customers in the
Philippines (Annex "B", Petition; p. 30, Rollo). Even as petitioner was such
exclusive distributor, private respondent, which was then petitioner's
dealer, imported the some goods via the FNF Trading which eventually
sold the merchandise in the domestic market (TSN, September 20, 1988,
p. 9; p. 117, Rollo). In the suit for injunction which petitioner filed before
the Regional Trial Court of the National Capital Judicial Region stationed at
Manila, petitioner pressed the idea that he was practically by-passed and
that private respondent acted in concert with the FNF Trading in
misleading Mayfair into believing that the goods ordered by the trading
firm were intended for shipment to Nigeria although they were actually
shipped to and sold in the Philippines (Paragraph 5, Complaint: p.
34, Rollo). Private respondent professed ignorance of the exclusive
contract in favor of petitioner. Even then, private respondent responded
by asserting that petitioner's understanding with Mayfair is binding only
between the parties thereto (Paragraph 5, Answer; p. 50, Rollo).
In the course of hearing the arguments for and against the issuance of the
requested writ of preliminary injunction, petitioner impressed before the
lower court that he is seeking to enjoin the sale and distribution by private
respondent of the same goods in the market (TSN, September 20, 1988, p.
35; p. 142, Rollo) but the Honorable Cesar V. Alejandria, Presiding Judge of
Branch 34 was unperturbed, thusly:
Resolving plaintiff's motion embodied in the
complaint for the issuance of a writ of preliminary
injunction after hearing, but without prejudging the
merits of the case, and finding from the evidences
adduced by the plaintiff, that the terms and
conditions of the agency agreement, Exhibit "A-inj."
between the plaintiff and The House of Mayfair of
England for the exclusive distributorship by the
plaintiff of the latter's goods, apertain to them; that
there is no privity of contract between the plaintiff
and the defendant; that the controversy in this case
arose from a breach of contract by the FNF Trading
of Germany, for having shipped goods it had
purchased from The House of Mayfair to the
Philippines: that as shown in Exh. "J-inj.", the House
of Mayfair was demanding payment of 4,500.00
from the FNF Trading for restitution of plaintiff's
alleged loss on account of the shipment of the goods
in question here in the Philippines and now in the
possession of the defendant; it appears to the Court
that to restrain the defendant from selling the goods
it has ordered from the FNF Trading of Germany,
would be without legal justification.
WHEREFORE, the motion for the issuance of a writ
of preliminary injunction to restrain the defendant
from selling the goods it has ordered from the FNF
Trading of Germany is hereby DENIED. (p. 64,Rollo.)
The indifference of the trial court towards petitioner's supplication
occasioned the filing of a petition for review oncertiorari with the Court of
Appeals but Justice Ordoez-Benitez, with whom Justices Bellosillo and
Kalalo concurred, reacted in the same nonchalant fashion. According to
the appellate court, petitioner was not able to demonstrate the
unequivocal right which he sought to protect and that private respondent
is a complete strangervis-a-vis the covenant between petitioner and
Mayfair. Apart from these considerations, the reviewing authority noted
that petitioner could be fully compensated for the prejudice he suffered
judging from the tenor of Mayfair's correspondence to FNF Trading
wherein Mayfair took the cudgels for petitioner in seeking compensation
for the latter's loss as a consequence of private respondent's scheme (p.
79, Rollo; pp. 23-29, Rollo).
In the petition at hand, petitioner anchors his plea for redress on his
perception that private respondent has distributed and continues to sell
Mayfair covering products in contravention of petitioner's exclusive right
conferred by the covenant with the House of Mayfair.
On March 13, 1989, a temporary restraining order was issued to last until
further notice from this Court directed against private respondent (p.
188, Rollo). Notwithstanding such proscription, private respondent
persisted in the distribution and sole (p. 208; 228-229, Rollo), triggering
petitioner's motion to cite private respondent's manager in contempt of
court (p. 223, Rollo). Considering that private respondent's manager, Frank
Sia, admitted the acts complained of, a fine of P500.00 was imposed on
him but he failed to pay the same within the five-day period provided in
Our Resolution of June 21, 1989
(p. 236, Rollo).
Did respondent appellate court correctly agree with the lower court in
disallowing the writ solicited by herein petitioner?
That the exclusive sales contract which links petitioner and the House of
Mayfair is solely the concern of the privies thereto and cannot thus extend
its chain as to bind private respondent herein is, We believe, beside the
point. Verily, injunction is the appropriate remedy to prevent a wrongful
interference with contracts by strangers to such contracts where the legal
remedy is insufficient and the resulting injury is irreparable (Gilchrist vs.
Cuddy, 29 Phil. 542 [1915]; 4-A Padilla, Civil Code Annotated, 1988 Ed., p.
90). The liability of private respondent, if any, does not emanate from the
four corners of the contract for undoubtedly, Unisia Merchandising Co.,
Inc. is not a party thereto but its accountability is "an independent act
generative of civil liability" (Daywalt vs. Corporacion de PP. Agustinos
Recoletos, 39 Phil. 587 [1919]; 4 Paras, Civil Code of the Philippines
Annotated, 1981 10th Ed., p. 439; 4 Tolentino, Commentaries and
Jurisprudence on the Civil Code, 1986 Ed.,
p. 439). These observations, however, do not in the least convey the
message that We have placed the cart ahead of the horse, so to speak, by
pronouncing private respondent's liability at this stage in view of the
pendency of the main suit for injunction below. We are simply rectifying
certain misperceptions entertained by the appellate court as regards the
feasibility of requesting a preliminary injunction to enjoin a stranger to an
agreement.
To Our mind, the right to perform an exclusive distributorship agreement
and to reap the profits resulting from such performance are proprietary
rights which a party may protect (30 Am. Jur. Section 19, pp. 71-72: Jurado,
Comments and Jurisprudence on Obligations and Contracts, 1983 8th Rev.
Ed., p. 336) which may otherwise not be diminished, nay, rendered illusory
by the expedient act of utilizing or interposing a person or firm to obtain
goods from the supplier to defeat the very purpose for which the exclusive
distributorship was conceptualized, at the expense of the sole authorized
distributor (43 C.J.S. 597).
Another circumstance which respondent court overlooked was petitioner's
suggestion, which was not disputed by herein private respondent in its
comment, that the House of Mayfair in England was duped into believing
that the goods ordered through the FNF Trading were to be shipped to
Nigeria only, but the goods were actually sent to and sold in the
Philippines. A ploy of this character is akin to the scenario of a third person
who induces a party to renege on or violate his undertaking under a
contract, thereby entitling the other contracting party to relief therefrom
(Article 1314, New Civil Code). The breach caused by private respondent
was even aggravated by the consequent diversion of trade from the
business of petitioner to that of private respondent caused by the latter's
species of unfair competition as demonstrated no less by the sales
effected inspite of this Court's restraining order. This brings Us to the
irreparable mischief which respondent court misappreciated when it
refused to grant the relief simply because of the observation that
petitioner can be fully compensated for the damage. A contrario, the
injury is irreparable where it is continuous and repeated since from its
constant and frequent recurrence, no fair and reasonable redress can be
had therefor by petitioner insofar as his goodwill and business reputation
as sole distributor are concerned. Withal, to expect petitioner to file a
complaint for every sale effected by private respondent will certainly court
multiplicity of suits (3 Francisco, Revised Rules of Court, 1985 Edition, p.
261).
WHEREFORE, the petition is hereby GRANTED. The decision of the Court of
Appeals dated January 13, 1989 in CA-G.R. SP No. 16019 and the Order
dated October 16, 1988 issued by the magistrate at the court of origin are
hereby REVERSED and SET ASIDE. Let this case be remanded to the court
of origin for issuance of a writ of preliminary injunction upon petitioner's
posting of a bond in the sum of Fifty Thousand (P50,000.00) Pesos to be
approved by said court, to remain effective during the trial on the merits
until final determination of the case. The manager of private respondent.
Frank Sia, is hereby ordered to pay to the Clerk of Court within five (5)
days from notice hereof the fine of P500.00, as previously imposed on
him, with a warning that failure to do so will be dealt with more severely.
Upon issuance of the writ of preliminary injunction, the restraining order
issued on March 13, 1989 by this Court shall be deemed automatically
lifted.
SO ORDERED.


SECOND DIVISION
[G.R. No. 159411. March 18, 2005]
TEODORO I. CHAVEZ, petitioner, vs. HON. COURT OF APPEALS and
JACINTO S. TRILLANA, respondents.
D E C I S I O N
PUNO, J.:
Assailed in this petition for review is the Decision dated April 2,
2003
[1]
of the Court of Appeals in CA-G.R. CV No. 59023
[2]
which modified
the Decision dated December 15, 1997 of the Regional Trial Court (RTC) of
Valenzuela City, Branch 172, in Civil Case No. 5139-V-97, as well as its
Resolution dated August 8, 2003
[3]
which denied petitioners motion for
reconsideration.
The antecedent facts are as follows:
In October 1994, petitioner Teodoro Chavez and respondent Jacinto
Trillana entered into a contract of lease
[4]
whereby the former leased to
the latter his fishpond at Sitio Pariahan, Taliptip, Bulacan, Bulacan, for a
term of six (6) years commencing from October 23, 1994 to October 23,
2000. The rental for the whole term was two million two hundred forty
thousand (P2,240,000.00) pesos, of which one million (P1,000,000.00)
pesos was to be paid upon signing of the contract. The balance was
payable as follows:
b. That, after six (6) months and/or, on or before one (1) year from the
date of signing this contract, the amount of THREE HUNDRED FORTY-FOUR
THOUSAND (P344,000.00) pesos shall be paid on April 23, 1995 and/or, on
or before October 23, 1995 shall be paid by the LESSEE to the LESSOR.
c. That, the LESSEE, shall pay the amount of FOUR HUNDRED FORTY-EIGHT
THOUSAND (P448,000.00) pesos x x x to the LESSOR on April 23, 1997
and/or, on or before October 23, 1997, and on April 23, 1998 and/or, on or
before October 23, 1998 the amount of FOUR HUNDRED FORTY-EIGHT
THOUSAND (P448,000.00) pesos x x x.
Paragraph 5 of the contract further provided that respondent shall
undertake all construction and preservation of improvements in the
fishpond that may be destroyed during the period of the lease, at his
expense, without reimbursement from petitioner.
In August 1996, a powerful typhoon hit the country which damaged
the subject fishpond. Respondent did not immediately undertake the
necessary repairs as the water level was still high. Three (3) weeks later,
respondent was informed by a barangay councilor that major repairs were
being undertaken in the fishpond with the use of a crane. Respondent
found out that the repairs were at the instance of petitioner who had
grown impatient with his delay in commencing the work.
In September 1996, respondent filed a complaint before the Office
of the Barangay Captain of Taliptip, Bulacan, Bulacan. He complained
about the unauthorized repairs undertaken by petitioner, the ouster of his
personnel from the leased premises and its unlawful taking by petitioner
despite their valid and subsisting lease contract. After conciliation
proceedings, an agreement was reached, viz.:
K A S U N D U A N
Napagkasunduan ngayong araw na to ika-17 ng Setyembre ng
nagpabuwis Teodoro Chavez at bumubuwis na si G. Jay Trillana na
ibabalik ni G. Chavez ang halagang P150,000.00 kay G. Trillana bilang sukli
sa natitirang panahon ng buwisan.
Ngunit kung maibibigay ni G. Chavez ang halagang P100,000.00 bago
sumapit o pagsapit ng ika-23 ng Setyembre, taong kasalukuyan, to ay
nangangahulugan ng buong kabayaran at hindi P150,000.00.
Kung sakali at hindi maibigay ang P100,000.00 ang magiging kabayaran
ay mananatiling P150,000.00 na may paraan ng pagbabayad ng
sumusunod:
Ang P50,000.00 ay ibibigay bago sumapit o pagsapit ng ika-31 ng Oktubre
1996 at ang balanseng P100,000.00 ay ibibigay sa loob ng isang taon
subalit magbibigay ng promissory note si G. Chavez at kung
mabubuwisang ang kanyang palaisdaan ay ibibigay lahat ni G. Chavez ang
buong P150,000.00 sa lalong madaling panahon.
Kung magkakaroon ng sapat at total na kabayaran si G. Chavez kay G.
Trillana ang huli ay lalagda sa kasulatan bilang waiver o walang anumang
paghahabol sa nabanggit na buwisan.
Alleging non-compliance by petitioner with their lease contract and
the foregoing Kasunduan, respondent filed a complaint on February 7,
1997 against petitioner before the RTC of Valenzuela City, docketed as
Civil Case No. 5139-V-97. Respondent prayed that the following amounts
be awarded him, viz.: (a) P300,000.00 as reimbursement for rentals of the
leased premises corresponding to the unexpired portion of the lease
contract; (b) P500,000.00 as unrealized profits; (c) P200,000.00 as moral
damages; (d) P200,000.00 as exemplary damages; and, (e) P100,000.00 as
attorneys fees plus P1,000.00 for each court appearance of respondents
counsel.
Petitioner filed his answer but failed to submit the required pretrial
brief and to attend the pretrial conference. On October 21, 1997,
respondent was allowed to present his evidence ex-partebefore the Acting
Branch Clerk of Court.
[5]
On the basis thereof, a decision was rendered on
December 15, 1997
[6]
in favor of respondent, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered as follows:
(1) Ordering the defendant to reimburse to the plaintiff the sum
of P300,000.00 representing rental payment of the leased premises for the
unused period of lease;
(2) Ordering the defendant to pay plaintiff the sum of P500,000.00
representing unrealized profit as a result of the unlawful deprivation by
the defendant of the possession of the subject premises;
(3) Ordering the defendant to pay plaintiff the sum of P200,000.00 as
moral damages;
(4) Ordering the defendant to pay plaintiff the sum of P200,000.00 as
exemplary damages; and
(5) Ordering the defendant to pay plaintiff the sum of P100,000.00 as
and for attorneys fees, plus costs of suit.
Petitioner appealed to the Court of Appeals which modified the
decision of the trial court by deleting the award of P500,000.00 for
unrealized profits for lack of basis, and by reducing the award for
attorneys fees to P50,000.00.
[7]
Petitioners motion for reconsideration
was denied. Hence, this petition for review.
Petitioner contends that the Court of Appeals erred in ruling that
the RTC of Valenzuela City had jurisdiction over the action filed by
respondent considering that the subject matter thereof, his alleged
violation of the lease contract with respondent, was already amicably
settled before the Office of the Barangay Captain of Taliptip, Bulacan,
Bulacan. Petitioner argued that respondent should have followed the
procedure for enforcement of the amicable settlement as provided for in
the Revised Katarungang Pambarangay Law. Assuming arguendo that the
RTC had jurisdiction, it cannot award more than the amount stipulated in
the Kasunduan which is P150,000.00. In any event, no factual or legal
basis existed for the reimbursement of alleged advance rentals for the
unexpired portion of the lease contract as well as for moral and exemplary
damages, and attorneys fees.
Indeed, the Revised Katarungang Pambarangay Law
[8]
provides that
an amicable settlement reached after barangay conciliation proceedings
has the force and effect of a final judgment of a court if not repudiated or
a petition to nullify the same is filed before the proper city or municipal
court within ten (10) days from its date.
[9]
It further provides that the
settlement may be enforced by execution by the lupong tagapamayapa
within six (6) months from its date, or by action in the appropriate city or
municipal court, if beyond the six-month period.
[10]
This special provision
follows the general precept enunciated in Article 2037 of the Civil
Code, viz.:
A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a
judicial compromise.
Thus, we have held that a compromise agreement which is not
contrary to law, public order, public policy, morals or good customs is a
valid contract which is the law between the parties themselves.
[11]
It has
upon them the effect and authority of res judicata even if not judicially
approved,
[12]
and cannot be lightly set aside or disturbed except for vices
of consent and forgery.
[13]

However, in Heirs of Zari, et al. v. Santos,
[14]
we clarified that the
broad precept enunciated in Art. 2037 is qualified by Art. 2041 of the same
Code, which provides:
If one of the parties fails or refuses to abide by the compromise, the other
party may either enforce the compromise or regard it as rescinded and
insist upon his original demand.
We explained, viz:
[B]efore the onset of the new Civil Code, there was no right to rescind
compromise agreements. Where a party violated the terms of a
compromise agreement, the only recourse open to the other party was to
enforce the terms thereof.
When the new Civil Code came into being, its Article 2041 x x x created for
the first time the right of rescission. That provision gives to the aggrieved
party the right to either enforce the compromise or regard it as rescinded
and insist upon his original demand. Article 2041 should obviously be
deemed to qualify the broad precept enunciated in Article 2037 that *a+
compromise has upon the parties the effect and authority of res judicata.
(underscoring ours)
In exercising the second option under Art. 2041, the aggrieved party may,
if he chooses, bring the suit contemplated or involved in his original
demand, as if there had never been any compromise agreement, without
bringing an action for rescission.
[15]
This is because he may regard the
compromise as already rescinded
[16]
by the breach thereof of the other
party.
Thus, in Morales v. National Labor Relations Commission
[17]
we
upheld the National Labor Relations Commission when it heeded the
original demand of four (4) workers for reinstatement upon their
employers failure to comply with its obligation to pay their monetary
benefits within the period prescribed under the amicable settlement. We
reiterated the rule that the aggrieved party may either (1) enforce the
compromise by a writ of execution, or (2) regard it as rescinded and so
insist upon his original demand upon the other partys failure or refusal to
abide by the compromise. We also recognized the options in Mabale v.
Apalisok,
[18]
Canonizado v. Benitez,
[19]
and Ramnani v. Court of
Appeals,
[20]
to name a few cases.
In the case at bar, the Revised Katarungang Pambarangay
Law provides for a two-tiered mode of enforcement of an amicable
settlement, to wit: (a) by execution by the Punong Barangaywhich is
quasi-judicial and summary in nature on mere motion of the party entitled
thereto; and (b) an action in regular form, which remedy is
judicial.
[21]
However, the mode of enforcement does not rule out the right
of rescission under Art. 2041 of the Civil Code. The availability of the right
of rescission is apparent from the wording of Sec. 417
[22]
itself which
provides that the amicable settlement may be enforced by execution by
the lupon within six (6) months from its date or by action in the
appropriate city or municipal court, if beyond that period. The use of the
word may clearly makes the procedure provided in the Revised
Katarungang Pambarangay Law directory
[23]
or merely optional in nature.
Thus, although the Kasunduan executed by petitioner and
respondent before the Office of the Barangay Captain had the force and
effect of a final judgment of a court, petitioners non-compliance paved
the way for the application of Art. 2041 under which respondent may
either enforce the compromise, following the procedure laid out in the
Revised Katarungang Pambarangay Law, or regard it as rescinded and
insist upon his original demand. Respondent chose the latter option when
he instituted Civil Case No. 5139-V-97 for recovery of unrealized profits
and reimbursement of advance rentals, moral and exemplary damages,
and attorneys fees. Respondent was not limited to claiming P150,000.00
because although he agreed to the amount in the Kasunduan, it is
axiomatic that a compromise settlement is not an admission of liability but
merely a recognition that there is a dispute and an impending
litigation
[24]
which the parties hope to prevent by making reciprocal
concessions, adjusting their respective positions in the hope of gaining
balanced by the danger of losing.
[25]
Under the Kasunduan, respondent
was only required to execute a waiver of all possible claims arising from
the lease contract if petitioner fully complies with his obligations
thereunder.
[26]
It is undisputed that herein petitioner did not.
Having affirmed the RTCs jurisdiction over the action filed by
respondent, we now resolve petitioners remaining contention. Petitioner
contends that no factual or legal basis exists for the reimbursement of
alleged advance rentals, moral and exemplary damages, and attorneys
fees awarded by the court a quo and the Court of Appeals.
The rule is that actual damages cannot be presumed, but must be
proved with a reasonable degree of certainty.
[27]
In the case at bar, we
agree with petitioner that no competent proof was presented to prove
that respondent had paid P300,000.00 as advance rentals for the
unexpired period of the lease contract. On the contrary, the lease contract
itself provided that the remaining rentals of P448,000.00 shall be paid on
April 23, 1997 and/or, on or before October 23, 1997, and on April 23,
1998 and/or, on or before October 23, 1998 the amount P448,000.00.
Respondent filed his complaint on February 7, 1997. No receipt or other
competent proof, aside from respondents self-serving assertion, was
presented to prove that respondent paid the rentals which were not yet
due. No proof was even presented by respondent to show that he had
already paid P1,000,000.00 upon signing of the lease contract, as
stipulated therein. Petitioner, in paragraphs 2 and 7 of his
answer,
[28]
specifically denied that respondent did so. Courts must base
actual damages suffered upon competent proof and on the best
obtainable evidence of the actual amount thereof.
[29]

As to moral damages, Art. 2220 of the Civil Code provides that same
may be awarded in breaches of contract where the defendant acted
fraudulently or in bad faith. In the case at bar, respondent alleged that
petitioner made unauthorized repairs in the leased premises and ousted
his personnel therefrom despite their valid and subsisting lease
agreement. Petitioner alleged, by way of defense, that he undertook the
repairs because respondent abandoned the leased premises and left it in a
state of disrepair. However, petitioner presented no evidence to prove his
allegation, as he did not attend the pretrial conference and was
consequently declared in default. What remains undisputed therefore is
that petitioner had a valid and subsisting lease contract with respondent
which he refused to honor by giving back possession of the leased
premises to respondent. We therefore sustain the conclusion of both the
trial court and the Court of Appeals that an award of moral damages is
justified under the circumstances. We likewise sustain the award for
exemplary damages considering petitioners propensity not to honor his
contractual obligations, first under the lease contract and second, under
the amicable settlement executed before the Office of the Barangay
Captain. Since respondent was compelled to litigate and incur expenses to
protect his interest on account of petitioners refusal to comply with his
contractual obligations,
[30]
the award of attorneys fees has to be
sustained.
IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The
assailed Decision dated April 2, 2003 of the Court of Appeals in CA-G.R. CV
No. 59023 is modified by deleting the award of P300,000.00 as
reimbursement of advance rentals. The assailed Decision is AFFIRMED in
all other respects.
SO ORDERED.

G.R. No. 70245 May 5, 1989
ELEUTERIO DOMINGO, petitioner
vs.
HON. ALFREDO A. ROSERO, Presiding Judge, Regional Trial Court, Branch
XXVI, Naga City; LEONILO BERCASIO and CANDIDA DELA TORRE,
respondents.
The correct appreciation and application of the provisions of Presidential
Decree No. 1508, more commonly known as the Katarungang
Pambarangay Law, particularly Section 6 thereof, which mandate the
submission of certain disputes before the barangay Lupong Tagapayapa
for conciliation and, if possible, amicable settlement between the parties,
prior to the filing of the controversy in the courts of justice, is, again, the
concern of this special civil action for certiorari. The petitioner assails the
public respondent, Judge Alfredo A. Rosero of the Regional Trial Court of
Naga City, for allegedly acting with grave abuse of discretion amounting to
lack or excess of jurisdiction in issuing on November 23, 1984, the
resolution
1
ordering the dismissal of his (petitioner's) complaint in Civil
Case No. 84295, entitled, "Eleuterio Domingo vs. Leonilo Bercasio, et al.,"
then pending in the respondent judge's sala.
There is no controversy as to the facts.
On February 7, 1984, the petitioner, as plaintiff, filed a complaint
2
for
declaration of ownership with damages against the private respondent,
the spouses Leonilo Bercasio and Candida dela Torre. Seventeen days
thereafter, or on February 24, 1984, to be exact, the private respondents-
defendants filed their answer (with counterclaim)
3
to the complaint. Still
much later, on November 11, 1984, the private respondents moved for the
dismissal of the complaint against them on the sole ground that the
petitioner allegedly failed to comply with the provisions of Section 6 of
Presidential Decree (P.D.) No. 1508 which require conciliation proceedings
before the barangay Lupong Tagapayapa as a pre- condition to the filing of
a case in court.
4
The petitioner lost no time in submitting an opposition to
the private respondents' motion to dismiss. The respondent judge, to
whose sala the case was raffled, on November 23, 1984, issued the
questioned resolution dismissing the complaint for lack of jurisdiction. A
motion for reconsideration of the trial court's resolution was filed, the
petitioner-movant arguing that the case does not come within the ambit
of P.D. No. 1508 inasmuch as the parties thereto reside in different
provinces. Alternatively, the petitioner insisted that even granting that
there was indeed a need to submit the case first before the barangay
court, the private respondents' failure to seasonably raise that ground in a
motion to dismiss before they filed their answer, or in their answer itself,
constitutes a waiver of the said ground.
5
Apparently, the petitioner's
supplications fell on deaf ears because the respondent trial court judge, on
February 6, 1985, denied the motion for reconsideration for allegedly
being "devoid of merit."
6

From the trial court, the petitioner came straight to us vigorously
maintaining, as earlier adverted to, that the respondent judge acted with
grave abuse of discretion in dismissing his complaint.
We grant the petition.
Section 6 of P.D. No. 1508 itself, from which the respondent jugde based
his rulings categorically states that it should be taken in conjunction with
the provisions of Section 2 of the same decree.
SECTION 6. Conciliation, pre-condition to filing of complaint.
No complaint, petition, action or proceeding involving any
matter within the authority of the Lupon as provided in Section
2 hereof shall be filed or instituted in court or any other
government office for adjudication unless there has been a
confrontation of the parties before the Lupon Chairman or the
Pangkat and no conciliation or settlement has been reached as
certified by the Lupon Secretary or the Pangkat Secretary,
attested by the Lupon or Pangkat Chairman, or unless the
settlement has been repudiated. However, the parties may go
directly to court in the following cases:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal
liberty calling for habeas corpus proceedings;
(3) Actions coupled with provisional remedies such
as preliminary injunction, attachment, delivery of
personal property and support pendente lite; and
(4) Where the action may otherwise be barred by
the Statute of Limitations.
(Emphasis supplied.)
Section 2 of P.D. No. 1508, on the other hand provides:
SECTION 2. Subject matters for amicable settlement. The
Lupon of each barangay shall have authority to bring together
the parties actually residing in the same city or municipality for
amicable settlement of all disputes except:
(1) Where one party is the government, or any subdivision or
instrumentality thereof:
(2) Where one party is a public officer or employee and the
dispute relates to the performance of his official functions;
(3) Offenses punishable by imprisonment exceeding 30 days, or
a fine exeeding P200.00:
(4) Offenses where there is private offended party;
(5) Such other classes of dispute which the Prime Minister may
in the interest of justice determine upon recommendation of
the Minister of Justice and the Minister of Local Government.
(Emphasis supplied.)
Additionally, Section 3 thereof states that:
SECTION 3. Venue Dispute between or among persons
actually residing in the same barangay shall be brought to
amicable settlement of different barangay. Those involving
actual residents of different barangays within the same city or
municipality shall be brought in the barangay where the
respondent or any of the respondents actually resides, at the
election of the complainant. However, all dispute which involve
real property or interest therein shall be brought in the
barangay where the real property or any part thereof is
situated.
The Lupon shall have no authority over disputes:
(1) involving parties who actually reside in barangays of
different cities or municipalities, except where such barangays
adjoin each other; and
xxx xxx xxx
(Emphasis supplied.)
From the foregoing provisions of the Katarungang Pambarangay Law, it is
crystal clear that only disputes between parties who are actual residents
of barangays located in the same city or municipality, or residents of
adjoining barangays located in two different municipalities, are within the
jurisdiction of the barangay court.
Unfortunately, the respondent judge failed to see the error of his position
divesting himself of jurisdiction and insisting that the complaint should
first be presented before the barangay court.
The petitioner (plaintiff), avers in paragraph 1 of his complaint' that his
residence and postal address is at 660 T. Solit Street, Pateros, Metro
Manila, while the defendants (private respondents) are residents of
Barangay Sto. Domingo, Pacasao, Camarines Sur. This avernment is
specifically admitted by the defendants (private respondents) in paragraph
1 of their Answer with Counterclaim.
8
The parties are therefore not only
residents of different barangays and municipalities but are also, in fact,
residents of different provinces. P.D. No. 1508 only applies to residents of
the same municipalities or at most, under par. 1 of Section 3 thereof,
residents of adjoining barangays situated in two different municipalities.
9

It would therefore be absurd if the compulsory conciliation process is
made to apply to residents of different and distant provinces, as the
parties herein, when the law itself is inapplicable to residents of different
municipalities unless they are from adjacent barangays. Undoubtedly, the
dispute between the petitioner and the private respondent is beyond the
jurisdiction of any barangay court and could immediately be filed in the
regular courts of justice as the petitioner here did.
The private respondents submit that the subject dispute between them
and the petitioner is cognizable by the barangay Lupon. They premise their
contention on the allegation that at the time the petitioner filed his
complaint, he was temporarily residing in Barangay Sto. Domingo, in
Pacasao, Camarines Sur.
10
But even if the foregoing allegation were a fact,
the private respondents' argument remains seriously flawed. Residence in
a barangay within the same municipality if only transient or temporary is
not enough to vest jurisdiction upon the barangay Lupon.
In the case of Bejer vs. Court of Appeals, et al.,
11
we have had the occasion
to rule that residence as contemplated in P.D. No. 1508 compels not only
actual residence but also membership in the barangay. Here, it has not
been shown that the petitioner became a member of Barangay Sto.
Domingo during his brief sojourn in Pacasao, Camarines Sur. It follows,
lacking in that qualification, that he could not then be considered, for the
purpose of applying the provisions of P.D. No. 1508, as an actual resident
of Barangay Sto. Domingo. There is therefore no need for the dispute
between him and the private respondents to be brought before a
barangay Lupon.
At any rate, as correctly pointed out by the petitioner, even assuming ex
gratia argumenti that the dispute is cognizable by a barangay court, the
requirement of submission or referral to the Lupong Tagapayapa under
P.D. 1508 is merely a condition precedent for the filing of a complaint in
court
12
and not jurisdictional.
13
It is the Judiciary Revamp Law (Batas
Pambansa Blg. 129) and the Judiciary Act of 1948, and not P.D. No. 1508,
which vest jurisdiction.
14
Accordingly, the failure of the private
respondents to raise timely this ground in a motion to dismiss filed before
their answer to the complaint, or in their answer, constitutes a waiver
thereof.
15
We have consistently adhered to that rule and we see no
cogent reason to deviate from it now.
WHEREFORE, the Resolution dated September 23, 1984 and the Order
dated February 6, 1985 of the public respondent, Judge Alfredo A. Rosero
dismissing the petitioner's Complaint, are hereby REVERSED and SET
ASIDE, and the trial court is ordered to REINSTATE Civil Case No. 84-295
thereof. No cost.
SO ORDERED.
[G.R. No. 156228. December 10, 2003]
MA. TERESA VIDAL, LULU MARQUEZ, and CARLOS SOBREMONTE,
petitioners, vs. MA. TERESA O. ESCUETA, represented by HERMAN O.
ESCUETA, respondent.
D E C I S I O N
CALLEJO, SR., J.:
This is a petition for review of the Decision dated July 23, 2002 of the
Court of Appeals in CA-G.R. SP NO. 68895 which affirmed the decision of
the Regional Trial Court (RTC) of Mandaluyong City, Branch 208, which
reversed and set aside the decision of the Metropolitan Trial Court of
Mandaluyong City (MTC), Branch 60; and granted the motion for execution
filed by private respondent Ma. Teresa O. Escueta in Civil Case No. 17520.
The petition at bar stemmed from the following antecedents:
When Abelardo Escueta died intestate on December 3, 1994, he was
survived by his widow Remedios Escueta and their six children, including
Ma. Teresa O. Escueta and her brother Herman O. Escueta. Part of his
estate was a parcel of land located at No. 14 Sierra Madre corner Kanlaon
Streets, Barangay Highway Hills, Mandaluyong City, covered by Transfer
Certificate of Title (TCT) No. (77083) - 27568, and the house thereon. The
property was leased to Rainier Llanera, who sublet the same to 25
persons. The heirs executed an extra-judicial settlement of estate over the
property. They also executed a special power of attorney authorizing Ma.
Teresa Escueta to sell the said property.
Sometime in 1999, Ma. Teresa Escueta, as a co-owner of the property,
filed an ejectment case against Llanera and the sub-lessees before the
Lupon of Barangay Highway Hills, docketed as Barangay Case No. 99-09.
In the meantime, on April 15, 1999, the heirs of Abelardo Escueta
executed a deed of conditional sale over the property including the house
thereon, to Mary Liza Santos for P13,300,000.00 payable as follows:
Down payment ONE MILLION FIVE HUNDRED THOUSAND
(P1,500,000.00) which the HEIRS-SELLERS acknowledged receipt thereof
with complete and full satisfaction;
Second payment - TEN MILLION EIGHT HUNDRED THOUSAND
(P10,800,000.00) after publication of the Extra-Judicial Settlement of the
Estate of the late Abelardo Escueta and payment of the taxes with the
Bureau of Internal Revenue by the Attorney-in-Fact; and
The balance of ONE MILLION (P1,000,000.00) upon vacation of all the
occupants of the subject property within SIX (6) months from date
hereof.
The parties further agreed that:
Ms. Maria Teresa Escueta shall deliver unto the BUYER the Owners
Duplicate Copy of the title upon receipt of the down payment while the
original copies of the Special Power of Attorney shall be delivered upon
payment of the Second Payment stated above.
The ATTORNEY-IN-FACT-SELLER shall be responsible for the ejectment of
all the tenants in the said subject property.
The ATTORNEY-IN-FACT-SELLER shall pay the estate tax, capital gains tax
and documentary stamp tax including the telephone, water and Meralco
bills and the publication for the Extra-Judicial Settlement of the estate of
the late ABELARDO ESCUETA while the registration and transfer fees shall
be shouldered by the BUYER.
On May 5, 1999, Escueta and Llanera, and the sub-lessees, executed an
Amicable Settlement, where they agreed that (a) the owners of the
property would no longer collect the rentals due from the respondents
therein (lessee and sub-lessees) starting May 1999, with the concomitant
obligation of the respondents to vacate the property on or before
December 1999; (b) time was the essence of the agreement, and that
consequently, if the lessee and sub-lessees fail or refuse to vacate the
property on or before December 1999, the barangay chairman was
authorized without any court order to cause the eviction and removal of
all the respondents on the property. The amicable settlement was
attested by Pangkat Chairman Jose Acong. The parties did not repudiate
the amicable settlement within ten days from the execution thereof.
Neither did any of the parties file any petition to repudiate the settlement.
The vendees having paid the down payment and second installment of the
price of the property, the vendors caused the cancellation on December
17, 1999, of TCT No. 27568 and the issuance of TCT No. 15324 to and
under the names of the vendees Mary Liza Santos, Susana Lim and Johnny
Lim. However, Escueta and the other vendors had yet to receive the
balance of the purchase price of P1,000,000.00 because the respondents
were still in the property.
Llanera vacated the leased premises. Later, twenty of the sub-lessees also
vacated the property. By January 2000, five sub-lessees, namely, Ma.
Teresa Vidal, Lulu Marquez, Marcelo Trinidad, Carlos Sobremonte] and
Jingkee Ang remained in the property, and requested Escueta for
extensions to vacate the property. Escueta agreed, but despite the lapse
of the extensions granted them, the five sub-lessees refused to vacate the
property.
Escueta opted not to have the sub-lessees evicted through the Punong
Barangay as provided for in the amicable settlement. Neither did she file
a motion with the Punong Barangay for the enforcement of the
settlement. Instead, she filed on May 12, 2000, a verified Motion for
Execution against the recalcitrant sub-lessees with the MTC for the
enforcement of the amicable settlement and the issuance of a writ of
execution. The pleading was docketed as Civil Case No. 17520, with Teresa
Escueta as plaintiff, and the sub-lessees as defendants.
The defendants opposed the motion alleging that they were enveigled
into executing the amicable settlement despite the fact that they had not
violated any of the terms and conditions of the verbal lease of the
property; they were coerced and forced to enter into such amicable
settlement as it was the only way of prolonging their stay in the leased
premises; and that they had been paying faithfully and religiously the
monthly rentals in advance.
They also contended that the plaintiff came to court with unclean hands,
as the property had been sold by the co-owners thereof on June 8, 1999,
without notifying them. The real parties-in-interest as plaintiffs, would be
the new owners of the property, and not the Escuetas. The defendants
further asserted that the amicable settlement was not elevated to or
approved by the MTC as required by Section 419 of the Local Government
Code (LGC), nor approved by a competent court; hence, there was no
judgment to enforce by a new motion for a writ of execution. As such, the
plaintiffs motion was premature and procedurally improper. The
defendants asserted that the plaintiff must first secure a certification to
file action from the barangay and thereafter, file an action for ejectment
against them as required by Section 417 of the LGC. The amicable
settlement of the parties before the Lupon cannot be a substitute for an
action for ejectment. Finally, they averred that they had been sub-lessees
for more than ten years already; hence, had the right of first refusal under
Section 6 of the Urban Land Reform Law (P.D. No. 1517). For her part, the
plaintiff asserted that there having been no execution of the amicable
settlement on or before November 6, 1999 by the Lupon, the settlement
may now be enforced by action in the proper city or municipal court.
On February 22, 2001, the court issued an Order denying the Motion for
Execution. The court held that the plaintiff was not the real party-in-
interest as the subject property had already been sold and titled to Susana
Lim, Johnny Lim and Mary Liza Santos. Only the vendees had the right to
demand the ejectment of the defendants from the said property. The
court further ruled that the defendants had the right of first refusal to
purchase the property under Presidential Decree No. 1517. The MTC,
however, did not rule on the issue of whether or not the plaintiffs motion
for execution was premature.
Aggrieved, the plaintiff, now the appellant, appealed the order to the RTC
where she contended that:
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN FINDING AND IN CONCLUDING THAT PLAINTIFF IS NO LONGER THE
REAL PARTY-IN-INTEREST.
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN FINDING AND IN CONCLUDING THAT DEFENDANTS CANNOT BE EJECTED
AND CAN EXERCISE THE RIGHT OF FIRST REFUSAL.
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN NOT FINDING AND IN NOT MAKING THE CONCLUSION THAT
DEFENDANTS HAVE VIOLATED THE FINAL AND EXECUTORY THE WRITTEN
AMICABLE SETTLEMENT BETWEEN PARTIES EXECUTED IN THEIR
BARANGAY CONFRONTATION.
THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR
IN NOT ORDERING THE EJECTMENT OF THE DEFENDANTS AND IN NOT
ORDERING SAID DEFENDANTS TO PAY THEIR ARREARAGES IN RENTAL
PAYMENTS FROM MAY 1999 UP TO THE DAY THEY ACTUALLY LEAVE THE
PREMISES AS WELL AS ATTORNEYS FEES AND DAMAGES.
On August 31, 2001, the RTC rendered a decision holding that the plaintiff-
appellant was still the owner of the property when the ejectment case was
filed in the office of the barangay captain, and, as such, was the real party-
in-interest as the plaintiff in the MTC. Moreover, under the deed of
conditional sale between her and the buyers, it was stipulated therein that
the purchase price of P1,000,000.00 would be delivered to the vendors
only upon the vacation of all the occupants of the subject property within
six (6) months from date hereof. She was duty-bound to cause the
eviction of the defendant from the property; hence, the appellant, as a co-
owner, had a substantial interest in the property. The MTC further held
that the sale, having been executed while the appellants complaint was
pending with the Lupon, the action in the MTC may be continued by the
plaintiff-appellant.
As to the right of first refusal being asserted by the appellees, the court
ruled that there was no showing that the land leased had been
proclaimed to be within a specific Urban Land Reform Zone. In fact, the
Housing and Land Use Regulatory Board had certified that the subject
property was outside the area for priority development; thus, the
appellees may not claim that they had been deprived of their preemptive
right when no such right existed in the first place. The court did not rule
on the third and fourth issues on the ground that the said issues were
never raised by the parties. The decretal portion of the RTC decision reads
as follows:
PREMISES CONSIDERED, the appeal is GRANTED. The Order dated
February 2, 2001 issued by the Metropolitan Trial Court of Mandaluyong
City, Branch 60, in Civil Case No. 17520 is hereby REVERSED and SET ASIDE,
and a new one is entered granting the Motion for Execution.
Let the Record of this case be remanded to the court a quo for proper
disposition.
SO ORDERED.
A petition for review under Rule 42 was filed with the Court of Appeals by
three of the appellees, now petitioners Ma. Teresa Vidal, Lulu Marquez
and Carlos Sobremonte. The court, however, dismissed the petition on (1)
procedural grounds, and (2) for lack of merit.
On procedural grounds, the CA ruled that the petitioners failed to indicate
the specific material dates, showing that their petition was filed on time as
required by the rules, and in declaring that they failed to justify their
failure to do so.
On the merits of the petition, the appellate court upheld the ruling of the
RTC. The decretal portion of the decision of the CA reads:
WHEREFORE, the instant petition is hereby DISMISSED. The assailed
Decision of the Regional Trial Court of Mandaluyong City, Branch 208,
rendered in Civil Case No. MC01-333-A, dated August 31, 2001 is hereby
AFFIRMED.
SO ORDERED.
In their petition at bar, the petitioners assert that the CA erred as follows:
(1) in not applying the rules of procedure liberally; (2) in declaring that
there was no need for the respondents to file an ejectment case for the
eviction of the petitioners; (3) that the real parties-in-interest as plaintiffs
in the MTC were the new owners of the property, Susana Lim, Johnny Lim
and Mary Liza Santos; (4) in not finding that the Amicable Settlement was
obtained through deceit and fraud; and (5) in ruling that the petitioners
had no right of first refusal in the purchase and sale of the subject
property under Presidential Decree No. 1517.
The petition is bereft of merit.
On the procedural issue, the CA dismissed the petition before it for the
petitioners failure to comply with Section 2, par. 1, Rule 42 of the 1997
Rules of Civil Procedure. The CA ratiocinated that there was no
justification for a relaxation of the Rules, thus:
Petitioners cited decisions of the Supreme Court where a relaxation of
procedural rules was allowed. However, a reading of those cases shows
that they are not exactly similar with the present case. In the case of
Mactan Cebu International Airport Authority vs. Francisco Cuizon
Mangubat, the Supreme Court allowed the late payment of docket fee by
the Solicitor General on the ground that the 1997 Rules of Civil Procedure
regarding payment of docket fees was still new at that time. The same
cannot be said in the present case. The petition was filed on February 28,
2002, almost five years from the issuance of the 1997 Rules of Civil
Procedure. The circumstances of typhoon and holiday for failure to obtain
a certified true copy of the DOJs Decision, in the case of Hagonoy Market
Vendor Association vs. Municipality of Hagonoy, Bulacan, were present in
the instant petition. The case of Salazar vs. Court of Appeals is also not
similar with the present case.
The petitioners aver in this case that the failure of their counsel to include
the material dates in their petition with the CA was, as stated in their
Amended Manifestation, because the said counsel was suffering from a
slight heart attack. The Court finds the petitioners pretext flimsy. If the
petitioners counsel was able to prepare their petition despite her
condition, there was no valid reason why she failed to include the material
dates required under the Rules of Court. Besides, the petitioners stated in
their petition that they had appended a copy of their Amended
Manifestation, but failed to do so. If the rules were to be applied strictly,
the CA could not be faulted for dismissing the petition.
However, in order to promote their objective of securing a just, speedy
and inexpensive dispensation of every action and proceedings, the Rules
are to be liberally construed. Rules of procedure are intended to promote,
not to defeat substantial justice and, therefore, should not be applied in a
very rigid and technical sense. This Court ruled in Buenaflor vs. Court of
Appeals, et al. that appeal is an essential part of our judicial system and
trial courts and the Court of Appeals are advised to proceed with caution
so as not to deprive a party of the right to appeal and that every party
litigant should be afforded the amplest opportunity for the proper and just
disposition of his cause, free from the constraints of technicalities. The
Court has given due course to petitions where to do so would serve the
demands of substantial justice and in the exercise of its equity jurisdiction.
In this case, the Court opts to apply the rules liberally to enable it to delve
into and resolve the cogent substantial issues posed by the petitioners.
We agree with the contention of the petitioners that under Section 416 of
the LGC, the amicable settlement executed by the parties before the
Lupon on the arbitration award has the force and effect of a final
judgment of a court upon the expiration of ten (10) days from the date
thereof, unless the settlement is repudiated within the period therefor,
where the consent is vitiated by force, violence or intimidation, or a
petition to nullify the award is filed before the proper city or municipal
court.1[25] The repudiation of the settlement shall be sufficient basis for
the issuance of a certification to file a complaint.
We also agree that the Secretary of the Lupon is mandated to transmit the
settlement to the appropriate city or municipal court within the time
frame under Section 418 of the LGC and to furnish the parties and the
Lupon Chairman with copies thereof. The amicable settlement which is not
repudiated within the period therefor may be enforced by execution by
the Lupon through the Punong Barangay within a time line of six months,
and if the settlement is not so enforced by the Lupon after the lapse of the
said period, it may be enforced only by an action in the proper city or
municipal court as provided for in Section 417 of the LGC of 1991, as
amended, which reads:
SEC. 417. Execution. The amicable settlement or arbitration award may
be enforced by execution by the Lupon within six (6) months from the date
of the settlement. After the lapse of such time, the settlement may be
enforced by action in the proper city or municipal court. (Underlining
supplied).
Section 417 of the Local Government Code provides a mechanism for the
enforcement of a settlement of the parties before the Lupon. It provides
for a two-tiered mode of enforcement of an amicable settlement executed
by the parties before the Lupon, namely, (a) by execution of the Punong
Barangay which is quasi-judicial and summary in nature on mere motion
of the party/parties entitled thereto; and (b) by an action in regular form,
which remedy is judicial. Under the first remedy, the proceedings are
covered by the LGC and the Katarungang Pambarangay Implementing
Rules and Regulations. The Punong Barangay is called upon during the
hearing to determine solely the fact of non-compliance of the terms of the
settlement and to give the defaulting party another chance at voluntarily
complying with his obligation under the settlement. Under the second
remedy, the proceedings are governed by the Rules of Court, as amended.
The cause of action is the amicable settlement itself, which, by operation
of law, has the force and effect of a final judgment.
Section 417 of the LGC grants a party a period of six months to enforce the
amicable settlement by the Lupon through the Punong Barangay before
such party may resort to filing an action with the MTC to enforce the
settlement. The raison d etre of the law is to afford the parties during the
six-month time line, a simple, speedy and less expensive enforcement of
their settlement before the Lupon.
The time line of six months is for the benefit not only of the complainant,
but also of the respondent. Going by the plain words of Section 417 of the
LGC, the time line of six months should be computed from the date of
settlement. However, if applied to a particular case because of its peculiar
circumstance, the computation of the time line from the date of the
settlement may be arbitrary and unjust and contrary to the intent of the
law. To illustrate: Under an amicable settlement made by the parties
before the Lupon dated January 15, 2003, the respondents were obliged to
vacate the subject property on or before September 15, 2003. If the time
line of six months under Section 417 were to be strictly and literally
followed, the complainant may enforce the settlement through the Lupon
only up to July 15, 2003. But under the settlement, the respondent was
not obliged to vacate the property on or before July 15, 2003; hence, the
settlement cannot as yet be enforced. The settlement could be enforced
only after September 15, 2003, when the respondent was obliged to
vacate the property. By then, the six months under Section 417 shall have



already elapsed. The complainant can no longer enforce the settlement
through the Lupon, but had to enforce the same through an action in the
MTC, in derogation of the objective of Section 417 of the LGC. The law
should be construed and applied in such a way as to reflect the will of the
legislature and attain its objective, and not to cause an injustice. As Justice
Oliver Wendell Holmes aptly said, courts are apt to err by sticking too
closely to the words of the law where these words support a policy that
goes beyond them. The Court should not defer to the latter that killeth but
to the spirit that vivifieth.
In light of the foregoing considerations, the time line in Section 417 should
be construed to mean that if the obligation in the settlement to be
enforced is due and demandable on the date of the settlement, the six-
month period should be counted from the date of the settlement;
otherwise, if the obligation to be enforced is due and demandable on a
date other than the date of the settlement, the six-month period should
be counted from the date the obligation becomes due and demandable.
Parenthetically, the Katarungang Pambarangay Implementing Rules and
Regulations, Rule VII, Section 2 provides:
SECTION 2. Modes of Execution. - The amicable settlement or arbitration
award may be enforced by execution by the Lupon within six [6] months
from date of the settlement or date of receipt of the award or from the
date the obligation stipulated in the settlement or adjudged in the
arbitration award becomes due and demandable. After the lapse of such
time, the settlement or award may be enforced by the appropriate local
trial court pursuant to the applicable provisions of the Rules of Court . An
amicable settlement reached in a case referred by the Court having
jurisdiction over the case to the Lupon shall be enforced by execution by
the said court. (Underlining supplied).
By express provision of Section 417 of the LGC, an action for the
enforcement of the settlement should be instituted in the proper
municipal or city court. This is regardless of the nature of the complaint
before the Lupon, and the relief prayed for therein. The venue for such
actions is governed by Rule 4, Section 1 of the 1997 Rules of Civil
Procedure, as amended. An action for the enforcement of a settlement is
not one of those covered by the Rules on Summary Procedure in civil
cases;2[30] hence, the rules on regular procedure shall apply, as provided
for in Section 1, Rule 5 of the Rules of Civil Procedure, as amended.
As to the requisite legal fees for the filing of an action in the first level
court under Section 417 of the Local Government Code, indigents-litigants
(a) whose gross income and that of their immediate family do not exceed
ten thousand (P10,000.00) pesos a month if residing in Metro Manila, and
five thousand (P5,000.00) pesos a month if residing outside Metro Manila,
and (b) who do not own real property with an assessed value of more than
fifty thousand (P50,000.00) pesos shall be exempt from the payment of
legal fees. Section 18, Rule 141 of the Revised Rules of Court, as amended
by A.M. No. 00-2-01-SC, is hereby further amended accordingly.
In this case, the parties executed their Amicable Settlement on May 5,
1999. However, the petitioners were obliged to vacate the property only
in January 2000, or seven months after the date of the settlement; hence,
the respondent may enforce the settlement through the Punong Barangay
within six months from January 2000 or until June 2000, when the
obligation of the petitioners to vacate the property became due. The
respondent was precluded from enforcing the settlement via an action
with the MTC before June 2000. However, the respondent filed on May
12, 2000 a motion for execution with the MTC and not with the Punong
Barangay. Clearly, the respondent adopted the wrong remedy. Although
the MTC denied the respondents motion for a writ of execution, it was for
a reason other than the impropriety of the remedy resorted to by the
respondent. The RTC erred in granting the respondents motion for a writ
of execution, and the CA erred in denying the petitioners petition for
review.
Normally, the Court would remand the case to the Punong Barangay for
further proceedings. However, the Court may resolve the issues posed by
the petitioners, based on the pleadings of the parties to serve the ends of
justice. It is an accepted rule of procedure for the Court to strive to settle
the existing controversy in a single proceeding, leaving no root or branch
to bear the seeds of future litigation.
In this case, there is no question that the petitioners were obliged under
the settlement to vacate the premises in January 2000. They refused,
despite the extensions granted by the respondent, to allow their stay in



the property. For the court to remand the case to the Lupon and require
the respondent to refile her motion for execution with the Lupon would be
an idle ceremony. It would only unduly prolong the petitioners unlawful
retention of the premises.
The RTC and the CA correctly ruled that the respondent is the real party-
in-interest to enforce amicable settlement. Rule 3, Section 2 of the Rules
of Court, as amended, reads:
SEC. 2. Parties in interest. - A real party in interest is the party who stands
to be benefited or injured by the judgment in the suit, or the party entitled
to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the
real party in interest.
The party-in-interest applies not only to the plaintiff but also to the
defendant. Interest within the meaning of the rules means material
interest, an interest in issue and to be affected by the decree as
distinguished from mere interest in the question involved, or a mere
incidental interest. A real party in interest is one who has a legal right.
Since a contract may be violated only by the parties thereto as against
each other, in an action upon that contract, the real parties-in-interest,
either as plaintiff or as defendant, must be parties to the said contract.
The action must be brought by the person who, by substantive law,
possesses the right sought to be enforced. In this case, the respondent
was the party in the amicable settlement. She is the real party-in-interest
to enforce the terms of the settlement because unless the petitioners
vacate the property, the respondent and the other vendors should not be
paid the balance of P1,000,000.00 of the purchase price of the property
under the Deed of Conditional Sale.
The petitioners are estopped from assailing the amicable settlement on
the ground of deceit and fraud. First. The petitioners failed to repudiate
the settlement within the period therefor. Second. The petitioners were
benefited by the amicable settlement. They were allowed to remain in the
property without any rentals therefor until December 1998. They were
even granted extensions to continue in possession of the property. It was
only when the respondent filed the motion for execution that the
petitioners alleged for the first time that the respondents deceived them
into executing the amicable settlement.3
On the petitioners claim that they were entitled to the right of first refusal
under P.D. No. 1517, we agree with the disquisition of the trial court, as
quoted by the Court of Appeals:
We likewise find no reversible error on the part of [the] RTC in rejecting
that the petitioners have a right of first refusal in the purchase and sale of
the subject property. As ratiocinated by the court:
xxx. Presidential Decree No. 1517 (The Urban Land Reform Law) does not
apply where there is no showing that the land leased has been proclaimed
to be within a specific Urban Land Reform Zone. In the instant case, the
annex attached to the Proclamation 1967 creating the areas declared as
priority development and urban land reform zone ... does not indicate that
the barangay where the subject property is located is included therein.
This is bolstered by the certification issued by the Housing and Land
Regulatory Board to the effect that the location of the property is outside
the area of Priority Development. It is therefore a reversible error for the
lower court to conclude that defendants-appellees were deprived of their
preemptive right when no right exists in the first place.
Indeed, before a preemptive right under PD 1517 can be exercised, the
disputed land should be situated in an area declared to be both an APD
(Areas for Priority Development) and a ULRZ (Urban Land Reform Zones).
Records show, and as not disputed by the petitioners, the disputed
property is not covered by the aforementioned areas and zones.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The petitioners
and all those acting for and in their behalf are directed to vacate, at their
own expense, the property covered by Transfer Certificate of Title No.
15324 of the Register of Deeds of Muntinlupa City and deliver possession
of the property to the vendees Mary Liza Santos, Susana Lim and Johnny
Lim. This is without prejudice to the right of the vendees to recover from
the petitioners reasonable compensation for their possession of the
property from January 2000 until such time that they vacate the property.
Costs against the petitioners.



SO ORDERED.
G.R. No. 111416 September 26, 1994
FELICIDAD UY, petitioner,
vs.
HON. MAXIMO C. CONTRERAS, Presiding Judge, Metropolitan Trial Court,
Branch 61, Makati, Metro Manila; HON. MAURO M. CASTRO, Provincial
Prosecutor of Pasig, Metro Manila; SUSANNA ATAYDE and WINNIE
JAVIER, respondents.
.
DAVIDE, JR., J.:
Assailed in this petition for certiorari under Rule 65 of the Rules of Court is
the order dated 2 July 1993 of public respondent Judge Maximo C.
Contreras of Branch 61 of the Metropolitan Trial Court (MTC) of Makati,
Metro Manila, denying the petitioner's motion to dismiss Criminal Cases
Nos. 145233 and 145234 for slight physical injuries. The motion to dismiss
is based on the failure of the private respondents, as the offended parties
therein, to comply with Section 6 of P.D. No. 1508 and Section 18 of the
1991 Revised Rule on Summary Procedure requiring prior referral of
disputes to the Lupong Tagapamayapa of the proper barangay.
At the outset, it must be stated that were it not for the importance of the
issue to be resolved in the light of the revised law on katarungang
pambarangay provided for in the Local Government Code of 1991 (R.A.
No. 7160) which took effect on 1 January 1992, this Court would have
declined to accept the invocation of its original jurisdiction to issue the
extraordinary writ prayed for. We have already ruled that while it is true
that this Court, the Court of Appeals, and the Regional Trial Courts have
concurrent original jurisdiction to issue writs of certiorari, prohibition,
mandamus, quo warranto, and habeas corpus, such concurrence does not
accord litigants unrestrained freedom of choice of the court to which
application therefor may be directed. There is a hierarchy of courts
determinative of the venue of appeals which should also serve as a
general determinant of the proper forum for the application for the
extraordinary writs. A becoming regard for this judicial hierarchy by the
petitioner and her lawyers ought to have led them to file the petition with
the proper Regional Trial Court.
The antecedent facts as disclosed by the pleadings of the parties are not
complicated.
Petitioner subleased from respondent Susanna Atayde (hereinafter
Atayde) the other half of the second floor of a building located at corner
Reposo and Oliman Streets, Makati, Metro Manila. She operated and
maintained therein a beauty parlor.
The sublease contract expired on 15 April 1993. However, the petitioner
was not able to remove all her movable properties.
On 17 April 1993, an argument arose between the petitioner and Atayde
when the former sought to withdraw from the subleased premises her
remaining movable properties such as cabinets, shelves, frames, a mirror,
a shampoo bowl, and an airconditioning casing. The argument
degenerated into a scuffle between the petitioner, on the one hand, and
Atayde and several of Atayde's employees, including private respondent
Winnie Javier (hereinafter Javier), on the other.
On 21 April 1993, the private respondent had themselves medically
examined for the alleged injuries inflicted on them by the petitioner.
On 23 April 1993, the private respondents filed a complaint with the
barangay captain of Valenzuela, Makati, which was docketed as Barangay
Cases Nos. 1023 and 1024.
The confrontation of the parties was scheduled by the barangay captain
for 28 April 1993. On the said date, only the petitioner appeared. The
barangay captain then reset the confrontation to 26 May 1993.
On 11 May 1993, the Office of the Provincial Prosecutor of Rizal filed two
informations for slight physical injuries against the petitioner with the MTC
of Makati, which were docketed as Criminal Cases Nos. 145233 and
145234 and assigned to Branch 61 thereof.
On 21 May 1993, public respondent Judge Contreras of Branch 61 ordered
the petitioner to submit her counter-affidavit and those of her witnesses.
On 14 June 1993, the petitioner submitted the required counter-
affidavits. In her own counter-affidavit, the petitioner specifically alleged
the prematurity of the filing of the criminal cases for failure to undergo
conciliation proceedings as she and the private respondents are residents
of Manila. She also attached to it a certification by the barangay captain of
Valenzuela, Makati, dated 18 May 1993, that there was an ongoing
conciliation between Atayde and the petitioner in Barangay Case No.
1023.
On 18 June 1993, the petitioner filed a motion to dismiss Criminal Cases
Nos. 145233 and 145234 for non-compliance with the requirement of P.D.
No. 1508 on prior referral to the Lupong Tagapamayapa and pursuant to
Section 18 of the 1991 Revised Rule on Summary Procedure.
On 2 July 1993, public respondent Judge Contreras handed down an order
denying the motion to dismiss, pertinent portions of which read:
The court finds the motion to be without sufficient merit. In the
first place, the offense subject of these cases accussed in
Makati, Metro Manila on April 17, 1993; that Barangay
Valenzuela of the Municipality of Makati had started the
conciliation proceedings between the parties but as of May 18,
1993 nothing has been achieved by the barangay (Annex "2" of
the Counter-Affidavit of the accused); that the above-entitled
cases were filed directly with this court by the public
prosecutor on May 11, 1993; and the accused and her
witnesses had already filed their counter-affidavits and
documents. At this stage of the proceedings, the court believes
that the accused had already waived the right to a
reconciliation proceedings before the barangay of Valenzuela,
Makati considering that accused and complainant are residents
of different barangays; that the offense charged occurred in the
Municipality of Makati; and finally, this offense is about to
prescribe.
Under the foregoing circumstances, the court believes, and so
holds, that the complainants may go directly to the court where
their complaint is about to prescribe or barred by statute of
limitations pursuant to Section 6 of PD 1508."
A motion to reconsider the above order was denied on 5 August 1993.
Hence this special civil action for certiorari. The petitioner contends that
the respondent judge committed grave abuse of discretion amounting to
lack of jurisdiction when he denied the motion to dismiss considering that
the private respondents failed to comply with the mandatory requirement
of P.D. No. 1508, now embodied in Section 412 of the Local Government
Code of 1991 and further required under the 1991 Revised Rule on
Summary Procedure.
In their Comment, the private respondents contend that the denial of the
motion to dismiss is proper because prior referral of the dispute to the
lupon is not applicable in the case of private respondent Javier since she
and the petitioner are not residents of barangays in the same city or
municipality or of adjoining barangays in different cities or municipalities
and that referral to the lupon is not likewise required if the case may
otherwise be barred by the statute of limitations. Moreover, even
assuming arguendo that prior referral to the lupon applies to the case of
private respondent Atayde, the latter had, nevertheless, substantially
complied with the requirement.
In its Comment, the Office of the Solicitor General agrees with the
petitioner that Criminal Cases Nos. 145233 and 145234 should be
dismissed for non-compliance with Sections 408, 409, 410, and 412 of the
Local Government Code of 1991 in relation to Section 7, Rule VI of the
Rules Implementing P.D. No. 1508.
The petitioner replied to the comments of the private respondents and of
the Office of the Solicitor General. The private respondents filed a
rejoinder to the petitioner's reply to their comment and a reply to the
comment of the Office of the Solicitor General.
In the Resolution of 16 May 1994, this Court gave due course to the
petition and required the parties to submit their respective memoranda,
which the petitioner and the private respondents complied with. The
Office of the Solicitor General, in view of its prior submission, moved that
it be excused from filing a memorandum.
The petition is impressed with merit.
The law on the katarungang pambarangay was originally governed by P.D.
No. 1508 which was enacted on 11 June 1978. However, the Local
Government Code of 1991, specifically Chapter 7, Title I, Book III thereof,
13
revised the law on the katarungang pambarangay. As a consequence of
this revision, P.D. No. 1508 was expressly repealed pursuant to Section
534(b) of the Code. Pertinent portions of Chapter 7, Title I, Book III thereof
read as follows:
Sec. 408. Subject Matter for Amicable Settlement; Exception Thereto.
The luppon of each barangay shall have authority to bring
together the parties actually residing in the same city or municipality
for amicable settlement of all disputes except:
(a) Where one party is the government or any subdivision or
instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute
relates to the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a
fine exceeding Five thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different
cities or municipalities unless the parties thereto agree to submit
their differences to amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of
different cities or municipalities, except where such barangay units
adjoin each other and the parties thereto agree to submit their
differences to amicable settlement by appropriate lupon;
(g) Such other classes of disputes which the President may determine
in the interest of justice or upon the recommendation of the
Secretary of Justice.
The court in which non-criminal cases not falling within the authority
of the lupon under this Code are filed may, at anytime before trial,
motu proprio refer the case to the lupon concerned for amicable
settlement.
Sec. 409. Venue. (a) Disputes between persons actually residing in
the same barangay shall be brought for amicable settlement before
the lupon of said barangay.
(b) Those involving actual residents of different barangays within the
same city or municipality shall be brought in the barangay where the
respondent or any of the respondents actually resides, at the
election of the complainant.
(c) All disputes involving real property or any interest therein shall be
brought in the barangay where the real property or the larger
portion thereof is situated.
(d) Those arising at the workplace where the contending parties are
employed or at the institution where such parties are enrolled for
study shall be brought in the barangay where such workplace or
institution is located.
Objections to venue shall be raised in the mediation proceedings
before the punong barangay; otherwise, the same shall be deemed
waived. Any legal question which may confront the punong barangay
in resolving objections to venue herein referred to may be submitted
to the Secretary of Justice or his duly designated representative
whose ruling thereon shall be binding.
Sec. 410. Procedure for Amicable Settlement. . . .
xxx xxx xxx
(c) Suspension of prescriptive period of offenses. While the dispute
is under mediation, conciliation, or arbitration, the prescriptive
periods for offenses and cause of action under existing laws shall be
interrupted upon filing of the complaint with the punong barangay.
The prescriptive periods shall resume upon receipt by the
complainant of the complaint or the certificate of repudiation or of
the certification to file action issued by the lupon or pangkat
secretary: Provided, however, That such interruption shall not exceed
sixty (60) days from the filing of the complaint with the punong
barangay.
xxx xxx xxx
Sec. 412. Conciliation. (a) Pre-condition to filing of complaint in
court. No complaint, petition, action, or proceeding involving any
matter within the authority of the lupon shall be filed or instituted
directly in court or any other government office for adjudication,
unless there has been a confrontation between the parties before
the lupon chairman or the pangkat, and that no conciliation or
settlement has been reached as certified by the lupon secretary or
pangkat secretary as attested to by the lupon chairman or pangkat
chairman or unless the settlement has been repudiated by the
parties thereto.
(b) Where parties may go directly to court. The parties may go
directly to court in the following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal liberty
calling for habeas corpus proceedings;
(3) Where actions are coupled with provisional remedies such as
preliminary injunction, attachment, delivery of personal property,
and support pendente lite; and
(4) Where the action may otherwise be barred by the statute of
limitations.
xxx xxx xxx
Sec. 415. Appearance of Parties in Person. In all katarungang
pambarangay proceedings, the parties must appear in person
without the assistance of counsel or representative, except for
minors and incompetents who may be assisted by their next-of-kin
who are not lawyers.
Pursuant to the authority vested in him under Section 421 of the Code, the
Secretary of Justice promulgated the Katarungang Pambarangay Rules to
implement the revised law on katarungang pambarangay. Sections 8 and
11 of Rule VI (Amicable Settlement of Disputes) thereof provide in part as
follows:
SECTION 8. Failure to appear.
a. Sanctions
The complaint may be dismissed when complainant, after due
notice, refuses or willfully fails to appear without justifiable reason
on the date set for mediation, conciliation or arbitration. Such
dismissal ordered by the Punong Barangay/Pangkat Chairman after
giving the complainant an opportunity to explain his non-
appearance shall be certified to by the Lupon or Pangkat Secretary
as the case may be, and shall bar the complainant from seeking
judicial recourse for the same cause of action as that dismissed.
xxx xxx xxx
Sec. 11. Suspension of prescriptive period of offenses and cause of
action. The prescriptive periods for offenses and causes of action
under existing laws shall be interrupted upon filing of the complaint
with the Punong Barangay. The running of the prescriptive periods
shall resume upon receipts by the complainant of the certificate of
repudiation or of the certification to file action issued by the Lupon
or Pangkat Secretary: Provided, however, that such interruption
shall not exceed sixty (60) days from the filing of the complaint with
the Punong Barangay. After the expiration of the aforesaid period
of sixty days, the filing of the case in court or government office for
adjudication shall be subject to the provision of paragraph (b) (4) of
Rule VIII of these Rules.
It may thus be observed that the revised katarungang pambarangay law
has at least three new significant features, to wit:
1. It increased the authority of the lupon in criminal
offenses from those punishable by imprisonment not
exceeding thirty days or a fine not exceeding P200.00 in
P.D. No. 1508 to those offenses punishable by
imprisonment not exceeding one year or a fine not
exceeding P5,000.00.
2. As to venue, it provides that disputes arising at the
workplace where the contending parties are employed or
at the institution where such parties are enrolled for study,
shall be brought in the barangay where such workplace or
institution is located.
3. It provides for the suspension of the prescriptive periods
of offenses during the pendency of the mediation,
conciliation, or arbitration process. Paragraph (c) of Section
410 of the law, however, suffers from some ambiguity
when it provides that the prescriptive periods "shall
resume upon receipt by the complainant of the complaint
or the certificate of repudiation or of the certification to file
action issued by the lupon or pangkat secretary." What is
referred to as receipt by the complainant of the complaint
is unclear; obviously, it could have been a drafting
oversight. Accordingly, in the above quoted Section 11 of
the Rules and Regulations issued by the Secretary of
Justice, the phrase "the complaint or" is not found, such
that the resumption of the running of the prescriptive
period shall, properly, be from receipt by the complainant
of the certificate of repudiation or the certification to file
action issued by the lupon or the pangkat secretary. Such
suspension, however, shall not exceed sixty days.
The first feature has necessarily broadened the jurisdiction of the lupon
and if the mediation and conciliation process at that level would be
effectively pursued, few cases would reach the regular courts, justice
would be achieved at less expense to the litigants, cordial relationships
among protagonists in a small community would be restored, and peace
and order therein enhanced.
The second feature, which is covered by paragraph (d), Section 409 of the
Local Government code, also broadens the authority of the lupon in the
sense that appropriate civil and criminal cases arising from incidents
occurring in workplaces or institutions of learning shall be brought in the
barangay where such workplace or institution is located. That barangay
may not be the appropriate venue in either paragraph (a) or paragraph (b)
of the said section. This rule provides convenience to the parties.
Procedural rules including those relating to venue are designed to insure a
fair and convenient hearing to the parties with complete justice between
them as a result.
14
Elsewise stated, convenience is the raison d'etre of the
rule on venue.
The third feature is aimed at maximizing the effectiveness of the
mediation, conciliation, or arbitration process. It discourages any
intentional delay of the referral to a date close to the expiration of the
prescriptive period and then invoking the proximity of such expiration as
the reason for immediate recourse to the courts. It also affords the parties
sufficient time to cool off and face each other with less emotionalism and
more objectivity which are essential ingredients in the resolution of their
dispute. The sixty-day suspension of the prescriptive period could spell the
difference between peace and a full-blown, wearisome, and expensive
litigation between the parties.
While P.D. No. 1508 has been repealed by the Local Government Code of
1991, the jurisprudence built thereon regarding prior referral to the lupon
as a pre-condition to the filing of an action in court remains applicable
because its provisions on prior referral were substantially reproduced in
the Code.
In Peregrina vs. Panis,
15
this Court stated:
Thus, Morata vs. Go, 125 SCRA 444 (1983), and Vda. de
Borromeo vs. Pogoy, 126 SCRA 217 (1983) have held that P.D.
No. 1508 makes the conciliation process at the Barangay level a
condition precedent for the filing of a complaint in Court. Non-
compliance with that condition precedent could affect the
sufficiency of the plaintiff's cause of action and make his
complaint vulnerable to dismissal on the ground of lack of
cause of action or prematurity. The condition is analogous to
exhaustion of administrative remedies, or the lack of earnest
efforts to compromise suits between family members, lacking
which the case can be dismiss The parties herein fall squarely
within the ambit of P.D. No. 1508. They are actual residents in
the same barangay and their disputes does not fall under any of
the excepted cases." (Emphasis omitted)
Such non-compliance is not, however, jurisdictional. This Court said so in
Garces vs. Court of Appeals:
16

In fine, we have held in the past that prior recourse to the
conciliation procedure required under P.D. 1508 is not a
jurisdictional requirement, non-compliance with which would
deprive a court of its jurisdiction either over the subject matter or
over the person of the defendant. Where, however, the fact of
non-compliance with and non-observance of such procedure has
been seasonably raised as an issue before the court first taking
cognizance of the complaint, dismissal of the action is proper.
xxx xxx xxx
The precise technical effect of failure to comply with the
requirement of P.D. 1508 where applicable is much the same
effect produced by non-exhaustion of administrative remedies;
the complaint becomes afflicted with the vice of pre-maturity; the
controversy there alleged is not ripe for judicial determination.
The complaint becomes vulnerable to a motion to dismiss.
(emphasis omitted)
There were, of course, cases where this Court ruled that the failure of the
defendant to seasonably invoke non-referral to the appropriate lupon
operated as a waiver thereof.
17
Furthermore, when such defect was
initially present when the case was first filed in the trial court, the
subsequent issuance of the certification to file action by the barangay,
which constituted substantial compliance with the said requirement,
cured the defect.
18

On 15 October 1991, this Court promulgated the Revised Rule on
Summary Procedure.
19
Section 18 thereof provides:
Sec. 18. Referral to Lupon. Cases requiring referral to the Lupon
for conciliation under the provisions of Presidential Decree No.
1508 where there is no showing of compliance with such
requirement, shall be dismissed without prejudice, and may be
revived only after such requirement shall have been complied
with. This provision shall not apply to criminal cases where the
accused was arrested without a warrant.
In the proceeding before the court a quo, the petitioner and the
respondent had in mind only P.D. No. 1508. The petitioner further invoked
the aforequoted Section 18. None knew of the repeal of the decree by the
Local Government Code of 1991. Even in her instant petition, the
petitioner invokes the decree and Section 18 of the Revised Rule on
Summary Procedure. However, the private respondents, realizing the
weakness of their position under P.D. No. 1508 since they did refer their
grievances to what might be a wrong forum under the decree, changed
tack. In their Comment, they assert that on 20 April 1993 Atayde "filed a
complaint against petitioner before the barangay council of Barangay
Valenzuela, Makati, in compliance with the requirement of the
Katarungang Pambarangay Law under the Local Government Code."
20
Yet,
in a deliberate effort to be cunning or shrewd, which is condemnable for it
disregards the virtue of candor, they assert that the said law is not
applicable to their cases before the court a quo because (a) the petitioner
and respondent Atayde are not residents of barangays in the same city or
municipality; (b) the law does not apply when the action, as in the said
cases, may otherwise be barred by the statute of limitations; and (c) even
assuming that the law applies insofar as Atayde is concerned, she has
substantially complied with it.
The Office of the Provincial Prosecutor of Rizal should have exerted
enough diligence to inquire from the private respondents if prior referral
to the lupon was necessary before filing the informations.
Respondent judge did not do any better. His total unawareness of the
Local Government Code of 1991, more specifically on the provisions on the
Katarungang pambarangay, is distressing. He should have taken judicial
notice thereof, ever mindful that under Section 1, Rule 129 of the Rules of
Court, courts are mandatorily required to take judicial notice of "the
official acts of the legislative, executive and judicial departments of the
Philippines." We have ruled that a judge is called upon to exhibit more
than just a cursory acquaintance with the statutes and procedural rules.
21

He should have applied the revised katarungang pambarangay law under
the Local Government Code of 1991. Had he done so, this petition would
not have reached us and taken valuable attention and time which could
have been devoted to more important cases.
In view of the private respondents' failure to appear at the first scheduled
mediation on 28 April 1993 for which the mediation was reset to 26 May
1993, no complaint for slight physical injuries could be validly filed with
the MTC of Makati at any time before such date. The filing then of Criminal
Cases Nos. 145233 and 145234 with the said court on 11 May 1993 was
premature and, pursuant to paragraph (a), Section 412 of the Local
Government Code, respondent Judge Contreras should have granted the
motion to dismiss the criminal cases. He cannot justify its denial by taking
refuge under Section 6 of P.D. No. 1508 (more properly, Section 412(b)(4)
of the Local Government Code of 1991) which states that the parties may
go directly to court where the action is about to prescribe. This is because,
as earlier stated, pursuant to paragraph (c), Section 410 of the Code, the
prescriptive period was automatically suspended for a maximum period of
sixty days from 23 April 1993 when the private respondents filed their
complaints with the lupon of Valenzuela Makati.
Moreover, having brought the dispute before the lupon of barangay
Valenzuela, Makati, the private respondents are estopped from
disavowing the authority of the body which they themselves had sought.
Their act of trifling with the authority of the lupon by unjustifiably failing
to attend the scheduled mediation hearings and instead filing the
complaint right away with the trial court cannot be countenanced for to
do so would wreak havoc on the barangay conciliation system.
Granting arguendo that the petitioner did inflict the alleged physical
injuries, the offense for which she may be liable would only be slight
physical injuries under paragraph (2), Article 266 of the Revised Penal
Code, considering that per the medical certificates
22
the injuries sustained
by the private respondents would "heal" in nine days "in the absence of
complication" and there is no showing that the said injuries incapacitated
them for labor or would require medical attendance for such period. The
penalty therefor would only be "arresto menor or a fine not exceeding 200
pesos and censure." These penalties are light under Article 25 of the
Revised Penal Code and would prescribe in two months pursuant to Article
90.
Accordingly, since the slight physical injuries charged in Criminal Cases
Nos. 145233 and 145234 were allegedly inflicted on 17 April 1993, the
prescriptive period therefor would have expired two months thereafter.
Nevertheless, its running was tolled by the filing of the private
respondents' complaints with the lupon of Valenzuela, Makati, on 23 April
1993 and automatically suspended for a period of sixty days, or until 22
June 1993. If no mediation or conciliation could be reached within the said
period of suspension and, accordingly, a certification to file action is
issued, the private respondents would still have fifty-six days within which
to file their separate criminal complaints for such offense. Evidently, there
was no basis for the invocation by the respondent judge of the exception
provided for in paragraph (b), Section 412 of the Local Government Code.
Neither are we persuaded by the reasoning of the respondent Judge that
the petitioner "had already waived the right to a reconciliation
proceedings before the barangay of Valenzuela, Makati, considering that
the accused and the complainant are residents of different barangays."
The petitioner did not waive the reconciliation proceedings before the
lupon of Valenzuela, Makati; she submitted to it and attended the
scheduled conciliation on 28 April 1993 and invoked the pre-condition of
referral to the lupon in her counter-affidavit.
23

Nor would this Court accept the contention of the private respondent that
the parties could not agree on a compromise and that they had to request
the barangay captain to issue a certification to file action.
24
The request is
dated 23 June 1993,
25
or nearly one and a half months after Criminal
Cases Nos. 145233 and 145234 were filed with the court a quo. Evidently,
this was done to support their contention in the said court that, in any
event, there was substantial compliance with the requirement of referral
to the lupon. It must be stressed that the private respondents, after failing
to appear at the initial confrontation and long after the criminal cases
were filed, had no right to demand the issuance of a certification to file
action.
The respondent judge thus acted with grave abuse of discretion in refusing
to dismiss Criminal Cases Nos. 145233 and 145234.
Before closing these cases, this Court wishes to emphasize the vital role
which the revised katarungang pambarangay law plays in the delivery of
justice at the barangay level, in promoting peace, stability, and progress
therein, and in effectively preventing or reducing expensive and
wearisome litigation. Parties to disputes cognizable by the lupon should,
with sincerity, exhaust the remedies provided by that law, government
prosecutors should exercise due diligence in ascertaining compliance with
it, and trial courts should not hesitate to impose the appropriate sanctions
for non-compliance thereof.
WHEREFORE, the instant petition is GRANTED. The Orders of respondent
Judge of 2 July 1993 and 5 August 1993 in Criminal Cases Nos. 145233 and
1452334, both entitled "People of the Philippines vs. Felicidad Uy" are
hereby SET ASIDE and the respondent Judge is hereby DIRECTED to
DISMISS said cases within ten (10) days from receipt of a copy of this
decision.
Costs against the private respondents.
SO ORDERED.
FACTS:

Petitioner Uy subleased from respondent Susanna Atayde the other half of
the second floor of a building Makati. The sublease contract expired on 15
April 1993. However, Uy was not able to remove all her movable
properties.

On 17 April 1993, an argument arose between Uy and Atayde when the
former sought to withdraw from the subleased premises her remaining
movable properties. The argument degenerated into a scuffle between Uy,
on the one hand, and Atayde and several of Atayde's employees, including
private respondent Winnie Javier, on the other.

The private respondents then filed a complaint with the barangay captain
of Valenzuela, Makati, however, during their scheduled confrontation
before the barangay captain, only the petitioner appeared. The prosecutor
then filed two informations for slight physical injuries against the
petitioner with the MTC of Makati.

Petitioner filed a motion to dismiss alleging the prematurity of the filing of
the criminal cases for failure to undergo conciliation proceedings.

On the other hand, private respondents contend that prior referral of the
dispute to the lupon is not applicable since she and petitioner are not
residents of barangays in the same city or municipality or of adjoining
barangays in different cities or municipalities and that referral to the lupon
is not likewise required if the case may otherwise be barred by the statute
of limitations. Moreover, even assuming arguendo that prior referral to
the lupon applies to the case of private respondent, the latter had,
nevertheless, substantially complied with the requirement with the
subsequent certification of the barangay to file the action.

Judge Contreras denied the motion to dismiss. The MR was likewise
denied. Hence, Uy filed a petition for certiorari.


ISSUE:

Whether or not the case should be dismissed


HELD:

While P.D. No. 1508 has been repealed by the L GC of 1991, the
jurisprudence built thereon regarding prior referral to the lupon as a pre-
condition to the filing of an action in court remains applicable because its
provisions on prior referral were substantially reproduced in the Code.

In view of the respondents' failure to appear at the scheduled mediation,
no complaint for slight physical injuries could be validly filed with the MTC
of Makati at any time before such date. The filing then of criminal cases
was premature and respondent Judge Contreras should have granted the
motion to dismiss the criminal cases. He cannot justify its denial by taking
refuge under Section 6 of P.D. No. 1508 (more properly, Section 412(b)(4)
of the Local Government Code of 1991) which states that the parties may
go directly to court where the action is about to prescribe. This is because
pursuant to paragraph (c), Section 410 of the Code, the prescriptive period
was automatically suspended for a maximum period of sixty days from 23
April 1993 when the private respondents filed their complaints with
the lupon of Valenzuela Makati.

Accordingly, since the slight physical injuries charged in Criminal Cases
were allegedly inflicted on 17 April 1993, the prescriptive period therefor
would have expired two months thereafter. Nevertheless, its running was
tolled by the filing of the private respondents' complaints with
the lupon of Valenzuela, Makati, on 23 April 1993 and automatically
suspended for a period of sixty days, or until 22 June 1993. If no mediation
or conciliation could be reached within the said period of suspension and,
accordingly, a certification to file action is issued, the private respondents
would still have fifty-six days within which to file their separate criminal
complaints for such offense. Evidently, there was no basis for the
invocation by the respondent judge of the exception provided for in
paragraph (b), Section 412 of the Local Government Code.

Moreover, having brought the dispute before the lupon of barangay
Valenzuela, Makati, the private respondents are estopped from
disavowing the authority of the body which they themselves had sought.
Their act of trifling with the authority of the lupon by unjustifiably failing
to attend the scheduled mediation hearings and instead filing the
complaint right away with the trial court cannot be countenanced for to
do so would wreak havoc on the barangay conciliation system.

Neither is the argument that petitioner "had already waived the right to a
reconciliation proceedings before the barangay, persuasive. The petitioner
did not waive the reconciliation proceedings before the lupon of
Valenzuela, Makati; she submitted to it and attended the scheduled
conciliation and invoked the pre-condition of referral to the lupon in her
counter-affidavit.

Lastly, nor could the Court accept the contention of the respondent that
the parties could not agree on a compromise and that they had to request
the barangay captain to issue a certification to file action. The request was
nearly one and a half months after criminal cases were filed with the court
a quo. Evidently, this was done to support their contention that, in any
event, there was substantial compliance with the requirement of referral
to the lupon. It must be stressed that the private respondents, after failing
to appear at the initial confrontation and long after the criminal cases
were filed, had no right to demand the issuance of a certification to file
action.
Petition granted. Respondent judge was ordered to dismiss the case