Arbitration Cases

Assignment No. 1
PANG-ET V. MANACNES-DAO-AS (REM)

BARANGAY CONCILIATION

What is compulsory under the Katarungang Pambarangay Law is that there be

CONFRONTATION between the parties before a Lupon and that a certification be
issued that NO CONCILIATION OR SETTLEMENT HAS BEEN REACHED, before a
case falling within the authority of the Lupon may be instituted in court or any
other government office for adjudication.

The only other precondition before any case may be filed before a court is that
there has been personal confrontation between parties but despite earnest efforts
to conciliate, THERE WAS A FAILURE TO AMICABLY SETTLE THE DISPUTE.

While spouses Manacnes appeared before the Lupon, they refused to sign the
Agreement for Arbitration form, which would have signified their consent to
submit the case for arbitration.

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Assignment No. 1
G.R. No. 167261 March 2, 2007
ROSARIA LUPITAN PANG-ET, Petitioner,
vs. CATHERINE MANACNES-DAO-AS, Heir of LEONCIO MANACNES and
FLORENTINA MANACNES, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil
Procedure, assailing the Decision1 of the Court of Appeals in CA-G.R. SP No.
78019, dated 9 February 2005, which reversed and set aside the Judgment2 of
the Regional Trial Court (RTC), Branch 36, Bontoc, Mountain Province, and
reinstated the Resolution3 of the Municipal Circuit Trial Court (MCTC) of Besao-
Sagada, Mountain Province dismissing herein petitioners action for Enforcement
of Arbitration Award and Damages.
The instant petition draws its origin from an Action4
for recovery of possession of
real property situated in Sitio Abatan, Barrio Dagdag, Sagada filed by herein
petitioner before the MCTC of Besao-Sagada, Mountain Province on 9 November
1994, against the spouses Leoncio and Florentina Manacnes, the predecessors-
in-interest of herein respondent.
On 23 February 1995, during the course of the pre-trial, the parties, through their
respective counsels, agreed to refer the matter to the Barangay Lupon (Lupon)
of Dagdag, Sagada for arbitration in accordance with the provisions of the
Katarungang Pambarangay Law.5 Consequently, the proceedings before the
MCTC were suspended, and the case was remanded to the Lupon for resolution.6
Thereafter, the Lupon issued a Certification to File Action on 26 February 1995
due to the refusal of the Manacnes spouses to enter into an Agreement for
Arbitration and their insistence that the case should go to court. On 8 March 1995,
the Certification, as well as the records of the case, were forwarded to the MCTC.
An Order was issued by the MCTC on 7 April 1995, once more remanding the
matter for conciliation by the Lupon and ordering the Lupon to render an
Arbitration Award thereon. According to the MCTC, based on the records of the
case, an Agreement for Arbitration was executed by the parties concerned;
however, the Lupon failed to issue an Arbitration Award as provided under the
Katarungang Pambarangay Law, so that, the case must be returned to the Lupon
until an Arbitration Award is rendered.
In compliance with the MCTC Order, the Lupon rendered an Arbitration Award on
10 May 1995 ordering herein petitioner to retrieve the land upon payment to the
spouses Manacnes of the amount of P8,000.00 for the improvements on the land.
Aggrieved, Leoncios widow,7 Florentina Manacnes, repudiated the Arbitration
Award but her repudiation was rejected by the Lupon. Thereafter, the MCTC was
furnished with copies of the Arbitration Award.
On 1 June 1995, herein petitioner filed with the Lupon a Motion for Execution of
the Arbitration Award. On the other hand, Florentina Manacnes filed a Motion
with the MCTC for the resumption of the proceedings in the original case for
recovery of possession and praying that the MCTC consider her repudiation of the
Arbitration Award issued by the Lupon.
Subsequently, the MCTC heard the Motion of Florentina Manacnes
notwithstanding the latters failure to appear before the court despite notice. The
MCTC denied Florentina Manacnes Motion to repudiate the Arbitration Award
elucidating that since the movant failed to take any action within the 10-day
reglementary period provided for under the Katarungang Pambarangay Law, the
arbitration award has become final and executory. Furthermore, upon motion of
herein petitioner Pang-et, the MCTC issued an Order remanding the records of
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Assignment No. 1
the case to the Lupon for the execution of the Arbitration Award. On 31 August
1995, the then incumbent Punong Barangay of Dagdag issued a Notice of
"Section 415. Appearance of parties in person. In all katarungang pambarangay
Execution of the Award.
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."
Said Notice of Execution was never implemented. Thus, on 16 October 2001,
herein petitioner Pang-et filed with the MCTC an action for enforcement of the
Arbitration Award which was sought to be dismissed by the heir of the Manacnes
It is very clear from the foregoing that personal appearance of the parties in
spouses.8 The heir of the Manacnes spouses argues that the Agreement for
conciliation proceedings before a Lupon Tagapamayapa is mandatory. Likewise,
Arbitration and the Arbitration Award are void, the Agreement for Arbitration not
the execution of the agreement to arbitrate must be done personally by the
having been personally signed by the spouses Manacnes, and the Arbitration
parties themselves so that they themselves are mandated to sign the agreement.
Award having been written in English a language not understood by the parties.

Unfortunately, in this case, it was not respondents-spouses [Manacnis] who

In its Resolution dated 20 August 2002, the MCTC dismissed the Petition for
Enforcement of Arbitration Award in this wise:
x x x Are defendants estopped from questioning the proceedings before the
Lupon Tagapamayapa concerned?
The defendants having put in issue the validity of the proceedings before the
lupon concerned and the products thereof, they are not estopped. It is a
hornbook rule that a null and void act could always be questioned at any time as
the action or defense based upon it is imprescriptible.
signed the agreement to arbitrate as plaintiff herself admitted but another person.
Thus, it is very clear that the mandatory provisos of Section 413 and 415 of RA
7160 are violated. Granting arguendo that it was Catherine who signed the
agreement per instruction of her parents, will it cure the violation? The answer
must still be in the negative. As provided for by the cited provisos of RA 7160, if
ever a party is entitled to an assistance, it shall be done only when the party
concerned is a minor or incompetent. Here, there is no showing that the spouses
[Manacnis] were incompetent. Perhaps very old but not incompetent. Likewise,
what the law provides is assistance, not signing of agreements or settlements.

The second issue: Is the agreement to Arbitrate null and void? Let us peruse the
pertinent law dealing on this matter which is Section 413 of the Local Government
Code of 1991 (RA 7160), to wit:
"Section 413 (a) The parties may, at any stage of the proceedings, agree in
writing that they shall abide by the arbitration award of the lupon chairman or
the pangkat. x x x"
Just suppose the spouses [Manacnis] executed a special power of attorney in
favor of their daughter Catherine to attend the proceedings and to sign the
agreement to arbitrate? The more that it is proscribed by the Katarungang
Pambarangay Law specifically Section 415 of RA 7160 which mandates the
personal appearance of the parties before the lupon and likewise prohibits the
appearance of representatives.

The foregoing should be taken together with Section 415 of the same code which
provides:
In view of the foregoing, it could now be safely concluded that the questioned
agreement to arbitrate is inefficacious for being violative of the mandatory
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Assignment No. 1
provisions of RA 7160 particularly sections 413 and 415 thereof as it was not the
respondents-spouses [Manacnis] who signed it.
The third issue: Is the Arbitration Award now sought to be enforced effective?
Much to be desired, the natural flow of events must follow as a consequence.
Considering that the agreement to arbitrate is inefficacious as earlier declared, it
follows that the arbitration award which emanated from it is also inefficacious.
Further, the Arbitration Award by itself, granting arguendo that the agreement to
arbitrate is valid, will readily show that it does not also conform with the mandate
of the Katarungang Pambarangay Law particularly Section 411 thereto which
provides:
"Sec. 411. Form of Settlement All amicable settlements shall be in writing in a
language or dialect known to the parties x x x. When the parties to the dispute
do not use the same language or dialect, the settlement shall be written in the
language known to them."
Likewise, the implementing rules thereof, particularly Section 13 provides:
"Sec. 13 Form of Settlement and Award. All settlements, whether by
mediation, conciliation or arbitration, shall be in writing, in a language or dialect
known to the parties. x x x"
It is of no dispute that the parties concerned belong to and are natives of the
scenic and serene community of Sagada, Mt. Province who speak the Kankanaey
language. Thus, the Arbitration Award should have been written in the Kankanaey
language. However, as shown by the Arbitration Award, it is written in English
language which the parties do not speak and therefore a further violation of the
Katarungang Pambarangay Law.
IN THE LIGHT of all the foregoing considerations, the above-entitled case is
hereby dismissed.9
Petitioner Pang-ets Motion for Reconsideration having been denied, she filed an
Appeal before the RTC which reversed and set aside the Resolution of the MCTC
and remanded the case to the MCTC for further proceedings. According to the
RTC:
As it appears on its face, the Agreement for Arbitration in point found on page 51
of the expediente, dated Feb. 6, 1995, and attested by the Pangkat Chairman of
the Office of the Barangay Lupon of Dagdag, Sagada was signed by the
respondents/defendants spouses Manacnis. The representative of the Appellee in
the instant case assails such Agreement claiming that the signatures of her
aforesaid predecessors-in-interest therein were not personally affixed by the
latter or are falsified-which in effect is an attack on the validity of the document
on the ground that the consent of the defendants spouses Manacnis is vitiated
by fraud. Indulging the Appellee Heirs of Manacnis its contention that such indeed
is the truth of the matter, the fact still remains as borne out by the circumstances,
that neither did said original defendants nor did any of such heirs effectively
repudiate the Agreement in question in accordance with the procedure outlined
by the law, within five (5) days from Feb. 6, 1995, on the ground as above-stated
(Secs. 413 (a), 418, RA 7160; Secs. 7, 13, KP Law; Sec. 12, Rule IV, KP Rules).
As mandated, such failure is deemed a waiver on the part of the defendants
spouses Manacnis to challenge the Agreement for Arbitration on the ground that
their consent thereto is obtained and vitiated by fraud (Sec. 12, Par. 3, KP Rules).
Corollarily, the Appellee Heirs being privy to the now deceased original
defendants should have not been permitted by the court a quo under the
equitable principle of estoppel, to raise the matter in issue for the first time in the
present case (Lopez vs. Ochoa, 103 Phil. 94).
The Arbitration Award relative to Civil Case 83 (B.C. No. 07) dated May 10, 1995,
written in English, attested by the Punong Barangay of Dagdag and found on
page 4 of the record is likewise assailed by the Appellee as void on the ground
that the English language is not known by the defendants spouses Manacnis who
are Igorots. Said Appellee contends that the document should have been written
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Assignment No. 1
in Kankana-ey, the dialect known to the party (Sec. 413 (b), RA 7160; Sec. 7,
Par. 2, KP law, Sec. 11, KP Rules). On this score, the court a quo presumptuously
concluded on the basis of the self-serving mere say-so of the representative of
the Appellee that her predecessors did not speak or understand English. As a
matter of judicial notice, American Episcopalian Missionaries had been in Sagada,
Mountain Province as early as 1902 and continuously stayed in the place by turns,
co-mingling with the indigenous people thereat, instructing and educating them,
and converting most to the Christian faith, among other things, until the former
left about twenty years ago. By constant association with the white folks, the
natives too old to go to school somehow learned the Kings English by ear and
can effectively speak and communicate in that language. Any which way, even
granting arguendo that the defendants spouses Manacnis were the exceptions
and indeed totally ignorant of English, no petition to nullify the Arbitration award
in issue on such ground as advanced was filed by the party or any of the Appellee
Heirs with the MCTC of Besao-Sagada, within ten (10) days from May 10, 1995,
the date of the document. Thus, upon the expiration thereof, the Arbitration
Award acquired the force and effect of a final judgment of a court (Sec. 416, RA
7160; Sec. 11, KP Law; Sec. 13, KP Rules); conclusive upon the original
defendants in Civil Case 83 (B.C. No. 07) and the Appellee Heirs herein privy to
said defendants.
In the light thereof, the collateral attack of the Appellee on the Agreement for
Arbitration and Arbitration Award re Civil Case 83 (B.C. No. 07) should not have
in the first place been given due course by the court a quo. In which case, it
would not have in the logical flow of things declared both documents
"inefficacious"; without which pronouncements, said court would not have
dismissed the case at bar.
Wherefore, Judgment is hereby rendered Reversing and Setting Aside the
Resolution appealed from, and ordering the record of the case subject thereof
remanded to the court of origin for further proceedings.10
Aggrieved by the reversal of the RTC, herein respondent filed a petition before
the Court of Appeals seeking to set aside the RTC Judgment. On 9 February 2005,
the appellate court rendered the herein assailed Decision, to wit:
After thoroughly reviewing through the record, We find nothing that would show
that the spouses Manacnes were ever amenable to any compromise with
respondent Pang-et. Thus, We are at a loss as to the basis of the Arbitration
Award sought to be enforced by respondent Pang-ets subsequent action before
the MCTC.
There is no dispute that the proceeding in Civil Case No. 83 was suspended and
the same remanded to the Lupon on account of the Agreement to Arbitrate which
was allegedly not signed by the parties but agreed upon by their respective
counsels during the pre-trial conference. In the meeting before the Lupon, it
would seem that the agreement to arbitrate was not signed by the spouses
Manacnes. More importantly, when the pangkat chairman asked the spouses
Manacnes to sign or affix their thumbmarks in the agreement, they refused and
insisted that the case should instead go to court. Thus, the Lupon had no other
recourse but to issue a certificate to file action. Unfortunately, the case was again
remanded to the Lupon to "render an arbitration award". This time, the Lupon
heard the voice tape of the late Beket Padonay affirming respondent Pang-ets
right to the disputed property. While Pang-et offered to pay P8,000.00 for the
improvements made by the spouses Manacnes, the latter refused to accept the
same and insisted on their right to the subject property. Despite this, the Lupon
on May 10, 1995 issued an Arbitration award which favored respondent Pang-et.
From the time the case was first referred to the Lupon to the time the same was
again remanded to it, the Spouses Manacnes remained firm in not entering into
any compromise with respondent Pang-et. This was made clear in both the
minutes of the Arbitration Hearing on 26 February 1995 and on 9 April 1995. With
the foregoing, We find it evident that the spouses Manacnes never intended to
submit the case for arbitration.
Moreover, the award itself is riddled with flaws. First of all there is no showing
that the Pangkat ng Tagapagkasundo was duly constituted in accordance with
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Assignment No. 1
Rule V of the Katarungan Pambarangay Rules. And after constituting of the
Pangkat, Rule VI, thereof the Punong Barangay and the Pangkat must proceed
to hear the case. However, according to the minutes of the hearing before the
lupon on 9 April 1995, the pangkat Chairman and another pangkat member were
absent for the hearing.
Finally, Section 13 of the same Rule requires that the Punong Barangay or the
Pangkat Chairman should attest that parties freely and voluntarily agreed to the
settlement arrived at. But how can this be possible when the minutes of the two
hearings show that the spouses Manacnes neither freely nor voluntarily agreed
to anything.
While RA 7160 and the Katarungan Pambarangay rules provide for a period to
repudiate the Arbitration Award, the same is neither applicable nor necessary
since the Agreement to Arbitrate or the Arbitration Award were never freely nor
voluntarily entered into by one of the parties to the dispute. In short, there is no
agreement validly concluded that needs to be repudiated.
With all the foregoing, estoppel may not be applied against petitioners for an
action or defense against a null and void act does not prescribe. With this, We
cannot but agree with the MCTC that the very agreement to arbitrate is null and
void. Similarly, the arbitration award which was but the off shoot of the
agreement is also void.
WHEREFORE, the RTC judgment of 2 June 2003 is REVERSED and SET ASIDE,
the MCTC Resolution DISMISSING the Civil Case No. 118 for enforcement of
Arbitration Award is REINSTATED.11
Vehemently disagreeing with the Decision of the Court of Appeals, petitioner
Pang-et filed the instant petition. Petitioner maintains that the appellate court
overlooked material facts that resulted in reversible errors in the assailed
Decision. According to petitioner, the Court of Appeals overlooked the fact that
the original parties, as represented by their respective counsels in Civil Case No.
83, mutually agreed to submit the case for arbitration by the Lupon ng
Tagapamayapa of Barangay Dagdag. Petitioner insists that the parties must be
bound by the initial agreement by their counsels during pre-trial to an amicable
settlement as any representation made by the lawyers are deemed made with
the conformity of their clients. Furthermore, petitioner maintains that if indeed
the spouses Manacnes did not want to enter into an amicable settlement, then
they should have raised their opposition at the first instance, which was at the
pre-trial on Civil Case No. 83 when the MCTC ordered that the case be remanded
to the Lupon ng Tagapamayapa for arbitration.
We do not agree with the petitioner.
First and foremost, in order to resolve the case before us, it is pivotal to stress
that, during the initial hearing before the Lupon ng Tagapamayapa, the spouses
Manacnes declined to sign the Agreement for Arbitration and were adamant that
the proceedings before the MCTC in Civil Case No. 83 must continue. As reflected
in the Minutes12 of the Arbitration Hearing held on 26 February 1995, the legality
of the signature of Catherine Manacnes, daughter of the Manacnes spouses, who
signed the Agreement for Arbitration on behalf of her parents, was assailed on
the ground that it should be the spouses Manacnes themselves who should have
signed such agreement. To resolve the issue, the Pangkat Chairman then asked
the spouses Manacnes that if they wanted the arbitration proceedings to
continue, they must signify their intention in the Agreement for Arbitration form.
However, as stated earlier, the Manacnes spouses did not want to sign such
agreement and instead insisted that the case go to court.
Consequently, the Lupon issued a Certification to File Action on 26 February 1995
due to the refusal of the Manacnes spouses. Indicated in said Certification are
the following: 1) that there was personal confrontation between the parties
before the Punong Barangay but conciliation failed and 2) that the Pangkat ng
Tagapagkasundo was constituted but the personal confrontation before the
Pangkat failed likewise because respondents do not want to submit this case for
arbitration and insist that said case will go to court.13 Nevertheless, upon receipt
of said certification and the records of the case, the MCTC ordered that the case
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Assignment No. 1
be remanded to the Lupon ng Tagapamayapa and for the latter to render an
arbitration award, explaining that:
Going over the documents submitted to the court by the office of the Lupon
Tagapamayapa of Dagdag, Sagada, Mountain Province, the court observed that
an "Agreement for Arbitration" was executed by the parties anent the above-
entitled case. However, said Lupon did not make any arbitration award as
mandated by the Katarungang Pambarangay Law but instead made a finding that
the case may now be brought to the court. This is violative of the KP Law, which
cannot be sanctioned by the court.14
At this juncture, it must be stressed that the object of the Katarungang
Pambarangay Law is the amicable settlement of disputes through conciliation
proceedings voluntarily and freely entered into by the parties.15 Through this
mechanism, the parties are encouraged to settle their disputes without enduring
the rigors of court litigation. Nonetheless, the disputing parties are not compelled
to settle their controversy during the barangay proceedings before the Lupon or
the Pangkat, as they are free to instead find recourse in the courts16 in the event
that no true compromise is reached.
The key in achieving the objectives of an effective amicable settlement under the
Katarungang Pambarangay Law is the free and voluntary agreement of the
parties to submit the dispute for adjudication either by the Lupon or the Pangkat,
whose award or decision shall be binding upon them with the force and effect of
a final judgment of a court.17 Absent this voluntary submission by the parties to
submit their dispute to arbitration under the Katarungang Pambarangay Law,
there cannot be a binding settlement arrived at effectively resolving the case.
Hence, we fail to see why the MCTC further remanded the case to the Lupon ng
Tagapamayapa and insisted that the arbitration proceedings continue, despite
the clear showing that the spouses Manacnes refused to submit the controversy
for arbitration.
It would seem from the Order of the MCTC, which again remanded the case for
arbitration to the Lupon ng Tagapamayapa, that it is compulsory on the part of
the parties to submit the case for arbitration until an arbitration award is rendered
by the Lupon. This, to our minds, is contrary to the very nature of the proceedings
under the Katarungang Pambarangay Law which espouses the principle of
voluntary acquiescence of the disputing parties to amicable settlement.
What is compulsory under the Katarungang Pambarangay Law is that there be a
confrontation between the parties before the Lupon Chairman or the Pangkat and
that a certification be issued that no conciliation or settlement has been reached,
as attested to by the Lupon or Pangkat Chairman, before a case falling within the
authority of the Lupon may be instituted in court or any other government office
for adjudication. 18 In other words, the only necessary pre-condition before any
case falling within the authority of the Lupon or the Pangkat may be filed before
a court is that there has been personal confrontation between the parties but
despite earnest efforts to conciliate, there was a failure to amicably settle the
dispute. It should be emphasized that while the spouses Manacnes appeared
before the Lupon during the initial hearing for the conciliation proceedings, they
refused to sign the Agreement for Arbitration form, which would have signified
their consent to submit the case for arbitration. Therefore, upon certification by
the Lupon ng Tagapamayapa that the confrontation before the Pangkat failed
because the spouses Manacnes refused to submit the case for arbitration and
insisted that the case should go to court, the MCTC should have continued with
the proceedings in the case for recovery of possession which it suspended in
order to give way for the possible amicable resolution of the case through
arbitration before the Lupon ng Tagapamayapa.
Petitioners assertion that the parties must be bound by their respective counsels
agreement to submit the case for arbitration and thereafter enter into an amicable
settlement is imprecise. What was agreed to by the parties respective counsels
was the remand of the case to the Lupon ng Tagapamayapa for conciliation
proceedings and not the actual amicable settlement of the case. As stated earlier,
the parties may only be compelled to appear before the Lupon ng Tagapamayapa
for the necessary confrontation, but not to enter into any amicable settlement,
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or in the case at bar, to sign the Agreement for Arbitration. Thus, when the
Manacnes spouses personally appeared during the initial hearing before the
Lupon ng Tagapamayapa, they had already complied with the agreement during
the pre-trial to submit the case for conciliation proceedings. Their presence during
said hearing is already their acquiescence to the order of the MCTC remanding
the case to the Lupon for conciliation proceedings, as there has been an actual
confrontation between the parties despite the fact that no amicable settlement
was reached due to the spouses Manacnes refusal to sign the Agreement for
Arbitration.
Furthermore, the MCTC should not have persisted in ordering the Lupon ng
Tagapamayapa to render an arbitration award upon the refusal of the spouses
Manacnes to submit the case for arbitration since such arbitration award will not
bind the spouses. As reflected in Section 413 of the Revised Katarungang
Pambarangay Law, in order that a party may be bound by an arbitration award,
said party must have agreed in writing that they shall abide by the arbitration
award of the Lupon or the Pangkat. Like in any other contract, parties who have
not signed an agreement to arbitrate will not be bound by said agreement since
it is axiomatic that a contract cannot be binding upon and cannot be enforced
against one who is not a party to it.19 In view of the fact that upon verification
by the Pangkat Chairman, in order to settle the issue of whether or not they
intend to submit the matter for arbitration, the spouses Manacnes refused to affix
their signature or thumb mark on the Agreement for Arbitration Form, the
Manacnes spouses cannot be bound by the Agreement for Arbitration and the
ensuing arbitration award since they never became privy to any agreement
submitting the case for arbitration by the Pangkat.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The
Decision of the Court of Appeals in CA-G.R. SP No. 78019 is hereby AFFIRMED.
The Municipal Circuit Trial Court of Besao-Sagada, Mountain Province, is hereby
ORDERED to proceed with the trial of Civil Case No. 83 for Recovery of Possession
of Real Property, and the immediate resolution of the same with deliberate
dispatch. No costs.
SO ORDERED.
THE LETTER AND INTENT OF THE KATARUNGAN PAMBARANGAY LAW [As
enshrined under P.D.1508 and R.A.7160]
Prior to the enactment of R.A. 7160[1] otherwise known as The Local Government
Code of 1991 (LGC for brevity), the governing laws on barangay justice system
were P.D. 1580[2] and The Local Government Code of 1983. Substantial
provisions of the erstwhile laws were retained if not reproduced in verbatim under
the current law[3]. Moreover under the revised Katarungan Pambarangay Law
jurisdiction has been expanded to include a wider range of cases.[4] It likewise
bears noting that some minor procedural changes have been incorporated in
order to accomplish and safeguard its substantive purposes.
To appreciate more vividly the letter and spirit of this novel innovation, a perusal
of the Whereas clauses of P.D. 1508 is apropos. The preamble of said law
envisioned the following noteworthy objectives. To wit;
WHEREAS, the perpetuation and official recognition of the time-honored tradition
of amicably settling disputes among family and barangay members at the
barangay level without judicial recourse would promote the speedy administration
of justice and implement the constitutional mandate to preserve and develop
Filipino culture and to strengthen the family as a basic social institution;
WHEREAS, the indiscriminate filing of cases in the courts of justice contributes
heavily and unjustifiably to the congestion of court dockets, thus causing a
deterioration in the quality of justice;
WHEREAS, in order to help relieve the courts of such docket congestion and
thereby enhance the quality of justice dispensed by the courts, it is deemed
desirable to formally organize and institutionalize a system of amicably settling
disputes at the barangay level;
It is axiomatic that a preamble is not an essential part of a statute much less a
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condition for its effectivity. Nonetheless it is imperative to note that whereas
clauses state the reasons and objectives of the enactment. As may be gleaned
from the above-quoted clauses, the salient noble purposes of Katarungan
Pambarangay Law are; (1) to obtain a just, speedy and inexpensive settlement
of disputes at the barangay level (2) to preserve Filipino culture and traditions
concerning the amicable settlement of disputes (3) to relieve the courts of docket
congestion and thereby enhance the quality of justice dispensed by them. In the
light thereof, it is undoubted that the heart of this law is geared towards peace
and harmony within the community and to afford accessible and effective form
of justice for community members. Viewed in a different angle, through
mediation, conciliation, or arbitration at the barangay levels, courts will be
relieved of docket congestion which has been considered a perennial setback for
the Philippine justice system. In the same vein, expensive and wearisome court
litigation is prevented and reduced at least gradually. Indeed, as pronounced by
no less than the Supreme Court in the case of Uy v. Contreras[5], the
katarungan pambarangay law plays a vital role in the delivery of justice at the
barangay level, in promoting peace, stability, and progress, and in effectively
preventing or reducing expensive and wearisome litigation. Furthermore in
Lupitan Pang-et v. Manacnes-Dao-As[6] the court held that, the object of
the Katarungan Pambarangay Law is the amicable settlement of disputes through
conciliation proceedings voluntarily and freely entered into by the parties.
Through this mechanism, the parties are encouraged to settle their disputes
without enduring the rigors of court litigation. And in Galuba v. Laureta,[7]
the Court in interpreting P.D.1580 declared,
The primordial objective of P.D. 1508 is to reduce the number of court litigations
and prevent the deterioration of the quality of justice which has been brought
about by the indiscriminate filing of cases in the courts. To allow court actions
assailing unrepudiated amicable settlements would exacerbate congestion of
court dockets. This is repugnant to the spirit of P.D. 1508 x x x
There are also instances wherein the Court is being confronted with issues
relating to the authority of Lupon vis a vis inferior courts. Nevertheless, the Court
in resolving the issue resort to inter alia the intent of the law as envisioned by
the lawmakers set forth in the preamble (whereas clauses of P.D. 1508). As held
in Morata v. Go,[8] the Court through the masterful pen of Justice Escolin said,
By compelling the disputants to settle their differences through the intervention
of the barangay leader and other respected members of the barangay, the
animosity generated by protracted court litigations between members of the
same political unit, a disruptive factor toward unity and cooperation, is avoided.
It must be borne in mind that the conciliation process at the barangay level is
likewise designed to discourage indiscriminate filing of cases in court in order to
decongest its clogged dockets and, in the process, enhance the quality of justice
dispensed by it. Thus, to say that the authority of the Lupon is limited to cases
exclusively cognizable by the inferior courts is to lose sight of this objective.
Worse, it would make the law a self-defeating one. For what would stop a party,
say in an action for a sum of money or damages, as in the instant case, from
bloating up his claim in order to place his case beyond the jurisdiction of the
inferior court and thereby avoid the mandatory requirement of P.D. 1508? And
why, indeed, should the law seek to ease the congestion of dockets only in inferior
courts and not in the regional trial courts where the log-jam of cases is much
more serious? Indeed, the lawmakers could not have intended such half-measure
and self-defeating legislation.
xxx
The objectives of the law are set forth in its preamble thus:
xxx
There can be no question that when the law conferred upon the Lupon the
authority to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes, . its obvious intendment
was to grant to the Lupon as broad and comprehensive an authority as possible
as would bring about the optimum realization of the aforesaid objectives. These
objectives would only be half-met and easily thwarted if the Lupons authority is
exercised only in cases falling within the exclusive jurisdiction of inferior courts.
9
 Arbitration Cases
Assignment No. 1
This is only one of those instances wherein the court harmonizes the letter and
intent of the Katarungan Pambarangay Law to achieve the desired primordial
objectives of the law.

Given the above perspective, it is pristine clear that in interpreting the provisions
of Katarungan Pambarangay Law serious considerations must be given to the
noble intent of the lawmakers. The preamble therefore, is the key to open the
minds of the makers of the law. It is especially helpful when the ambiguity is not
simply that arising from the meaning of particular words, but such as may arise
in respect to the general scope and meaning of a statute. However it must be
emphasized that the letter of the law is equally important and should prevail
under certain circumstances to prevent miscarriage of justice. In fact, it is
essential to note that legislative intent is determined primarily from the language
of the statute which accordingly, affords the best means for its exposition. Hence,
when confronted by procedural ambiguities of the law specifically in barangay
conciliation proceedings, and strict compliance thereof will result to injustice,
legislative intent now comes into play. Failure to apply the following constructions
will definitely undermine and delay the dispensation of barangay justice.

It must be borne in mind that this landmark legislation should never be made
dependent on the whims and caprices of public officials tasked to enforce it. In
any event, public officials (especially Barangay Chairmen) who are duty bound to
implement this law are obligated to respect and be informed of pertinent
jurisprudence on this matter. It is for this purpose that Article 8 of the New Civil
Code is relevant when it enunciates that, Judicial decisions applying and
interpreting the laws or the Constitution shall form a part of the legal system of
the Philippines. Contemporaneous interpretation of laws form part of the law as
of the time of their enactment. They assume the authority as the statute
themselves. They are what the laws mean. They merely establish the
contemporaneous legislative intent that the construed laws purport to carry into
effect.[9] In sum, while it is conceded that public officials are not strictly bound
to the rules of statutory construction, they might as well utilize these rules as
instrument to effectively discharge their duties and functions under the law, and
that is the dispensation of genuine barangay justice.

10
 Arbitration Cases
Assignment No. 1
Rosaria Lupitan Pang-et vs. Catherine Manacnes-Dao-As a. Not personally signed by the parties --- even petitioner herself
admitted that respondent was not the one who signed the
document
b. Catherine (daughter of the respondents) --- even if she signed, it
1. Petitioner filed an action for recovery of possession of real property
will be invalid as the parents cannot be assisted by anyone unless
situated in Sitio Abatan, Barrio Dagdag, Sagada before the MTC against
the respondent spouses they are minor & incompetent
c. Written in English & not understood by the parties
2. During the course of the trial--- parties thru their counsels --- agreed to
d. Consent of the Spouses where vitiated by fraud
refer the matter to the Brgy. Lupon for arbitration in accordance w/ the
2. The respondents never really intended to submit the case for arbitration
provisions of the KPL --- MTC proceedings is suspended
3. 3 days later --- Lupon issued a tion to File an Action due to the refusal of
the Manacnes spouses to enter into an agreement for arbitration and their
insistence that the case should go to court
4. More than a month later --- MCTC remanded the matter for conciliation
by the Lupon & ordered the Lupon to render an Arbitration Award
5. In compliance, Lupon rendered an Arbitration Award ordering the
petitioner to retrieve the land upon payment to the respondents of PHP
8K for the improvements
6. Respondent aggrieved --- repudiated the award but was rejected by the
Lupon
7. 1 month later --- petitioner filed w/ the Lupon a Motion for Execution
while respondent filed a motion for the resumption of the proceedings in
the original case & prayed that her repudiation be considered by the court
8. MTC denied respondents motion contending that the 10-day period for
repudiation had already lapsed and the award became final
9. Almost 2 months later the Brgy. Chairman issued a notice of execution
of the award --- but was not implemented
10. 6 yrs later petitioner filed w/ the MTC an action for the enforcement of
the award --- respondent argues that the award was void for not having
been personally signed by the spouses and in a language not understood
by the parties

Issue: W/N the case properly undergone the KPL Rules?

Held: NO!

1. The award was void:

11
 Arbitration Cases
Assignment No. 1

parcel of land covered by Tax Declaration No. 12080, 23,489 square meters of
SECOND DIVISION
which they also sold to petitioners, and the remaining 500 square meters they
FELICIANO ESGUERRA, CANUTO G.R. No. 169890 sold to their other grandchildren, the brothers Eulalio and Julian Trinidad
ESGUERRA, JUSTA ESGUERRA, ANGEL
ESGUERRA, FIDELA Present: (Trinidad brothers).
ESGUERRA, CLARA ESGUERRA,
and PEDRO ESGUERRA, QUISUMBING, J., Chairperson,
Also sold to the Trinidad brothers were a 7,048-square meter parcel of
Petitioners, CARPIO,
CARPIO MORALES, land covered by Tax Declaration No. 9059, a 4,618-square meter parcel of land
- versus - TINGA, and covered by Tax Declaration No. 12081, and a 768-square meter parcel of land
VIRGINIA TRINIDAD, VELASCO, JR., JJ.
PRIMITIVA TRINIDAD, and THE covered by Tax Declaration No. 13989.
REGISTER OF DEEDS OF Promulgated:
MEYCAUAYAN, BULACAN, March 12, 2007
Respondents. The Esguerra spouses executed the necessary Deed of Sale in favor of
x - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x petitioners on August 11, 1937,[1] and that in favor of the Trinidad brothers
on August 17, 1937.[2] Both documents were executed before notary public
DECISION Maximo Abao.

CARPIO MORALES, J.:
Involved in the present controversy are two parcels of land located
in Camalig, Meycauayan, Bulacan.
Felipe Esguerra and Praxedes de Vera (Esguerra spouses) were the
owners of several parcels of land in Camalig, Meycauayan, Bulacan among them
a 35,284-square meter parcel of land covered by Tax Declaration No. 10374, half
of which (17,642 square meters) they sold to their grandchildren, herein
petitioners Feliciano, Canuto, Justa, Angel, Fidela, Clara and Pedro, all surnamed
Esguerra; and a 23,989-square meter
Eulalio Trinidad later sold his share of the land to his daughters-
respondents herein, via a notarized Kasulatan ng Bilihang Tuluyan ng
Lupa[3] dated October 13, 1965. A portion of the land consisting of 1,693 square
meters was later assigned Lot No. 3593 during a cadastral survey conducted in
the late 1960s.
On respondents application for registration of title, the then Court of First
Instance (CFI) of Bulacan, by Decision[4] of February 20, 1967, awarded Lot No.
3593 in their favor in Land Registration Case No. N-323-V. Pursuant to the
Decision, the Land Registration Commission (LRC, now the Land Registration
Authority [LRA]) issued Decree No. N-114039 by virtue of which the Register of
Deeds of Bulacan issued OCT No. 0-3631[5] in the name of respondents.

12
 Arbitration Cases
Assignment No. 1

Meanwhile, under a notarized Bilihan ng Lupa[6] dated November 10, In the first complaint, docketed as Civil Case No. 737-M-94, petitioners
1958, petitioners sold to respondents parents Eulalio Trinidad and Damiana sought the cancellation of OCT No. 0-3631.
Rodeadilla (Trinidad spouses) a portion of about 5,000 square meters of the In the other complaint, docketed as Civil Case No. 738-M-94, petitioners
23,489-square meter of land which they previously acquired from sought the cancellation of OCT No. 0-6498.
the Esguerra spouses.[7]
Both cases were consolidated and tried before Branch 79 of the RTC
During the same cadastral survey conducted in the late 1960s, it was which, after trial, dismissed the cases by Joint Decision[10] of May 15, 1997.
discovered that the about 5,000-square meter portion of petitioners parcel of land
sold to the Trinidad spouses which was assigned Lot No. 3591 actually measured Their appeal with the Court of Appeals having been dismissed by Decision
6,268 square meters. of February 28, 2005, a reconsideration of which was, by Resolution of October
In a subsequent application for registration of title over Lot No. 3591, 3, 2005,[11] denied, petitioners filed the instant petition.
docketed as Land Registration Case No. N-335-V, the CFI, by
Decision[8] of August 21, 1972, awarded Lot No. 3591 in favor of Eulalio Petitioners fault the appellate court
Trinidad. Pursuant to the Decision, the LRC issued Decree No. N-149491 by virtue
1. . . . in misappreciating the fact that the act of the
of which the Register of Deeds of Bulacan issued OCT No. 0-6498[9] in the name respondent Eulalio Trinidad in acquiring the property from Felipe
of Trinidad. Esguerra constituted fraud.

2. . . . in the [i]nterpretation and application of the

Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT provisions of Article 1542 of the New Civil Code.
No. 0-6498 was transmitted to respondents by succession.
3. . . . in ruling that there is prescription, res judicata, and
violation of the non-[forum] shopping.[12]
Petitioners, alleging that upon verification with the LRA they discovered
the issuance of the above-stated two OCTs, filed on August 29, 1994 before the
In their Comment, respondents assailed the petition as lacking verification
Regional Trial Court (RTC) of Malolos, Bulacan two separate complaints for their
and certification against forum shopping and failing to attach to it an affidavit of
nullification on the ground that they were procured through fraud or
service and material portions of the record in support thereof. Petitioners counter
misrepresentation.
that the procedural deficiencies have been mooted by the filing of a Compliance.

13
 Arbitration Cases
Assignment No. 1
A check of the rollo shows that attached to the petition are an Affidavit
of Service dated November 21, 2005 and the appellate courts Decision of
February 28, 2005 and Resolution of October 3, 2005; and that on January 16,
2006 or almost three months following the last day to file the petition, petitioners
submitted, not at their own instance,[13] a Verification and Sworn Certification on
Non-Forum Shopping signed by petitioner Pedro Esguerra who cited honest and
excusable mistake behind the omission to submit the same.
This Court has strictly enforced the requirement of verification and
certification, obedience to which and to other procedural rules is needed if fair
results are to be expected therefrom.[14] While exceptional cases have been
considered to correct patent injustice concomitant to a liberal application of the
rules of procedure, there should be an effort on the part of the party invoking
liberality to advance a reasonable or meritorious explanation for his failure to
comply with the rules.[15] In petitioners case, no such explanation has been
advanced.
With regard to petitioners failure to attach material portions of the record in
support of the petition, this requirement is not a mere technicality but an essential
requisite for the determination of prima facie basis for giving due course to the
petition.[16] As a rule, a petition which lacks copies of essential pleadings and
portions of the case record may be dismissed. Much discretion is left to the
reviewing court, however, to determine the necessity for such copies as the exact
nature of the pleadings and portions of the case record which must accompany
a petition is not specified.[17]
At all events, technicality aside, the petition must be denied.
It is settled that fraud is a question of fact and the circumstances
constituting the same must be alleged and proved in the court below.[18]
In the present cases, as did the trial court, the appellate court found no
fraud in respondents acquisition and registration of the land, viz:
. . . Appellant Pedro Esguerra even testified that he does not
know how appellees were able to secure a title over the lot in
question and that they never sold Lot No. 3593 to Virginia
Trinidad since it is part of the whole lot of 23,489 square
meters. The said testimony is a mere conclusion on the part of
appellants. On the other hand, the evidence shows that appellees
acquired title over the subject property by virtue of a deed of sale
executed by their father Eulalio Trinidad in their favor.
xxxx
[T]hey failed to establish that appellees acquisition of the
certificate of title is fraudulent. In fact, in their two complaints,
appellants acknowledged that appellees observed and took the
initial procedural steps in the registration of the land, thus ruling
out fraud in the acquisition of the certificate of title. . . .[19]
Factual findings of the trial court, when affirmed by the Court of
Appeals, are final, conclusive and binding on this Court,[20]which is not a trier of
facts,[21] hence, bereft of function under Rule 45 to examine and weigh the
probative value of the evidence presented,[22] its jurisdiction being limited only to
the review and revision of errors of law.[23] Albeit there are exceptions[24] to this
rule, the cases at bar do not fall thereunder, there being no showing that the trial
14
 Arbitration Cases
Assignment No. 1
and appellate courts overlooked matters which, if considered, would alter their
outcome.
Under the Torrens System, an OCT enjoys a presumption of validity,
which correlatively carries a strong presumption that the provisions of the law
governing the registration of land which led to its issuance have been duly
followed.[25] Fraud being a serious charge, it must be supported by clear and
convincing proof.[26] Petitioners failed to discharge the burden of proof, however.
On the questioned interpretation and application by the appellate court
of Article 1542 of the Civil Code reading:
In the sale of real estate, made for a lump sum and not
at the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although there
be a greater or less areas or number than that stated in the
contract.
The same rule shall be applied when two or more
immovables are sold for a single price; but if, besides mentioning
the boundaries, which is indispensable in every conveyance of
real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included
within said boundaries, even when it exceeds the area or number
specified in the contract; and, should he not be able to do so, he
shall suffer a reduction in the price, in proportion to what is
lacking in the area or number, unless the contract is rescinded
because the vendee does not accede to the failure to deliver what
has been stipulated. (Emphasis and underscoring supplied),
while petitioners admittedly sold Lot No. 3591 to the Trinidad spouses, they
contend that what they sold were only 5,000 square meters and not 6,268 square
meters, and thus claim the excess of 1,268 square meters.
In sales involving real estate, the parties may choose between two types
of pricing agreement: a unit price contract wherein the purchase price is
determined by way of reference to a stated rate per unit area (e.g., P1,000 per
square meter), or a lump sum contract which states a full purchase price for
an immovable the area of which may be declared based on an estimate or where
both the area and boundaries are stated (e.g., P1 million for 1,000 square meters,
etc.). In Rudolf Lietz, Inc. v. Court of Appeals,[27] the Court discussed the
distinction:
. . . In a unit price contract, the statement of area of immovable
is not conclusive and the price may be reduced or increased
depending on the area actually delivered. If the vendor delivers
less than the area agreed upon, the vendee may oblige the
vendor to deliver all that may be stated in the contract or demand
for the proportionate reduction of the purchase price if delivery is
not possible. If the vendor delivers more than the area stated in
the contract, the vendee has the option to accept only the amount
agreed upon or to accept the whole area, provided he pays for
the additional area at the contract rate.
xxxx
In the case where the area of the immovable is stated in
the contract based on an estimate, the actual area delivered may
not measure up exactly with the area stated in the
contract. According to Article 1542 of the Civil Code, in the sale
of real estate, made for a lump sum and not at the rate of a
certain sum for a unit of measure or number, there shall be no
increase or decrease of the price, although there be a greater or
less areas or number than that stated in the contract. . . .
15
 Arbitration Cases
Assignment No. 1
deed of sale mentioned the boundaries covering the whole area
xxxx of 33,489 square meters, including the bahaging palayan. Had
appellants intended to sell only a portion of the bahaging palayan,
Where both the area and the boundaries of the they could have stated the specific area in the deed of sale and
immovable are declared, the area covered within the not the entire bahaging palayan . . . .[29]
boundaries of the immovable prevails over the stated
area. In cases of conflict between areas and boundaries, it is the
latter which should prevail. What really defines a piece of In fine, under Article 1542, what is controlling is the entire land included
ground is not the area, calculated with more or less certainty, within the boundaries, regardless of whether the real area should be greater or
mentioned in its description, but the boundaries therein laid
down, as enclosing the land and indicating its limits. In a contract smaller than that recited in the deed. This is particularly true since the area of
of sale of land in a mass, it is well established that the specific the land in OCT No. 0-6498 was described in the deed as humigit kumulang, that
boundaries stated in the contract must control over any statement
is, more or less.[30]
with respect to the area contained within its boundaries. It is not
of vital consequence that a deed or contract of sale of land should
disclose the area with mathematical accuracy. It is sufficient if its A caveat is in order, however. The use of more or less or similar words in
extent is objectively indicated with sufficient precision to enable designating quantity covers only a reasonable excess or deficiency. A vendee of
one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver land sold in gross or with the description more or less with reference to its area
everything within the boundaries, inasmuch as it is the entirety does not thereby ipso facto take all risk of quantity in the land.[31]
thereof that distinguishes the determinate object.[28] (Emphasis
and underscoring supplied)
Numerical data are not of course the sole gauge of unreasonableness of
the excess or deficiency in area. Courts must consider a host of other factors. In

The courts below correctly characterized the sale of Lot No. 3591 as one one case,[32] the Court found substantial discrepancy in area due to

involving a lump sum contract. The Bilihan ng Lupa shows that the parties agreed contemporaneous circumstances.Citing change in the physical nature of the

on the purchase price of P1,000.00 on a predetermined, albeit unsurveyed, area property, it was therein established that the excess area at the southern portion

of 5,000 square meters and not on a particular rate per unit area. As noted by was a product of reclamation, which explained why the lands technical description

the Court of Appeals, the identity of the realty was sufficiently described as in the deed of sale indicated the seashore as its southern boundary, hence, the

riceland: inclusion of the reclaimed area was declared unreasonable.

It is clear from the afore-quoted Bilihan ng Lupa that what In OCT No. 0-6498, the increase by a fourth of a fraction of the area
appellants sold to Eulalio was the bahaging palayan. Though
indicated in the deed of sale cannot be considered as an unreasonable
measured as 5,000 square meters, more or less, such
measurement is only an approximation, and not an exact excess. Most importantly, the circumstances attendant to the inclusion of the
measurement. Moreover, we take note of the fact that the said
16
 Arbitration Cases
Assignment No. 1

excess area bare nothing atypical or significant to hint at unreasonableness. It
must be noted that the land was not yet technically surveyed at the time of the
sale. As vendors who themselves executed the Bilihan ng Lupa, petitioners may
rightly be presumed to have acquired a good estimate of the value and area of
the bahaging palayan.
While petitioners admittedly failed to comply with the requirement of
barangay conciliation, they assert that respondents waived such objection when
they failed to raise it in their Answer. Contrary to petitioners claim, however, the
records reveal that respondents raised their objection in their Amended
Answers[37] filed in both cases.

As for the last assigned error, the appellate court, in finding that the
IN FINE, it is a fundamental principle in land registration that a certificate
complaints were time-barred, noted that when the complaints were filed in 1994,
of title serves as evidence of an indefeasible and incontrovertible title to the
more than 27 years had elapsed from the issuance of OCT No. 0-3631 and more
property in favor of the person whose name appears therein. Such indefeasibility
than 20 years from the issuance of OCT No. 0-6498. The prescriptive period of
commences after the lapse or expiration of one year from the date of entry of
one (1) year had thus set in.
the decree of registration when all persons are considered to have a constructive
notice of the title to the property. After the lapse of one year, therefore, title to
Petitioners reliance on Agne v. Director of Lands[33] is misplaced since the
the property can no longer be contested. This system was so effected in order to
cancellation of title was predicated not on the ground of fraud but on want of
quiet title to land.[38]
jurisdiction. Even assuming that petitioners actions are in the nature of a suit for
quieting of title, which is imprescriptible, the actions still necessarily fail since
WHEREFORE, the petition is DENIED. The assailed Decision and
petitioners failed to establish the existence of fraud. Resolution of the Court of Appeals are AFFIRMED.

A word on Republic Act No. 7160[34] which was raised by petitioners in

Costs against petitioners.
their petition. It expressly requires the parties to undergo a conciliation process
under the Katarungang Pambarangay, as a precondition to filing a complaint in
SO ORDERED.
court,[35] non-compliance with this condition precedent does not prevent a court
of competent jurisdiction from exercising its power of adjudication over a case
unless the defendants object thereto. The objection should be seasonably made
before the court first taking cognizance of the complaint, and must be raised in
the Answer or in such other pleading allowed under the Rules of Court.[36]

17
 Arbitration Cases
Assignment No. 1
THIRD DIVISION
[G.R. No. 146195. November 18, 2004]
AVELINA ZAMORA, EMERITA ZAMORA-NICOL, SONNY NICOL, TERESA
ZAMORA-UMALI, CLARENCE UMALI, ROBERTO ZAMORA,
ROLANDO ZAMORA, MARY ANN ZAMORA, MICHELLE ZAMORA
and RODRIGO ZAMORA, petitioners, vs. HEIRS of CARMEN
IZQUIERDO, represented by their attorney-in-fact, ANITA F.
PUNZALAN, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] assailing the Decision[2] of
the Court of Appeals dated September 12, 2000 and its Resolution dated
December 1, 2000 in CA-G.R. SP No. 54541, entitled Avelina Zamora, et al.,
petitioners, versus Heirs of Carmen Izquierdo, represented by the executrix, Anita
F. Punzalan, respondents.
The records show that sometime in 1973, Carmen Izquierdo and Pablo
Zamora entered into a verbal stipulation whereby the former leased to the latter
one of her apartment units located at 117-B General Luna Street, Caloocan City.
They agreed on the following: the rental is P3,000.00 per month; the leased
premises is only for residence; and only a single family is allowed to occupy it.
After the death of Carmen (lessor) in 1996 her attorney-in-fact, Anita
Punzalan, representing the heirs, herein respondents, prepared a new contract
of lease wherein the rental was increased from P3,000.00 to P3,600.00 per
month.[3] However, petitioners refused to sign it.
In January 1997, Pablo (lessee) died. His wife, Avelina Zamora, and their
children (two of whom have their own families), herein petitioners, continued to
reside in the apartment unit. However, they refused to pay the increased rental
and persisted in operating a photocopying business in the same apartment.
Meanwhile, petitioner Avelina Zamora applied with the Metropolitan
Waterworks & Sewerage System (MWSS) for a water line installation in the
premises. Since a written consent from the owner is required for such installation,
she requested respondents attorney-in-fact to issue it. However, the latter
declined because petitioners refused to pay the new rental rate and violated the
restrictions on the use of the premises by using a portion thereof for photocopying
business and allowing three families to reside therein.
This prompted petitioner Avelina Zamora to file with the Office of the Punong
Barangay of Barangay 16, Sona 2, District I, Lungsod ng Caloocan, a complaint
against Anita Punzalan (respondents attorney-in-fact), docketed as Usaping Bgy.
Blg. 1-27-97, Ukol sa: Hindi Pagbibigay ng Pahintulot sa Pagpapakabit ng Tubig.
On August 24, 1997, during the barangay conciliation proceedings,
petitioner Avelina Zamora declared that she refused to sign the new lease
contract because she is not agreeable with the conditions specified therein.
The following day, Anita Punzalan sent Avelina a letter[4] informing her that
the lease is being terminated and demanding that petitioners vacate the premises
within 30 days from notice.
Despite several barangay conciliation sessions, the parties failed to settle
their dispute amicably. Hence, the Barangay Chairman issued a Certification to
File Action dated September 14, 1997.[5]
Consequently, on October 2, 1997, respondents, represented by Anita
Punzalan, filed with the Metropolitan Trial Court (MTC), Branch 49, Caloocan City,
a complaint for unlawful detainer and damages against petitioners, docketed as
Civil Case No. 23702.[6] Forthwith, petitioners filed a motion to dismiss[7] the
complaint on the ground that the controversy was not referred to
the barangay for conciliation. First, they alleged that the barangay Certification
to File Action is fatally defective because it pertains to another dispute, i.e., the
refusal by respondents attorney-in-fact to give her written consent to petitioners
request for installation of water facilities in the premises. And, second, when the
parties failed to reach an amicable settlement before the Lupong
Tagapamayapa, the Punong Barangay (as Lupon Chairman), did not constitute
the Pangkat ng Tagapagkasundo before whom mediation or arbitration
proceedings should have been conducted, in violation of Section 410(b), Chapter
7 (Katarungang Pambarangay), Title One, Book III of Republic Act No.
7160[8] (otherwise known as the Local Government Code of 1991), which reads:
18
 Arbitration Cases
Assignment No. 1
SECTION 410. Procedure for Amicable Settlement.
(a) x x x
(b) Mediation by lupon chairman Upon receipt of the complaint,
the lupon chairman[9] shall, within the next working day, summon the
respondent(s), with notice to the complainant(s) for them and their witnesses
to appear before him for a mediation of their conflicting interests. If he fails in
his mediation effort within fifteen (15) days from the first meeting of the
parties before him, he shall forthwith set a date for the constitution of
thepangkat in accordance with the provisions of this Chapter. (Underscoring
supplied)
Respondents opposed the motion to dismiss,[10] the same being prohibited
under Section 19 of the 1991 Revised Rule on Summary Procedure. They prayed
that judgment be rendered as may be warranted by the facts alleged in the
complaint, pursuant to Section 6[11] of the same Rule.
On July 9, 1998, the MTC issued an Order[12] denying petitioners motion to
dismiss and considering the case submitted for decision in view of their failure to
file their answer to the complaint.
Petitioners filed a motion for reconsideration,[13] contending that a motion to
dismiss the complaint on the ground of failure to refer the complaint to
the Lupon for conciliation is allowed under Section 19 of the 1991 Revised Rule
on Summary Procedure, which partly provides:
SEC. 19. Prohibited pleadings and motions. The following pleadings,
motions, or petitions shall not be allowed in the cases covered by this Rule:
(a) Motion to dismiss the complaint or to quash the complaint or
information except on the ground of lack of jurisdiction over the subject
matter, or failure to comply with the preceding section [referring to
Section 18 on referral of the complaint to the Lupon for conciliation];
x x x.
On August 26, 1998, the MTC rendered a Judgment[14] in favor of
respondents and against petitioners, the dispositive portion of which reads:
WHEREFORE, Judgment is hereby rendered in favor of the plaintiff and against
the defendants, ordering defendants and all persons claiming right under them:
1) To vacate the leased premises located at No. 117-B General
Luna Street, Caloocan City and to surrender possession
thereof to the plaintiff;
2) To pay the amount of three thousand six hundred
(P3,600.00) pesos per month starting January, 1997 until the
premises being occupied by them is finally vacated and
possession thereof is restored to the plaintiff;
3) To pay plaintiff the sum of five thousand (P5,000.00) pesos
as and for attorneys fees; and
4) To pay the costs of this suit.
SO ORDERED.
On appeal, the Regional Trial Court (RTC), Branch 125, Caloocan City,
rendered its Decision[15] dated February 15, 1999 affirming the MTC Judgment.
Subsequently, it denied petitioners motion for reconsideration.[16]
Petitioners then filed with the Court of Appeals a petition for review,
docketed as CA-G.R. SP No. 54541. On September 12, 2000, it rendered a
Decision[17] affirming the RTC Decision.
Thereafter, petitioners filed a motion for reconsideration but was denied by
the Appellate Court in its Resolution dated December 1, 2000.[18]
Hence, the instant petition.
I
The primordial objective of Presidential Decree No. 1508 (the Katarungang
Pambarangay Law), now included under R.A. No. 7160 (the Local Government
Code of 1991), is to reduce the number of court litigations and prevent the
deterioration of the quality of justice which has been brought about by the
indiscriminate filing of cases in the courts.[19] To attain this objective, Section
412(a) of R.A. No. 7160 requires the parties to undergo a conciliation process
19
 Arbitration Cases
Assignment No. 1
before the Lupon Chairman or the Pangkat as a precondition to filing a complaint
in court, thus:
SECTION 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 orpangkat secretary and attested to by
the lupon or pangkat chairman x x x. (Underscoring supplied)
In the case at bar, the Punong Barangay, as Chairman of the Lupong
Tagapamayapa, conducted conciliation proceedings to resolve the dispute
between the parties herein. Contrary to petitioners contention, the complaint
does not only allege, as a cause of action, the refusal of respondents attorney-
in-fact to give her consent to the installation of water facilities in the premises,
but also petitioners violation of the terms of the lease, specifically their use of a
portion therein for their photocopying business and their failure to pay the
increased rental. As correctly found by the RTC:
The records show that confrontations before the barangay chairman were held
on January 26, 1997, February 9, 1997, February 23, 1997, February 28, 1997,
July 27, 1997, August 3, 1997, August 10, 1997, August 17, 1997 and August
24, 1997 wherein not only the issue of water installation was discussed but also
the terms of the lease and the proposed execution of a written contract relative
thereto. It appears, however, that no settlement was reached despite a total of
nine meetings at the barangay level.
It is of no moment that the complaint was initially made by defendant-appellant
Avelina Zamora because herein plaintiff-appellee was given by the Sangguniang
Barangay the authority to bring her grievance to the Court for resolution. While
it is true that the Sertifikasyon dated September 14, 1997 is entitled Ukol Sa
Hindi Pagbibigay Ng Pahintulot Sa Pagpapakabit Ng Tubig, this title must not
prevail over the actual issues discussed in the proceedings.
Hence, to require another confrontation at the barangay level as a sine qua non
for the filing of the instant case would not serve any useful purpose anymore
since no new issues would be raised therein and the parties have proven so
many times in the past that they cannot get to settle their differences
amicably.[20]
We cannot sustain petitioners contention that the Lupon conciliation alone,
without the proceeding before the Pangkat ng Tagapagkasundo, contravenes the
law on Katarungang Pambarangay. Section 412(a) of R.A. No. 7160, quoted
earlier, clearly provides that, as a precondition to filing a complaint in court, the
parties shall go through the conciliation process either before
the Lupon Chairman (as what happened in the present case), or the Pangkat.
Moreover, in Diu vs. Court of Appeals,[21] we held that notwithstanding the
mandate in Section 410(b) of R.A. No. 7160 that the Barangay Chairman shall
constitute a Pangkat if he fails in his mediation efforts, the same Section 410(b)
should be construed together with Section 412(a) of the same law (quoted
earlier), as well as the circumstances obtaining in and peculiar to the case. Here,
while the Pangkatwas not constituted, however, the parties met nine (9)
times at the Office of the Barangay Chairman for conciliation wherein not only
the issue of water installation was discussed but also petitioners violation of the
lease contract. It is thus manifest that there was substantial compliance with the
law which does not require strict adherence thereto.[22]
II
We hold that petitioners motion to dismiss the complaint for unlawful
detainer is proscribed by Section 19(a) of the 1991 Revised Rule on Summary
Procedure, quoted earlier. Section 19(a) permits the filing of such pleading only
when the ground for dismissal of the complaint is anchored on lack of jurisdiction
over the subject matter, or failure by the complainant to refer the subject
matter of his/her complaint to the Lupon for conciliation prior to its filing
with the court. This is clear from the provisions of Section 18 of the same Rule,
which reads:
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.
(Underscoring supplied)
20
 Arbitration Cases
Assignment No. 1
As discussed earlier, the case was referred to the Lupon Chairman for
conciliation. Obviously, petitioners motion to dismiss, even if allowed, is bereft of
merit.
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution
of the Court of Appeals in CA-G.R. SP No. 54541 sustaining the Decision of the
RTC which upheld the MTC Judgment is AFFIRMED.
Costs against petitioners.
SO ORDERED.

21
 Arbitration Cases
Assignment No. 1
THIRD DIVISION
which dismissed respondent Ernesto Aures (Aure) complaint for ejectment on the
ground, inter alia, of failure to comply with barangay conciliation proceedings.
LIBRADA M. AQUINO,
G.R. No. 153567
Petitioner,
Present: The subject of the present controversy is a parcel of land situated in Roxas

YNARES-SANTIAGO, J., District, Quezon City, with an area of 449 square meters and covered by Transfer
Chairperson, Certificate of Title (TCT) No. 205447 registered with the Registry of Deeds of
AUSTRIA-MARTINEZ,
Quezon City (subject property).[7]
CHICO-NAZARIO,
- versus -
NACHURA, and
REYES, JJ. Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for
ejectment against Aquino before the MeTC docketed as Civil Case No. 17450. In
Promulgated: their Complaint, Aure and Aure Lending alleged that they acquired the subject
ERNEST S. AURE[1], property from Aquino and her husband Manuel (spouses Aquino) by virtue of a
February 18, 2008
Respondent.
Deed of Sale[8] executed on 4 June 1996. Aure claimed that after the spouses
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Aquino received substantial consideration for the sale of the subject property,
they refused to vacate the same.[9]
DECISION
In her Answer,[10] Aquino countered that the Complaint in Civil Case No.
17450 lacks cause of action for Aure and Aure Lending do not have any legal right
CHICO-NAZARIO, J.:
over the subject property. Aquino admitted that there was a sale but such was
governed by the Memorandum of Agreement[11] (MOA) signed by Aure. As stated
Before this Court is a Petition for Review on Certiorari[2] under Rule 45 of the in the MOA, Aure shall secure a loan from a bank or financial institution in his
Revised Rules of Court filed by petitioner Librada M. Aquino (Aquino), seeking the own name using the subject property as collateral and turn over the proceeds
reversal and the setting aside of the Decision[3] dated 17 October 2001 and the thereof to the spouses Aquino.However, even after Aure successfully secured a
Resolution[4]dated 8 May 2002 of the Court of Appeals in CA-G.R. SP No. loan, the spouses Aquino did not receive the proceeds thereon or benefited
63733. The appellate court, in its assailed Decision and Resolution, reversed the therefrom.
Decision[5] of the Regional Trial Court (RTC) of Quezon City, Branch 88, affirming
the Decision[6] of the Metropolitan Trial Court (MeTC) of Quezon City, Branch 32,

22
 Arbitration Cases
Assignment No. 1
On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450
in favor of Aquino and dismissed the Complaint for ejectment of Aure and Aure
Lending for non-compliance with the barangay conciliation process, among other
grounds. The MeTC observed that Aure and Aquino are residents of the
same barangay but there is no showing that any attempt has been made to settle
the case amicably at the barangay level. The MeTC further observed that Aure
Lending was improperly included as plaintiff in Civil Case No. 17450 for it did not
stand to be injured or benefited by the suit. Finally, the MeTC ruled that since the
question of ownership was put in issue, the action was converted from a mere
detainer suit to one incapable of pecuniary estimation which properly rests within
the original exclusive jurisdiction of the RTC. The dispositive portion of the MeTC
Decision reads:
WHEREFORE, premises considered, let this case be, as it
is, hereby ordered DISMISSED. [Aquinos] counterclaim is likewise
dismissed.[12]
On appeal, the RTC affirmed the dismissal of the Complaint on the same
ground that the dispute was not brought before the Barangay Council for
conciliation before it was filed in court. In a Decision dated 14 December 2000,
the RTC stressed that the barangay conciliation process is a conditio sine qua
non for the filing of an ejectment complaint involving residents of the
same barangay, and failure to comply therewith constitutes sufficient cause for
the dismissal of the action. The RTC likewise validated the ruling of the MeTC
that the main issue involved in Civil Case No. 17450 is incapable of pecuniary
estimation and cognizable by the RTC. Hence, the RTC ruled:
WHEREFORE, finding no reversible error in the appealed
judgment, it is hereby affirmed in its entirety.[13]
Aures Motion for Reconsideration was denied by the RTC in an Order[14] dated 27
February 2001.
Undaunted, Aure appealed the adverse RTC Decision with the Court of
Appeals arguing that the lower court erred in dismissing his Complaint for lack of
cause of action. Aure asserted that misjoinder of parties was not a proper ground
for dismissal of his Complaint and that the MeTC should have only ordered the
exclusion of Aure Lending as plaintiff without prejudice to the continuation of the
proceedings in Civil Case No. 17450 until the final determination thereof. Aure
further asseverated that mere allegation of ownership should not divest the MeTC
of jurisdiction over the ejectment suit since jurisdiction over the subject matter is
conferred by law and should not depend on the defenses and objections raised
by the parties. Finally, Aure contended that the MeTC erred in dismissing his
Complaint with prejudice on the ground of non-compliance with barangay
conciliation process. He was not given the opportunity to rectify the procedural
defect by going through the barangay mediation proceedings and, thereafter,
refile the Complaint.[15]
On 17 October 2001, the Court of Appeals rendered a Decision, reversing
the MeTC and RTC Decisions and remanding the case to the MeTC for further
proceedings and final determination of the substantive rights of the parties. The
appellate court declared that the failure of Aure to subject the matter
to barangay conciliation is not a jurisdictional flaw and it will not affect the
sufficiency of Aures Complaint since Aquino failed to seasonably raise such issue
in her Answer. The Court of Appeals further ruled that mere allegation of
23
 Arbitration Cases
Assignment No. 1
ownership does not deprive the MeTC of jurisdiction over the ejectment case for
jurisdiction over the subject matter is conferred by law and is determined by the
allegations advanced by the plaintiff in his complaint. Hence, mere assertion of
ownership by the defendant in an ejectment case will not oust the MeTC of its
summary jurisdiction over the same. The decretal part of the Court of Appeals
Decision reads:
WHEREFORE, premises considered, the petition is hereby
GRANTED - and the decisions of the trial courts below REVERSED
and SET ASIDE. Let the records be remanded back to the court
a quo for further proceedings for an eventual decision of the
substantive rights of the disputants.[16]
In a Resolution dated 8 May 2002, the Court of Appeals denied the Motion
for Reconsideration interposed by Aquino for it was merely a rehash of the
arguments set forth in her previous pleadings which were already considered and
passed upon by the appellate court in its assailed Decision.
Aquino is now before this Court via the Petition at bar raising the following issues:
I.
WHETHER OR NOT NON-COMPLIANCE WITH THE BARANGAY
CONCILIATION PROCEEDINGS IS A JURISDICTIONAL DEFECT
THAT WARRANTS THE DISMISSAL OF THE COMPLAINT.
II.
WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS THE MeTC OF
ITS JURISDICTION OVER AN EJECTMENT CASE.
The barangay justice system was established primarily as a means of
easing up the congestion of cases in the judicial courts. This could be
accomplished through a proceeding before the barangay courts which, according
to the conceptor of the system, the late Chief Justice Fred Ruiz Castro, is
essentially arbitration in character, and to make it truly effective, it should also
be compulsory. With this primary objective of the barangay justice system in
mind, it would be wholly in keeping with the underlying philosophy of Presidential
Decree No. 1508, otherwise known as the Katarungang Pambarangay Law, and
the policy behind it would be better served if an out-of-court settlement of the
case is reached voluntarily by the parties.[17]
The primordial objective of Presidential Decree No. 1508 is to reduce the number
of court litigations and prevent the deterioration of the quality of justice which
has been brought by the indiscriminate filing of cases in the courts.[18] To ensure
this objective, Section 6 of Presidential Decree No. 1508[19] requires the parties
to undergo a conciliation process before the Lupon Chairman or the Pangkat ng
Tagapagkasundo as a precondition to filing a complaint in court subject to certain
exceptions[20] which are inapplicable to this case. The said section has been
declared compulsory in nature.[21]
Presidential Decree No. 1508 is now incorporated in Republic Act No.
7160, otherwise known as The Local Government Code, which took effect on 1
January 1992.
The pertinent provisions of the Local Government Code making
conciliation a precondition to filing of complaints in court, read:
24
Arbitration Cases
Assignment No. 1
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.
(c) Conciliation among members of indigenous cultural
communities. The customs and traditions of indigenous cultural
communities shall be applied in settling disputes between
members of the cultural communities.
SEC. 408. Subject Matter for Amicable Settlement;
Exception Therein. 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;
(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.
There is no dispute herein that the present case was never referred to
the Barangay Lupon for conciliation before Aure and Aure Lending instituted Civil
Case No. 17450. In fact, no allegation of such barangay conciliation proceedings
was made in Aure and Aure Lendings Complaint before the MeTC. The only issue
to be resolved is whether non-recourse to the barangay conciliation process is a
jurisdictional flaw that warrants the dismissal of the ejectment suit filed with the
MeTC.
Aquino posits that failure to resort to barangay conciliation makes the
action for ejectment premature and, hence, dismissible.She likewise avers that
this objection was timely raised during the pre-trial and even subsequently in her
Position Paper submitted to the MeTC.
25
 Arbitration Cases
Assignment No. 1
We do not agree. now be allowed belatedly to adopt an inconsistent
posture by attacking the jurisdiction of the court to which
they had submitted themselves voluntarily. x x x (Emphasis
It is true that the precise technical effect of failure to comply with the supplied.)
requirement of Section 412 of the Local Government Code
on barangay conciliation (previously contained in Section 5 of Presidential Decree
In the case at bar, we similarly find that Aquino cannot be allowed to attack the
No. 1508) is much the same effect produced by non-exhaustion of administrative
jurisdiction of the MeTC over Civil Case No. 17450 after having submitted herself
remedies -- the complaint becomes afflicted with the vice of pre-maturity; and
voluntarily thereto. We have scrupulously examined Aquinos Answer before the
the controversy there alleged is not ripe for judicial determination. The complaint
MeTC in Civil Case No. 17450 and there is utter lack of any objection on her part
becomes vulnerable to a motion to dismiss.[22]Nevertheless, the conciliation
to any deficiency in the complaint which could oust the MeTC of its jurisdcition.
process is not a jurisdictional requirement, so that non-compliance
therewith cannot affect the jurisdiction which the court has otherwise
We thus quote with approval the disquisition of the Court of Appeals:
acquired over the subject matter or over the person of the defendant.[23]

Moreover, the Court takes note that the defendant

As enunciated in the landmark case of Royales v. Intermediate Appellate [Aquino] herself did not raise in defense the aforesaid lack of
conciliation proceedings in her answer, which raises the exclusive
Court[24]:
affirmative defense of simulation. By this acquiescence,
defendant [Aquino] is deemed to have waived such objection. As
held in a case of similar circumstances, the failure of a defendant
Ordinarily, non-compliance with the condition precedent
[Aquino] in an ejectment suit to specifically allege the fact that
prescribed by P.D. 1508 could affect the sufficiency of the
there was no compliance with the barangay conciliation procedure
plaintiff's cause of action and make his complaint vulnerable to
constitutes a waiver of that defense. x x x.[25]
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, as in this case, By Aquinos failure to seasonably object to the deficiency in the Complaint,
failed to object to such exercise of jurisdiction in their she is deemed to have already acquiesced or waived any defect attendant
answer and even during the entire proceedings a quo.
thereto. Consequently, Aquino cannot thereafter move for the dismissal of the
While petitioners could have prevented the trial court ejectment suit for Aure and Aure Lendings failure to resort to
from exercising jurisdiction over the case by seasonably taking
exception thereto, they instead invoked the very same jurisdiction the barangay conciliation process, since she is already precluded from doing
by filing an answer and seeking affirmative relief from it. What is so. The fact that Aquino raised such objection during the pre-trial and in her
more, they participated in the trial of the case by cross-examining
respondent Planas. Upon this premise, petitioners cannot
26
 Arbitration Cases
Assignment No. 1
Position Paper is of no moment, for the issue of non-recourse
to barangay mediation proceedings should be impleaded in her Answer.
As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure:
Sec. 1. Defenses and objections not pleaded. Defenses and
objections not pleaded either in a motion to dismiss or in
the answer are deemed waived. However, when it appears
from the pleadings or the evidence on record that the court has
no jurisdiction over the subject matter, that there is another
action pending between the same parties for the same cause, or
that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim. (Emphasis supplied.)
While the aforequoted provision applies to a pleading (specifically, an Answer) or
a motion to dismiss, a similar or identical rule is provided for all other motions in
Section 8 of Rule 15 of the same Rule which states:
Sec. 8. Omnibus Motion. - Subject to the provisions of Section 1
of Rule 9, a motion attacking a pleading, order, judgment, or
proceeding shall include all objections then available, and all
objections not so included shall be deemed waived.
The spirit that surrounds the foregoing statutory norm is to require the party filing
a pleading or motion to raise all available exceptions for relief during the single
opportunity so that single or multiple objections may be avoided.[26] It is clear
and categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to
raise defenses and objections in a motion to dismiss or in an answer is deemed
a waiver thereof; and basic is the rule in statutory construction that when the law
is clear and free from any doubt or ambiguity, there is no room for construction
or interpretation.[27] As has been our consistent ruling, where the law speaks in
clear and categorical language, there is no occasion for interpretation; there is
only room for application.[28] Thus, although Aquinos defense of non-compliance
with Presidential Decree No. 1508 is meritorious, procedurally, such defense is
no longer available for failure to plead the same in the Answer as required by
the omnibus motion rule.
Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997
Rules of Civil Procedure provide only three instances when the court may motu
proprio dismiss the claim, and that is when the pleadings or evidence on the
record show that (1)the court has no jurisdiction over the subject matter;
(2) there is another cause of action pending between the same parties for the
same cause; or (3) where the action is barred by a prior judgment or by a statute
of limitations. Thus, it is clear that a court may not motu proprio dismiss a case
on the ground of failure to comply with the requirement for barangay conciliation,
this ground not being among those mentioned for the dismissal by the trial court
of a case on its own initiative.
Aquino further argues that the issue of possession in the instant case cannot be
resolved by the MeTC without first adjudicating the question of ownership, since
the Deed of Sale vesting Aure with the legal right over the subject property is
simulated.
Again, we do not agree. Jurisdiction in ejectment cases is determined by
the allegations pleaded in the complaint. As long as these allegations
demonstrate a cause of action either for forcible entry or for unlawful detainer,
the court acquires jurisdiction over the subject matter. This principle holds, even
if the facts proved during the trial do not support the cause of action thus alleged,
27
 Arbitration Cases
Assignment No. 1
several demands made by [Aure and Aure Lending] against
in which instance the court -- after acquiring jurisdiction -- may resolve to dismiss
[Aquino] and all persons claiming right under her to vacate the
the action for insufficiency of evidence. subject premises and surrender possession thereof to [Aure and
Aure Lending] causing damage and prejudice to [Aure and Aure
Lending] and making [Aquinos] occupancy together with those
The necessary allegations in a Complaint for ejectment are set forth in actually occupying the subject premises claiming right under her,
Section 1, Rule 70 of the Rules of Court, which reads: illegal.[29]
SECTION 1. Who may institute proceedings, and when. Subject
to the provisions of the next succeeding section, a person
deprived of the possession of any land or building by force, It can be inferred from the foregoing that Aure, together with Aure
intimidation, threat, strategy, or stealth, or a lessor, vendor,
vendee, or other person against whom the possession of any land Lending, sought the possession of the subject property which was never
or building is unlawfully withheld after the expiration or surrendered by Aquino after the perfection of the Deed of Sale, which gives rise
termination of the right to hold possession, by virtue of any
to a cause of action for an ejectment suit cognizable by the MeTC. Aures assertion
contract, express or implied, or the legal representatives or
assigns of any such lessor, vendor, vendee, or other person may of possession over the subject property is based on his ownership thereof as
at any time within one (1) year after such unlawful deprivation or
evidenced by TCT No. 156802 bearing his name. That Aquino impugned the
withholding of possession, bring an action in the proper Municipal
Trial Court against the person or persons unlawfully withholding validity of Aures title over the subject property and claimed that the Deed of Sale
or depriving of possession, or any person or persons claiming was simulated should not divest the MeTC of jurisdiction over the ejectment
under them, for the restitution of such possession, together with
damages and costs. case.[30]

In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997,
alleged as follows: As extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v.
2. [Aure and Aure Lending] became the owners of a Court of Appeals[31]:
house and lot located at No. 37 Salazar Street corner Encarnacion
Street, B.F. Homes, Quezon City by virtue of a deed of absolute
As the law on forcible entry and unlawful detainer cases now
sale executed by [the spouses Aquino] in favor of [Aure and Aure
stands, even where the defendant raises the question of
Lending] although registered in the name of x x x Ernesto S. Aure;
ownership in his pleadings and the question of possession cannot
title to the said property had already been issued in the name of
be resolved without deciding the issue of ownership, the
[Aure] as shown by a transfer Certificate of Title , a copy of which
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
is hereto attached and made an integral part hereof as Annex A;
Circuit Trial Courts nevertheless have the undoubted competence
to resolve the issue of ownership albeit only to determine the
3. However, despite the sale thus transferring ownership of the
issue of possession.
subject premises to [Aure and Aure Lending] as above-stated and
consequently terminating [Aquinos] right of possession over the
x x x. The law, as revised, now provides instead that when
subject property, [Aquino] together with her family, is
the question of possession cannot be resolved without
continuously occupying the subject premises notwithstanding
28
 Arbitration Cases
Assignment No. 1
deciding the issue of ownership, the issue of ownership
shall be resolved only to determine the issue of
possession. On its face, the new Rule on Summary Procedure WHEREFORE, premises considered, the instant Petition
was extended to include within the jurisdiction of the inferior is DENIED. The Court of Appeals Decision dated 17 October 2001 and its
courts ejectment cases which likewise involve the issue of
ownership. This does not mean, however, that blanket authority Resolution dated 8 May 2002 in CA-G.R. SP No. 63733 are
to adjudicate the issue of ownership in ejectment suits has been hereby AFFIRMED. Costs against the petitioner.
thus conferred on the inferior courts.
SO ORDERED.
At the outset, it must here be stressed that the resolution
of this particular issue concerns and applies only to forcible entry
and unlawful detainer cases where the issue of possession is
intimately intertwined with the issue of ownership. It finds no
proper application where it is otherwise, that is, where ownership
is not in issue, or where the principal and main issue raised in the
allegations of the complaint as well as the relief prayed for make
out not a case for ejectment but one for recovery of ownership.

Apropos thereto, this Court ruled in Hilario v. Court of Appeals[32]:

Thus, an adjudication made therein regarding the issue of

ownership should be regarded as merely provisional and,
therefore, would not bar or prejudice an action between the same
parties involving title to the land. The foregoing doctrine is a
necessary consequence of the nature of forcible entry and
unlawful detainer cases where the only issue to be settled is the
physical or material possession over the real property, that is,
possession de facto and not possession de jure.

In other words, inferior courts are now conditionally vested with adjudicatory
power over the issue of title or ownership raised by the parties in an ejectment
suit. These courts shall resolve the question of ownership raised as an incident in
an ejectment case where a determination thereof is necessary for a proper and
complete adjudication of the issue of possession.[33]
29
 Arbitration Cases
Assignment No. 1
SECOND DIVISION
[G.R. No. 159411. March 18, 2005]
TEODORO I. CHAVEZ, petitioner, vs. HON. COURT OF APPEALS and
JACINTO S. TRILLANA, respondents.
DECISION
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.:
KASUNDUAN
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:
30
 Arbitration Cases
Assignment No. 1
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-parte before 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.
31
 Arbitration Cases
Assignment No. 1
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 Barangay which 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
32
 Arbitration Cases
Assignment No. 1
factual or legal basis exists for the reimbursement of alleged advance rentals, IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The assailed
moral and exemplary damages, and attorneys fees awarded by the court a quo Decision dated April 2, 2003 of the Court of Appeals in CA-G.R. CV No. 59023 is
and the Court of Appeals. modified by deleting the award of P300,000.00 as reimbursement of advance
rentals. The assailed Decision is AFFIRMED in all other respects.
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 SO ORDERED.
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.
33
 Arbitration Cases
Assignment No. 1
SECOND DIVISION Sometime in January 1993, Harold engaged the services of
MARIA L. HAROLD, G.R. No. 130864 respondent Agapito T. Aliba, a geodetic engineer, to conduct a relocation survey
and to execute a consolidation-subdivision of their properties including that of
Petitioner,
Present: Harolds sister, Alice Laruan, located in Pico, La Trinidad, Benguet. After
completing his work, Aliba was paid P4,050 for his services, but he failed to
return the certificates of title of the said properties for more than one year,
QUISUMBING, J., Chairperson,
despite repeated demands to return them.
- versus - CARPIO,

CARPIO MORALES, It also appears that sometime in January 1994, Aliba prevailed upon
Harold and her husband to sign a document which was supposedly needed to
TINGA, and
facilitate the consolidation-subdivision and the issuance of separate transfer
VELASCO, JR., JJ.
certificates of title over the properties. Harold and her husband signed the
AGAPITO T. ALIBA, document without reading it.
Respondent. Promulgated:
Thereafter, on April 18, 1994, a truck loaded with G.I. sheets and
construction materials came to the subject lot[2] owned by Harold. Upon inquiry,
October 2, 2007
Harold and her husband were informed that Aliba had sold the lot to a third
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - person.
- - -x

DECISION On several occasions, Aliba tried to convince Harold to accept the sum
of P400,000 which was later on increased to P500,000, as purchase price of the
QUISUMBING, J.:
said lot. It was only after such offers were made that Aliba told Harold that he

For review on certiorari is the Decision[1] dated September 3, 1997 of the had indeed sold the lot.

Court of Appeals in CA-G.R. SP No. 40416, affirming the dismissal of petitioner

On May 3, 1994, Harold agreed to accept the P500,000 from Aliba but only
Maria L. Harolds complaint before the Municipal Trial Court of La
as partial payment, considering that the lot has an aggregate value
Trinidad, Benguet.
of P1,338,000[3] or P6,000 per square meter. On the same date, Harold was made

The pertinent facts are as follows:

34
 Arbitration Cases
Assignment No. 1
to sign an acknowledgment receipt and other papers which were made to appear
that Harold accepted the sum of P480,000 as full and final payment for the lot.
Harold later discovered that Aliba made it appear that she had sold the lot
to him for P80,000 and had her certificates of title cancelled and transferred to
him. Harold also found out that the alleged deed of sale was the document
that Aliba caused Harold and her husband to sign in January 1994.
Thinking that she can no longer recover her property, Harold asked for
the payment of the fair market value of her property but to no avail. The dispute
between Harold and Aliba was referred to Punong Barangay Limson Ogas and
the LupongTagapamayapa. During the June 8, 1994 barangay conciliation
proceedings, the parties herein agreed that Aliba will pay an additional amount
of P75,000 to the initial P500,000 Aliba had already given to Harold. In the same
proceedings, Aliba tendered P70,000, which Harold accepted.[4] The receipt of
the amount given was evidenced by an acknowledgment receipt signed by the
parties herein, attested to by the Lupon chairman, and witnessed by
several barangay officials.[5]
On June 9, 1994, as agreed upon, Aliba tendered the
remaining P5,000 to Harold to complete their amicable settlement.Unfortunately,
Harold refused to accept the same, saying that P5,000 is not enough and insisted
on the elevation of the case to the court.[6] Thus, a certification to file
action[7] was issued by the Office of the Lupong Tagapamayapa on June 29,
1994.Immediately thereafter, Harold filed a Complaint[8] against Aliba before the
Municipal Trial Court (MTC) of La Trinidad, Benguet.
In his Answer,[9] Aliba prayed for the dismissal of the complaint,
considering that he had already been absolutely released from any obligation to
Harold and that what remains to be done is merely the completion of the amicable
settlement of the parties.
On September 4, 1995, the MTC issued an Order dismissing Harolds
complaint, holding that
xxxx
It is not disputed that on June 8, 1994, both parties met
before Barangay Captain Limson Ogas. After a lengthy
deliberation, towards mediation, it was agreed by both parties in
the presence of Barangay Officials that Mr. Agapito Aliba will pay
an additional amount of P75,000.00 to settle once and for all the
case. Mr. Aliba at that time has in his possession P70,000.00,
because that was the amount previously agreed upon by both
parties. The amount of P70,000.00 was personally handed by
Mr. Aliba to Mrs. Harold, on that day, the remaining balance of
P5,000.00 to be paid the following day, June 9, 1994. An
Acknowledgment Receipt was signed by Mrs. Harold and
witnessed by the barangay officials. . . .
The said minutes further states therein, continued for the
second day, which logically means that the balance be given the
following day.
In the afternoon of June 9, 1994, Mr. Aliba returned with
the remaining balance of P5,000.00. It was at this time that when
Mr. Aliba was supposed to hand the money Mrs. Harold bluntly
told him the amount of P5,000 is still not enough and instead she
started crying and shouting . . . .
35
Arbitration Cases
Assignment No. 1
The last paragraph [of the minutes] states
Mr. Aliba requested then if the paid amount of P70,000.00 be
returned. Mrs. Harold refused and opted that this case be
elevated to the higher court.
Based on the minutes of the mediation proceedings, it is
clear that Barangay Captain Ogas was able to successfully mediate
the case between plaintiff and defendant. As a matter of
fact, Aliba has already substantially complied. It is not disputed
that he gave plaintiff, on that occasion, P70,000.00, and to give the
balance of P5,000.00, the day after. Thus, there was meeting of
the minds between the parties on a lawful subject, and there
was substantial fulfillment of the obligation. Regret[t]ably, when
the small balance is to be paid, Mrs. Harold reneged on the
agreement, saying P75,000.00[10] is not enough, then insisted that
the case be filed in court, but at the same time refusing to return
the P70,000.00, when defendant tried to collect it
back. Consequently, the issuance of the Certificate to File Action, is
improper because no valid repudiation [of the amicable settlement]
was made.
Obviously, Mrs. Harold wants her cake and eat it too, so
to speak. It is in[i]quitous to allow Mrs. Harold to exact
substantial fulfillment from Aliba then conveniently change her
mind overnight and worse, to refuse to give back what she
already received.
The Court agrees with defendant that there is no clear
repudiation of the agreement. It would have been different if Mrs.
Harold returned the P70,000.00 to the defendant, after changing
her mind. There would have been a clear repudiation of the
amicable settlement.[11]
The dispositive portion of the said MTC Order reads:
WHEREFORE, in view of the foregoing findings, the
Motion to Dismiss, incorporated in the Answer is hereby
granted. This case is hereby ordered dismissed.
However, defendant is hereby ordered to tender payment
to plaintiff his balance in the amount of P5,000.00 when this order
becomes final and executory.
SO ORDERED.[12]
Dissatisfied, Harold filed an appeal before the Regional Trial Court (RTC),
Branch 63, of La Trinidad, Benguet.
In an Order dated February 20, 1996, the RTC affirmed in toto the
assailed Order of the MTC.
Undaunted, Harold further appealed to the Court of Appeals, which
however denied the same. Hence this petition, on the following grounds:
I.
WHETHER OR NOT THE THREE LOWER COURTS WERE CORRECT
IN DISMISSING HER COMPLAINT ON THE SOLE GROUND THAT
SHE AND RESPONDENT WERE ABLE TO ARRIVE [AT] A
MUTUALLY ACCEPTABLE AMICABLE SETTLEMENT BEFORE
THE BARANGAY COURT OF THEIR PLACE WHEN CLEARLY ALL
CIRCUMSTANCES SHOW THERE WAS NO MEETING OF MINDS
BETWEEN THEM.
II.
GRANTING, WITHOUT ADMITTING, THERE WAS A MEETING OF
MINDS BETWEEN THE PARTIES AND THEREFORE, THERE WAS A
VALID AMICABLE SETTLEMENT, WHETHER OR NOT THE
ACKNOWLEDGEMENT RECEIPT SIGNED BY PETITIONER AND
36
 Arbitration Cases
Assignment No. 1
THE MINUTES OF THE PROCEEDINGS IS A SUBSTANTIAL
COMPLIANCE WITH THE REQUIREMENT OF SECTION 411 OF RA
7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE
OF 1991 AS CONCLUDED BY THE MUNICIPAL TRIAL COURT, AND
AFFIRMED BY THE REGIONAL TRIAL COURT AND COURT OF
APPEALS.
III.
GRANTING, WITHOUT ADMITTING, SAID LAW WAS
SUBSTANTIALLY COMPLIED WITH, WHETHER OR NOT
PETITIONERS ACT OF NOT ACCCEPTING THE REMAINING
BALANCE BEING PROFFERED BY RESPONDENT AND HER
INSISTENCE THAT THE CASE BE INSTEAD ELEVATED TO THE
COURTS DURING THE SECOND DAY OF HEARING SHOULD NOT
ALSO BE CONSIDERED A REPUDIATION OF SAID AMICABLE
SETTLEMENT OR AT THE VERY LEAST A SUBSTANTIAL
COMPLIANCE THEREOF.[13]
Essentially, we are asked to resolve whether the Court of Appeals
committed reversible error in affirming the dismissal of the complaint on the
ground that the dispute between the parties had already been amicably settled
during the barangay conciliation proceedings.
After a careful scrutiny of the records of this case, we hold that no reason
exists to overturn the decision of the Court of Appeals affirming the dismissal of
the subject complaint.
In this case, Harolds main contention was hinged on the alleged non-
perfection of the questioned amicable settlement between her and Aliba because
there was allegedly no meeting of the minds between them regarding the subject
matter and the cause thereof.[14] On the other hand, Alibas principal defense is
anchored on the alleged existence and validity of the said amicable settlement.[15]
Harolds submission that there was no meeting of the minds between the
parties herein pertaining to the subject matter and cause of the questioned amicable
settlement is a clear deviation from the facts on record. Admittedly, both parties
agreed during the June 8, 1994 barangay conciliation proceedings for Aliba to pay
an additional amount of P75,000 (which was the object or subject matter of the
amicable settlement) to the initial P500,000 Aliba had given to Harold as purchase
price for the subject lot in order to put an end to their dispute (which was the cause
or reason of the amicable settlement). Thus, it is evident that the parties herein
entered into an amicable settlement, or more specifically, a compromise agreement,
during the said barangay conciliation proceedings.
Under Article 2028 of the Civil Code, a compromise agreement was defined
as a contract whereby the parties, by making reciprocal concessions, avoid
litigation or put an end to one already commenced. In Sanchez v. Court of
Appeals,[16] we held that a compromise is a form of amicable settlement that is not
only allowed but also encouraged in civil cases.[17]
It must also be highlighted that Harold expressly acknowledged that the offer
made by Aliba to pay an additional P75,000 was made in order for her to desist
from pursuing her case against him.[18] By reason of her unconditional
acceptance of the offer and the P70,000 tendered to her, Harold had already
effectively waived whatever claims she might have against Aliba regarding the
subject lot. Moreover, she is likewise barred from pursuing her case
against Aliba under the principle of estoppel now.
37
 Arbitration Cases
Assignment No. 1

Under Article 1431 of the Civil Code, through estoppel, an admission or Moreover, even without the minutes of the meeting and the
representation is rendered conclusive upon the person making it, and cannot be acknowledgment receipt, the amicable settlement, or more specifically the
denied or disproved as against the person relying on it. Expounding on the compromise agreement, entered into by the parties is undeniably valid, considering
principle of estoppel, we held in Springsun Management Systems Corporation that a compromise agreement is a consensual contract, and as such, it is perfected
v. Camerino[19] that where a party, by his deed or conduct, has induced another upon the meeting of' the minds of the parties to the contract.[23]
to act in a particular manner, estoppel effectively bars the former from adopting
an inconsistent position, attitude or course of conduct that causes loss or injury Furthermore, to rule against the validity of the cited amicable settlement
to the latter.[20] herein would militate against the spirit and purpose of
the Katarungang Pambarangay Law,[24] which is to encourage the amicable
The doctrine of estoppel is based upon the grounds of public policy, fair settlement of disputes at the barangay level as an alternative to court litigation.
dealing, good faith and justice, and its purpose is to forbid one to speak against
his own act, representations, or commitments to the injury of one to whom they Harolds refusal to accept the remaining P5,000 that Aliba had tendered
were directed and who reasonably relied thereon.[21] cannot constitute an effective repudiation of the questioned amicable settlement,
considering that the reason for her refusal to accept the said amount or alleged
The issue concerning the alleged non-compliance of the amicable repudiation of the assailed amicable settlement is not one of the grounds for
settlement pursuant to the mandate of Section 411[22] of Republic Act No. 7160 repudiation clearly specified under Section 418[25] of the LGC. As borne out by
or the Local Government Code (LGC) arose because there was no formal the records, her refusal to accept the same was based on the alleged insufficiency
document denominated as Amicable Settlement signed by the parties. However, of the remaining P5,000 as settlement for the lot, without any reference to
we agree with the similar holdings of the Court of Appeals and the RTC that the vitiation of her consent by any fraud, violence or intimidation on Alibas part.
requirements under Section 411 of the LGC had been substantially complied
with. The minutes of the barangay conciliation proceedings readily disclose the WHEREFORE, the petition is DENIED for lack of merit. The assailed

terms agreed upon by the parties for the settlement of their dispute, and that the Decision dated September 3, 1997 of the Court of Appeals in CA-G.R. SP No.
acknowledgment receipt, which was written in a language known to the parties, 40416 is AFFIRMED. Costs against the petitioner.

signed by them, attested to by the Lupon Chairman, and witnessed by

several barangay officials, serves as an indubitable proof of the amicable
settlement and of the substantial compliance of its terms by respondent Aliba.

38