292 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as amicable settlement under the Katarungang Pambarangay
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.
Katarungang Pambarangay Law; The object of the
Katarungang Pambarangay Law is the amicable settlement
of disputes through conciliation proceedings voluntarily and
freely entered into by the parties; 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 courts.—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. 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 courts in the event that no true compromise
is reached.
_______________
* THIRD DIVISION.
293
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Pang-et vs. Manacnes-Dao-as
Same; The key in achieving the objectives of an effective
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.—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.
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.
Same; 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
293
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.—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. In other words, the only necessary pre-
condition before any case falling within the authority of
the Lupon or the Pangkatmay be filed before
294
2 SUPREME COURT REPORTS ANNOTATED
94
Pang-et vs. Manacnes-Dao-as
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.
Same; 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.—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. In view of the fact that upon verification
by the PangkatChairman, 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.
295
VOL. 517, MARCH 2, 2007 295
Pang-et vs. Manacnes-Dao-as
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Ma. Inglay Capuyan-Fokno for petitioner.
Johnny Ekid for respondent.
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
petitioner’s 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 Kata-
_______________
1 Penned by Associate Justice Rosmari D. Carandang
with Associate Justices Remedios Salazar-Fernando and
Monina ArevaloZenarosa, concurring; Rollo, pp. 29–36.
2 Penned by Judge Artemio B. Marrero, dated 2 June
2003 in Civil Case No. 1090; id., at pp. 37–40.
3Penned by Presiding Judge James P. Kibitin, dated 20
August 2002 in Civil Case No. 118; Records, pp. 52–55.
4 Docketed as Civil Case No. 83.
296
296 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as
rungang 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 Luponfailed 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, Leoncio’s
widow,7Florentina 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
_______________
5 The Revised Katarungang Pambarangay Law, Sections
399–422, Chapter 7; Title One, Book III, Republic Act No.
7160, otherwise known as the Local Government Code of
1991.
6 Docketed as Barangay Case No. 7.
7 Leoncio Manacnes died on 10 May 1995; Records, p. 39.
297
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Pang-et vs. Manacnes-Dao-as
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 latter’s 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 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 Execution of the Award.
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 spouses.8 The heir of the Manacnes spouses
argues that the Agreement for Arbitration and the
Arbitration Award are void, the Agreement for Arbitration
not having been personally signed by the spouses
Manacnes, and the Arbitration Award having been written
in English—a language not understood by the parties.
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?
_______________
297
8 Florentina Manacnes also died sometime after the
issuance of the Notice of Execution; id., at p. 2.
298
298 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as
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.
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” The foregoing should be taken together with Section 415
of the same code which provides:
“Section 415. Appearance of parties in person.—In
all katarungang pambarangay proceedings, the parties
must appear in person without the assistance of counsel or
representative, except for minors and incompetents who
may be assisted by their next-of-kin who are not lawyers.”
It is very clear from the foregoing that personal
appearance of the parties in conciliation proceedings before
a Lupon Tagapamayapa is mandatory. Likewise, the
execution of the agreement to arbitrate must be done
personally by the parties themselves so that they
themselves are mandated to sign the agreement.
Unfortunately, in this case, it was not respondents-
spouses [Manacnis] who 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.
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 Sec
299
VOL. 517, MARCH 2, 2007 299
Pang-et vs. Manacnes-Dao-as
tion 415 of RA 7160 which mandates the personal
appearance of the parties before the lupon and likewise
prohibits the appearance of representatives.
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 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.
300
300 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as
IN THE LIGHT of all the foregoing considerations, the
aboveentitled case is hereby dismissed.”9
Petitioner Pang-et’s 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
_______________
9 MCTC Resolution, pp. 2–4, Records, pp. 53–55.
301
VOL. 517, MARCH 2, 2007 301
Pang-et vs. Manacnes-Dao-as
language is not known by the defendants spouses Manacnis
who are Igorots. Said Appellee contends that the document
should have been written 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
selfserving 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 King’s 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
_______________
10 RTC Judgment, pp. 3–4; Rollo, pp. 39–40.
302
302 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as
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-et’s
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 pretrial 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-et’s 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
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
303
VOL. 517, MARCH 2, 2007
303
Pang-et vs. Manacnes-Dao-as
the case. However, according to the minutes of the hearing
before the lupon on 9 April 1995, the pangkat Chairman
and another pangkatmember were absent for the hearing.
Finally, Section 13 of the same Rule requires that
the Punong Barangay or the PangkatChairman 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 Tagapamayapaof 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 confor-
_______________
11 CA Decision, pp. 5–8; id., at pp. 33–36.
304
304 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as
mity 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 thePangkat failed likewise
because respondents do not want to submit this case
for arbitration and insist that said
_______________
12 CA Rollo, p. 66.
305
VOL. 517, MARCH 2, 2007 305
Pang-et vs. Manacnes-Dao-as
case will go to court.13 Nevertheless, upon receipt of said
certification and the records of the case, the MCTC ordered
that the case 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 Tagapamayapaof 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 barangayproceedings 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.
_______________
13 Id., at p. 67.
14 Id., at p. 68.
 15 Preamble, Presidential Decree No. 1293, otherwise
known as the Katarungang Pambarangay Law.
16 Revised Katarungang Pambarangay Law, Section 412
(a)—Pre-condition to filing of Complaint in Court—No
complaint, petition, action or proceeding involving any
matter within the authority of the luponshall be filled 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
306
306 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as
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
_______________
lupon or pangkat chairman or unless the settlement has
been repudiated by the parties thereto.
17 Section 413, Revised Katarungang PambarangayLaw.
18 CA Rollo, p. 68.
307
VOL. 517, MARCH 2, 2007 307
Pang-et vs. Manacnes-Dao-as
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.
Petitioner’s 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, 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 Luponfor 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.
308
308 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as
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
CAG.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.
Ynares-Santiago (Chairperson), Austria-
Martinez and Nachura, JJ., concur.
_______________
 Ramos v. Court of Appeals, G.R. No. 132196, 9
19

December 2005, 477 SCRA 85, 99.

309

VOL. 517, MARCH 2, 2007 309

Portuguez vs. GSIS Family Bank (Comsavings Bank)
Callejo, Sr., J., On Leave.

Petition denied, judgment affirmed.

Notes.—Section 415 of the LGC clearly requires the
personal appearance of the parties in katarungang
pambarangayconciliation proceedings, unassisted by
counsel or representative. There can be no quibbling that
laymen of good will can easily agree to conciliate and settle
their dispute between themselves without what sometimes
is the unsettling assistance of lawyers whose presence could
sometimes obfuscate and confuse issues. (Magno vs.
Velasco-Jacoba, 475 SCRA 584 [2005])
The Settlement Agreement of parties approved by
the Lupon ng Tagapamayapamay be enforced by the Lupon,
through the punong barangay within six months, and if the
settlement is not enforced after the lapse of said period, it
may be enforced by an action in the proper city or municipal
court. (Berba vs. Pablo, 474 SCRA 686[2005])

——o0o——
186 SUPREME COURT REPORTS ANNOTATED
Esguerra vs. Trinidad
G.R. No. 169890. March 12, 2007.*
FELICIANO ESGUERRA, CANUTO ESGUERRA, JUSTA
ESGUERRA, ANGEL ESGUERRA, FIDELA ESGUERRA,
CLARA ESGUERRA, and PEDRO ESGUERRA,
petitioners, vs. VIRGINIA TRINIDAD, PRIMITIVA
TRINIDAD, and THE REGISTER OF DEEDS OF
MEYCAUAYAN, BULACAN, respondents.
Actions; Pleadings and Practice; Procedural Rules and
Technicalities; 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.—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. 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. In petitioners’ case, no
such explanation has been advanced.
Same; Same; Same; While 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
_______________
* SECOND DIVISION.
187
VOL. 518, MARCH 12, 2007 187
Esguerra vs. Trinidad
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.—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. 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.
Sales; 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, or a lump
sum contract which states a full purchase for an
immovable the area of which may be declared based on an
estimate or where both the area and boundaries are stated;
where both the area and the boundaries of the immovable
are declared, the area covered within the boundaries of the
immovable prevails over the stated area—what really
defines a piece of ground is not the area, calculated with
more or less certainty, mentioned in its description, but the
boundaries therein laid down, as enclosing the land and
indicating its limits.—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, 478 SCRA 451 (2005), 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
188
1 SUPREME COURT REPORTS ANNOTATED
88
Esguerra vs. Trinidad
the contract rate. x x x x 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. . . . x x x
x Where both the area and the boundaries of the immovable
are declared, the area coveredwithin the 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 ground
is not the area, calculated with more or less certainty,
mentioned in its description, but the boundaries therein
laid down, as enclosing the land and indicating its limits.
Same; Words and Phrases; The use of “more or less” or
similar words in designating quantity covers only a
reasonable excess or deficiency—the vendee does not thereby
ipso facto take all risk of quantity in the land; The increase
by a fourth of a fraction of the area indicated in the deed of
sale cannot be considered as an unreasonable excess.—
A caveat is in order, however. The use of “more or less” or
similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in
gross or with the description “more or less” with reference
to its area does not thereby ipso facto take all risk of
quantity in the land. 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 one
case, the Court found substantial discrepancy in area due to
contemporaneous circumstances. Citing change in the
physical nature of the property, it was therein established
that the excess area at the southern portion was a product
of reclamation, which explained why the land’s technical
description in the deed of sale indicated the seashore as its
southern boundary, hence, the inclusion of the reclaimed
area was declared unreasonable. In OCT No. 0-6498, the
increase by a fourth of a fraction of the area indicated in the
deed of sale cannot be considered as an unreasonable
excess. Most importantly, the circumstances attendant to
the inclusion of the 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,
 189
VOL. 518, MARCH 12, 2007
189
Esguerra vs. Trinidad
petitioners may rightly be presumed to have acquired a
good estimate of the value and area of the bahaging
palayan.
Actions; Katarungang Pambarangay
Proceedings; Local Government Code (R.A. No. 7160); Non-
compliance with the condition that the parties undergo a
conciliation process under the Katarungang Pambarangay,
as a precondition to filing a complaint in court, does not
prevent a court of competent jurisdiction from exercising its
power of adjudication over a case unless the defendants
object thereto.—A word on Republic Act No. 7160 which was
raised by petitioners in their petition. It expressly requires
the parties to undergo a conciliation process under
the Katarungang Pambarangay, as a precondition to filing
a complaint in court, 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.
Land Titles; It is a fundamental principle in land
registration that a certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in
favor of the person whose name appears therein.—It is a
fundamental principle in land registration that a certificate
of title serves as evidence of an indefeasible and
incontrovertible title to the property in favor of the person
whose name appears therein. Such indefeasibility
commences after the lapse or expiration of one year from
the date of entry of 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 the property can no longer be contested. This system
was so effected in order to quiet title to land.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Conrado P. Estrada for petitioners.
Martinez and Mendoza for respondents.
190
190 SUPREME COURT REPORTS ANNOTATED
Esguerra vs. Trinidad
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 parcel of land covered
by Tax Declaration No. 12080, 23,489 square meters of
which they also sold to petitioners, and the remaining 500
square meters they sold to their other grandchildren, the
brothers Eulalio and Julian Trinidad (Trinidad brothers).
Also sold to the Trinidad brothers were a 7,048-square
meter parcel of land covered by Tax Declaration No. 9059, a
4,618-square meter parcel of land covered by Tax
Declaration No. 12081, and a 768-square meter parcel of
land covered by Tax Declaration No. 13989.
The Esguerra spouses executed the necessary Deed of
Sale in favor of 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 Maximo
Abaño.
Eulalio Trinidad later sold his share of the land to his
daughters-respondents herein, via a notarized Kasulatan
ng Bilihang Tuluyan ng Lupa3 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.
_______________
1 Records, pp. 501-502.
2 Id., at pp. 686-687.
3 Id., at pp. 688-689.
191
VOL. 518, MARCH 12, 2007
Esguerra vs. Trinidad
On respondents’ application for registration of title, the
then Court of First Instance (CFI) of Bulacan, by
Decision4 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. 0-36315 in
the name of respondents.
Meanwhile, under a notarized Bilihan ng Lupa6 dated
November 10, 1958, petitioners sold to respondents’ parents
Eulalio Trinidad and Damiana Rodeadilla (Trinidad
spouses) a portion of about 5,000 square meters of the
23,489-square meter of land which they previously acquired
from the Esguerra spouses.7
During the same cadastral survey conducted in the late
1960s, it was 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 6,268 square meters.
In a subsequent application for registration of title over
Lot No. 3591, docketed as Land Registration Case No. N-
335-V, the CFI, by Decision8 of August 21, 1972, awarded
Lot No. 3591 in favor of Eulalio Trinidad. Pursuant to the
Decision, the LRC issued Decree No. N-149491 by virtue of
which the Register of Deeds of Bulacan issued OCT No. 0-
64989 in the name of Trinidad.
Upon the death of the Trinidad spouses, Lot No. 3591
covered by OCT No. 0-6498 was transmitted to respondents
by succession.
_______________
4 Id., at pp. 690-691.
191 5 Id., at pp. 692-693.
6 Id., at pp. 707-708.
7 Rollo, p. 20.
8 Records, pp. 709-711.
9 Id., at p. 712.
192
192 SUPREME COURT REPORTS ANNOTATED
Esguerra vs. Trinidad
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 Regional Trial Court
(RTC) of Malolos, Bulacan two separate complaints for their
nullification on the ground that they were procured through
fraud or misrepresentation.
In the first complaint, docketed as Civil Case No. 737-M-
94, petitioners sought the cancellation of OCT No. 0-3631.
In the other complaint, docketed as Civil Case No. 738-M-
94, petitioners sought the cancellation of OCT No. 0-6498.
Both cases were consolidated and tried before Branch 79 of
the RTC which, after trial, dismissed the cases by Joint
Deci-sion10 of May 15, 1997.
Their appeal with the Court of Appeals having been
dismissed by Decision of February 28, 2005, a
reconsideration of which was, by Resolution of October 3,
2005,11 denied, petitioners filed the instant petition.
Petitioners fault the appellate court
1. “1.. . . in misappreciating the fact that the act of the
respondent Eulalio Trinidad in acquiring the
property from Felipe Esguerra constituted fraud.
2. 2.. . . in the [i]nterpretation and application of the
provisions of Article 1542 of the New Civil Code.
3. 3.. . . in ruling that there is prescription, res
judicata, and violation of the non-[forum]
shopping.”12
_______________
10 Id., at pp. 869-894. Penned by Judge (now CA Justice)
Arturo G. Tayag.
11 Rollo, pp. 30-40, 42. Justice Hakim S. Abdulwahid,
with the concurrence of Justice Elvi John S. Asuncion and
Justice Estela M. Perlas-Bernabe, penned both Decision
and Resolution in the appeal docketed as CA-G.R. CV No.
57263.
12 Id., at p. 16. In affirming the dismissal, the appellate
court already ruled out res judicata and forum shopping.
193
VOL. 518, MARCH 12, 2007 193
Esguerra vs. Trinidad
In their Comment, respondents assailed the petition as
lacking verification and certification against forum
shopping and failing to attach to it an affidavit of service
and material portions of the record in support thereof.
Petitioners counter that the procedural deficiencies have
been mooted by the filing of a Compliance.
A check of the rollo shows that attached to the petition
are an Affidavit of Service dated November 21, 2005 and
the appellate court’s 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 there-from.14While 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
_______________
 13 Id., at p. 45. By Resolution of December 12, 2005, this
Court required petitioners to submit a certificate on non-
forum shopping within five days from notice.
14 See Clavecilla v. Quitain, G.R. No. 147989, February
20, 2006, 482 SCRA 623, 631.
15 See Suzuki v. De Guzman, G.R. No. 146979, July 27,
2006, 496 SCRA 651; see also Pedrosa v. Hill, 327 Phil.
153; 257 SCRA 373 (1996) where “sheer inadvertence” was
not taken as a satisfactory reason for non-compliance with a
rule.
194
194 SUPREME COURT REPORTS ANNOTATED
Esguerra vs. Trinidad
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
_______________
16 Vide Far East Bank and Trust Co. v. Commissioner of
Internal Revenue, G.R. No. 138919, May 2, 2006, 488 SCRA
473, 483.
17 See Air Philippines Corp. v. Zamora, G.R. No. 148247,
August 7, 2006, 498 SCRA 59 for guideposts in the exercise
of such discretion.
18 Philippine American Life Insurance Company v. Court
of Appeals, 398 Phil. 559, 344 SCRA 620 (2000); Periquet,
Jr. v. Intermediate Appellate Court, G.R. No. 69996,
December 5, 1994, 238 SCRA 697.
195
VOL. 518, MARCH 12, 2007 195
Esguerra vs. Trinidad
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,20which 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 exceptions24 to this rule, the cases at
bar do not fall there-under, there being no showing that the 196
trial and appellate courts overlooked matters which, if 196 SUPREME COURT REPORTS ANNOTATED
considered, would alter their outcome. Esguerra vs. Trinidad
_______________ Under the Torrens System, an OCT enjoys a presumption of
validity, which correlatively carries a strong presumption
19 Rollo, pp. 34, 36.
that the provisions of the law governing the registration of
20 Lubos v. Galupo, 424 Phil. 665; 373 SCRA
land which led to its issuance have been duly
618(2002); Mindex Resources Dev’t. v. Morillo, 428 Phil.
followed.25 Fraud being a serious charge, it must be
934; 379 SCRA 144 (2002).
21 Far East Bank and Trust Co. v. Querimit, 424 Phil.
supported by clear and convincing proof.26 Petitioners failed
to discharge the burden of proof, however.
721; 373 SCRA 665 (2002).
22 Asia Trust Development Bank v. Concepts Trading
On the questioned interpretation and application by the
appellate court of Article 1542 of the Civil Code reading:
Corp., 452 Phil. 552; 404 SCRA 449 (2003).
23 Changco v. Court of Appeals, 429 Phil. 336; 379 SCRA
“In the sale of real estate, made for a lump sumand not at
the rate of a certain sum for a unit of measure or number,
590 (2002).
24 These include instances “(1) when the conclusion is a
there shall be no increase or decrease of the price, although
there be a greater or less areas or number than that stated in
finding grounded entirely on speculation, surmises and
the contract.
conjectures; (2) when the inference made is manifestly
The same rule shall be applied when two or more
mistaken, absurd or impossible; (3) where there is a grave
immovables are sold for a single price; but if, besides
abuse of discretion; (4) when the judgment is based on a
mentioning the boundaries, which is indispensable in every
misapprehension of facts; (5) when the findings of fact are
conveyance of real estate, its area or number should be
conflicting; (6) when the Court of Appeals, in making its
designated in the contract, the vendor shall be bound to
findings, went beyond the issues of the case and the same is
deliver all that is included within said boundaries, even
contrary to the admissions of both appellant and appellee;
when it exceeds the area or number specified in the
(7) when the findings are contrary to those of the trial
contract; and, should he not be able to do so, he shall suffer
court; (8) when the findings of fact are conclusions without
a reduction in the price, in proportion to what is lacking in
citation of specific evidence on which they are based; (9)
the area or number, unless the contract is rescinded
when the facts set forth in the petition as well as in the
because the vendee does not accede to the failure to deliver
petitioners’ main and reply briefs are not disputed by the
what has been stipulated.” (Emphasis and italics supplied),
respondents; and (10) when the findings of fact of the Court
of Appeals are premised on the supposed absence of while petitioners admittedly sold Lot No. 3591 to the
evidence and contradicted by the evidence on Trinidad spouses, they contend that what they sold were
record.” Siasat v. Court of Appeals, 425 Phil. 139, 145; 374 only 5,000 square meters and not 6,268 square meters, and
SCRA 326, 331 (2002). 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
_______________
25 Vide Tichangco v. Enriquez, G.R. No. 150629, June 30
2004, 433 SCRA 324; see also RULES OF COURT, Rule
131, Sec. 3 (m), (o) & (ff).
26 Quinsay v. Intermediate Appellate Court, G.R. No.
67935, March 18, 1991, 195 SCRA 268, 282.
197
VOL. 518, MARCH 12, 2007
197
Esguerra vs. Trinidad
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. . . .
xxxx
Where both the area and the boundaries of the
immovable are declared, the area covered within the
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 ground is not the area, calculated with more or
less certainty, mentioned in its description, but the
boundaries therein laid down, as enclosing the land and
indicating its limits. In a contract of sale of land in a mass,
it is well established
_______________
27 G.R. No. 122463, December 19, 2005, 478 SCRA 451,
citing CIVIL CODE, Arts. 1539-1540, 1542.
198
198 SUPREME COURT REPORTS ANNOTATED
Esguerra vs. Trinidad
that the specific boundaries stated in the contract must
control over any statement 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 extent is objectively indicated with sufficient
precision to enable one to identify it. An error as to the
superficial area is immaterial. Thus, the obligation of the
vendor is to deliver everything within the boundaries,
inasmuch as it is the entirety thereof that distinguishes the
determinate object.”28(Emphasis and italics supplied)
The courts below correctly characterized the sale of Lot No.
3591 as one involving a lump sum contract. The Bilihan ng
Lupashows that the parties agreed on the purchase price of
P1,000.00 on a predetermined, albeit unsurveyed, area of
5,000 square meters and not on a particular rate per unit
area. As noted by the Court of Appeals, the identity of the
realty was sufficiently described as riceland:
“It is clear from the afore-quoted Bilihan ng Lupa that
what appellants sold to Eulalio was the “bahaging
palayan.” Though measured as 5,000 square meters, more
or less, such measurement is only an approximation, and
not an exact measurement. Moreover, we take note of the
fact that the said deed of sale mentioned the boundaries
covering the whole area of 33,489 square meters, including
the “bahaging palayan.” Had appellants intended to sell
only a portion of the “bahaging palayan,” they could have
stated the specific area in the deed of sale and not the
entire “bahaging palayan” . . . .”29
In fine, under Article 1542, what is controlling is the entire
land included within the boundaries, regardless of whether
the real area should be greater or smaller than that recited
in the deed. This is particularly true since the area of the
land in
_______________
28 Id., at pp. 457-459.
29 Rollo, p. 37.
199
VOL. 518, MARCH 12, 2007 199
Esguerra vs. Trinidad
OCT No. 0-6498 was described in the deed as “humigit
kumulang,” that is, more or less.30
A caveat is in order, however. The use of “more or less”
or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in
gross or with the description “more or less” with reference
to its area does not thereby ipso facto take all risk of
quantity in the land.31
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 one case,32 the
Court found substantial discrepancy in area due to
contemporaneous circumstances. Citing change in the
physical nature of the property, it was therein established
that the excess area at the southern portion was a product
of reclamation, which explained why the land’s technical
description in the deed of sale indicated the seashore as its
southern boundary, hence, the inclusion of the reclaimed
area was declared unreasonable.
In OCT No. 0-6498, the increase by a fourth of a fraction
of the area indicated in the deed of sale cannot be
considered as an unreasonable excess. Most importantly,
the circumstances attendant to the inclusion of the 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.
As for the last assigned error, the appellate court, in
finding that the complaints were time-barred, noted that
when
_______________
 30 Vide Balantakbo v. Court of Appeals, 319 Phil.
436; 249 SCRA 323 (1995).
31 See Roble v. Arbasa, 414 Phil. 343; 362 SCRA
69(2001).
32 Id.
200
200 SUPREME COURT REPORTS ANNOTATED
Esguerra vs. Trinidad
the complaints were filed in 1994, more than 27 years had
elapsed from the issuance of OCT No. 0-3631 and more
than 20 years from the issuance of OCT No. 0-6498. The
prescriptive period of one (1) year had thus set in.
Petitioners’ reliance on Agne v. Director of Lands 33 is
misplaced since the cancellation of title was predicated not
on the ground of fraud but on want of 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 petitioners failed to
establish the existence of fraud.
A word on Republic Act No. 716034 which was raised by
petitioners in their petition. It expressly requires the
parties to undergo a conciliation process under
the Katarungang Pambarangay, as a precondition to filing
a complaint in court,35non-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
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 Answers37 filed in both cases.
IN FINE, it is a fundamental principle in land
registration that a certificate of title serves as evidence of
an indefeasible
_______________
33 G.R. No. 40399, February 6, 1990, 181 SCRA 793.
34 LOCAL GOVERNMENT CODE of 1991, Sec. 412 (a).
35 Id., Sec. 412 (a).
36 Espino v. Legarda, G.R. No. 149266, March 17,
2006, 485 SCRA 74.
37 Records, pp. 192, 229.
201
VOL. 518, MARCH 12, 2007 201
Esguerra vs. Trinidad
and incontrovertible title to the property in favor of the
person whose name appears therein. Such indefeasibility
commences after the lapse or expiration of one year from
the date of entry of 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 the property can no longer be contested. This system
was so effected in order to quiet title to land.38
WHEREFORE, the petition is DENIED. The assailed
Decision and Resolution of the Court of Appeals are
AFFIRMED. Costs against petitioners.
SO ORDERED.
Quisumbing (Chairperson), Carpio, Tinga and Velas
co, Jr., JJ., concur.
Petition denied, assailed decision and resolution
affirmed.
 Notes.—Prior registration of the subject property does
not by itself confer ownership or a better right over the
property—before the second buyer can obtain priority over
the first, he must show that he acted in good faith
throughout (i.e., in ignorance of the first sale and of the first
buyer’s rights) from the time of acquisition until the title is
transferred to him by registration. (Consolidated Rural
Bank [Cagayan Valley], Inc. vs. Court of Appeals, 448 SCRA
347 [2005])
A person dealing with registered land is not required to
inquire further than what the Torrens Title on its face
indicates. (Arrofo vs. Quiño, 449 SCRA 284 [2005])

——o0o——

_______________

Vda. de Retuerto v. Barz, 423 Phil. 1008, 1016; 372

38

SCRA 712 (2001); Tichangco v. Enriquez, supra.

202
© Copyright 2019
24 SUPREME COURT REPORTS ANNOTATED
Zamora vs. Heirs of Carmen Izquierdo
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.
Actions; Katarungang Pambarangay Law; The
primordial objective of P.D. 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.—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. To attain this
objective, Section 412(a) of R.A. No. 7160 requires the
parties to undergo a conciliation process 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
_______________
* THIRD DIVISION.
25
VOL. 443, NOVEMBER 18, 2004 2
5
Zamora vs. Heirs of Carmen Izquierdo
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 or
pangkat secretary and attested to by the lupon or
pangkat chairman x x x.”
Same; Same; Section 412(a) of R.A. No. 7160 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 or the Pangkat.—We
cannot sustain petitioners’ contention that
the Luponconciliation 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 LuponChairman
(as what happened in the present case), or the Pangkat.
Moreover, in Diu vs. Court of Appeals, 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 Pangkat was 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.
Same; Same; Ejectment; Unlawful Detainer; Motions to
Dismiss; Revised Rule on Summary Procedure; A motion to
dismiss may only be filed in an action for unlawful detainer
if 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.—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
26
2 SUPREME COURT REPORTS ANNOTATED
6 residence; and only a single family is allowed to occupy it.
Zamora vs. Heirs of Carmen Izquierdo
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.”
PETITION for review on certiorari and resolution of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Emmanuel M. Basa for petitioners.
Salonga, Hernandez & Mendoza for respondents.
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari1 assailing the
Decision2 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
_______________
1 Filed under Rule 45 of the 1997 Rules of Civil
Procedure, as amended.
2 Penned by Associate Justice Eugenio S. Labitoria and
concurred in by Justice Bernardo P. Abesamis and Justice
Alicia L. Santos (both retired).
27
VOL. 443, NOVEMBER 18, 2004 27
Zamora vs. Heirs of Carmen Izquierdo
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
letter4 informing her that the lease is being terminated and
demand-
_______________
3 Annexes “A” and “C”, Petition, Rollo at pp. 38, 53.
4 Rollo at p. 43.
28
28 SUPREME COURT REPORTS ANNOTATED
Zamora vs. Heirs of Carmen Izquierdo
ing 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 BarangayChairman 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 dismiss7 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.
71608 (otherwise known as the Local Government Code of
1991), which reads:
_______________
 5 Id., at p. 42. The barangay certification was signed
by Barangay Secretary Flordeliza Fernandez, Punong
Barangay Jose R. Galgana and Lupong
Tagapamayapa Efren Simangan.
6 Annex “A”, Petition, Rollo at pp. 36-41.
7 Annex “B”, id., at pp. 44-47.
8 This law took effect on January 1, 1992. The law
on barangay conciliation was originally governed by
Presidential Decree No. 1508 (enacted on June 11, 1978)
which was repealed by codification in the Local Government
Code of 1991.
29
VOL. 443, NOVEMBER 18, 2004
Zamora vs. Heirs of Carmen Izquierdo
“SECTION 410. Procedure for Amicable Settlement.—
1. (a)x x x
2. (b)Mediation by lupon chairman—Upon receipt of
the complaint, the lupon chairman9 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 the
pangkat in accordance with the provisions of this
Chapter.” (Italics 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 611 of the same Rule.
On July 9, 1998, the MTC issued an Order12 denying
petitioners’ motion to dismiss and considering the case
submitted for decision in view of their failure to file their
answer to the complaint.
_______________
9Under Section 399 (a) of R.A. 7160, the Punong
Barangay is designated as the Lupon Chairman.
10 Annex “B-1”, Petition, Rollo at pp. 48-52.
11 Section 6 of the Revised Rule on Summary Procedure
provides:
“SEC. 6. Effect of failure to answer.—Should the defendant
fail to answer the complaint within the period above
provided [10 days from service of summons], the
29
court, motu proprio, or on motion of the plaintiff, shall
render judgment as may be warranted by the facts alleged
in the complaint and limited to what is prayed for
therein: Provided, however,That the court may in its
discretion reduce the amount of damages and attorney’s
fees claimed for being excessive or otherwise
unconscionable. This is without prejudice to the
applicability of Section 4, Rule 18 of the Rules of Court, if
there are two or more defendants.”
12 Annex “C”, Petition, Rollo at pp. 53-54.
30
30 SUPREME COURT REPORTS ANNOTATED
Zamora vs. Heirs of Carmen Izquierdo
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 Luponfor 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 Judgment14 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. 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. 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. 3)To pay plaintiff the sum of five thousand
(P5,000.00) pesos as and for attorney’s fees; and
4. 4)To pay the costs of this suit.
SO ORDERED.”
_______________
13 Annex “D”, Id., at pp. 55-57.
14 Annex “E”, Id., at pp. 58-61.
31
VOL. 443, NOVEMBER 18, 2004 31
Zamora vs. Heirs of Carmen Izquierdo
On appeal, the Regional Trial Court (RTC), Branch 125,
Caloocan City, rendered its Decision15 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 Decision17 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
before the LuponChairman 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 con-
_______________
 Annex “H”, Id., at pp. 79-83.
15 It is of no moment that the complaint was initially made
Annex “I”, Id., at p. 84.
16 by defendant-appellant Avelina Zamora because herein
17 Annex “J”, Id., at pp. 85-93. plaintiff-appellee was given by the Sangguniang
18 Annex “L”, Id., at p. 98. Barangay the authority to bring her grievance to the Court
19 Galuba vs. Laureta, No. L-71091, January 29, for resolution. While it is true that the Sertifikasyondated
1988, 157 SCRA 627, 634. September 14, 1997 is entitled ‘Ukol Sa Hindi Pagbibigay
Ng Pahintulot Sa Pagpapakabit Ng Tubig’, this title must
32 not prevail over the actual issues discussed in the
32 SUPREME COURT REPORTS ANNOTATED proceedings.
Zamora vs. Heirs of Carmen Izquierdo Hence, to require another confrontation at
ciliation or settlement has been reached as certified by the barangay level as a sine qua non for the filing of the
the lupon or pangkat secretary and attested to by the lupon instant case would not serve any useful purpose anymore
or pangkat chairman x x x.” (Italics supplied) since no new issues would be raised therein and the parties
have proven so many times in the past that they cannot get
In the case at bar, the Punong Barangay, as Chairman of to settle their differences amicably.”20
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
20 RTC Decision, Rollo at pp. 81-82.
respondents’ attorney-in-fact to give her consent to the
33
installation of water facilities in the premises, but also
petitioners’ violation of the terms of the lease, specifically VOL. 443, NOVEMBER 18, 2004 33
their use of a portion therein for their photocopying Zamora vs. Heirs of Carmen Izquierdo
business and their failure to pay the increased rental. As We cannot sustain petitioners’ contention that
correctly found by the RTC: the Lupon conciliation alone, without the proceeding before
“The records show that confrontations before the Pangkat ng Tagapagkasundo, contravenes the law
the barangay chairman were held on January 26, 1997, on Katarungang Pambarangay. Section 412(a) of R.A. No.
February 9, 1997, February 23, 1997, February 28, 1997, 7160, quoted earlier, clearly provides that, as a precondition
July 27, 1997, August 3, 1997, August 10, 1997, August 17, to filing a complaint in court, the parties shall go through
1997 and August 24, 1997 wherein not only the issue of the conciliation process eitherbefore the Lupon Chairman
water installation was discussed but also the terms of the (as what happened in the present case), or the Pangkat.
lease and the proposed execution of a written contract Moreover, in Diu vs. Court of Appeals,21we held that
relative thereto. It appears, however, that no settlement “notwithstanding the mandate in Section 410(b) of R.A. No.
was reached despite a total of nine meetings at 7160 that the Barangay Chairman shall constitute
the barangay level. 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 Pangkat was not constituted, however, the parties
met nine (9) times at the Office of the BarangayChairman
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:
_______________
21 G.R. No. 115213, December 19, 1995, 251 SCRA 472.
22 Id.
34
34 SUPREME COURT REPORTS ANNOTATED
Zamora vs. Heirs of Carmen Izquierdo
“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.” (Italics supplied)
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.
Panganiban (Chairman), Carpio-
Morales and Garcia, JJ., concur.
Corona, J., On Leave.
Petition denied, assailed decision and resolution
affirmed.
Notes.—Judges should take judicial notice of the Local
Government Code of 1991, specifically on the provisions on
the katarungang pambarangay, and a judge’s total
unawareness thereof is distressing. (Uy vs. Contreras, 237
SCRA 167 [1994])
There is substantial compliance with the law even
though no pangkat was constituted if the parties met at the
office of the barangay chairman for possible settlement yet
the efforts of the barangaychairman proved futile. (Diu vs.
Court of Appeals, 251 SCRA 472 [1995])
It is clear from the Katarungang Pambarangay Rules
that recourse to barangay conciliation proceedings is not
necessary where the parties do not reside in the same
municipality or
35
 VOL. 443, NOVEMBER 18, 2004 35
Sunrise Manning Agency, Inc. vs. National Labor Relations Commission
city or in adjoining barangays. (Vercide vs. Hernandez, 330
SCRA 49 [2000])

——o0o——
 February 18, 2008. G.R. No. 153567.*
LIBRADA M. AQUINO, petitioner, vs.ERNEST S.
AURE,1 respondent.
Actions; Barangay Justice System; Katarungang
Pambarangay Law (P.D. 1508); The barangay justice system
was established primarily as a means of easing up the
congestion of cases in the judicial courts; 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; P.D. No. 1508 is
now incorporated in R.A. No. 7160, otherwise known as The
Local Government Code, which took effect on 1 January
1992.—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.
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.
To ensure this objective, Section 6 of Presidential Decree
No. 1508 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 which are inapplicable to
this case. The said section has been declared compulsory in
nature. Presidential Decree No. 1508 is now incorporated in
Repub-
_______________
* THIRD DIVISION.
1 Substituted by his heirs: Agnes J. Aure, Ma. Cecilia
Aure-Quinsay, Ma. Concepcion Criselda Aure-Barrion, Ma.
Erna J. Aure, Ernest Michael J. Aure and Ma. Melissa J.
Aure; Rollo, p. 159.
72lic Act No. 7160, otherwise known as The Local
Government Code, which took effect on 1 January 1992.
Same; Same; Jurisdictions; Exhaustion of
Administrative Remedies; While it is true that the precise
technical effect of failure to comply with the requirement of
Section 412 of the Local Government Code on barangay
conciliation is much the same effect produced by non-
exhaustion of administrative remedies—the complaint
becomes afflicted with the vice of pre-maturity—the
conciliation process is not a jurisdictional requirement, so
that non-compliance therewith cannot affect the jurisdiction
which the court has otherwise acquired over the subject
matter or over the person of the defendant.—It is true that
the precise technical effect of failure to comply with the
requirement of Section 412 of the Local Government Code
on barangay conciliation (previously contained in Section 5
of Presidential Decree No. 1508) is much the same effect
produced by non-exhaustion of administrative remedies—
the complaint becomes afflicted with the vice of pre-
maturity; and the controversy there alleged is not ripe for
judicial determination. The complaint becomes vulnerable
to a motion to dismiss. Nevertheless, the conciliation
process is not a jurisdictional requirement, so that non-
compliance therewith cannot affect the jurisdiction which
the court has otherwise acquired over the subject matter or
over the person of the defendant.
Same; Same; Same; Pleadings and Practice; The fact
that the defendant raised the issue of non-recourse to
barangay mediation proceedings during the pre-trial and in
her Position Paper is of no moment, for the same should be
impleaded in her Answer.—By Aquino’s failure to
seasonably object to the deficiency in the Complaint, she is
deemed to have already acquiesced or waived any defect
attendant thereto. Consequently, Aquino cannot thereafter
move for the dismissal of the ejectment suit for Aure and
Aure Lending’s failure to resort to the barangay conciliation
process, since she is already precluded from doing so. The
fact that Aquino raised such objection during the pre-trial
and in her Position Paper is of no moment, for the issue of
non-recourse to barangay mediation proceedings should be
impleaded in her Answer.
Same; Same; Same; Same; Statutory Construction; It is
clear and categorical in Section 1, Rule 9 of the Revised
Rules of Court that failure to raise defense and objections in
a motion to dismiss or in an answer is deemed a waiver
thereof—and basic is the rule in statutory73construction
that when the law is clear and free from any doubt or
ambiguity, there is no room for construction or
interpretation.—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. 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. 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. Thus, although Aquino’s 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.
Same; Same; Same; 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.—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 barangayconciliation, this ground not being among those
mentioned for the dismissal by the trial court of a case on
its own initiative.
Jurisdictions; Ejectment; Jurisdiction in ejectment
cases is determined by the allegations pleaded in the
complaint.—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 the74facts proved during the trial do not support
the cause of action thus alleged, in which instance the
court—after acquiring jurisdiction—may resolve to dismiss
the action for insufficiency of evidence.
Same; Same; Ownership; Inferior courts are now
conditionally vested with adjudicatory power over the issue
of title or ownership raised by the parties in an ejectment
suit.—This Court ruled in Hilario v. Court of Appeals, 260
SCRA 420 (1996): 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.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Benigno M. Puno for petitioner.
M.C. Santos Law Office for respondent.
CHICO-NAZARIO,J.:
Before this Court is a Petition for Review
on Certiorari2 under Rule 45 of the Revised Rules of Court
filed by petitioner Librada M. Aquino (Aquino), seeking the
reversal and the
_______________
2 Rollo, pp. 8-21.
75setting aside of the Decision3 dated 17 October 2001 and
the Resolution4 dated 8 May 2002 of the Court of Appeals in
CA-G.R. SP No. 63733. The appellate court, in its assailed
Decision and Resolution, reversed the Decision5 of the
Regional Trial Court (RTC) of Quezon City, Branch 88,
affirming the Decision6 of the Metropolitan Trial Court
(MeTC) of Quezon City, Branch 32, which dismissed
respondent Ernesto Aure’s (Aure) complaint for ejectment
on the ground, inter alia, of failure to comply with barangay
conciliation proceedings.
The subject of the present controversy is a parcel of land
situated in Roxas District, Quezon City, with an area of 449
square meters and covered by Transfer Certificate of Title
(TCT) No. 205447 registered with the Registry of Deeds of
Quezon City (subject property).7
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 their
Complaint, Aure and Aure Lending alleged that they
acquired the subject property from Aquino and her husband
Manuel (spouses Aquino) by virtue of a Deed of
Sale8 executed on 4 June 1996. Aure claimed that after the
spouses Aquino received substantial consideration for the
sale of the subject property, they refused to vacate the
same.9
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 over the subject
property.
_______________
 3 Penned by Associate Justice Ramon Mabutas, Jr. with
Associate Justices Roberto A. Barrios and Edgardo P. Cruz,
concurring. Rollo, pp. 21-26.
4 Id., at p. 28.
5 Records, pp. 514-515.
6 Id., at pp. 436-439.
7 Id., at pp. 482-483.
8 Id.
9 Id., at pp. 1-7.
10 Id., at pp. 11-15.
76Aquino admitted that there was a sale but such was
governed by the Memorandum of Agreement11 (MOA)
signed by Aure. As stated in the MOA, Aure shall secure a
loan from a bank or financial institution in his own name
using the subject property as collateral and turn over the
proceeds thereof to the spouses Aquino. However, even after
Aure successfully secured a loan, the spouses Aquino did
not receive the proceeds thereon or benefited therefrom.
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. [Aquino’s] 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
_______________
11 Id., at pp. 14-15.
12 Id., at p. 439.
77residents 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
Aure’s Motion for Reconsideration was denied by the
RTC in an Order14 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 deter-
_______________
13 Id., at p. 516.
14 Id., at p. 537.
15 Id., at pp. 465-480.
78mination 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 Aure’s
Complaint since Aquino failed to seasonably raise such
issue in her Answer. The Court of Appeals further ruled
that mere allegation of 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.
_______________
16 Rollo, p. 25.
79
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 PambarangayLaw, 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. 150819
_______________
17 People v. Caruncho, Jr., 212 Phil. 16, 27; 127 SCRA
16, 29 (1984).
18 Galuba v. Laureta, G.R. No. 71091, 29 January 1988,
157 SCRA 627, 634.
19 6. SECTIONConciliation, pre-condition to filing of
complaint.—No complaint, petition, action or proceeding
involving any matter within the authority of the Lupon as
provided in Section 2 hereof shall be filed or instituted in
court or any other government office for adjudication unless
there has been a confrontation of the parties before
the LuponChairman or the Pangkat and no conciliation or
settlement has been reached as certified by
the LuponSecretary or the Pangkat Secretary attested by
the Lupon or Pangkat Chairman, or unless the settlement
has been repudiated. However, the parties may go directly
to court in the following cases:
Where the accused is under detention; [1]
Where a person has otherwise been deprived of personal
liberty calling for [2] habeas corpus proceedings;
80requires 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 exceptions20 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:
412. “SEC.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 luponchairman or pangkat
_______________
Actions coupled with provisional remedies such as
preliminary injunction, attachment, delivery of personal
property and support pendente lite; and [3]
Where the action may otherwise be barred by the
Statute of Limitations. [4]
20 Paragraph 2, Section 6, PD No. 1508.
However, the parties may go directly to court in the
following cases:
Where the accused is under detention; [1]
Where a person has otherwise been deprived of personal
liberty calling for [2] habeas corpus proceedings;
 Actions coupled with provisional remedies such as
preliminary injunction, attachment, delivery of personal
property and support [3] pendente lite; and
Where the action may otherwise be barred by the
Statute of Limitations. [4]
21 Morata v. Go, 210 Phil. 367, 372; 125 SCRA 444, 453
(1983).
81chairman 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:
Where the accused is under detention; (1)
Where a person has otherwise been deprived of personal
liberty calling for (2) habeas corpus proceedings;
Where actions are coupled with provisional remedies
such as preliminary injunction, attachment, delivery of
personal property, and support (3) pendente lite; and
Where the action may otherwise be barred by the statute
of limitations. (4)
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. (c)
408. SEC.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:
Where one party is the government or any subdivision or
instrumentality thereof; (a)
Where one party is a public officer or employee, and the
dispute relates to the performance of his official functions;
(b)
Offenses punishable by imprisonment exceeding one (1)
year or a fine exceeding Five thousand pesos (P5,000.00);
(c)
Offenses where there is no private offended party; (d)
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 (e) lupon;
Disputes involving parties who actually reside in
(f) barangays of different cities or municipalities, except
where such barangayunits adjoin each other and the
parties thereto agree to submit their differences to amicable
settlement by an appropriate lupon;82
Such other classes of disputes which the President may
determine in the interest of justice or upon the
recommendation of the Secretary of Justice.” (g)
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 Lending’s
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.
We do not agree.
It is true that the precise technical effect of failure to
comply with the requirement of Section 412 of the Local
Government Code on barangay conciliation (previously
contained in Section 5 of Presidential Decree No. 1508) is
much the same effect produced by non-exhaustion of
administrative remedies—the complaint becomes afflicted
with the vice of pre-maturity; and the controversy there
alleged is not ripe for judicial determination. The complaint
becomes vulnerable to a motion to
dismiss.22 Nevertheless, the conciliation process is not
a jurisdictional requirement, so that non-compliance
therewith cannot affect the jurisdiction which the
court has otherwise acquired over the subject matter
or over the person of the defendant.23
_______________
22 Uy v. Contreras, G.R. Nos. 111416-17, 26 September
1994, 237 SCRA 167, 170.
23 Presco v. Court of Appeals, G.R. No. 82215, 10
December 1990, 192 SCRA 232, 240-241.
83As enunciated in the landmark case of Royales v.
Intermediate Appellate Court:24
“Ordinarily, non-compliance with the condition
precedent prescribed by P.D. 1508 could affect the
sufficiency of the plaintiff's cause of action and make his
complaint vulnerable to dismissal on ground of lack of cause
of action or prematurity; but the same would not
prevent a court of competent jurisdiction from
exercising its power of adjudication over the case
before it, where the defendants, as in this case, failed
to object to such exercise of jurisdiction in their
answer and even during the entire proceedings a
quo.
While petitioners could have prevented the trial court
from exercising jurisdiction over the case by seasonably
taking exception thereto, they instead invoked the very
same jurisdiction by filing an answer and seeking
affirmative relief from it. What is more, they participated in
the trial of the case by cross-examining respondent
Planas. Upon this premise, petitioners cannot 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 supplied.)
In the case at bar, we similarly find that Aquino cannot
be allowed to attack the jurisdiction of the MeTC over Civil
Case No. 17450 after having submitted herself voluntarily
thereto. We have scrupulously examined Aquino’s Answer
before the MeTC in Civil Case No. 17450 and there is utter
lack of any objection on her part to any deficiency in the
complaint which could oust the MeTC of its jurisdiction.
We thus quote with approval the disquisition of the
Court of Appeals:
“Moreover, the Court takes note that the defendant
[Aquino] herself did not raise in defense the aforesaid lack
of conciliation proceedings in her answer, which raises the
exclusive affirmative defense of simulation. By this
acquiescence, defendant [Aquino] is deemed to have waived
such objection. As held in a case of similar
_______________
24 212 Phil. 432, 435-436; 127 SCRA 470, 473-474
(1984).
84circumstances, the failure of a defendant [Aquino] in an
ejectment suit to specifically allege the fact that there was
no compliance with the barangay conciliation procedure
constitutes a waiver of that defense. x x x.”25
By Aquino’s failure to seasonably object to the deficiency
in the Complaint, she is deemed to have already acquiesced
or waived any defect attendant thereto. Consequently,
Aquino cannot thereafter move for the dismissal of the
ejectment suit for Aure and Aure Lending’s failure to resort
to the barangay conciliation process, since she is already
precluded from doing so. The fact that Aquino raised such
objection during the pre-trial and in her Position Paper is of
no moment, for the issue of non-recourse
to barangaymediation proceedings should be impleaded in
her Answer.
As provided under Section 1, Rule 9 of the 1997 Rules of
Civil Procedure:
1. “SectionDefenses 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:
8. “Sec.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.”
_______________
25 Rollo, p. 24.
85
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.27As 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 Aquino’s 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 omnibusmotion 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
propriodismiss 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.
_______________
 26 Manacop v. Court of Appeals, G.R. No. 104875, 13
November 1992, 215 SCRA 773, 778.
27 Twin Ace Holdings Corporation v. Rufina and
Company, G.R. No. 160191, 8 June 2006, 490 SCRA 368,
376.
28 Id.
86
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, in which instance
the court—after acquiring jurisdiction—may resolve to
dismiss the action for insufficiency of evidence.
The necessary allegations in a Complaint for ejectment
are set forth in Section 1, Rule 70 of the Rules of Court,
which reads:
1. “SECTIONWho 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, intimidation, threat, strategy, or stealth,
or a lessor, vendor, vendee, or other person against whom
the possession of any land or building is unlawfully
withheld after the expiration or termination of the right to
hold possession, by virtue of any contract, express or
implied, or the legal representatives or assigns of any such
lessor, vendor, vendee, or other person may at any time
within one (1) year after such unlawful deprivation or
withholding of possession, bring an action in the proper
Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any
person or persons claiming under them, for the restitution
of such possession, together with damages and costs.”
In the case at bar, the Complaint filed by Aure and Aure
Lending on 2 April 1997, alleged as follows:
[Aure and Aure Lending] became the owners of a house and
lot located at No. 37 Salazar Street corner Encarnacion
Street, B.F. Homes, Quezon City by virtue of a deed of
absolute sale exe- “2.87cuted by [the spouses Aquino] in
favor of [Aure and Aure Lending] although registered in the
name of x x x Ernesto S. Aure; title to the said property had
already been issued in the name of [Aure] as shown by a
transfer Certificate of Title, a copy of which is hereto
attached and made an integral part hereof as Annex “A”;
However, despite the sale thus transferring ownership of
the subject premises to [Aure and Aure Lending] as above-
stated and consequently terminating [Aquino’s] right of
possession over the subject property, [Aquino] together with
her family, is continuously occupying the subject premises
notwithstanding several demands made by [Aure and Aure
Lending] against [Aquino] and all persons claiming right
under her to vacate the subject premises and surrender
possession thereof to [Aure and Aure Lending] causing
damage and prejudice to [Aure and Aure Lending] and
making [Aquino’s] occupancy together with those actually
occupying the subject premises claiming right under her,
illegal.” 3.29
It can be inferred from the foregoing that Aure, together
with Aure Lending, sought the possession of the subject
property which was never surrendered by Aquino after the
perfection of the Deed of Sale, which gives rise to a cause of
action for an ejectment suit cognizable by the MeTC. Aure’s
assertion of possession over the subject property is based on
his ownership thereof as evidenced by TCT No. 156802
bearing his name. That Aquino impugned the validity of
Aure’s title over the subject property and claimed that the
Deed of Sale was simulated should not divest the MeTC of
jurisdiction over the ejectment case.30
As extensively discussed by the eminent jurist Florenz
D. Regalado in Refugia v. Court of Appeals:31
“As the law on forcible entry and unlawful detainer
cases now stands, even where the defendant raises the
question of ownership in his pleadings and the question of
possession cannot be resolved
_______________
29 Records, pp. 1-2.
30 Tecson v. Gutierez, G.R. No. 152928, 4 March 2005,
452 SCRA 781, 786.
31 327 Phil. 982, 1001-1002; 258 SCRA 347 (1996).
88without deciding the issue of ownership, the
Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts nevertheless have the
undoubted competence to resolve the issue of ownership
albeit only to determine the issue of possession.
x x x. The law, as revised, now provides instead
that when the question of possession cannot be
resolved without 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 was extended to include
within the jurisdiction of the inferior courts ejectment cases
which likewise involve the issue of ownership. This does not
mean, however, that blanket authority to adjudicate the
issue of ownership in ejectment suits has been thus
conferred on the inferior courts.
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
_______________
32 329 Phil. 202, 208; 260 SCRA 420, 426 (1996), as
cited in Oronce v. Court of Appeals, 358 Phil. 616; 298
SCRA 133 (1998).
89courts 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
WHEREFORE, premises considered, the instant
Petition is DENIED. The Court of Appeals Decision dated
17 October 2001 and its Resolution dated 8 May 2002 in
CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs
against the petitioner.
SO ORDERED.
Ynares-Santiago (Chairperson), Austria-Martinez,
Nachura and Reyes, JJ., concur.

Petition denied, judgment and resolution affirmed.

Notes.—Non-exhaustion of administrative remedies is

not jurisdictional—it only renders the action
premature, i.e., the claimed cause of action is not ripe for
judicial determination and for that reason a party has no
cause of action to ventilate in court. (Carale vs. Abarintos,
269 SCRA 132 [1997])
Cognizant of the beneficial effects of amicable
settlements, the Katarungang Pambarangay Law (P.D.
1508) and later the Local Government Code provide for a
mechanism for conciliation where party-litigants can enter
into an agreement in the barangay level to reduce the
deterioration of the quality of justice due to indiscriminate
filing of court cases. (Quiros vs. Arjona, 425 SCRA 57
[2004])
——o0o——

_______________

33 Id.

© Copyright 2019 Central Book Supply, Inc. All rights

reserved.
 VOL. 453, MARCH 18, 2005
843
Chavez vs. Court of Appeals
G.R. No. 159411. March 18, 2005.*
TEODORO I. CHAVEZ, petitioner, vs.HON. COURT OF
APPEALS and JACINTO S. TRILLANA, respondents.
Remedial Law; Revised Katarungang Pambarangay
Law; Settlements; 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; 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.—
The Revised Katarungang Pambarangay Law 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. 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. This special provision follows the
general precept enunciated in Article 2037 of the Civil
Code.
Same; Same; Same; A compromise agreement has the
effect and authority of res judicata even if not judicially
approved, and cannot be lightly set aside or disturbed except
for vices of consent and forgery.—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. It
has upon them the effect and authority of res judicataeven
if not judicially approved, and cannot be lightly set aside or
disturbed except for vices of consent and forgery.
Same; Same; Same; The broad precept enunciated in
Art. 2037 is qualified by Art. 2041.—In Heirs of Zari, et al.
v. Santos, 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
_______________
* SECOND DIVISION.
844
8 SUPREME COURT REPORTS ANNOTATED
44
Chavez vs. Court of Appeals
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.
Same; Same; Same; 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; The mode of enforcement does not rule out the right
of rescis-sion under Art. 2041 of the Civil Code.—In the case
at bar, the Revised Katarungang Pambarangay
Lawprovides 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. 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 itself which provides that the amicable
settlement “may” be enforced by execution by
the luponwithin 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 Lawdirectory or merely optional in nature.
Same; Same; Same; 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.—Although the “Kasunduan” executed by
petitioner and respondent before the Office of
the BarangayCaptain had the force and effect of a final
judgment of a court, petitioner’s 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
attorney’s 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
845
VOL. 453, MARCH 18, 2005
845
Chavez vs. Court of Appeals
and an impending litigation 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. 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. It is undisputed that
herein petitioner did not.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Benito P. Fabie for petitioner.
Edgardo V. Cruz for respondent.
PUNO, J.:
Assailed in this petition for review is the Decision dated
April 2, 20031 of the Court of Appeals in CA-G.R. CV No.
590232 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, 20033 which denied petitioner’s
motion for reconsideration.
The antecedent facts are as follows:
In October 1994, petitioner Teodoro Chavez and
respondent Jacinto Trillana entered into a contract of
lease4 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
_______________
1Rollo, pp. 28-35.
2Entitled “Jacinto S. Trillana, plaintiff-appellee, v.
Teodoro Chavez, defendant-appellant.”
 3Rollo, pp. 37-38.
4Entitled “Contract of Lease of Fishpond,” Id., pp. 46-50;
Original Records, pp. 8-12.
846
846 SUPREME COURT REPORTS ANNOTATED
Chavez vs. Court of Appeals
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:
1. 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.
2. 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 BarangayCaptain 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.:
847
VOL. 453, MARCH 18, 2005 847
Chavez vs. Court of Appeals
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:
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
attorney’s fees plus P1,000.00 for each court appearance of
respondent’s 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
evi-
848
848 SUPREME COURT REPORTS ANNOTATED
Chavez vs. Court of Appeals
dence ex-parte before the Acting Branch Clerk of Court.5 On
the basis thereof, a decision was rendered on December 15,
19976 in favor of respondent, the dispositive portion of
which reads:
“WHEREFORE, judgment is hereby rendered as follows:
1. (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. (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. (3)Ordering the defendant to pay plaintiff the sum of
P200,000.00 as moral damages;
4. (4)Ordering the defendant to pay plaintiff the sum of
P200,000.00 as exemplary damages; and
5. (5)Ordering the defendant to pay plaintiff the sum of
P100,000.00 as and for attorney’s 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 attorney’s fees to
P50,000.00.7 Petitioner’s 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. Peti-
_______________
5 Order dated October 21, 1997 issued by Judge Floro P.
Alejo, RTC of Valenzuela City, Branch 172; Original
Records, p. 46.
6 Rollo, pp. 58-59; Original Records, pp. 50-51.
7 Supra at Note 1.
849
VOL. 453, MARCH 18, 2005 849
 Chavez vs. Court of Appeals
tioner 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
attorney’s fees.
Indeed, the Revised Katarungang Pambarangay
Law8 provides that an amicable settlement reached
after barangayconciliation proceedings has the force and
effect of a final judgment of a court if not repudiated or a
petition to nullify the same is filed before the proper city or
municipal court within ten (10) days from its date.9 It
further provides that the settlement may be enforced by
execution by the lupong tagapamayapa within six (6)
months from its date, or by action in the appropriate city or
municipal court, if beyond the six-month period.10 This
special provision follows the general precept enunciated in
Article 2037 of the Civil Code, viz.:
A compromise has upon the parties the effect and authority
of res judicata; but there shall be no execution except in
compliance with a judicial compromise.
Thus, we have held that a compromise agreement which is
not contrary to law, public order, public policy, morals or
good customs is a valid contract which is the law between
the par-
_______________
8Codified in Sections 399-422, Chapter VII, Title One,
Book III, and Sec. 515, Title One, Book IV of Republic Act
No. 7160, otherwise known as the Local Government Code
of 1991.
9 Section 416, Chapter VII, Title One, Book III of R.A.
No. 7160.
10 Section 417, Chapter VII, Title One, Book III of R.A.
No. 7160. See Vidal v. Escueta, 417 SCRA 617(2003).
850
850 SUPREME COURT REPORTS ANNOTATED
Chavez vs. Court of Appeals
ties themselves. It has upon them the effect and authority
11
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. (italics 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 rescis-
_______________
11 Pasay City Government v. CFI of Manila, Br. X,132
SCRA 156 (1984), citing Municipal Board of Cabanatuan
City v. Samahang Magsasaka, Inc., 62 SCRA 435 (1975).
12 Vda. de Guilas v. David, 23 SCRA 762 (1968).
13 Binamira v. Ogan-Occena, 148 SCRA 677 (1987).
14 137 Phil. 79; 27 SCRA 651 (1969).
851
VOL. 453, MARCH 18, 2005
Chavez vs. Court of Appeals
sion.15 This is because he may regard the compromise as
already rescinded16 by the breach thereof of the other party.
Thus, in Morales v. National Labor Relations
Commission17 we upheld the National Labor Relations
Commission when it heeded the original demand of four (4)
workers for reinstatement upon their employer’s 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 party’s 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. 41722itself
_______________
15 Leonor v. Sycip, 1 SCRA 1215 (1961). See also Iloilo
Traders Finance, Inc. v. Heirs of Oscar Soriano, Jr., 404
SCRA 67 (2003), citing Diongzon v. Court of Appeals, 321
SCRA 477 (1999).
16 Leonor v. Sycip, supra.
17 241 SCRA 103 (1995).
851 18 88 SCRA 234 (1979).
19 127 SCRA 610 (1984).
20 360 SCRA 645 (2001).
21 See Vidal v. Escueta, supra.
22 The amicable settlement or arbitration award may be
enforced by execution by the lupon within six (6) months
from the date of the settlement. After the lapse of such
time, the settlement may be enforced by action in the
appropriate city or municipal court.
852
852 SUPREME COURT REPORTS ANNOTATED
Chavez vs. Court of Appeals
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 directory23or 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,
petitioner’s 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 attorney’s 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 litigation24 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.
_______________
23 Maceda, Jr. v. Moreman Builders Co., Inc., 203 SCRA
293 (1991).
24 Servicewide Specialists, Inc. v. Court of Appeals,257
SCRA 643 (1996).
25 Genova v. De Castro, 407 SCRA 165 (2003).
26 The last paragraph of the “Kasunduan” specifically
reads: “Kung magkakaroon ng sapat at total na kabayaran
si G. Chavez kay
853
VOL. 453, MARCH 18, 2005 853
Chavez vs. Court of Appeals
Having affirmed the RTC’s jurisdiction over the action filed
by respondent, we now resolve petitioner’s remaining
contention. Petitioner contends that no factual or legal
basis exists for the reimbursement of alleged advance
rentals, moral and exemplary damages, and attorney’s fees
awarded by the court a quo and the Court of Appeals.
The rule is that actual damages cannot be presumed, but
must be proved with a reasonable degree of certainty.27 In
the case at bar, we agree with petitioner that no competent
proof was presented to prove that respondent had paid
P300,000.00 as advance rentals for the unexpired period of
the lease contract. On the contrary, the lease contract itself
provided that the remaining rentals of P448,000.00 shall be
paid “on April 23, 1997 and/or, on or before October 23,
1997, and on April 23, 1998 and/or, on or before October 23,
1998 the amount P448,000.00.” Respondent filed his
complaint on February 7, 1997. No receipt or other
competent proof, aside from respondent’s 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,28specifically 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. Peti-
_______________
G. Trillana ang huli ay lalagda sa kasulatan bilang
waiver o walang anumang paghahabol sa nabanggit na
buwisan.”
27 Chan v. Maceda, Jr., 402 SCRA 352 (2003).
28 Original Records, pp. 22-23.
29 Id.
IN VIEW WHEREOF, the petition is PARTIALLY
GRANTED. The assailed Decision dated April 2, 2003 of the
Court of Appeals in CA-G.R. CV No. 59023 is modified by
deleting the award of P300,000.00 as reimbursement of
advance rentals. The assailed Decision is AFFIRMED in all
other respects.
SO ORDERED.
Austria-Martinez, Callejo, Sr., Tingaand Chico-
Nazario, JJ., concur.

Petition partially granted.

854 Note.—It is elementary that if a party fails or refuses to
854 SUPREME COURT REPORTS ANNOTATED abide by a compromise agreement, the other party may
Chavez vs. Court of Appeals either enforce the compromise or regard it as rescinded and
tioner alleged, by way of defense, that he undertook the insist
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
30See Tugade, Sr. v. Court of Appeals, 407 SCRA
attend the pretrial conference and was consequently 497 (2003).
declared in default. What remains undisputed therefore is
855
that petitioner had a valid and subsisting lease contract
with respondent which he refused to honor by giving back VOL. 453, MARCH 18, 2005 855
possession of the leased premises to respondent. We Chavez vs. Court of Appeals
therefore sustain the conclusion of both the trial court and
upon his original demand. (Ramnani vs. Court of
the Court of Appeals that an award of moral damages is
Appeals, 360 SCRA 645 [2001])
justified under the circumstances. We likewise sustain the
award for exemplary damages considering petitioner’s ——o0o——
propensity not to honor his contractual
obligations, first under the lease contract and second, under 856
the amicable settlement executed before the Office of © Copyright 2019 Central Book Supply, Inc. All rights
the Barangay Captain. Since respondent was compelled to reserved.
litigate and incur expenses to protect his interest on
account of petitioner’s refusal to comply with his
contractual obligations,30 the award of attorney’s fees has to
be sustained.
478 SUPREME COURT REPORTS ANNOTATED
Harold vs. Aliba
G.R. No. 130864. October 2, 2007.*
MARIA L. HAROLD, petitioner, vs.AGAPITO T. ALIBA,
respondent.
Actions; Compromise Agreements; Words and
Phrases; A compromise agreement is defined as a contract
whereby the parties, by making reciprocal concessions, avoid
litigation or put an end to one already commenced.—
Harold’s 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 agreementwas
_______________
* SECOND DIVISION.
479
VOL. 534, OCTOBER 2, 2007
479
Harold vs. Aliba
defined as “a contract whereby the parties, by making
reciprocal concessions, avoid litigation or put an end to one
already commenced.”InSanchez v. Court of Appeals, 279
SCRA 647 (1997), we held that a “compromise is a form of
amicable settlement that is not only allowed but also
encouraged in civil cases.”
Same; Same; Estoppel; The doctrine of estoppel is based
upon the grounds of public policy, fair 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 were directed and who reasonably relied
thereon.—Under Article 1431 of the Civil Code, through
estoppel, an admission or representation is rendered
conclusive upon the person making it, and cannot be denied
or disproved as against the person relying on it.
Expounding on the principle of estoppel, we held
in Springsun Management Systems Corporation v.
Camerino, 449 SCRA 65 (2005), that “where a party, by his
deed or conduct, has induced another 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 to the latter.” The doctrine of estoppel
is based upon the grounds of public policy, fair 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 were directed and who
reasonably relied thereon.
Same; Same; Katarungang Pambarangay Law; Where
the minutes of the barangay conciliation proceedings readily
disclose the terms agreed upon by the parties for the
settlement of their dispute, and the acknowledgment receipt,
written in a language known to the parties, are signed by
them, attested to by the Lupon Chairman, and witnessed by
several barangay officials, the same serves as an indubitable
proof of the amicable settlement and of the substantial
compliance of its terms by one of the parties.—The issue
concerning the alleged non-compliance of the amicable
settlement pursuant to the mandate of Section 411 of
Republic Act No. 7160 or the Local Government Code (LGC)
arose because there was no formal document denominated
as “Amicable Settlement” signed by the parties. However,
we agree with the similar holdings of the Court of Appeals
and the RTC that the requirements under Section 411 of
the LGC had been substantially complied with. The
minutes of the barangay conciliation proceedings readily
disclose the terms agreed upon by
480
4 SUPREME COURT REPORTS ANNOTATED
80
Harold vs. Aliba
the parties for the settlement of their dispute, and that
the acknowledgment receipt, which was written in a
language known to the parties, signed by them, attested to
by the LuponChairman, and witnessed by
several barangayofficials, serves as an indubitable proof of
the amicable settlement and of the substantial compliance
of its terms by respondent Aliba.
Same; Same; A compromise agreement is a consensual
contract, and as such, it is perfected upon the meeting of the
minds of the parties to the contract.—Even without the
minutes of the meeting and the acknowledgment receipt,
the amicable settlement, or more specifically the
compromise agreement, entered into by the parties is
undeniably valid, considering that “a compromise
agreement is a consensual contract, and as such, it is
perfected upon the meeting of the minds of the parties to
the contract.”
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Ruben E. Paoad for petitioner.
Ma. Inglay Capuyan-Fokno for respondent.
QUISUMBING, J.:
For review on certiorari is the Decision1dated September 3,
1997 of the Court of Appeals in CA-G.R. SP No. 40416,
affirming the dismissal of petitioner Maria L. Harold’s
complaint before the Municipal Trial Court of La Trinidad,
Benguet.
The pertinent facts are as follows:
Sometime in January 1993, Harold engaged the services
of respondent Agapito T. Aliba, a geodetic engineer, to
conduct a relocation survey and to execute a consolidation-
subdivision of their properties including that of Harold’s
sister, Alice La-
_______________
1Rollo, pp. 42-49. Penned by Associate Justice B.A.
Adefuin-De la Cruz, with Associate Justices Arturo B.
Buena and Ricardo P. Galvez concurring.
481
VOL. 534, OCTOBER 2, 2007 481
Harold vs. Aliba
ruan, 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, despite repeated
demands to return them.
It also appears that sometime in January 1994, Aliba
prevailed upon Harold and her husband to sign a document
which was supposedly needed to facilitate the
consolidationsubdivision and the issuance of separate
transfer certificates of title over the properties. Harold and
her husband signed the document without reading it.
Thereafter, on April 18, 1994, a truck loaded with G.I.
sheets and construction materials came to the subject
lot2 owned by Harold. Upon inquiry, Harold and her
husband were informed that Aliba had sold the lot to a
third person.
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 said lot. It was only after
such offers were made that Aliba told Harold that he had
indeed sold the lot.
On May 3, 1994, Harold agreed to accept the P500,000
from Aliba but only as partial payment, considering that
the lot has an aggregate value of P1,338,0003 or P6,000 per
square meter. On the same date, Harold was made 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.
_______________
2Id., at p. 121. (With an aggregate area of 223 sq.
meters.)
3 Product of 223 sq. meters x P6,000.
482
482 SUPREME COURT REPORTS ANNOTATED
Harold vs. Aliba
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 BarangayLimson Ogas
and the Lupong Tagapamayapa. 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.4The 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 action7was issued by the Office of the Lupong
Tagapamayapa on June 29, 1994. Immediately thereafter,
Harold filed a Complaint8 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 Harold’s complaint, holding that
_______________
4 Rollo, p. 64.
5 Id., at p. 220.
6 Id., at pp. 64-65.
 7 Id., at p. 66.
8 Id., at pp. 35-41.
9 Id., at pp. 55-62.
483
VOL. 534, OCTOBER 2, 2007
483
Harold vs. Aliba
“x x x x
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 . . . .
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 P75,000.0010 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
_______________
Id., at p. 64. (Should be P5,000 as mentioned in the
10
minutes.)
484
484 SUPREME COURT REPORTS ANNOTATED
Harold vs. Aliba
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 SETTLE-
_______________
11 Id., at pp. 195-197.
12 Id., at p. 198.
485
VOL. 534, OCTOBER 2, 2007
Harold vs. Aliba
MENT 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 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 PETITIONER’S 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
485
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 barangayconciliation 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, Harold’s main contention was hinged on the
alleged non-perfection of the questioned amicable
settlement
_______________
13 Id., at p. 14.
486
486 SUPREME COURT REPORTS ANNOTATED
Harold vs. Aliba
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, Aliba’s
principal defense is anchored on the alleged existence and
validity of the said amicable settlement.15
Harold’s 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
_______________
14 Id., at pp. 20-24.
15 Id., at pp. 191-192.
16 G.R. No. 108947, September 29, 1997, 279 SCRA 647.
17 Id., at p. 676.
18 Rollo, p. 22.
487
VOL. 534, OCTOBER 2, 2007 487
Harold vs. Aliba
against Aliba regarding the subject lot. Moreover, she is
likewise barred from pursuing her case against Aliba under
the principle of estoppel now.
Under Article 1431 of the Civil Code, through estoppel,
an admission or representation is rendered conclusive upon
the person making it, and cannot be denied or disproved as
against the person relying on it. Expounding on the
principle of estoppel, we held in Springsun Management
Systems Corporation v. Camerino19 that “where a party, by
his deed or conduct, has induced another 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 to the latter.”20
The doctrine of estoppel is based upon the grounds of
public policy, fair 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 were directed and who reasonably relied
thereon.21
The issue concerning the alleged non-compliance of the
amicable settlement pursuant to the mandate of Section
41122 of Republic Act No. 7160 or the Local Government
Code (LGC) arose because there was no formal document
denominated as “Amicable Settlement” signed by the
parties. However, we agree with the similar holdings of the
Court of Appeals and the RTC that the requirements under
Section 411 of the LGC had been substantially complied
with. The min-
_______________
19 G.R. No. 161029, January 19, 2005, 449 SCRA 65.
20 Id., at p. 83.
21 P.J. Lhuillier, Inc. v. National Labor Relations
Commission, G.R. No. 158758, April 29, 2005, 457 SCRA
784, 793-794.
22 SECTION 411. Forms of Settlement.—All amicable
settlements shall be in writing, in a language or dialect
known to the parties, signed by them, and attested to by
the lupon chairman or the pangkatchairman, as the case
may be. When the parties to the dispute do not use the
same language or dialect, the settlement shall be written in
the language or dialect known to them.
488
488 SUPREME COURT REPORTS ANNOTATED
Harold vs. Aliba
utes of the barangay conciliation proceedings readily
disclose the terms agreed upon by the parties for the
settlement of their dispute, and that the acknowledgment
receipt, which was written in a language known to the
parties, signed by them, attested to by the LuponChairman,
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.
Moreover, even without the minutes of the meeting and
the acknowledgment receipt, the amicable settlement, or
more specifically the compromise agreement, entered into
by the parties is undeniably valid, considering that “a
compromise agreement is a consensual contract, and as
such, it is perfected upon the meeting of the minds of the
parties to the contract.”23
Furthermore, to rule against the validity of the cited
amicable settlement herein would militate against the
spirit and purpose of the Katarungang
PambarangayLaw, which is to encourage the amicable
24
settlement of disputes at the barangay level as an
alternative to court litigation.
Harold’s refusal to accept the remaining P5,000 that
Aliba had tendered cannot constitute an effective
repudiation of the questioned amicable settlement,
considering that the reason for her refusal to accept the
said amount or alleged repudiation of the assailed amicable
settlement is not one of the grounds for repudiation clearly
specified under Section 41825
_______________
23Sanchez v. Court of Appeals, G.R. No. 108947,
September 29, 1997, 279 SCRA 647, 675.
24 Covers Sections 399-422 of the Local Government
Code.
 25 Section 418. Repudiation.—Any party to the dispute by the barangay chairman, is sufficient compliance with
may, within ten (10) days from the date of the settlement, Article 151 of the Family Code. (Martinez vs. Martinez, 461
repudiate the same by filing with the lupon chairman a SCRA 562[2005])
statement to that effect sworn to before him, where the
consent is vitiated by fraud, violence, or intimidation. Such ——o0o——
repudiation shall be sufficient basis for the issuance of the
certification for filing a complaint as hereinabove provided. 490
(Emphasis supplied.) © Copyright 2019 Central Book Supply, In

489
VOL. 534, OCTOBER 2, 2007 489
Harold vs. Aliba
of the LGC. As borne out by the records, her refusal to
accept the same was based on the alleged insufficiency of
the remaining P5,000 as settlement for the lot, without any
reference to vitiation of her consent by any fraud, violence
or intimidation on Aliba’s part.
WHEREFORE, the petition is DENIED for lack of merit.
The assailed Decision dated September 3, 1997 of the Court
of Appeals in CA-G.R. SP No. 40416 is AFFIRMED. Costs
against the petitioner.
SO ORDERED.
Carpio, Carpio-Morales, Tinga and Velasco, Jr., JJ.,
concur.

Petition denied, assailed decision affirmed.

Notes.—There is substantial compliance with the law
even though no pangkat was constituted if the parties met
at the office of the barangay chairman for possible
settlement yet the efforts of the barangaychairman proved
futile. (Diu vs. Court of Appeals, 251 SCRA 472 [1995])
An allegation in the complaint that the petitioners had
initiated a proceeding against the respondent for unlawful
detainer in the Katarungang Pambarangay, in compliance
with P.D. No. 1508, as well as the certification to file action