(01arbit)joycgc |1

G.R. No. 158901

March 9, 2004
PROCESO QUIROS and LEONARDA VILLEGAS, petitioners,
vs.
MARCELO ARJONA, TERESITA BALARBAR, JOSEPHINE
ARJONA, and CONCHITA ARJONA, respondents.

P-Proceso Quiros and Leonarda Villegas filed - office of the

barangay captain of Labney, San Jacinto, Pangasinan,
- for recovery of ownership and possession of a parcel of
land located at Labney, San Jacinto, Pangasinan
-to recover from their uncle R-Marcelo Arjona their lawful
share of the inheritance from their late grandmother Rosa Arjona
Quiros alias Doza, the same to be segregated from the following
parcels of land:
a) A parcel of land at Labney, Torud, San Jacinto, Pangasinan
(44,520) square meters;
b) A parcel of Unirrig. riceland at Labney, San Jacinto, San
Jacinto, Pangasinan, 6450 sq. meters assessed at P2390.00;
c) A parcel of Unirrig. riceland at Labney, San Jacinto,
Pangasinan, 6450 sq. meters at assessed at P1700.00;
d) A parcel of Unirrig. riceland at Labney, San Jacinto,
Pangasinan assessed at P5610.00;
e) A parcel of Cogon land situated at Labney, San Jacinto,
Pangasinan, 14133 sq. meters assessed at P2830.
An amicable settlement was reached between the parties. By
reason thereof, R-Arjona executed a document denominated as
"PAKNAAN" ("Agreement", in Pangasinan dialect), which reads:
MARCELO ARJONA of Barangay Sapang, Buho, Palayan City,
Nueva Ecija, have a land consisting of one (1) hectare;
which I gave to Proceso Quiros and Leonarda Villegas;
this land was inherited by Doza;
that is why I am giving the said land to them for it is in my
name.
On the same date, another "PAKNAAN" was executed by Jose
Banda, as follows:
JOSE BANDA, married to Cecilia L. Banda and resident of
Sitio Torrod, Barangay Labney, San Jacinto, Pangasinan.
A land was entrusted to me situated in Sitio Torrod, Brgy.
Labney, San Jacinto, Pangasinan, land of Arjona family.
I am cultivating/tilling this land but if ever Leonarda Villegas
and Proceso Quiros would like to get this land, I will
voluntarily surrender it to them.

P filed at MCTC - a complaint with prayer for the issuance of a writ

of execution of the compromise agreement;
- denied because the subject property cannot be determined
with certainty.
RTC - reversed the decision of the MC on appeal;
- ordered the issuance of the writ of execution.
R appealed to the CA- reversed the decision of the RTC;
- reinstated the decision of the MCTC
ISSUE:
WON the amicable settlement executed by the
parties is valid and enforceable. YES, remedy is
reformation.
WON a writ of execution may issue on the basis
thereof. NO

P contentions Sec. 416 of the LGC which provides that an

amicable settlement shall have the force and effect of a final
judgment upon the expiration of 10 days from the date thereof,
unless repudiated or nullified by the proper court.
- since no such repudiation or action to nullify has been
initiated, the MC has no discretion but to execute the
agreement which has become final and executory.
- that despite the failure of the Paknaan to describe with
certainty the object of the contract, the evidence will show
that after the execution of the agreement, respondent
Marcelo Arjona accompanied them to the actual site of the
properties at Sitio Torod, Labney, San Jacinto, Pangasinan
and pointed to them the 1 hectare property referred to in
the said agreement.
R insist - that respondent Arjona could not have accompanied P to
the subject land at Torrod, Labney because he was physically
incapacitated and there was no motorized vehicle to transport him
to the said place.
Civil Code - encourage and favor compromises and do not even
require judicial approval. Article 2029 of the Civil Code, the courts
must endeavor to persuade the litigants in a civil case to agree
upon some fair compromise. Pursuant to Article 2037 of the Civil
Code, a compromise has upon the parties the effect and authority
of res judicata, and this is true even if the compromise is not
judicially approved. Articles 2039 and 2031 thereof also provide for
the suspension of pending actions and mitigation of damages to
the losing party who has shown a sincere desire for a compromise,
in keeping with the Codes policy of encouraging amicable
settlements.

(01arbit)joycgc |2

Cognizant of the beneficial effects of amicable settlements, the

Katarungang Pambarangay Law (P.D. 1508) and later the LGC
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.
Section 416 of the said Code, an amicable settlement shall have
the force and effect of a final judgment of the court upon the
expiration of 10 days from the date thereof, unless repudiation of
the settlement has been made or a petition to nullify the award has
been filed before the proper court
P submit - that since the amicable settlement had not been
repudiated or impugned before the court within the 10-day
prescriptive period in accordance with Section 416 of the LGC, the
enforcement of the same must be done as a matter of course and a
writ of execution must accordingly be issued by the court.
GR - where no repudiation was made during the 10-day period, the
amicable settlement attains the status of finality and it becomes
the ministerial duty of the court to implement and enforce it. EXPN
- where its execution is unjust, may warrant the suspension of
execution of a decision that has become final and executory.
In the case at bar, the ends of justice would be frustrated if a writ of
execution is issued considering the uncertainty of the object of the
agreement. To do so would open the possibility of error and future
litigations.
On ocular inspection however, the municipal trial court found that
the land referred to in the second Paknaan was different from the
land being occupied by P. Hence, no writ of execution could be
issued for failure to determine with certainty what parcel of land
respondent intended to convey.
In denying the issuance of the writ of execution, the AC ruled that
the contract is null and void for its failure to describe with certainty
the object thereof. While we agree that no writ of execution may
issue, we take exception to the appellate courts reason for its
denial.
Since an amicable settlement, which partakes of the nature of a
contract, is subject to the same legal provisions providing for the
validity, enforcement, rescission or annulment of ordinary
contracts, there is a need to ascertain whether the Paknaan in
question has sufficiently complied with the requisites of validity in
accordance with Article 1318 of the Civil Code.
There is no question that there was meeting of the minds between
the contracting parties. In executing the Paknaan, the respondent
undertook to convey 1 hectare of land to petitioners who accepted.

It appears that while the Paknaan was prepared and signed by

respondent Arjona, P acceded to the terms thereof by not disputing
its contents and are in fact now seeking its enforcement.
object - 1-hectare parcel of land representing P inheritance
from their deceased grandmother;
cause of the contract is the delivery of P share in the
inheritance.
The inability of the MC to identify the exact location of the inherited
property did not negate the principal object of the contract. This is
an error occasioned by the failure of the parties to describe the
subject property, which is correctible by reformation and does not
indicate the absence of the principal object as to render the
contract void.
It cannot be disputed that the object is determinable as to its kind,
i.e.1 hectare of land as inheritance, and can be determined without
need of a new contract or agreement. Clearly, the Paknaan has all
the earmarks of a valid contract.
Although both parties agreed to transfer one-hectare real property,
they failed to include in the written document a sufficient
description of the property to convey. This error is not one for
nullification of the instrument but only for reformation.
Reformation is a remedy in equity whereby a written instrument is
made or construed so as to express or conform to the real intention
of the parties where some error or mistake has been committed. In
granting reformation, the remedy in equity is not making a new
contract for the parties, but establishing and perpetuating the real
contract between the parties which, under the technical rules of
law, could not be enforced but for such reformation.
In order that an action for reformation of instrument as provided in
Article 1359 of the Civil Code may prosper, the following requisites
must concur:
(1) there must have been a meeting of the minds of the
parties to the contract;
(2) the instrument does not express the true intention of the
parties; and
(3) the failure of the instrument to express the true intention
of the parties is due to mistake, fraud, inequitable conduct
or accident.
When the terms of an agreement have been reduced to writing, it is
considered as containing all the terms agreed upon and there can
be, between the parties and their successors in interest, no
evidence of such terms other than the contents of the written
agreement, except when it fails to express the true intent and
agreement of the parties thereto, in which case, one of the parties

(01arbit)joycgc |3

may bring an action for the reformation of the instrument to the

end that such true intention may be expressed.
Both parties acknowledge that P are entitled to their inheritance,
hence, the remedy of nullification, which invalidates the Paknaan,
would prejudice P and deprive them of their just share of the
inheritance.
R cannot be allowed to renege on his legal obligation to transfer the
property to its rightful heirs. A refusal to reform the Paknaan under
such circumstances would have the effect of penalizing one party
for negligent conduct, and at the same time permitting the other
party to escape the consequences of his negligence and profit
thereby. No person shall be unjustly enriched at the expense of
another.

[G.R. No. 113070. September 30, 1999]

ABARINTOS vs CA

P and PR are co-owners of Arnaiz Hermanos, a hacienda consisting

of several hectares of land devoted to the production and raising of
sugar cane, coconut and other crops. Portions of the hacienda also
serve as fishpond, salt bed and prawn farm.
Francisca Ponce De Leon along with the other PR owns around
64.485976% of the property while P represent a total of
35.5140232%.
By virtue of a SPA, the co-owners appointed P-Jose Garcia as
administrator of the property.
P-Garcia
- owns a 5.91900305% share
- acted as attorney-in-fact of the co-owners
- wielded almost absolute power over the property.
-decided on the crops planted;
- the investments made;
- the equipment used;
- the purchases done;
- the produce sold and the quantity, price and time to sell
the produce.

- exercised full control over the funds of the co-ownership,

including the distribution thereof to the co-owners.
R started to entertain doubts on the manner Garcia administered
the property. They questioned the manner of distribution of profits
prompting the respondents to hire the services of an accounting
firm, to conduct an audit of the books of the co-ownership.
The audit resulted to a startling discovery of disbursements,
expenditures, withdrawal of funds, deposits and investments which
were improperly made and thus, prejudicial to the interest of the
co-owners.
Co-owners, by virtue of resolutions approved by the majority,
decided to manage and operate the farm themselves, including its
financial matters, and required Garcia to render a fair, true and
complete accounting of the transactions entered into by him as
administrator.
Eventually the co-owners terminate the co-ownership and divide
the property among themselves.
PR moved that Garcia be made to account for the proceeds of the
operation of the farm during his incumbency as administrator. PGarcia, however, walked out of the meeting. Notwithstanding
Garcias absence, the co-owners declared the existence of a quorum
and implemented the resolution which earlier revoked the special
power of attorney executed in favor of Garcia.
By a majority vote of the co-owners, an action for accounting was
filed against Garcia before the RTC Negros Oriental.
P- Garcia filed a complaint for partition with ex parte appointment
of receiver, before the RTC of Bais City.
P filed an urgent ex parte motion for appointment of
receiver, which failed to contain a notice of hearing. No copy of the
motion was sent to the private respondents.
RTC Bais City appointed Enrico Garcia as receiver, without any
hearing subject however to the filing of a P30,000.00 bond as fixed
by the court and Lawyer Enrico Garcia complied with the order of
the court.
PR, through Ana Maria A. Diago filed with the same court a
motion for inhibition and recall and/or annulment of all orders
issued in connection with appointment of receiver and partition.
Enrico Garcia, as receiver filed a motion ex parte in his
appointment, which sought to grant him authority to withdraw
funds from the bank. The motion failed to contain a notice of
hearing and private respondents were not furnished with a copy
thereof.
Judge denied the motion for inhibition.

(01arbit)joycgc |4

LC - denied private respondents motion for annulment of the

orders
- granted the ex parte motion of the receiver, Enrico Garcia
which authorized the latter to withdraw money from the Far
East Bank and Trust Company, Dumaguete City and/or from
the Bank of the Philippine Islands, Bais City, Negros Oriental.
LC - granted anew the ex parte motion of the receiver Enrico
Garcia to withdraw funds for the operation of the co-ownership
property; to sell sugar, molasses, copra, salt and fish products and
to deposit the proceeds of the sale with the bank.
Parties entered into a compromise agreement and submitted the
same to the court for approval.
COMPROMISE AGREEMENT PAGE 556-558 OF SCRA

PR brought before the CA a petition for certiorari and prohibition

with prayer for preliminary injunction and/or temporary restraining
order which sought to annul or set aside the LC orders.
CA granted petition for certiorari and prohibition filed by PR. After
carefully reviewing the records of this case, We perceive the
following important data:
(1) that ex parte motions are mere scraps of papers;
(2) that a motion to dismiss Civil Case No. 139-B is so
important as to be wrongfully ignored by mere ex parte
motions;
(3) that a question of inhibition involves an important
question of faith in the administration of justice as to be
easily ignored or cast aside;
(4) that the absence of notice or opportunity to be heard
violates the fundamental principle of due process and
constitutes grave abuse of discretion by the respondent
judge amounting to lack of or excess of jurisdiction; and
(5) that since partition of the property of the decedents
Hacienda has already been agreed upon by the parties, Civil
Case No. 139-B is inappropriate and baseless and should
have been dismissed outright.
P filed a MR - appellate court denied.
ISSUE: Effect of the compromise agreement entered into by
the parties and approved by the court, on the action for
partition with ex parte appointment of receiver filed by
herein petitioner Jose Garcia.

WON the compromise agreement entered into

between the parties constitutes and operates as a partition.
YES, it effectively terminated the co-ownership over the
properties.

Under Article 2028 of the Civil Code, a compromise is a contract

whereby the parties, by making reciprocal concessions, avoid
litigation or put an end to one already commenced. A judicial
compromise has the force of law and is conclusive between the
parties. Once an agreement is stamped with judicial approval, it
becomes more than a mere contract binding upon the parties, and
having the sanction of the court and entered as its determination of
the controversy, it has the force and effect of any other judgment.
The compromise agreement entered into between the parties, as
represented by Jose Garcia on the part of the plaintiffs and Ana
Maria Diago, on the part of the defendants, constitutes and
operates as a partition that effectively terminated the relation of
co-ownership over the properties contemplated thereunder.
It is settled that every act which is intended to put an end to
indivision among co-heirs and legatees or devisees is deemed to be
a partition, although it should purport to be a sale, an exchange, a
compromise, or any other transaction.
Parties already agreed on the mechanics of the partition and
apportioned the property owned in common. Notwithstanding such
glaring fact, P-Jose Garcia decided to file a complaint for partition
with ex parte appointment of receiver. Eventually though, a
compromise agreement was forged between the co-owners, as duly
represented by P-Garcia on the part of the plaintiffs and PR-Diago
on the part of the defendants.
It reveals that herein P-Jose Garcia was a signatory to the
compromise partition. The records show that the compromise
partition was duly approved by the RTC Dumaguete City.
Be that as it may, the partition for which Civil Case No. 139-B was
filed had already been realized through the execution of the
compromise agreement by the co-owners and the subsequent
approval thereof by the court.
Stated differently, inasmuch as the co-owners have already agreed
to partition the property and in fact appointed Ana Maria Diago and
Jose Garcia, as joint administrators during the winding-up period,
and considering that the compromise agreement had been duly
stamped with judicial approval, the pending issues in Civil Case No.
139-B have already been rendered moot and academic.
The law provides that a compromise has upon the parties the effect
and authority of res judicata. It is axiomatic that a decision based

(01arbit)joycgc |5

on a compromise agreement is immediately final and executory. A

compromise agreement, once approved by final orders of the court,
has the force of res judicata between the parties and should not be
disturbed except for vices of consent or forgery.
We see no reason to depart from the general rule in the absence of
any vice of consent or forgery clearly established in this
case. Indeed, compromises are generally to be favored and cannot
be set aside if the parties acted in good faith and made reciprocal
concessions to each other in order to terminate a case.
Verily, the co-owners by their compromise agreement in Civil Case
No. 139-B, contracted, among others, to partition the co-ownership
property and to distribute it among themselves. Similarly, the coowners authorized Ana Maria Diago and Jose Garcia to act as joint
administrators pending the final winding-up of the affairs of the coownership. Moreover, the parties agreed to waive their respective
claims and counterclaims in connection with the case.
We therefore hold that the compromise agreement transcends its
identity as a mere contract binding only upon the parties
thereto. Having been approved by a court of law, it has become a
judgment which is subject to execution in accordance with the
Rules.

G.R. No. 175123

July 4, 2012
MOLDEX REALTY, INC. and ANSELMO AGERO, Petitioners,
vs.
SPOUSES RICARDO J. VILLABONA and GILDA G. VILLABONA
and EDUARDO J. VILLABONA,Respondents.

R filed a Complaint against P and Levi P. Sayo (Sayo) for the

annulment of TCT registered under the name of Moldex and
formerly covered by OCTs 3322, 3323. R likewise prayed for the
award of damages.
R-Eduardo J. Villabona alleged:
that he was the true owner of Lot No. 2346, covered by OCT
No. 3322;
R-Ricardo Villabona and Gilda Villabona of Lot No. 2527,
covered by OCT No. 3323.
acquired these properties by virtue of a Deed of Sale
executed by their parents, Rafael Villabona and Ursula Jose
Villabona.
that P-Moldex, through its alleged representative Sayo,
negotiated for the purchase of the subject properties,
whereby Lot No. 2346 would be sold for P1,132,080 and Lot
No. 2527 for P511,320.
Sayo then was able to successfully obtain from R-Ricardo
the original copy of OCT Nos. 3322 and 3323.
Sayo encashed the check payment of P-Moldex for Lot No.
2346, while P-Anselmo Agero encashed that for Lot No.
2527.
that P caused the cancellation and transfer of OCTs through
allegedly falsified DOAS.
that the deeds were falsified, because these were executed
after the deaths of Rafael and Ursula.
R attached to their Complaint photocopies of the DOS executed by
them and their parents; TCT Nos. NT-250333 and NT-250334;
Certificates of Death of Rafael and Ursula; and DOAS allegedly
executed between spouses Rafael and Ursula and P-Moldex.
P-Agero denied being an agent of respondent Moldex in the
purchase of the subject properties. He further denied having
received money representing the purchase price of these lots.
P-Moldex alleged:
that Sayo and Agero were R real estate brokers and offered
the subject properties for sale.
that R had executed DOAS, whereby Lot No. 2527 was sold
for P 383,490 and Lot No. 2346 for P849,060. In
consideration of the sale of the two parcels of land, it issued
United Coconut Planters Bank (UCPB) of P1,132,080, which
was endorsed by R-Ricardo.
The check was subsequently deposited and the amount
therein stated withdrawn.

(01arbit)joycgc |6

R-Ricardo voluntarily handed the titles over to Sayo, so that

the latter could cause the transfer thereof.
denied having any knowledge of or participation in the
alleged falsified DOAS.
P-Moldex attached photocopies of the deeds it executed with
respondent Ricardo, as well as the UCPB check including the dorsal
part thereof.
R filed an Amended Complaint impleading Atty. Elias Estrella, the
Deputy Register of Deeds of Cabanatuan City; Atty. Alfredo G.
Ortaleza, the lawyer who notarized the alleged falsified Deeds of
Absolute Sale; and Jacinto Uy, the chairperson of theBoard of
Directors of petitioner Moldex.
Trial ensued. After the presentation of Ricardo as the first witness,
Atty. Cecilio Suarez, counsel for R, prayed for a resetting of the
hearing for the presentation of another witness. RESET- laging
wala si counsel.
In view of this, the presentation of the evidence for the plaintiffs is
hereby considered closed and terminated specially so that there
was a promise on the part of the plaintiffs, through counsel, that a
settlement will be arrived at and a compromise agreement will be
presented today, yet nothing was heard over [sic] on the part of the
plaintiffs as well as counsel.
R filed a MR of the RTC Order, insisting that they were still to
present two more witnesses. absent pa din sa hearingHearing was reset once more, upon agreement of the parties, in
anticipation of an amicable settlement.
Atty. Suarez moved for the cancellation of the hearing scheduled
because of a previously scheduled one in another court. He further
manifested that a compromise agreement had been approved by
respondents and may be submitted for the approval of the trial
court once the agreement was signed by the parties.
During the hearing, Atty. Suarez and R were likewise absent. P
objected to the resetting of the hearing on account of the
numerous postponements attributable to the nonappearance of R
and their counsel. Upon agreement of the parties, the hearing was
reset and had to be reset two times more for possible amicable
settlement of the case.
Finally, with Atty. Suarez still failing to appear at the hearing, the
RTC issued an Order submitting the case for decision based on
whatever evidence had been adduced.
TC - stating that there being no formal offer of evidence from P, it
thus resolved to set aside the previous Order. The court gave 15
days for petitioners to submit their written formal offer of evidence

from receipt of the Order, after which the case was to be deemed
submitted for resolution.
Without waiting for the submission of the written formal offer of
evidence, the RTC rendered its assailed Decision, the dispositive
portion of which states:
1. Declaring Transfer Certificate of Title Nos. NT-250333 and
NT-250334 both of the Registry of Deeds of Cabanatuan City
in the name of Moldex Realty Inc. is hereby declared null
and void;
2. Ordering jointly and severally the defendants to pay the
plaintiffs the amount of P100,000.00 Philippine Currency, as
actual, moral and exemplary damages; and,
3. To pay the plaintiffs the sum of P10,000.00 as attorney[]s
fees.
P- Moldex received a copy of the Decision, it filed a Manifestation
asking for a clarification of the trial courts Order. It alleged that it
was in a quandary over whether to file its formal offer of evidence,
considering that it had not yet presented any, and that the court
had already ordered respondents presentation of evidence as
closed and terminated without any formal offer.
P-Moldex filed a MR. It alleged:
that Judge Ballutay gravely erred and abused his discretion
when he rendered the assailed Decision before R had
completed their evidence and rested their case, and before
defendants had the opportunity to adduce evidence;
that the Decision was rendered without the 15-day period
given to P to formally submit their evidence pursuant to the
Order;

that the Decision was tantamount to a judgment on the

pleadings and/or summary judgement;
and that the Decision was contrary to the law and the facts.
RTC denied the MR for the following reasons:
counsel for petitioner Moldex, Atty. Samuel Acorda, was
absent on several hearing dates;
he manifested in open court during the 31 May 2000
hearing that petitioner Moldex had nothing to do with the
case;
the parties failed to submit a compromise agreement
despite manifesting that they would; and the case had
already dragged on for a number of years.
On appeal, the CA affirmed the ruling of the TC:

(01arbit)joycgc |7

that P had been given ample time to present their evidence,

but failed to do so and in fact agreed to submit the case for
resolution.
that the TC based its findings on the documents attached to
the Complaint, pointing out that these documents had been
properly identified and marked during the testimony of
Ricardo.
Neither did the CA find the RTCs resolution of the case
reprehensible despite the fact that the 15 days given to
petitioners to submit their formal offer of evidence had not
yet lapsed.
that P-Moldex failed to prove that it had actually paid R the
value of the subject properties.
that the DOAS, which were purportedly signed by Ursula and
Rafael Villabona, were null and void.
ISSUE: WON

It is clear from the records that since 18 January 2001, P did not
have the opportunity to present their evidence through no fault of
their own. Most of the time, counsel for R did not attend the
scheduled hearings. While it is true that some of the
postponements were attributable to P, these were agreed upon by
the parties in order to reach an amicable settlement. It must be
emphasized that, in this jurisdiction, a compromise agreement is
highly encouraged as provided under the Civil Code. Articles 2029
and 2030 thereof reads:
Art. 2029. The court shall endeavour to persuade the
litigants in a civil case to agree upon some fair compromise.
Art. 2030. Every civil action or proceeding shall be
suspended:
(1) If willingness to discuss a possible compromise is
expressed by one or both parties; or
(2) If it appears that one of the parties, before the
commencement of the action or proceeding, offered to
discuss a possible compromise but the other party refused
the offer.
The duration and terms of the suspension of the civil action or
proceeding and similar matters shall be governed by such
provisions of the rules of court as the Supreme Court shall
promulgate. Said rules of court shall likewise provide for the
appointment and duties of amicable compounders.
Furthermore, upon failure of the parties to present an amicable
settlement, what the trial court should have done was to continue

the trial by resolving R R and allowing P to present their evidence

in chief.
Rather, the RTC immediately considered the case submitted for
decision. After realizing that no formal offer of evidence had been
submitted by P, it recalled the 12 November 2001 Order, through
another Order dated 28 November 2001, and required petitioners
to submit their formal offer of evidence.
Clearly, the procedure adopted by the RTC was contrary to that
provided in Rule 30, Section 5 of the Rules of Court PAGE 624 SCRA
Moreover, without verifying the date of receipt by P of the 28
November 2001 Order, and without waiting for the submission of
their formal offer of evidence, the RTC rendered its Decision. Not
only the parties, but even the court itself is bound by its own Order.
The RTC further brushed aside petitioner Moldexs Manifestation
filed on 5 February 2002 that it still had to present evidence to
prove its case, as well as its explanation that it only received the 28
November 2001 Order on 29 January 2002.
It is equally important to note that the trial court relied merely on
the Annexes of photocopied documents attached to the Complaint,
without giving the same weight to those attached to petitioner
Moldexs Answer. On the one hand, R claim that the titles to the
subject properties were transferred by virtue of falsified DOAS
executed by their deceased parents in favor of P-Moldex. On the
other hand, P-Moldex alleges that the titles were transferred to its
name by virtue of the DOAS executed by R themselves. It further
claims that payment had been made upon Ricardos endorsement
of the check, extinguishing its obligation to him. Clearly, there were
still substantial issues that needed to be threshed out that
necessitated the presentation of evidence.
In Borje v. Court of First Instance of Misamis Occidental, Branch
II, we said:
Verily, the above discussion shows the need of
presentation of proof for the respective allegations of the
parties. For the respondent Court to make a summary finding of
lack of malice or bad faith on the part of private respondents from
those controverted facts and then decree the dismissal of the case
is, therefore, violative of due process. In view of the doubtful
question of facts presented herein, respondent court, in the
exercise of sound discretion, should have refused to
consider and decide in a summary manner and should have
allowed the parties to present proof in support of their
respective stand. This is because the right to a hearing,
which is the right of the parties interested or affected to

(01arbit)joycgc |8

present their respective cases and submit evidence in

support thereof, is one of the primary cardinal rights of
litigants.
The importance of this right has been underscored in several cases
of this nature decided by this Court. In one of such cases, De Leon
vs. Henson, his Court ruled that the dismissal of an action upon a
motion to dismiss constitutes a denial of due process, if, from a
consideration of the pleadings, it appears that there are issues of
fact which cannot be decided without a trial of the case on the
merits. Similarly, in Constantino vs. Estenzo, citing Garanciang, et
al. vs. Garanciang, et al. and Boaga vs. Soler, this Court held as
follows:
"x x x Summary or outright dismissals of actions are not
proper where there are factual matters in dispute which
need presentation and appreciation of evidence. The
demands of a fair, impartial and wise administration of
justice call for faithful adherence to legal precepts on
procedure which ensure to litigants the opportunity to
present their evidence and secure a ruling on all the issues
presented in their respective pleadings. Short cuts in
judicial processes are to be avoided where they impede
rather than promote a judicious dispensation of justice."

It was therefore incumbent on the RTC to allow the presentation of

petitioners evidence for the proper disposal of the case. In all, we
find that the TC violated the parties due process when it proceeded
with the trial contrary to the procedure provided by the Rules of
Court. It failed to resolve Rs MR questioning the 18 January 2001
Order and prevented P from presenting their evidence in chief.
Let this case be remanded to RTC Cabanatuan City, which is hereby
ORDERED to resolve R MR and to proceed with the trial thereafter,
as provided under the Rules of Court.

G.R. No. 147349

February 13, 2004
MANILA INTERNATIONAL AIRPORT AUTHORITY
(MIAA), petitioner
vs.
ALA INDUSTRIES CORPORATION, respondent.

P-MIAA conducted a public bidding for a contract involving the

structural repair and waterproofing of the International Passenger
Terminal (IPT) and International Container Terminal (ICT) buildings
of the Ninoy Aquino International Airport (NAIA). Out of eleven
bidders, R-ALA Corp submitted the second lowest and most
advantageous bid. The contract was awarded to R in the amount
of P32,000,000.00 when it agreed to reduce the price
from P36,000.00. CONTRACT is on PAGE 605-606 SCRA.
The contract contains escalation clauses and price adjustments. R
made the necessary repairs and waterproofing. After submission of
its progress billings to P, R received partial payments. Progress
billing No. 6 remained unpaid despite repeated demands by R.
P unilaterally rescinded the contract on the ground that R failed to
complete the project within the agreed completion date. P advised

(01arbit)joycgc |9

R of a committee formed to determine the extent of the work done

which was given until September 30, 1994 to submit its findings.
Just the same, R was not fully paid.

R objected to the rescission made by P and reiterated its claims. As

of the filing of the complaint for sum of money and damages R was
seeking to recover from P the latters outstanding obligation
and amount due from the first to fifth progress billings.
With the filing of R sur-rejoinder to P rejoinder, the TC directed the
parties to proceed to arbitration. The Court a quos ruling is based
on Article XXVII of the contract that provides for arbitration.
Both parties executed a compromise agreement, assisted
by their counsels, and jointly filed in court a motion for judgment
based on compromise agreement.
RTC rendered judgment approving the compromise agreement. The
pertinent portions of the compromise read as follows:
1. As full and complete payment of its claims against P
arising from their waterproofing contract subject of this case, R
accepts Ps offer of payment in the amount of (P5,946,294.31).
2. P shall pay R said amount of (P5,946,294.31) within a
period of thirty (30) days from receipt of a copy of the Order of the
Court approving this Compromise Agreement.
3. Failure of the P to pay said amount to R within the period
above stipulated shall entitle the R to a writ of execution from this
Honorable Court to enforce all its claims pleaded in the Complaint.
4. In consideration of the Implementation of this
Compromise Agreement, R agrees to waive all its claims against
the P as pleaded in the Complaint, and P also agrees to waive all its
claims, rights and interests pleaded in the answer, and all such
other claims that it has or may have in connection with, related to
or arising from the Waterproofing Contract subject of this case with
R.
For P failure to pay within the period above stipulated, R filed a
motion for execution to enforce its claim in the total amount
of P13,118,129.84. P filed a comment and attributed the delays to
its being a government agency. In its effort to render Rs motion for
execution moot and academic, P paid R P5,946,294.31 on February
2, 1998.
TC denied R motion for execution. It also denied the MR:
The delay in complying with the Compromise Agreement
having been satisfactorily explained by the Office of the
Government Counsel, the Motion for Reconsideration of the

order denying [respondents] Motion for Execution is

denied.
CA reversed the TC, ordered it to issue a writ of execution to
enforce Rs claim to the extent of Ps remaining balance. A
judgment rendered in accordance with a compromise agreement
was immediately executory, and that a delay of almost two months
was not substantial compliance therewith.
ISSUE: WON there was a fortuitous event that excused
petitioner from complying with the terms and conditions of
the judicially approved Compromise Agreement. NO.

Delay in Payment by Reason of a Fortuitous Event - A compromise

agreement is a contract whereby the parties make reciprocal
concessions
to
resolve
their
differences, 9 thus
avoiding
10
litigation or putting an end to one that has already
commenced.11 Generally favored in law,12 such agreement is a
bilateral act or transaction that is binding on the contracting parties
and is expressly acknowledged by the Civil Code as a juridical
agreement between them.13 Provided it is not contrary to law,
morals, good customs, public order or public policy, 14 it is
immediately executory.
Judicial Compromise Final and Executory - In a long line of cases,
we have consistently held that "x x x a compromise once approved
by final orders of the court has the force of res judicata 16 between
the parties and should not be disturbed except for vices of consent
or forgery. Hence, a decision on a compromise agreement is final
and executory x x x. Such agreement has the force of law and is
conclusive between the parties. It transcends its identity as a mere
contract binding only upon the parties thereto, as it becomes a
judgment that is subject to execution in accordance with the
Rules. Judges therefore have the ministerial and mandatory duty to
implement and enforce it.

To be valid, a compromise agreement is merely required by law,

first, to be based on real claims; second, to be actually agreed upon
in good faith. Both conditions are present in this case. The claims of
the parties are valid, and the agreement done without any fraud or
vice of consent.

Without a doubt, each of the parties herein entered into

Compromise Agreement freely and voluntarily. When they carefully
negotiated the terms and provisions thereof, they were adequately

( 0 1 a r b i t ) j o y c g c | 10

assisted by their respective counsels -- petitioner, no less than by

the Office of the Government Corporate Counsel (OGCC). Each
party agreed to something that neither might have actually
wanted, except for the peace that would be brought by the
avoidance of a protracted litigation. Hence, the Agreement must
govern their relations.

The Christmas Season Not a Fortuitous Event - The failure to pay on

the date stipulated was clearly a violation of the Agreement. Within
thirty days from receipt of the judicial Order approving it -- on
December 20, 1997 -- payment should have been made, but was
not. Thus, non fulfillment of the terms of the compromise justified
execution. It is the height of absurdity for petitioner to attribute to a
fortuitous event its delayed payment. Petitioners explanation is
clearly "a gratuitous assertion that borders on callousness." The
Christmas season cannot be cited as an act of God that would
excuse a delay in the processing of claims by a government entity
that is subject to routine accounting and auditing rules.
A fortuitous event is one that cannot be foreseen or, though
foreseen, is inevitable. It has the following characteristics:
(a) [T]he cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply with his
obligations, must be independent of human will;
(b) it must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen, it must be
impossible to avoid;
(c) the occurrence must be such as to render it impossible
for the debtor to fulfill his obligation in a normal manner; and
(d) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor."
None of these elements appears in this case.
First, processing claims against the government and
subjecting these to the usual accounting and auditing
procedures are certainly not only foreseeable and
expectable, but also dependent upon the human will.
Liquidation and payment resulting therefrom can be
deliberately delayed or speeded up.
Second, the Christmas season is not a caso fortuito, but a
regularly occurring event. It is in fact foreseeable, and its
occurrence has absolutely nothing to do with the processing
of claims.
Third, the occurrence of the Christmas season did not at all
render impossible the normal fulfillment of the obligation of

petitioner; otherwise, few claims would ever be paid during

this period. It ought to have taken appropriate measures to
ensure that a delay would be avoided. When it entered into
the Agreement, it knew fully well that the 30-day period for
it to pay its obligation would end during the Christmas
season. Thus, it cannot now be allowed to renege on its
commitment.
Fourth, petitioner cannot argue that it is free from any
participation in the delay. It should have laid out on the
compromise table the problems that would be caused by a
deadline falling during the Christmas season. Furthermore, it
should have explained to respondent that government
accounts would be examined carefully and thoroughly to the
last detail, in strict compliance 29 with accounting and
auditing rules issued by and pursuant to the constitutional
mandate of the Commission on Audit.
In the present case, there was already an antecedent appropriation
for the contract when petitioner entered into it. Obviously, prior
planning had not taken into account the liquidation process in the
conduct of the compromise. The sheer neglect shown by petitioner
in failing to consider these matters aggravated the resulting injury
suffered by respondent. The former cannot be allowed to hide now
behind its government cloak.
Fortuitous Event Negated by Negligence - The act-of-God doctrine
requires all human agencies to be excluded from creating the cause
of the mischief.34Such doctrine cannot be invoked to protect a
person who has failed to take steps to forestall the possible adverse
consequences of loss35 or injury. Since the delay in payment in the
present case was partly a result of human participation -- whether
from active intervention or neglect -- the whole occurrence was
humanized and was therefore outside the ambit of a caso fortuito.
Verily, an assiduous scrutiny of the records convinces us that it was
negligent, and that it thereby incurred a delay in the performance
of its contractual obligation under the judicial compromise. It thus
created an undue risk or injury to respondent by failing to exercise
that reasonable degree of care, precaution or vigilance that the
circumstances justly demanded, and that an ordinarily prudent
person would have done.
Court Without Power to Alter a Judicial Compromise - The principle
of autonomy of contracts must be respected." The Compromise
Agreement was a contract perfected by mere consent; hence, it
should have been respected. Item 3 thereof provided that failure of
petitioner to pay within the stipulated period would entitle
respondent to a writ of execution to enforce all the claims that had

( 0 1 a r b i t ) j o y c g c | 11

been pleaded by the latter in the Complaint. This provision must be

upheld, because the Agreement supplanted the Complaint itself.
Although judicial approval was not required for the perfection of
that Agreement once it was granted, it could not and must not be
disturbed except for vices of consent or forgery.
No such infirmity can be found in the subject Compromise
Agreement. Its terms are clear and leave no doubt as to their
intention. Thus, the literal meaning of its stipulations must
control. It "must be strictly interpreted and x x x understood as
including only matters specifically determined therein or which, by
necessary inference from its wording, must be deemed included."
The lower court was without power to relieve petitioner from an
obligation it had voluntarily assumed, simply because the
Agreement later turned out to be unwise, disastrous or foolish. It
had no authority to impose upon the parties a judgment different
from or against the terms and conditions of their Compromise
Agreement. It could not alter a contract by construction or make a
new one for the parties; "its duty is confined to the interpretation of
the one which they have made for themselves without regard to its
wisdom or folly as the court cannot supply material stipulations or
read into the contract words which it does not contain." It could not
even set aside its judgment without declaring in an incidental
hearing that the Agreement was vitiated by any of the grounds
enumerated in Article 2038 of the Civil Code. Above all, neither the
Agreement nor the courts approval of it was ever questioned or
assailed by the parties.
Basic is the rule that if a party fails or refuses to abide by a
compromise agreement, the other may either enforce it or regard it
as rescinded and insist upon the original demand. 50 For failure of
petitioner to abide by the judicial compromise, respondent chose to
enforce it. The latters course of action was in accordance with the
very stipulations in the Agreement that the lower court could not
change.
Estoppel Inapplicable - In estoppel, a person, who by his act or
conduct has induced another to act in a particular manner, is
barred from adopting an inconsistent position, attitude or course of
conduct that thereby causes loss or injury to another." No such
inconsistency is present here. From the very start, respondent was
already asking the courts to enforce all its claims, pursuant to the
Agreement. It has not shown any act or conduct that would leads
us to believe that by accepting petitioners partial payment, it has
dropped all claims to which it is entitled.
Certainly, an obligation may be extinguished by payment, but this
rule applies when the creditor "receives and acknowledges full

payment" from the debtor. Respondent has neither acknowledged

full payment nor led petitioner to believe that it has. Lack of
reservation or protest does not ipso facto constitute a waiver of
claims. Because estoppel should be applied with caution, the action
that gives rise to it must be deliberate and unequivocal.
In the present case, respondent continued to pursue the execution
of
its
total
demand
of P13,118,129.84,
even
after
receiving P5,946,294.31 from petitioner. This continued pursuit
signified the formers intent not to waive its total claim. Hence, it
cannot be considered estopped from enforcing such claim.
The appellate court was correct in strictly following the Agreement
by deducting the amount received by respondent from the latters
total claim. Besides, "questions raised on appeal must be within the
issues framed by the parties and, consequently, issues not raised in
the trial court cannot be raised for the first time on appeal."Any
assertion of equity must finally be struck down "when dilatory
schemes exist."

( 0 1 a r b i t ) j o y c g c | 12

G.R. No. 191336

January 25, 2012
CRISANTA ALCARAZ MIGUEL, Petitioner,
vs.
JERRY D. MONTANEZ, Respondent.

R-Jerry Montanez secured a loan payable in one (1) year, or until

February 1, 2002, from the petitioner. The R gave as collateral
therefor his house and lot located at Bagumbong, Caloocan City.
Due to Rs failure to pay the loan, the P filed a complaint against
the R before the Lupong Tagapamayapa of Barangay San Jose,
Rodriguez, Rizal. The parties entered into a Kasunduang Pag-aayos
wherein the R agreed to pay his loan in installments in the amount
of P2,000.00/month, and in the event the house and lot given as
collateral is sold, the R would settle the balance of the loan in full.
However, the R still failed to pay, and on December 13, 2004, the
Lupong Tagapamayapa issued a certification to file action in court
in favor of the P.

P filed before the Metropolitan Trial Court Makati City, a complaint

for Collection of Sum of Money. In his Answer with
Counterclaim, the R raised the defense of improper venue
considering that the P was a resident of Bagumbong, Caloocan City
while he lived in San Mateo, Rizal.
After trial the MeTC rendered a Decision:
ordering defendant Jerry D. Montanez to pay plaintiff the
following:
1. The amount representing the obligation with legal rate of
interest from February 1, 2002 which was the date of the
loan maturity until the account is fully paid;
2. The amount of of attorneys fees; and the costs.
On appeal to the RTC of Makati City, the R raised the same issues
cited in his Answer - affirmed the MeTC Decision
R appealed to the CA raising two issues
(1) WON venue was improperly laid, and

(2)WON the Kasunduang Pag-aayos effectively novated the

loan agreement.
GRANTED. RTC is REVERSED and SET ASIDE. A new
judgment is entered dismissing Rs complaint for collection of sum
of money, without prejudice to her right to file the necessary action
to enforce the Kasunduang Pag-aayos.
CA ruled in the negative, there is no novation of the loan. It
is clear that no novation of the old obligation has taken place.
Contrary to Ps assertion, there was no reduction of the term or
period originally stipulated. The original period in the first
agreement is one (1) year to be counted from February 1, 2001, or
until January 31, 2002. When the complaint was filed before the
barangay on February 2003, the period of the original agreement
had long expired without compliance on the part of petitioner.
Hence, there was nothing to reduce or extend. There was only a
change in the terms of payment which is not incompatible with the
old agreement. In other words, the Kasunduang Pag-aayos merely
supplemented the old agreement.
The CA went on saying that since the parties entered into a
Kasunduang Pag-aayos before the Lupon ng Barangay, such
settlement has the force and effect of a court judgment, which may
be enforced by execution within six (6) months from the date of
settlement by the Lupon ng Barangay, or by court action after the
lapse of such time. Considering that more than six (6) months had
elapsed from the date of settlement, the CA ruled that the remedy
of the petitioner was to file an action for the execution of the
Kasunduang Pag-aayos in court and not for collection of sum of
money. Consequently, the CA deemed it unnecessary to resolve the
issue on venue.
ISSUES: (1) Whether or not a complaint for sum of money is
the proper remedy for the P, notwithstanding the
Kasunduang Pag-aayos; YES.
(2) Whether or not the CA should have decided the case on
the merits rather than remand the case for the enforcement
of the Kasunduang Pag-aayos. YES.

Because the R failed to comply with the terms of the Kasunduang

Pag-aayos, said agreement is deemed rescinded pursuant to Article
2041 of the New Civil Code and the P can insist on his original
demand. Perforce, the complaint for collection of sum of money is
the proper remedy.

( 0 1 a r b i t ) j o y c g c | 13

The petitioner contends that the CA erred in ruling that she should
have followed the procedure for enforcement of the amicable
settlement as provided in the Revised Katarungang Pambarangay
Law, instead of filing a collection case. The petitioner points out
that the cause of action did not arise from the Kasunduang Pagaayos but on the respondents breach of the original loan
agreement.

It is true that an amicable settlement reached at the barangay

conciliation proceedings, like the Kasunduang Pag-aayos in this
case, is binding between the contracting parties and, upon its
perfection, is immediately executory insofar as it is not contrary to
law, good morals, good customs, public order and public policy. This
is in accord with the broad precept of 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.
Being a by-product of mutual concessions and good faith of the
parties, an amicable settlement has the force and effect of res
judicata even if not judicially approved. It transcends being a mere
contract binding only upon the parties thereto, and is akin to a
judgment that is subject to execution in accordance with the
Rules. Thus, under Section 417 of the LGC, such amicable
settlement or arbitration award may be enforced by execution by
the Barangay Lupon within six (6) months from the date of
settlement, or by filing an action to enforce such settlement in the
appropriate city or municipal court, if beyond the six-month period.
1st remedy - the proceedings are covered by the LGC and the
Katarungang Pambarangay IRR. The Punong Barangay is called
upon during the hearing to determine solely the fact of noncompliance of the terms of the settlement and to give the
defaulting party another chance at voluntarily complying with his
obligation under the settlement.
2nd remedy - the proceedings are governed by the Rules of Court, as
amended. The cause of action is the amicable settlement itself,
which, by operation of law, has the force and effect of a final
judgment.
Those remedies are only applicable if the contracting parties have
not repudiated such settlement within ten (10) days from the date
thereof in accordance with Section 416 of the LGC. If the amicable
settlement is repudiated by one party, either expressly or impliedly,
the other party has two options:

to enforce the compromise in accordance with the Local

Government Code or Rules of Court as the case may be, or
to consider it rescinded and insist upon his original demand.
This is in accord with Article 2041 of the Civil Code, which
qualifies the broad application of Article 2037, viz: 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.
In the case of Leonor v. Sycip, SC had the occasion to explain this
provision of law. It ruled that Article 2041 does not require an action
for rescission, and the aggrieved party, by the breach of
compromise agreement, may just consider it already rescinded
PAGE 352 IN SCRA
Case of Chavez v. Court of Appeals, a party's non-compliance with
the amicable settlement paved the way for the application of
Article 2041 under which the other party may either enforce the
compromise, following the procedure laid out in the Revised
Katarungang Pambarangay Law, or consider it as rescinded and
insist upon his original demand. PAGE 352-353 IN SCRA
In this case, the respondent did not comply with the terms and
conditions of the Kasunduang Pag-aayos. Such non-compliance
may be construed as repudiation because it denotes that the
respondent did not intend to be bound by the terms thereof,
thereby negating the very purpose for which it was executed.
Perforce, the petitioner has the option either to enforce the
Kasunduang Pag-aayos, or to regard it as rescinded and insist upon
his original demand, in accordance with the provision of Article
2041 of the Civil Code. Having instituted an action for collection of
sum of money, the petitioner obviously chose to rescind the
Kasunduang Pag-aayos.
As such, it is error on the part of the CA to rule that enforcement by
execution of said agreement is the appropriate remedy under the
circumstances.
Considering that the Kasunduang Pag-aayos is deemed rescinded
by the non-compliance of the respondent of the terms thereof,
remanding the case to the trial court for the enforcement of said
agreement is clearly unwarranted.
The CA took off on the wrong premise that enforcement of the
Kasunduang Pag-aayos is the proper remedy, and therefore erred in
its conclusion that the case should be remanded to the trial court.
The fact that the petitioner opted to rescind the Kasunduang Pagaayos means that she is insisting upon the undertaking of the
respondent under the original loan contract.

( 0 1 a r b i t ) j o y c g c | 14

CA should have decided the case on the merits, as an appeal

before it, and not prolong the determination of the issues by
remanding it to the trial court. Pertinently, evidence abounds that
the respondent has failed to comply with his loan obligation. In fact,
the Kasunduang Pag-aayos is the well nigh incontrovertible proof of
the respondents indebtedness with the petitioner as it was
executed precisely to give the respondent a second chance to
make good on his undertaking. And since the respondent still
reneged in paying his indebtedness, justice demands that he must
be held answerable therefor.

G.R. No. 157830 November 17, 2005

DANTE M. PASCUAL, represented by REYMEL R.
SAGARIO, Petitioner,
vs.
MARILOU M. PASCUAL, Respondent.

P, a permanent resident of the USA, appointed Sagario as his

attorney-in-fact by a SPA:

1. To file a case for the cancellation of TCT in the name of

Marilou M. Pascual as well as the Deed of Sale of Registered Land
and/or Reconveyance at the appropriate court;
2. To collect the monthly rentals from the tenant;
3. To enter into amicable settlement with Marilou M. Pascual
or any other mode of payment/and/or dispute resolution;
4.
To execute
and
sign
any
and
all
papers,
contracts/documents which may be necessary relative to the above
acts.
Pursuant to the SPA, Sagario filed at the Isabela RTC at Roxas a
complaint for Annulment of TCT of Isabela and Deed of Absolute
Sale of Registered Land and/or Reconveyance with Damages.
To the Complaint the defendant-herein respondent Marilou M.
Pascual filed a MTD on two grounds one of which was noncompliance with the requirement under Section 412 of the LGC, she
contending that there is no showing that the dispute was referred
to the barangay court before the case was filed in court.
Isabela RTC at Roxas granted Rs MTD in this wise:
-

RA 7160 Section 409 "All disputes involving real property or

any interest therein shall be brought in the barangay where
the real property or the larger portion thereof is situated."
Hence, the reliance of the plaintiff on Section 408 of R.A.
7160 is incorrect.

When real property or any interest therein is involved, the

dispute shall be filed before the barangay where the
property is located, regardless of the residence of the
parties.

It is incorrect to say that the parties are not residents of the

same place, Vira, Roxas, Isabela. The Attorney-in-fact of
the plaintiff in the person of Reymel R. Sagario is a
resident
of
Vira,
Roxas,
Isabela,
and
he
substitute (sic)Dante Pascual by virtue of said Special
Power of Attorney.

Attorney-in-fact should have brought the dispute before

barangay Vira, Roxas, Isabela, where the property is located.
In the case of Royales vs. Intermediate Appellate Court 127
SCRA 470, "Ordinarily, non-compliance with the condition
precedent prescribed by P.D. 1508 could affect the
sufficiency of the plaintiffs cause of action and make his

( 0 1 a r b i t ) j o y c g c | 15

complaint vulnerable to dismissal on ground of lack of cause

of action or prematurity."

Ps MR denied

The Court is of the opinion that the said Attorney-in-fact shall be

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

Being the real party in interest, the Attorney-in-fact may therefore

bring the necessary complaint before the Lupon Tagapayapa
and appear in person as if he is the owner of the land.
ISSUE: WON local lupon has jurisdiction over the dispute.
NO, therefore there is no need for prior referral to it for
conciliation before filing it to the court.

Petitioner argues that since he, not his attorney-in-fact Sagario, is

the real party in interest, and since he actually resides abroad,
the lupon would have no jurisdiction to pass upon the dispute
involving real property.
That attorney-in-fact Sagario is a resident of the same barangay as
that of hers, respondent argues in any event, brings the matter
under the jurisdiction of the lupon, for Sagario, following Section 3
of Rule 3 of the 1997 Rules of Civil Procedure which provides:
Sec. 3. Representative as parties. - Where the action is
allowed to be prosecuted or defended by a representative or
someone acting in a fiduciary capacity, the beneficiary shall be
included in the title of the case and shall be deemed to be the real
party in interest. A representative may be a trustee of an express
trust, a guardian, an executor or administrator, or a party
authorized by law or these Rules. An agent acting in his own name
for the benefit of an undisclosed principal may sue or be sued
without joining the principal except when the contract involves
things belonging to the principal, being a substitute, becomes the
real party-in-interest.
The pertinent provisions of the LGC read: PAGE 273 - 274

SEC. 408. Subject Matter for Amicable Settlement;

Exception Thereto.
SEC. 409. Venue.
Objections to venue shall be raised in the mediation proceedings
before the punong barangay; otherwise, the same shall be deemed
waived. Any legal question which may confront the punong
barangay in resolving objections to venue herein referred to may be
submitted to the Secretary of Justice or his duly designated
representative whose ruling thereon shall be binding.
To
construe
the
express
statutory
requirement
of actual residency as applicable to the attorney-in-fact of the
party-plaintiff, as contended by respondent, would abrogate the
meaning of a "real party in interest" as defined in Section 2 of Rule
314 of the 1997 Rules of Court vis a vis Section 3 of the same Rule
which was earlier quoted but misread and misunderstood by
respondent.
In fine, since the plaintiff-herein petitioner, the real party in
interest, is not an actual resident of the barangay where the
defendant-herein respondent resides, the local lupon has no
jurisdiction over their dispute, hence, prior referral to it for
conciliation is not a pre-condition to its filing in court.
The RTC thus erred in dismissing petitioners complaint.