ADR Case Digests 2
powers of attorney5 both dated August 3, 2007
Linda v. Micarez
The severity of punishment is not commensurate to what
happened in the case
FACTS: Petitioner is of Filipino descent who
became a naturalized American citizen after
marrying an American national in 1981. She is
now a permanent resident of the United States of
America (USA).
In her complaint, petitioner claimed that the
residential lot in Panabo City, which she
purchased in 1982, was clandestinely and
fraudulently conveyed and transferred by her
parents, respondent spouses Alvaro and Paz
Micarez (Spouses Micarez), in favor of her
youngest brother, respondent Dionesio Micarez
(Dionesio), to her prejudice and detriment.
Aware that there would be difficulty in registering
a real property in her name, she being married to
an American citizen, she arranged to pay for the
purchase price of the residential lot and register it,
in the meantime, in the names of Spouses Micarez
under an implied trust. The title thereto shall be
transferred in her name in due time.
Thus, on October 20, 1982, a deed of absolute
sale was executed between Spouses Micarez and
the owner, Abundio Panganiban, for the 328
square meter residential lot covered by Transfer
Certificate of Title (TCT) No. T-25833. Petitioner
sent the money which was used for the payment
of the lot. TCT No. T-25833 was cancelled upon
the registration of the deed of sale before the
Registry of Deeds of Davao del Norte. In lieu
thereof, TCT No. T-38635 was issued in the
names of Spouses Micarez on January 31, 1983.
Sometime in 2005, she learned from Manalang
that Spouses Micarez sold the subject lot to
Dionesio on November 22, 2001 and that
consequently, TCT T-172286 was issued in her
brother’s name on January 21, 2002.
Meanwhile, the respondents executed two special
before the Consulate General of the Philippines in
Los Angeles, California, U.S.A., authorizing their
counsel, Atty. Richard C. Miguel (Atty. Miguel), to
file their answer in Civil Case No. 13-2007 and to
represent them during the pre-trial conference and
all subsequent hearings with power to enter into a
compromise agreement. By virtue thereof, Atty.
Miguel timely filed his principals’ answer denying
the material allegations in the complaint.
After the parties had filed their respective pre-trial
briefs, and the issues in the case had been joined,
the RTC explored the possibility of an amicable
settlement among the parties by ordering the
referral of the case to the Philippine Mediation
Center (PMC). On March 1, 2008, Mediator
Esmeraldo O. Padao, Sr. (Padao) issued a
Mediator’s Report6 and returned Civil Case No.
13-2007 to the RTC allegedly due to the non-
appearance of the respondents on the scheduled
conferences before him. Acting on said Report,
the RTC issued an order on May 29, 2009
allowing petitioner to present her evidence ex
parte.
Later, Padao clarified, through a Manifestation,8
dated July 15, 2008, that it was petitioner,
represented by Atty. Benjamin Utulle (Atty.
Utulle), who did not attend the mediation
proceedings set on March 1, 2008, and not Atty.
Miguel, counsel for the respondents and their
authorized representative. Padao explained that
Atty. Miguel inadvertently affixed his signature for
attendance purposes on the column provided for
the plaintiff’s counsel in the mediator’s report
RTC Ruling: Dismissed the case of petitioner for
failure to appear in the mediation proceedings.
This was affirmed by the court and denied
petitioner’s motion for reconsideration
ISSUE: Whether RTC erred in dismissing the
complaint
RULING: YES, RTC erred in their decision
A.M. No. 01-10-5-SC-PHILJA regards mediation
as part of pre-trial where parties are encouraged to
personally attend the proceedings. The personal
non-appearance, however, of a party may be
excused only when the representative, who
appears in his behalf, has been duly authorized to
enter into possible amicable settlement or to
submit to alternative modes of dispute resolution.
To ensure the attendance of the parties, A.M. No.
01-10-5-SC-PHILJA specifically enumerates the
sanctions that the court can impose upon a party
who fails to appear in the proceedings which
includes censure, reprimand, contempt, and even
dismissal of the action in relation to Section 5,
Rule 18 of the Rules of Court.15 The respective
lawyers of the parties may attend the proceedings
and, if they do so, they are enjoined to cooperate
with the mediator for the successful amicable
settlement of disputes16 so as to effectively
reduce docket congestion.
Although the RTC has legal basis to order the
dismissal of Civil Case No. 13-2007, the Court
finds this sanction too severe to be imposed on
the petitioner where the records of the case is
devoid of evidence of willful or flagrant disregard
of the rules on mediation proceedings. There is no
clear demonstration that the absence of
petitioner’s representative during mediation
proceedings on March 1, 2008 was intended to
perpetuate delay in the litigation of the case.
Neither is it indicative of lack of interest on the
part of petitioner to enter into a possible amicable
settlement of the case.
The Court notes that Manalang was not entirely at
fault for the cancellation and resettings of the
conferences. Let it be underscored that
respondents’ representative and counsel, Atty.
Miguel, came late during the January 19 and
February 9, 2008 conferences which resulted in
their cancellation and the final resetting of the
mediation proceedings to March 1, 2008.
Considering the circumstances, it would be most
unfair to penalize petitioner for the neglect of her
lawyer.
Assuming arguendo that the trial court correctly
construed the absence of Manalang on March 1,
2008 as a deliberate refusal to comply with its
Order or to be dilatory, it cannot be said that the
court was powerless and virtually without
recourse. Indeed, there are other available
remedies to the court a quo under A.M. No. 01-
10-5-SC-PHILJA, apart from immediately
ordering the dismissal of the case. If Manalang’s
absence upset the intention of the court a quo to
promptly dispose the case, a mere censure or
reprimand would have been sufficient for
petitioner’s representative and her counsel so as to
be informed of the court’s intolerance of tardiness
and laxity in the observation of its order.
It bears emphasis that the subject matter of the
complaint is a valuable parcel of land measuring
328 square meters and that petitioner had allegedly
spent a lot of money not only for the payment of
the docket and other filing fees but also for the
extra-territorial service of the summons to the
respondents who are now permanent residents of
the U.S.A. Certainly, petitioner stands to lose
heavily on account of technicality. Even if the
dismissal is without prejudice, the refiling of the
case would still be injurious to petitioner because
she would have to pay again all the litigation
expenses which she previously paid for. The Court
should afford party-litigants the amplest
opportunity to enable them to have their cases
justly determined, free from constraints of
technicalities.18 Technicalities should take a
backseat against substantive rights and should give
way to the realities of the situation. Besides, the
petitioner has manifested her interest to pursue
the case through the present petition. At any rate,
it has not been shown that a remand of the case
for trial would cause undue prejudice to
respondents.
Real Bank v. Samsung Mabuhay
Illustrative case of an excusable reason for non-appearance
in mediation
FACTS: Plaintiff SAMSUNG MABUHAY
ELECTRONIC CORPORATION is a joint
venture corporation between SAMSUNG
ELECTRONICS CO. LTD., a foreign
corporation duly organized and existing under
Korean laws, and plaintiff MABUHAY
ELECTRONICS CORPORATION, a (3) checks and Mabuhay Electronics Company’s
corporation organized and existing under
Philippine laws
As a result of the Joint Venture Agreement,
Samsung Mabuhay Electronics Corporation
became the exclusive distributor for Samsung
products in the Philippines.
Sometime in December of 1996, Conpinco
Trading, a regular dealer of [respondent] Samsung
Mabuhay Corporation in Davao City, issued five
(5) postdated [United Coconut Planters Bank]
UCPB checks payable to the order of Samsung
Mabuhay Corporation
These five (5) checks were picked-up by Reynaldo
Senson, former Collection Supervisor of Samsung
Mabuhay Corporation for Visayas and Mindanao,
at Conpinco Trading’s place of business
Two (2) of the five (5) checks picked-up by
Reynaldo Senson were remitted to Samsung
Mabuhay Corporation. However, the three (3)
remaining UCPB checks, i.e., check nos. 1869863,
1869864, and 1869865 amounting to
P1,563,750.00, were not remitted by Reynaldo
Senson to Samsung Mabuhay Corporation.
Instead, Reynaldo Senson, using an alias name,
Edgardo Bacea, opened an account with
defendant Real Bank, Malolos, Bulacan branch
under the account name of one Mabuhay
Electronics Company, a business entity in no way
related to plaintiff Mabuhay Electronics
Corporation. Mabuhay Electronics Company is a
single proprietorship owned and managed by
Reynaldo Senson, alias Edgardo Bacea.
Defendant [Real Bank] then sent the three (3)
checks for clearing and for payment through Far
East Bank and Trust Company, Malolos, Bulacan
Branch after stamping at the back of the checks
the usual endorsements: "ALL PRIOR
ENDORSEMENT and/or LACK OF
ENDORSEMENT GUARANTEED." Conpinco
Trading’s account with the drawee bank, UCPB,
was eventually debited for the value of the three
account with defendant [Real Bank] was credited
for the same amount although it was not the payee
nor the person authorized by the payee.
Despite plaintiffs’ [Samsung Mabuhay
Corporation’s] demands, defendant [Real Bank]
ignored and refused to reimburse them with the
value of the three (3) checks. Thus, plaintiffs were
constrained to hire the legal services of the law
firm of V.E. Del Rosario and Partners.
On 7 March 2001, the trial court issued an Order
dated 17 March 2001 requiring both petitioner
Real Bank, Inc. and respondent Samsung to
appear in a mediation proceeding set on 3 April
2001.15 This Order of the trial court was sent to
respondent Samsung’s former counsel, V.E. Del
Rosario and Partners which had at that time
already filed a notice of withdrawal of
appearance.16
The mediation proceedings took place as
scheduled on 3 April 2001 and Mediator Tammy
Ann C. Reyes, who handled the mediation
proceedings submitted her report to the Court
stating therein that no action was taken on the
case referred for mediation because respondent
Samsung failed to appear.
RTC Ruling: Dismissed the case for failure of
respondent Samsung to appear
CA Ruling: Reversed the decision of RTC and
ruled: [R]espondent judge did not even peruse or
verify the records of the case. Has she done so,
she would have discovered that the former
counsel of petitioner to whom she sent the Notice
of the order had already withdrawn and that a new
counsel for petitioner had already entered their
appearance. Likewise, she should have discovered
that at that time the Order dated March 7, 2001
was issued by RTC Br. 9, petitioner was no longer
holding office at its given address. This fact is
clearly indicated in the Order of March 7, 2001
itself. Clearly, therefore, respondent judge
committed grave abuse of discretion amounting to
excess or lack of jurisdiction
ISSUE: Whether RTC did not commit any
grave abuse of discretion
RULING: NO, it committed grave abuse of
discretion, CA was proper in reversing RTC
order
It being daylight clear that the withdrawal of
respondent Samsung’s original counsel was
sufficient as the same carried the stamp of
approval of the client, the notice of mediation sent
to respondent Samsung’s original counsel was
ineffectual as the same was sent at the time when
such counsel had already validly withdrawn its
representation. Corollarily, the absence of
respondent Samsung during the scheduled
mediation conference was excusable and justified.
Therefore, the trial court erroneously dismissed
Civil Case No. 97-86265.
The calendar of hearings document the fact that
respondent Samsung has been willing and able to
prosecute its case. Except for the lone instance,
reasonable as already shown, of absence during
the scheduled mediation conference on 3 April
2001, respondent Samsung had, till then, promptly
and religiously attended the hearings set by the
RTC. In fact, respondent Samsung exhibited
diligence and dispatch in prosecuting its case
against petitioner Real Bank, Inc. by immediately
moving to set the case for pre-trial after it had
filed its reply and momently filing a motion for
reconsideration of the RTC Order dismissing Civil
Case No. 97-86265.
While not at the fore of this case, it may be stated
that the state of the court docket cannot justify
injudicious case dismissals. Inconsiderate
dismissals, even without prejudice, do not
constitute a panacea or a solution to the
congestion of court dockets; while they lend a
deceptive aura of efficiency to records of
individual judges, they merely postpone the
ultimate reckoning between the parties. In the
absence of clear lack of merit or intention to
delay, justice is better served by a brief
continuance, trial on the merits, and final
disposition of cases before the court.
LM Power Engineer v. Capitol Industrial
Construction Groups
Submission to arbitration: CIAC Jurisdiction
FACTS: On February 22, 1983, Petitioner LM
Power Engineering Corporation and Respondent
Capitol Industrial Construction Groups Inc.
entered into a Subcontract Agreement involving
electrical work at the Third Port of Zamboanga.[5]
On April 25, 1985, respondent took over some of
the work contracted to petitioner.[6] Allegedly, the
latter had failed to finish it because of its inability
to procure materials.[7]
Upon completing its task under the Contract,
petitioner billed respondent in the amount of
P6,711,813.90.[8] Contesting the accuracy of the
amount of advances and billable accomplishments
listed by the former, the latter refused to pay.
Respondent also took refuge in the termination
clause of the Agreement.[9] That clause allowed it
to set off the cost of the work that petitioner had
failed to undertake -- due to termination or take-
over -- against the amount it owed the latter.
Because of the dispute, petitioner filed with the
Regional Trial Court (RTC) of Makati (Branch
141) a Complaint[10] for the collection of the
amount representing the alleged balance due it
under the Subcontract. Instead of submitting an
Answer, respondent filed a Motion to Dismiss,[11]
alleging that the Complaint was premature,
because there was no prior recourse to arbitration.
In its Order[12] dated September 15, 1987, the
RTC denied the Motion on the ground that the
dispute did not involve the interpretation or the
implementation of the Agreement and was,
therefore, not covered by the arbitral clause
CA ruling: Reversed the decision of RTC and
ordered the referral of the case to arbitration. The
appellate court held as arbitrable the issue of
whether respondents take-over of some work
items had been intended to be a termination of
the original contract under Letter K of the
Subcontract.
ISSUE: Whether the case is premature
RULING: YES, the case is premature, it
should have been arbitrated first according to
their agreement
We side with respondent. Essentially, the dispute
arose from the parties ncongruent positions on
whether certain provisions of their Agreement
could be applied to the facts. The instant case
involves technical discrepancies that are better left
to an arbitral body that has expertise in those
areas. In any event, the inclusion of an arbitration
clause in a contract does not ipso facto divest the
courts of jurisdiction to pass upon the findings of
arbitral bodies, because the awards are still
judicially reviewable under certain conditions.
Clearly, the resolution of the dispute between the
parties herein requires a referral to the provisions
of their Agreement. Within the scope of the
arbitration clause are discrepancies as to the
amount of advances and billable
accomplishments, the application of the provision
on termination, and the consequent set-off of
expenses.
A review of the factual allegations of the parties
reveals that they differ on the following questions:
(1) Did a take-over/termination occur? (2) May
the expenses incurred by respondent in the take-
over be set off against the amounts it owed
petitioner? (3) How much were the advances and
billable accomplishments?
The resolution of the foregoing issues lies in the
interpretation of the provisions of the Agreement.
Under the present Rules of Procedure, for a
particular construction contract to fall within the
jurisdiction of CIAC, it is merely required that the
parties agree to submit the same to voluntary
arbitration Unlike in the original version of
Section 1, as applied in the Tesco case, the law as
it now stands does not provide that the parties
should agree to submit disputes arising from their
agreement specifically to the CIAC for the latter
to acquire jurisdiction over the same. Rather, it is
plain and clear that as long as the parties agree to
submit to voluntary arbitration, regardless of what
forum they may choose, their agreement will fall
within the jurisdiction of the CIAC, such that,
even if they specifically choose another forum, the
parties will not be precluded from electing to
submit their dispute before the CIAC because this
right has been vested upon each party by law, i.e.,
E.O. No. 1008.
The arbitral clause in the Agreement is a
commitment on the part of the parties to submit
to arbitration the disputes covered therein.
Because that clause is binding, they are expected
to abide by it in good faith.[35] And because it
covers the dispute between the parties in the
present case, either of them may compel the other
to arbitrate.
Trinidad v. Ombudsman
Criminal actions are not the subject matter of compromise
agreements
FACTS: The Office of the Ombudsman in fact
filed two Informations against petitioner with the
Sandiganbayan, docketed as Criminal Case Nos.
28089 and 28093.
In Criminal Case No. 28089, petitioner, as DOTC
Assistant Secretary and member of the DOTC
Pre-qualifications, Bids and Awards Committee
for the NAIA IPT III Project (PBAC), was
charged with knowingly pre-qualifying Paircargo
Consortium3 (later incorporated into Philippine
International Air Terminals Co., Inc. or PIATCO)
on September 24, 1996 despite its failure to meet
the financial capability standards set by law.
During the pendency of the petition, the
Sandiganbayan found no probable cause to
proceed with the trial in, and thus dismissed
Criminal Case No. 28093 by Resolution of
September 7, 2006, and denied the prosecution’s
motion for reconsideration by Resolution of
February 28, 2007.7 The petition insofar as it
concerns Criminal Case No. 28093 is thus
effectively mooted, the issues raised therein
having ceased to present a justiciable controversy
such that a determination thereof would be of no
practical use and value.
In Criminal Case No. 28089, petitioner is charged
with violation of Section 3(j) of the Anti-Graft
and Corrupt Practices Act which punishes the act
of "[k]nowingly approving or granting any license,
permit, privilege or benefit in favor of any person
not qualified for or not legally entitled to such
license, permit, privilege or advantage
In compliance with this Court’s Resolution of
December 14, 2004, private respondent Asia’s
Emerging Dragon Corporation (AEDC), and the
Office of the Solicitor General (OSG) on behalf
of public respondents, respectively filed on
February 24, 2005 and April 20, 2005 their
comments5 on the petition, to which petitioner
filed a reply.
Respondent PBAC Chairman Primitivo Cal, Vice-
Chairman Francisco Atayde, and Member
Wilfredo Trinidad and Technical Committee
Chairman Pantaleon Alvarez knowingly pre-
qualified PAIRCARGO despite its obvious failure
to meet the financial capability standards set by
Paragraph c, Section 5.4 of the 1994
Implementing Rules of the BOT Law in relation
to PBAC Bulletin No. 3, as they relate to other
applicable laws and rules.
In assessing the financial capability of the
PAIRCARGO Consortium, and in declaring such
as pre-qualified, the PBAC used the entire net
worth of companies comprising the
PAIRCARGO Consortium, including Security
Bank. In so doing, the PBAC deliberately closed
its eyes on, and consciously disregarded, the
provisions of the General Banking Act and the
Manual of Regulations for Banks which set a
limitation on the amount which certain types of
banks can invest in any one enterprise.
Petitioner contends, however, that AEDC is
barred from filing a criminal complaint against
him due to the dismissal on April 30, 1999 by the
Regional Trial Court of Pasig City, Branch 261 of
Civil Case No. 66213, a case filed by the AEDC
for declaration of nullity of proceedings,
mandamus, and injunction which sought to
disqualify the Paircargo Consortium and to award
the NAIA IPT III Project to AEDC. The case
was dismissed upon the parties’ joint motion with
a mutual quitclaim and waiver.
ISSUE: Whether the case should be dismissed
due to the mutual quitclaim executed between
AEDC and petitioner herein
RULING: NO, it should not be dismissed
It is a firmly recognized rule, however, that
criminal liability cannot be the subject of a
compromise.25 For a criminal case is committed
against the People, and the offended party may
not waive or extinguish the criminal liability that
the law imposes for its commission. And that
explains why a compromise is not one of the
grounds prescribed by the Revised Penal Code for
the extinction of criminal liability.26
Even a complaint for misconduct, malfeasance or
misfeasance against a public officer or employee
cannot just be withdrawn at any time by the
complainant. This is because there is a need to
maintain the faith and confidence of the people in
the government and its agencies and
instrumentalities.27
The ineluctable conclusion, therefore, is that the
order dismissing the above-mentioned civil case
does not bar petitioner’s criminal prosecution.
Petitioner’s reliance on Republic v.
Sandiganbayan28 is misplaced. In that case, the
Court dismissed the criminal case following the
forging of a compromise agreement by the
accused and the Presidential Commission on
Good Government (PCGG) which gave the
accused absolute immunity from criminal and civil
prosecutions. As correctly distinguished by the
OSG, that case involved the PCGG which, unlike
AEDC, is a government agency expressly
authorized by law to grant civil and criminal
immunity.
RCBC v. Magwin [Magulin]
Non-submission of compromise agreement is not a proper
ground for refusal to continue the case
FACTS: On 4 March 1999 petitioner Rizal
Commercial Banking Corporation (RCBC) filed a
complaint for recovery of a sum of money with
prayer for a writ of preliminary attachment against
respondents Magwin Marketing Corporation,
Nelson Tiu, Benito Sy and Anderson Uy.1 On 26
April 1999, the trial court issued a writ of
attachment.2 On 4 June 1999 the writ was
returned partially satisfied since only a parcel of
land purportedly owned by defendant Benito Sy
was attached.3 In the meantime, summons was
served on each of the defendants, respondents
herein, who filed their respective answers, except
for defendant Gabriel Cheng who was dropped
without prejudice as party-defendant as his
whereabouts could not be located.4 On 21
September 1999 petitioner moved for an alias writ
of attachment which on 18 January 2000 the court
a quo denied.
Petitioner did not cause the case to be set for pre-
trial.6 For about six (6) months thereafter,
discussions between petitioner and respondents
Magwin Marketing Corporation, Nelson Tiu,
Benito Sy and Anderson Uy, as parties in Civil
Case No. 99-518, were undertaken to restructure
the indebtedness of respondent Magwin
Marketing Corporation.7 On 9 May 2000
petitioner approved a debt payment scheme for
the corporation which on 15 May 2000 was
communicated to the latter by means of a letter
dated 10 May 2000 for the conformity of its
officers, i.e., respondent Nelson Tiu as
President/General Manager of Magwin Marketing
Corporation and respondent Benito Sy as Director
thereof.8 Only respondent Nelson Tiu affixed his
signature on the letter to signify his agreement to
the terms and conditions of the restructuring.
On 31 July 2000 petitioner moved for
reconsideration of the Order (dismissing their
case) by informing the trial court of respondents'
unremitting desire to settle the case amicably
through a loan restructuring program.11 On 22
August 2000 petitioner notified the trial court of
the acquiescence thereto of respondent Nelson
Tiu as an officer of Magwin Marketing
Corporation and defendant in the civil case.12
On 8 September 2000 the court a quo issued an
Order reconsidering the dismissal without
prejudice of Civil Case No. 99-518;
Acting on plaintiff's "Motion for
Reconsideration" of the Order dated 20
July 2000 dismissing this case for failure
to prosecute, it appearing that there was
already conformity to the restructuring of
defendants' indebtedness with plaintiff by
defendant Nelson Tiu, President of
defendant corporation per "Manifestation
and Motion" filed by plaintiff on 22
August 2000, there being probability of
settlement among the parties, as prayed
for, the Order dated 20 July 2000 is
hereby set aside.
 Plaintiff is directed to submit the
compromise agreement within 15 days
from receipt hereof. Failure on the part of
plaintiff to submit the said agreement
shall cause the imposition of payment of
the required docket fees for re-filing of
this case.
On 27 July 2000 petitioner filed in Civil Case No.
99-518 a Manifestation and Motion to Set Case
for Pre-Trial Conference alleging that "[t]o date,
only defendant Nelson Tiu had affixed his
signature on the May 10, 2000 letter which
informed the defendants that plaintiff [herein
petitioner] already approved defendant Magwin
Marketing Corporations request for restructuring
of its loan obligations to plaintiff but subject to
the terms and conditions specified in said letter."
The trial court, in an undated Order (although a
date was later inserted in the Order), denied
petitioner's motion to calendar Civil Case No. 99-
518 for pre-trial stating that for failure of the
plaintiff to submit a compromise agreement
pursuant to the Order dated 8 September 2000
plaintiff's motion to set case for pre-trial
conference is hereby denied.
In the main, petitioner argued that the court a quo
had no authority to compel the parties in Civil
Case No. 99-518 to enter into an amicable
settlement nor to deny the holding of a pre-trial
conference on the ground that no compromise
agreement was turned over to the court a quo.
ISSUE: Whether the parties can be compelled
to enter into a compromise agreement before
setting the case to pre-trial
RULING: NO, the parties cannot be
compelled as a condition precedent for the
continuation of the case
In Goldloop Properties, Inc., we reversed the
action of the trial court in dismissing the
complaint for failure of the plaintiff to prosecute
its case, which was in turn based on its inability to
forge a compromise with the other parties within
fifteen (15) days from notice of the order to do so
and held -
Since there is nothing in the Rules that
imposes the sanction of dismissal for
failing to submit a compromise
agreement, then it is obvious that the
dismissal of the complaint on the basis
thereof amounts no less to a gross
procedural infirmity assailable by
certiorari. For such submission could at
most be directory and could not result in
throwing out the case for failure to effect
a compromise. While a compromise is
encouraged, very strongly in fact, failure
to consummate one does not warrant any
procedural sanction, much less an
authority to jettison a civil complaint
worth P4,000,000.00 . . . Plainly,
submission of a compromise agreement is
never mandatory, nor is it required by any
rule.
As also explained therein, the proper course of
action that should have been taken by the court a
quo, upon manifestation of the parties of their
willingness to discuss a settlement, was to suspend
the proceedings and allow them reasonable time
to come to terms (a) If willingness to discuss a
possible compromise is expressed by one or both
parties; or (b) 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,
pursuant to Art. 2030 of the Civil Code. If despite
efforts exerted by the trial court and the parties
the negotiations still fail, only then should the
action continue as if no suspension had taken
place.
Ostensibly, while the rules allow the trial court to
suspend its proceedings consistent with the policy
to encourage the use of alternative mechanisms of
dispute resolution, in the instant case, the trial
court only gave the parties fifteen (15) days to
conclude a deal. This was, to say the least, a
passive and paltry attempt of the court a quo in its
task of persuading litigants to agree upon a
reasonable concession.34 Hence, if only to inspire
confidence in the pursuit of a middle ground
between petitioner and respondents, we must not
interpret the trial court's Orders as dismissing the
action on its own motion because the parties,
specifically petitioner, were anxious to litigate their
case as exhibited in their several manifestations
and motions.
We reject respondent Uy's contention that
Goldloop Properties, Inc. v. Court of Appeals is
irrelevant to the case at bar on the dubious
reasoning that the complaint of petitioner was
dismissed for failure to prosecute and not for the
non-submission of a compromise agreement
which was the bone of contention in that case,
and that the dismissal imposed in the instant case
was without prejudice, in contrast to the dismissal
with prejudice decreed in the cited case. To begin
with, whether the dismissal is with or without
prejudice if grievously erroneous is detrimental to
the cause of the affected party; Goldloop
Properties, Inc. does not tolerate a wrongful
dismissal just because it was without prejudice.
More importantly, the facts in Goldloop
Properties, Inc. involve, as in the instant case, a
dismissal for failure to prosecute on the ground of
the parties' inability to come up with a
compromise agreement within fifteen (15) days
from notice of the court's order therein. All told,
the parallelism between them is unmistakable.
Paramount v. AC Ordonez
FACTS: Petitioner Paramount Insurance Corp. is
the subrogee of Maximo Mata, the registered
owner of a Honda City sedan involved in a
vehicular accident with a truck mixer owned by
respondent corporation and driven by respondent
Franklin A. Suspine on September 10, 1997, at
Brgy. Panungyanan, Gen. Trias, Cavite.
On February 22, 2000, petitioner filed before the
Metropolitan Trial Court of Makati City, a
complaint for damages against respondents. Based
on the Sheriff’s Return of Service, summons
remained unserved on respondent Suspine,5 while
it was served on respondent corporation and
received by Samuel D. Marcoleta of its Receiving
Section on April 3, 2000.6
On May 19, 2000, petitioner filed a Motion to
Declare Defendants in Default; however, on June
28, 2000, respondent corporation filed an
Omnibus Motion (And Opposition to Plaintiff’s
Motion to Declare Defendant in Default) alleging
that summons was improperly served upon it
because it was made to a secretarial staff who was
unfamiliar with court processes; and that the
summons was received by Mr. Armando C.
Ordoñez, President and General Manager of
respondent corporation only on June 24, 2000.
Respondent corporation asked for an extension of
15 days within which to file an Answer.
MTC ruling: On July 26, 2000, respondent
corporation filed a Motion to Admit Answer
alleging honest mistake and business reverses that
prevented them from hiring a lawyer until July 10,
2000, as well as justice and equity. The Answer
with Counterclaim specifically denied liability,
averred competency on the part of respondent
Suspine, and due selection and supervision of
employees on the part of respondent corporation,
and argued that it was Maximo Mata who was at
fault.
RTC ruling: Reversed the ruling of MTC
CA ruling: Reversed the ruling of RTC and
reinstated MTC order
Petitioner argued, among other things, that the
court erred in not calling the parties to mediation
ISSUE: Whether the parties should be called
to mediation
RULING: NO, there is a need for written
request before it is submitted to mediation
Finally, the decision to refer a case to mediation
involves judicial discretion. Although Sec. 9 B,
Rule 141 of the Rules of Court, as amended by A.
M. No. 04-2-04-SC, requires the payment of
P1,000.00 as mediation fee upon the filing of a
mediatable case, petition, special civil action,
comment/answer to the petition or action, and
the appellee’s brief, the final decision to refer a
case to mediation still belongs to the ponente,
subject to the concurrence of the other members
of the division.
As clarified by A. M. No. 04-3-15 (Revised
Guidelines for the Implementation of Mediation
in the Court of Appeals) dated March 23, 2004:
II. SELECTION OF CASES
Division Clerks of Court, with the
assistance of the Philippine Mediation
Center (PMC), shall identify the pending
cases to be referred to mediation for the
approval either of the Ponente for
completion of records, or, the Ponente
for decision. Henceforth, the petitioner or
appellant shall specify – by writing or by
stamping on the right side of the caption
of the initial pleading (under the case
number) that the case is mediatable.
Any party who is interested to have the appealed
case mediated may also submit a written request in
any form to the Court of Appeals. If the case is
eligible for mediation, the Ponente, with the
concurrence of the other members of the
Division, shall refer the case to the PMC.
(Emphasis ours)
Thus, for cases pending at the time the said
guidelines were issued, the Division Clerks of
Court, with the assistance of the Philippine
Mediation Center, shall identify the cases to be
referred to mediation. Thereafter, the petitioner or
appellant shall specify, by writing or by stamping
on the right side of the caption of the initial
pleading (under the case number), that the case is
mediatable. Further, any party who is interested to
have the appealed case mediated may also submit
a "written request in any form to the Court of
Appeals." In the instant case, petitioner failed to
write or stamp the notation "mediatable" on its
Memorandum of Appeal. Moreover, it failed to
submit any written request for mediation.
Agbayani v. CA
Barangay conciliation
FACTS: Agbayani and Genabe were both
employees of the Regional Trial Court (RTC),
Branch 275 of Las Piñas City, working as Court
Stenographer and Legal Researcher II,
respectively. On December 29, 2006, Agbayani
filed a criminal complaint for grave oral
defamation against Genabe before the Office of
the City Prosecutor of Las Piñas City, docketed as
I.S. No. 07-0013, for allegedly uttering against her,
in the presence of their fellow court employees
and while she was going about her usual duties at
work, the following statements, to wit:
"ANG GALING MO LETY, SINABI
MO NA TINAPOS MO YUNG
MARVILLA CASE, ANG GALING
MO. FEELING LAWYER KA KASI,
BAKIT DI KA MAGDUTY NA LANG,
STENOGRAPHER KA MAGSTENO
KA NA LANG, ANG GALING MO,
FEELING LAWYER KA TALAGA.
NAGBEBENTA KA NG KASO,
TIRADOR KA NG JUDGE. SIGE
HIGH BLOOD DIN KA, MAMATAY
KA SANA SA HIGH BLOOD MO."3
In a Resolution4 rendered on February 12, 2007,
the Office of the City Prosecutor of Las Piñas
City5 found probable cause for the filing of the
Information for grave oral defamation against
Genabe.
However, upon a petition for review filed by
Genabe, the DOJ Undersecretary Ernesto L.
Pineda (Pineda) found that (among other things)
the instant case should nonetheless be dismissed
for non-compliance with the provisions of Book
III, Title I, Chapter 7 (Katarungang
Pambarangay), of Republic Act No. 7160 (The
Local Government Code of 1991). As shown by
the records, the parties herein are residents of Las
Piñas City.
The complaint-affidavit, however, failed to show
that the instant case was previously referred to the
barangay for conciliation in compliance with
Sections 408 and 409, paragraph (d), of the Local
Government Code, which provides
Section 408. Subject Matter for Amicable
Settlement; Exception Thereto. – The
lupon of each barangay shall have
authority to bring together the parties
actually residing in the same city or
municipality for amicable settlement of all
disputes except: xxx
Section 409. Venue. x x x (d) Those
arising at the workplace where the
contending parties are employed or xxx
shall be brought in the barangay where
such workplace or institution is located.
The records of the case likewise show that the
instant case is not one of the exceptions
enumerated under Section 408 of the Local
Government Code. Hence, the dismissal of the
instant petition is proper.
CA ruling: Affirmed that there was no grave abuse
of discretion
ISSUE: Whether the case should have
undergone barangay conciliation
RULING: YES, it should have undergone
such compulsory conciliation, failure warrants
the dismissal of the case
I. All disputes are subject to Barangay conciliation
pursuant to the Revised Katarungang
Pambarangay Law [formerly P.D. 1508, repealed
and now replaced by Secs. 399-422, Chapter VII,
Title I, Book III, and Sec. 515, Title I, Book IV,
R.A. 7160, otherwise known as the Local
Government Code of 1991], and prior recourse
thereto is a pre-condition before filing a complaint
in court or any government offices, except in the
following disputes:
[1] Where one party is the government, or
any subdivision or instrumentality
thereof;
[2] Where one party is a public officer or
employee and the dispute relates to the
performance of his official functions;
[3] Where the dispute involves real
properties located in different cities and
municipalities, unless the parties thereto
agree to submit their difference to
amicable settlement by an appropriate
Lupon;
[4] Any complaint by or against
corporations, partnerships or juridical
entities, since only individuals shall be
parties to Barangay conciliation
proceedings either as complainants or
respondents [Sec. 1, Rule VI,
Katarungang Pambarangay Rules];
[5] Disputes involving parties who
actually reside in barangays of different
cities or municipalities, except where such
barangay units adjoin each other and the
parties thereto agree to submit their
differences to amicable settlement by an
appropriate Lupon;
[6] Offenses for which the law prescribes
a maximum penalty of imprisonment
exceeding one [1] year or a fine of over
five thousand pesos ([₱]5,000.00);
[7] Offenses where there is no private
offended party;
[8] Disputes where urgent legal action is
necessary to prevent injustice from being
committed or further continued,
specifically the following:
[a] Criminal cases where accused
is under police custody or
detention [See Sec. 412(b)(1),
Revised Katarungang
Pambarangay Law];
[b] Petitions for habeas corpus by
a person illegally deprived of his
rightful custody over another or a
person illegally deprived of or on
acting in his behalf;
[c] Actions coupled with
provisional remedies such as
preliminary injunction,
attachment, delivery of personal
property and support during the
pendency of the action; and
[d] Actions which may be barred
by the Statute of Limitations.
[9] Any class of disputes which the
President may determine in the interest of
justice or upon the recommendation of
the Secretary of Justice;
[10] Where the dispute arises from the
Comprehensive Agrarian Reform Law
(CARL) [Secs. 46 & 47, R. A. 6657];
[11] Labor disputes or controversies
arising from employer-employee relations
[Montoya vs. Escayo, 171 SCRA 442; Art.
226, Labor Code, as amended, which
grants original and exclusive jurisdiction
over conciliation and mediation of
disputes, grievances or problems to
certain offices of the Department of
Labor and Employment];
[12] Actions to annul judgment upon a
compromise which may be filed directly
in court [See Sanchez vs. [Judge] Tupaz,
158 SCRA 459]."
The compulsory process of arbitration is a pre-
condition for the filing of the complaint in court.
Where the complaint (a) did not state that it is one
of excepted cases, or (b) it did not allege prior
availment of said conciliation process, or (c) did
not have a certification that no conciliation had
been reached by the parties, the case should be
dismissed.27
Here, petitioner Agbayani failed to show that the
instant case is not one of the exceptions
enumerated above. Neither has she shown that
the oral defamation caused on her was so grave as
to merit a penalty of more than one year.
Positos v. Chua
FACTS: Petitioner had since 1980 been
occupying a portion of a parcel of land covered by
Transfer Certificate of Title No. T-2316862
situated in Leon Garcia St., Davao City. The land
was likewise occupied by members of the Sto.
Tomas de Villanueva Settlers Association (the
Association), of which petitioner was a member.
On December 26, 1994, the registered owner of
the land, Ansuico, Inc., transferred its rights and
interests thereover to respondent.1awphi1
The Association thereupon filed a complaint
against respondent for prohibitory injunction
before the RTC of Davao City. A compromise
agreement was thereafter forged and approved by
the trial court wherein the Association agreed to
vacate the premises provided respondent extends
financial assistance to its members.
Petitioner refused to abide by the compromise
agreement, however, prompting respondent to
send her a demand letter to vacate the premises
within fifteen (15) days from receipt thereof.
The conflict was referred for conciliation before
the Lupon following Republic Act No. 7160 (R.A.
7160), "The Local Government Code."
Respondent did not appear during the
proceedings but sent a representative on his
behalf. No settlement having been reached,
respondent filed a complaint against petitioner for
Unlawful Detainer with prayer for damages and
attorney’s fees before the Municipal Trial Court in
Cities (MTCC), Davao City.

In her Answer to the complaint, petitioner alleged

that the failure of respondent to appear personally
during the proceedings is equivalent to non-
compliance with R.A. 7160 to thus render the
complaint dismissible

During the preliminary conference before the

MTCC, the parties stipulated on respondent’s
failure to personally appear during conciliation,
the due existence of the Certificate to File Action
issued by the barangay captain, and the lack of
lessor-lessee relationship between the parties.

MTC to CA: Ruled in favour of respondent herein

on the ground that he was represented by counsel
during the barangay conciliation proceeding

ISSUE: Whether the case should be dismissed

due to failure of respondent to appear before
the barangay conciliation

RULING: NO, the case should not be

dismissed

As reflected above, respondent’s complaint was

dismissed for failure to comply with the
conciliation process. Non-compliance affected the
sufficiency of his cause of action and rendered the
complaint susceptible, as in fact it resulted to
dismissal on the ground of prematurity.

A dismissal without prejudice does not operate as

a judgment on the merits, for there is no
unequivocal determination of the rights and
obligations of the parties with respect to the cause
of action and subject matter thereof.