THIRD DIVISION

[G. R. No. 128574. September 18, 2002]

UNIVERSAL ROBINA SUGAR MILLING CORPORATION, petitioner, vs. HEIRS OF ANGEL TEVES,
respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

Andres Abanto owned two parcels of land situated in Campuyo, Manjuyod, Negros Oriental. One lot,
consisting of 55,463 square meters, is registered in his name under Transfer Certificate of Title (TCT) No.
H-37 of the Registry of Deeds of said province. The other lot with an area of 193,789 square meters is
unregistered. He died on February 16, 1973.[1]

On October 19, 1974, Andres Abanto's heirs executed an Extrajudicial Settlement of the Estate of the
Deceased Andres Abanto and Simultaneous Sale.*2+ In this document, Abanto's heirs adjudicated unto
themselves the two lots and sold the (a) unregistered lot of 193,789 square meters to the United
Planters Sugar Milling Company, Inc. (UPSUMCO), and (b) the registered lot covered by TCT No. H-37 to
Angel M. Teves, for a total sum of P115,000.00. The sale was not registered.[3]

Out of respect for his uncle Ignacio Montenegro, who was UPSUMCO's founder and president, Teves
verbally allowed UPSUMCO to use the lot covered by TCT No. H-37 for pier and loading facilities, free of
charge, subject to the condition that UPSUMCO shall shoulder the payment of real property taxes and
that its occupation shall be co-terminus with its corporate existence.[4] UPSUMCO then built a
guesthouse and pier facilities on the property.[5]

Years later, UPSUMCOs properties were acquired by the Philippine National Bank (PNB). Later, PNB
transferred the same properties to the Asset Privatization Trust (APT) which, in turn, sold the same to
the Universal Robina Sugar Milling Corporation (URSUMCO). URSUMCO then took possession of
UPSUMCOs properties, including Teves' lot covered by TCT No. H-37.

Upon learning of URSUMCO's acquisition of his lot, Teves formally asked the corporation to turn over to
him possession thereof or the corresponding rentals. He stated in his demand letters that he merely
allowed UPSUMCO to use his property until its corporate dissolution; and that it was not mortgaged by
UPSUMCO with the PNB and, therefore, not included among the foreclosed properties acquired by
URSUMCO.[6]

URSUMCO refused to heed Teves' demand, claiming that it acquired the right to occupy the property
from UPSUMCO which purchased it from Andres Abanto; and that it was merely placed in the name of
Angel Teves, as shown by the Deed of Transfer and Waiver of Rights and Possession dated November
26, 1987.[7] Under this document, UPSUMCO transferred to URSUMCO its application for agricultural
and foreshore lease. The same document partly states that the lands subject of the foreshore and
agricultural lease applications are bounded on the north by the "titled property of Andres Abanto
bought by the transferor (UPSUMCO) but placed in the name of Angel Teves". URSUMCO further
claimed that it was UPSUMCO, not Teves, which has been paying the corresponding realty taxes.

Consequently, on June 18, 1992, Teves filed with the Regional Trial Court (RTC), Dumaguete City, Branch
43, a complaint for recovery of possession of real property with damages against URSUMCO, docketed
as Civil Case No. 10235.

On September 4, 1992, Teves died[8] and was substituted by his heirs.[9]

On April 6, 1994, the RTC rendered its Decision[10] finding that URSUMCO has no personality to
question the validity of the sale of the property between the heirs of Andres Abanto and Angel Teves
since it is not a party thereto; that Teves' failure to have the sale registered with the Registry of Deeds
would not vitiate his right of ownership, unless a third party has acquired the land in good faith and for
value and has registered the subsequent deed; that the list of properties acquired by URSUMCO from
the PNB does not include the disputed lot and, therefore, was not among those conveyed by UPSUMCO
to URSUMCO. The dispositive portion of the Decision reads:

"Wherefore, in view of the foregoing, judgment is hereby rendered:

1. Declaring plaintiff (Teves) the owner of the parcel of land covered by Transfer Certificate of Title No.
H-37 situated at Campuyo, Manjuyod, Negros Oriental and as such, is entitled to the possession of said
land subject to the provision of Article 448 of the New Civil Code. Accordingly, except where the
immediate premises of the guest house and pier are concerned, defendant (URSUMCO) is directed to
vacate the remaining portion of said property;

2. Declaring defendant as the owner of the guest house and pier and as a builder in good faith of said
guest house and pier;

3. Declaring plaintiff as entitled to the option under Article 448 of the New Civil Code, namely:

(a) To appropriate the guest house and pier as his own upon payment of indemnity under Articles 546
and 548 of the New Civil Code, or

(b) To oblige defendant to buy the land in question unless its value is considerably more than the
improvements (guest house and pier), in which case defendant shall pay reasonable rent.

4. Declaring defendant as entitled to retain possession of the guest house and pier until defendant is
indemnified of the useful and necessary expenses for the preservation of said improvements provided in
Article 546 of the New Civil Code and such other expenses for luxury as may be allowed under Article
548 of the same Code in case plaintiff takes the option of appropriating for himself the improvements;

5. Ordering defendant to pay plaintiff reasonable attorneys fees in the amount of P15,000.00;

6. Dismissing all other claims for damages by plaintiff and the counterclaim for lack of merit; and

7. Ordering defendant to pay the costs of this suit.

SO ORDERED."

On appeal by URSUMCO, the Court of Appeals[11] affirmed the RTC decision, holding that the
transaction between Angel Teves and Andres Abanto's heirs is a contract of sale, not one to sell, because
ownership was immediately conveyed to the purchaser upon payment of P115,000.00. The Court of
Appeals further held that Teves' failure to cause the registration of the sale is not fatal since a contract
of sale is perfected by mere consent of the contracting parties and has the force of law between them.
Besides, his failure to refer the case to the barangay cannot affect the jurisdiction already acquired by
the court over the subject matter and the person of "defendant-appellant" URSUMCO.

On October 29, 1996, URSUMCO filed a motion for reconsideration but was denied by the Appellate
Court in a Resolution dated February 10, 1997.[12]

Hence, the instant petition for review on certiorari[13] raising the following legal issues:

1. Whether the respondents have established a cause of action against petitioner;

2. Whether petitioner herein has the legal capacity to question the validity of the sale; and

3. Whether the complaint should have been dismissed for lack of barangay conciliation.

The petition is bereft of merit.

Petitioner URSUMCO contends that respondents have no cause of action because the Extrajudicial
Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale is merely a promise to
sell and not an absolute deed of sale, hence, did not transfer ownership of the disputed lot to Angel
Teves. Assuming that the document is a contract of sale, the same is void for lack of consideration
because the total price of P115,000.00 does not specifically refer to the lot covered by TCT No. H-37,
making the price uncertain. Furthermore, the transaction, being unregistered, does not bind third
parties.

Petitioner's contentions lack merit. As held by the RTC and the Court of Appeals, the transaction is not
merely a contract to sell but a contract of sale. In a contract of sale, title to the property passes to the
vendee upon delivery of the thing sold; while in a contract to sell, ownership is, by agreement, reserved
in the vendor and is not to pass to the vendee until full payment of the purchase price.[14] In the case at
bar, the subject contract, duly notarized, provides:[15]

"EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF THE DECEASED ANDRES ABANTO AND

SIMULTANEOUS SALE

KNOW ALL MEN BY THESE PRESENTS:

That VICTORINA C. VDA. DE ABANTO, widow, and GUMERSINDA A. ABANTO-MALDO, married to Porferio
Maldo, both of legal age, Filipinos, and residents of Olimpia, Bais City, hereby freely and spontaneously

DECLARE AND MAKE MANIFEST THAT:

1. That they are the only legitimate heirs of the deceased Andres Abanto, being the surviving spouse and
the legally adopted daughter of the deceased Andres Abanto;

2. That the aforementioned deceased died on February 16, 1973 in the City of Bais, which was his
residence at the time of his death;

3. That said decedent died without leaving any will and without debts and his only surviving heirs are the
aforementioned Victorina C. Vda. de Abanto and Gumersinda A. Maldo;

4. That the deceased left as his estate and only real properties, certain parcels of land which are more
particularly described and founded as follows:

PARCEL ONE TCT NO. H-37

"A parcel of agricultural land, with the improvements thereon, containing an area of FIFTY-FIVE
THOUSAND FOUR HUNDRED SIXTY THREE (55,463) SQUARE METERS MORE OR LESS, situated in barrio
Campuyo, Manjuyod, Negros Oriental and bounded on the Northeast by Taon Strait; on the South by
the property claimed by Nazario Acabal; on the west by North Bais Bay, public land and the properties
claimed by Fortunato Acabal and Manuel Gonzales as described in TCT No. H-37."

PARCEL TWO

"A parcel of unregistered land, together with the improvements, accessions and other interests over the
said lot, situated at barrio Campuyo, Municipality of Manjuyod, Province of Negros Oriental, containing
an area of ONE HUNDRED NINETY THREE THOUSAND, SEVEN HUNDRED EIGHTY NINE (193,789) square
meters more or less, as described on plan Psu. 123473 and as amended by PSU 07-01-000 and as
declared under Tax Declaration No. 00589 and assessed in said tax declaration for taxation purposes at
P24,860.00"

5. That the parties herein have agreed as they hereby agree to adjudicate said parcels of land unto
themselves in accordance with Sec. 1, Rule 74 of the Rules of Court and to sell, transfer and convey for a
total sum of ONE HUNDRED FIFTEEN THOUSAND PESOS (P115,000.00) Philippine currency the above
described properties in the following manner to wit:

1. TO THE UNITED PLANTERS' SUGAR MILLING CO., INC., a domestic corporation duly organized and
existing under the laws of the Philippines, with residence and office address at Alangilanan, Manjuyod,
Negros Oriental - That parcel which is described as parcel two above;

2. TO ANGEL M. TEVES, of legal age, Filipino, married to Elena Teves, a resident of and with postal
address at Bais City - That parcel described as parcel one above.

In witness whereof, we have hereunto affixed our signatures this 19th day of October 1974 at the City of
Bais, Philippines.

(Sgd.)

VICTORINA C. VDA. DE ABANTO

Heir Vendor

(Sgd.)

GUMERSINDA ABANTO-MALDO

Heir Vendor

UNITED PLANTERS' SUGAR MILLING CO., INC.

Vendee

by:

(Sgd.)

IGNACIO VICENTE

President

(Sgd.)

ANGEL M. TEVES

Vendee

_______(Sgd.)______ witnesses ______(Sgd.)_______"

It is clear from the recitals of the above contract that it is an extrajudicial settlement of the estate of the
deceased Andres Abanto, and simultaneous sale of the properties described therein, including the
subject lot. Clearly indicated therein is that the Abanto heirs sold to Teves the lot covered by TCT No. H37. There is no showing that the Abanto heirs merely promised to sell the said lot to Teves.

That absolute ownership over the land (TCT No. H-37) was indeed transferred to Teves is further shown
by his acts subsequent to the execution of the contract. As found by the trial court, it was Teves, not
Andres Abanto's heirs, who allowed UPSUMCO to construct pier facilities and guesthouse on the land.
When the property was erroneously included among UPSUMCO's properties that were transferred to
petitioner URSUMCO, it was Teves, not the heirs of Andres Abanto, who informed petitioner that he
owns the same and negotiated for an arrangement regarding its use. Teves even furnished petitioner
documents and letters[16] showing his ownership of the lot, such as a copy of the "Extrajudicial
Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale"[17] and a certified true
copy of TCT No. H-37 covering the disputed lot.[18] Indeed, the trial court and the Court of Appeals
correctly ruled that Teves purchased the lot from the Abanto heirs, thus:

"1. That Angel Teves was the purchaser of the land in question covered by Transfer Certificate of Title
No. H-37 in an Extrajudicial Settlement of Estate of Andres Abanto and Simultaneous Sale, dated
October 19, 1974 (Exhibit "A"), more particularly described as follows:

"A parcel of agricultural land, with the improvements thereon, containing an area of FIFTY-FIVE
THOUSAND FOUR HUNDRED SIXTY THREE (55,463) SQUARE METERS MORE OR LESS, situated in barrio
Campuyo, Manjuyod, Negros Oriental and bounded on the Northeast by Taon Strait; on the South by
the property claimed by Nazario Acabal; on the west by North Bais Bay, Public land and the properties
claimed by Fortunato Acabal and Manuel Gonzales as described in TCT No. H-37."[19]

If we follow petitioner's posture that the transaction was only a contract to sell, ownership of the lot
would have remained with the Abanto heirs, not with UPSUMCO. Consequently, UPSUMCO would not
have transferred any right over the property to petitioner URSUMCO.

We are likewise unconvinced by petitioner's assertion that the price or consideration of the contract is
not certain. In a contract of sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money
or its equivalent.*20+ The subject of the sale embodied in the Extrajudicial Settlement of Estate of the
Deceased Andres Abanto and Simultaneous Sale consists of two parcels of land. It is clear from the said
instrument that the amount of P115,000.00 refers to the price for the two lots as a whole. Thus,
contrary to petitioner's claim, the price of the subject property is not uncertain.

That the contract of sale was not registered does not affect its validity. Being consensual in nature, it is
binding between the parties, the Abanto heirs and Teves. Article 1358 of the New Civil Code, which
requires the embodiment of certain contracts in a public instrument, is only for convenience, and the
registration of the instrument would merely affect third persons.[21] Formalities intended for greater
efficacy or convenience or to bind third persons, if not done, would not adversely affect the validity or
enforceability of the contract between the contracting parties themselves.[22] Thus, by virtue of the
valid sale, Angel Teves stepped into the shoes of the heirs of Andres Abanto and acquired all their rights
to the property.

Anent the second issue, petitioner contends that being an innocent purchaser for value of the lot and its
current possessor, it has the personality to assail the validity of the sale in question.

An innocent purchaser is one who acquired the property for a valuable consideration, not knowing that
the title of the vendor or grantor is null and void.[23] He is also one who buys the property of another
without notice that some other person has a right to, or interest in, such property and pays a full and
fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of
some other persons in the property.[24] The concept underscores two important factors: (1) the
property which is bought for consideration, and (2) the lack of knowledge or notice of adverse claim or
interest prior to the sale. Both factors are not present insofar as petitioner URSUMCO is concerned.

For one, petitioner acquired almost all of UPSUMCOS properties for a consideration but failed to prove
that the lot covered by TCT No. H - 37 was included therein. In fact, the lot was not among the
properties acquired by petitioner from the APT whose holdings were limited only to those UPSUMCO

properties foreclosed by the PNB. Also, the Deed of Transfer and Waiver of Rights and Possession
shows that only the following properties and rights of UPSUMCO were transferred to petitioner
URSUMCO:[25]

1. The guest house and pier at Campuyo site in the Municipality of Manjuyod, Negros Oriental;

2. A parcel of land consisting of twenty five (25) hectares, more or less, leading to the Campuyo pier
which is the subject matter of UPSUMCO's agricultural lease application pending with the Bureau of
Lands and Land District Officer, Dumaguete City; and

3. Pending application for an industrial or foreshore lease of that portion of the adjacent government
land approximately 270,000 square meters, later amended to be 16,000 square meters.

The foregoing list does not specifically include the subject lot. Admittedly, the same Deed of Transfer
and Waiver of Rights and Possession states that a titled property of Andres Abanto bought by the
transferor (UPSUMCO) but placed in the name of Angel Teves is on the northern boundary of the
above-mentioned lands subject of the foreshore and agricultural lease applications.[26] However, such
description is insufficient to establish that the titled property is indeed owned by UPSUMCO.

Petitioner cannot likewise assert that it has no adequate notice of any adverse claim over the lot in
controversy. Teves informed petitioner of his ownership and demanded that he be placed in possession
thereof or, in the alternative, that he be paid the corresponding rentals. Moreover, petitioner should
have been sufficiently forewarned of a probable anomaly or irregularity in the ownership of the subject
lot, considering that it was registered not in the name of UPSUMCO, but in the name of Andres Abanto.
A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then
claim that he acted in good faith under the belief that there was no defect in the title of the vendor.[27]

The petition having been stripped of these anchors, both the RTC and the Court of Appeals correctly
ruled that petitioner has no sufficient cause of action against Angel Teves, represented by herein
respondents. Not being a party to the contract of sale between Andres Abanto's heirs and Angel Teves,
and not being a subsequent innocent purchaser for value, petitioner cannot claim any right of
possession over the land in question. Surely, petitioner is proscribed from questioning Teves'
ownership.

Regarding the third issue, suffice it to state that being a corporation, petitioner cannot be impleaded as
a party to a barangay conciliation proceeding. Section 1, Rule VI of the Katarungang Pambarangay Rules
implementing the Katarungang Pambarangay Law[28]provides:

"Section 1. Parties. - Only individuals shall be parties to these proceedings either as complainants or
respondents. No complaint by or against corporations, partnerships or other juridical entities shall be
filed, received or acted upon." (emphasis ours)

Incidentally, respondents, in their memorandum, pray that petitioner URSUMCO be declared a

recalcitrant possessor in bad faith and be held liable for damages in the following amounts: (1)
P1,060,000.00 as actual damages; (2) P100,000.00 as moral damages; and (3) P50,000.00 as exemplary
damages.

We quote with approval the disquisition of the RTC, affirmed by the Court of Appeals, dismissing
respondents' claim for damages, thus:

"As to the damages claimed by plaintiff (Teves), the Court holds that he is not entitled to any of the
damages claimed considering that Article 448 of the Civil Code does not provide such remedy.
Furthermore, there is no evidence showing that defendant had made use of the land except with
respect to the pier and guesthouse which defendant had validly acquired from the United Planters Sugar
Milling Company (Exhibit "3"). However, based on equitable considerations, considering that plaintiff
was compelled to litigate in view of the refusal of defendant despite demand by the plaintiff (Exhibits
"C", "D", "F", "G", "H") to pay rental for the use of the property in question, defendant should pay
plaintiff reasonable attorney's fees in the amount of P15,000.00."[29]

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated September 30,
1996 in CA-G.R. CV No. 46352 is AFFIRMED.

SO ORDERED.

Puno, (Chairman), Panganiban, Corona, and Carpio-Morales, JJ., concur.

[1] RTC Record, p. 6.

[2] RTC Record, p. 6.

[3] CA Decision, Rollo, p. 17.

[4] Ibid., p. 16.

[5] Ibid., p. 17.

[6] CA Decision, Rollo, p. 16.

[7] RTC Record, pp. 130-133.

[8] Certificate of Death, RTC Record, p. 22.

[9] RTC Record, p. 27.

[10] Penned by Judge Winston M. Villegas, RTC Record, pp. 148-158.

[11] CA Decision penned by Associate Justice Consuelo Ynares-Santiago, and concurred in by Associate
Justices Fidel P. Purisima and Ruben T. Reyes, Rollo, pp. 13-26.

[12] Annex "B", Petition, Rollo, pp. 27-28.

[13] Rollo, pp. 3-12.

[14] Dawson vs. Register of Deeds, Quezon City, 295 SCRA 733, 741-742 (1998), citing Salazar vs. Court
of Appeals, 258 SCRA 317, 325 (1996).

[15] RTC Record, pp. 6-7.

[16] Exhibits "C" , "D", "F", "G", "H", RTC Record, pp. 49-50 and 52-54.

[17] Exhibit "A", RTC Record, pp. 6-7.

[18] Exhibit "B", RTC Record, p. 48.

[19] Rollo, pp. 16-17.

[20] Article 1458, Civil Code.

[21] Fule vs. Court of Appeals, 286 SCRA 698, 713 (1998).

[22] Cenido vs. Apacionado, 318 SCRA 688, 704 (1999).

[23] Lucena vs. Court of Appeals, 313 SCRA 47, 57 (1999).

[24] Sandoval vs. Court of Appeals, 260 SCRA 283, 296-297 (1996); Sajonas vs. Court of Appeals, 258
SCRA 79, 100 (1996).

[25] RTC Record, pp. 130-131.

[26] RTC Record, p. 131.

[27] Development Bank of the Philippines vs. Court of Appeals, 331 SCRA 267, 290 (2000).

[28] Sections 399 to 422, Chapter 7, Title One, Book III and Section 515, Title One, Book IV of Republic
Act No. 7160.

[29] CA Rollo, p. 42.

SECOND DIVISION
[A.M. No. MTJ-00-1265. April 6, 2000]
VALENCIDES VERCIDE, complainant, vs. JUDGE PRISCILLA T. HERNANDEZ, Fifth Municipal Circuit Trial
Court, Clarin and Tudela, Misamis Occidental, respondent. francis
DECISION
MENDOZA, J.:
This is a complaint filed against Judge Priscilla T. Hernandez of the Fifth Municipal Circuit Trial Court,
Clarin and Tudela, Misamis Occidental, charging her with grave abuse of authority and ignorance of the
law for her dismissal of a case which complainant Valencides Vercide and his wife had filed against Daria
Lagas Galleros for recovery of possession of a piece of land. The land is located in Upper Centro, Tudela,
Misamis Occidental. Defendant Galleros is a resident of the same municipality, while complainant and
his wife are residents of Dipolog City. Because of this fact, the case was filed in court without prior
referral to the Lupong Tagapamayapa.
However, this matter was raised by defendant in her answer as an affirmative defense, and respondent,
in her order of July 15, 1997, ordered the dismissal of the case without prejudice to the prosecution of
the counterclaim pleaded by the defendant in her answer. In support of her order, respondent cited P.D.
No. 1508, 3 of which provides:
Venue. - Disputes between or among persons actually residing in the same barangay shall be brought for
amicable settlement before the Lupon of said barangay. Those involving actual residents of different
barangays within the same city or municipality shall be brought in the barangay where the respondent
or any of the respondents actually resides, at the election of the complainant. However, all disputes
which involve real property or any interest therein shall be brought in the barangay where the real
property or any part thereof is situated. (Emphasis added)
Complainant and his wife moved for a reconsideration, citing the following provisions of R.A. 7160, "The
Local Government Code of 1991":
SEC. 408. Subject matter for Amicable Settlement; Exception Thereto. The lupon of each barangay
shall have authority to bring together the parties actually residing in the same city or municipality for
amicable settlement of all disputes except:
(a) Where one party is the government of any subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute relates to the performance of his
official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five Thousand
pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real property located in different cities or municipalities unless the
parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except
where such barangay units adjoin each other and the parties thereto agree to submit their differences
to amicable settlement by an appropriate lupon;
(g) Such other classes of disputes which the President may determine in the interest of justice or upon
recommendation of the Secretary of Justice. marie
The court in which the non-criminal cases not falling within the authority of the lupon under this Code
are filed may, at any time before trial, motu proprio refer the case to the lupon concerned for amicable
settlement.
SEC. 409. Venue. - (a) Disputes between persons actually residing in the same barangay shall be brought
for amicable settlement before the lupon of said barangay.
(b) Those involving actual residents of different barangays within the same city of municipality shall be
brought in the barangay where the respondent or any of the respondents actually resides, at the
election of the complainant.
(c) All disputes involving real property or any interest therein shall be brought in the barangay where the
real property or the larger portion thereof is situated.
(d) Those arising at the workplace where the contending parties are employed or at the institution
where such parties are enrolled for study shall be brought in the barangay where such workplace or
institution is located.
Objections to venue shall be raised in the mediation proceedings before the punong barangay;
otherwise, the same shall be deemed waived. Any legal question which may confront the punong
barangay in resolving objections to venue herein referred to may be submitted to the Secretary of
Justice or his duly designated representative whose ruling thereon shall be binding.
They argued that under 408(f), in relation to 409(c), where the parties to a dispute involving real
property or any interest therein are not actual residents of the same city or municipality or of adjoining
barangays, prior resort to barangay conciliation is not required.

However, respondent denied the motion. In her order dated September 9, 1997, respondent stated:
The Court after taking into consideration the Motion for Reconsideration and the ground relied upon by
the counsel finds that counsel for the plaintiffs failed to correlate Sections 408 and 409 of Republic Act
No. 7160 and to consider Rule VIII, paragraph (a) of the Katarungang Pambarangay Rules, the rules and
regulations [of] which were promulgated to implement Sections 399 to 422, Chapter 7, Title One Book III
and Section 515, Book IV of R.A. No. 7160, otherwise known as the Katarungang Pambarangay Law, to
wit:
"RULE VIII - PRE-CONDITION FOR FORMAL ADJUDICATION
Conciliation, pre-condition for filing of complaint in court or government office. novero
(a) No individual may go directly to court or to any government office for adjudication of his dispute
with another individual upon any matter falling within the authority of the Punong Barangay or Pangkat
ng Tagapagkasundo to settle under these Rules, unless, after personal confrontation of the parties
before them earnest efforts to conciliate have failed to result in a settlement or such settlement has
been effectively repudiated."
and also Rule VI, Section 3 paragraph (c) of the same Katarungang Pambarangay Rules which provides:
"Rule VI - Amicable Settlement of Disputes
Section 3. Venue. The place of settlement shall be subject to the following rules:
....
(c) Dispute involving real property shall be brought for settlement in the Barangay where the real
property or larger portion thereof is situated.
From the provisions of the above-cited Rules it was very clear that parties whose disputes involved real
property should first br[ing] the said dispute before the barangay where the property was located, and
that [because of] failure to bring the dispute before the Barangay for conciliation no action may be filed
in court for final adjudication of the said dispute.
That parties should first comply with the provisions of the Katarungang Pambarangay Law before the
Court can acquire jurisdiction over the complaint. That non-compliance of the plaintiff to the
requirement of the Katarungang Pambarangay Law was admitted by her in paragraph 3 of the
complaint. Her allegation of non-compliance with the mandatory requirement of Lupon Conciliation
before the filing of the complaint, in a way divest[s] the Court of its jurisdiction over the case. In the
1997 Rules of Civil Procedure, Rule 16, Section 1, paragraph (j) provides:

"That a condition precedent for filing the claim has not been complied with"
WHEREFORE, in view of the foregoing, the Motion for Reconsideration is hereby denied.
Complainant alleges that in dismissing Civil Case No. 295, respondent judge committed "(a) Grave abuse
of authority by knowingly rendering an unjust and unlawful order; (b) Ignorance of the law in its highest
order, she being a judge; (c) Grave disobedience to the jurisprudence laid down by the Supreme Court of
the Philippines on the matter of exemption of lupon conciliation of contending parties who are not
residen[ts] of the same city or municipality." He states that respondent "practically threw several
decisions of the Supreme Court on the matter out of the window and obviously followed hook, line and
sinker the arguments of the [defendant] Daria Galleros."
In answer, respondent judge claims that she merely followed the law in dismissing the case. She prays
that the complaint against her be dismissed and that complainant be ordered to stop harassing her just
because he had not been able to obtain the relief he wanted in Civil Case No. 295. nigel
In its memorandum dated February 29, 2000, the Office of the Court Administrator recommends the
dismissal of this case on the ground that the "issue [raised] is purely judicial and is best resolved by a
court of competent jurisdiction" and that, even if respondent had erred, she should not be held
administratively liable since there is no allegation that she acted in bad faith or knowingly rendered an
unjust judgment.
In Tavora v. Veloso,[1] this Court already ruled that where parties do not reside in the same city or
municipality or in adjoining barangays, there is no requirement for them to submit their dispute
involving real property to the Lupong Tagapamayapa. As explained in that case:
The sole issue raised is one of law: Under the given facts, is the respondent judge barred from taking
cognizance of the ejectment case pursuant to Sec. 6 of PD 1508 establishing a system of amicably
settling disputes at the barangay level? The section reads:
"SECTION. 6. Conciliation, precondition to filing of complaint. - No complaint, petition, action or
proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof shall
be filed or instituted in court or any other government office for adjudication unless there has been a
confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or
settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested by
the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. . . ." (Italics supplied)
For the above provision to be operative, the controversy must be within the jurisdiction of the Lupong
Tagapayapa (Lupon or Barangay court). On this point, the relevant provisions of PD 1508 are:

"SECTION 2. Subject matters for amicable settlement. - The Lupon of each barangay shall have authority
to bring together the parties actually residing in the same city or municipality for amicable settlement of
all disputes except:
(1) Where one party is the government, or any subdivision or instrumentality thereof;
(2) Where one party is a public officer or employee, and the dispute relates to the performance of his
official functions;
(3) Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding P200.00;
(4) Offenses were there is no private offended party;
(5) Such other classes of disputes which the Prime Minister may in the interest of justice determine,
upon recommendation of the Minister of Justice and the Minister of Local Government. ella
"SECTION 3. Venue. Disputes between or among persons actually residing in the same barangay shall
be brought for amicable settlement before the Lupon of said barangay. Those involving actual residents
of different barangays within the same city or municipality shall be brought in the barangay where the
respondent or any of the respondents actually resides, at the election of the complainant. However, all
disputes which involve real property or any interest therein shall be brought in the barangay where the
real property or any part thereof is situated.
"The Lupon shall have no authority over disputes:
(1) involving parties who actually reside in barangays of different cities or municipalities, except where
such barangays adjoin each other; and
(2) involving real property located in different municipalities." (Italics supplied)
The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of a
barangay "shall have authority" to bring together the disputants for amicable settlement of their
dispute: The parties must be "actually residing in the same city or municipality." At the same time,
Section 3 while reiterating that the disputants must be "actually residing in the same barangay" or in
"different barangays within the same city or municipality" unequivocably declares that the Lupon
shall have "no authority" over disputes "involving parties who actually reside in barangays of different
cities or municipalities," except where such barangays adjoin each other.
Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes
where the parties are not actual residents of the same city or municipality, except where the barangays
in which they actually reside adjoin each other.

It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a given
dispute, Sec. 3 of PD 1508 adds:
"However, all disputes which involve real property or any interest therein shall be brought in the
barangay where the real property or any part thereof is situated."
Actually, however, this added sentence is just an ordinary proviso and should operate as such. marinella
The operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or vary
the operation of the principal clause, rather than expand its scope, in the absence of a clear indication to
the contrary.[2]
To be sure, the Court was interpreting in that case the provisions of P.D. No. 1508 which, except for
some modifications, are applicable to the case before respondent judge because they are now found in
408-409 of R.A. No. 7160 which took effect on January 1, 1992. The ruling in Tavora v. Veloso,
reiterated in other cases,[3] should be familiar to the bench and the bar. As we have held in Espiritu v.
Jovellanos,[4] the phrase "Ignorance of the law excuses no one" has a special application to judges who,
under the injunction of Canon 1.01 of the Code of Judicial Conduct, "should be the embodiment of
competence, integrity, and independence." In Bacar v. De Guzman,[5] it was held that when the law
violated is basic, the failure to observe it constitutes gross ignorance. Reiterating this ruling, it was
emphasized in Almeron v. Sardido[6] that the disregard of an established rule of law amounts to gross
ignorance of the law and makes the judge subject to disciplinary action.
In the case at bar, respondent showed patent ignorance if not disregard of this Courts rulings on
the jurisdiction of the Lupong Tagapamayapa by her erroneous quotations of the provisions of the
Katarungang Pambarangay Rules implementing R.A. No. 7160. While a judge may not be held
administratively accountable for every erroneous order or decision he renders, his error may be so gross
or patent that he should be administratively disciplined for gross ignorance of the law and
incompetence.
In this case, respondent at first cited P.D. No. 1508, 3 as basis of her action. When her attention was
called to the fact that this had been repealed by 409(c) of R.A. No. 7160, respondent, who obviously
was more intent in justifying her previous order than correcting her error, quoted out of context the
provisions of the Katarungang Pambarangay Rules implementing the Katarungang Pambarangay
provisions of R.A. No. 7160. She thus violated Canon 3 of the Code of Judicial Conduct which provides
that "In every case, a judge shall endeavor diligently to ascertain the facts and the applicable law
unswayed by partisan interest, public opinion or fear of criticism."
Contrary to respondents interpretation, it is clear even from the Katarungang Pambarangay Rules that
recourse to barangay conciliation proceedings is not necessary where the parties do not reside in the
same municipality or city or in adjoining barangays. Rule VI of the same states in pertinent part:

SECTION 2. Subject matters for settlement. - All disputes may be the subject of proceedings for amicable
settlement under these rules except the following enumerated cases:
(a) Where one party is the government, or any subdivision or instrumentality thereof; alonzo
(b) Where one party is a public officer or employee, and the dispute relates to the performance of his
official functions;
(c) Offenses for which the law prescribes a maximum penalty of imprisonment exceeding one (1) year or
a fine exceeding Five Thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different cities or municipalities unless the
parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except
where such barangay units adjoin each other and the parties thereto to agree to submit their
differences to amicable settlement by an appropriate lupon;
(g) Such other classes of disputes which the President may determine in the interest of justice or upon
the recommendation of the Secretary of Justice.
The foregoing exceptions notwithstanding, the court in which non-criminal cases not falling within the
authority of the lupon under these Katarungang Pambarangay Law and Rules are filed may, at any time
before trial, motu proprio refer the case to the lupon concerned for amicable settlement.
SECTION 3. Venue. The place of settlement shall be subject to the following rules:
(a) Where the parties reside in the same barangay, the dispute shall be brought for settlement in said
barangay;
(b) Where the parties reside in different barangays in the same city or municipality, the dispute shall be
settled in the barangay where the respondent or any one of the respondents actually resides, at the
choice of the complainant;
(c) Dispute involving real property shall be brought for settlement in the barangay where the real
property or larger portion thereof is situated;

(d) Disputes arising at the workplace where the contending parties are employed or at the institution
where such parties are enrolled for study, shall be brought in the barangay where such workplace or
institution is located;
(e) Any objection relating to venue shall be raised before the Punong Barangay during the mediation
proceedings before him. Failure to do so shall be deemed a waiver of such objection;
(f) Any legal question which may confront the Punong Barangay in resolving objections to venue herein
referred to may be submitted to the Secretary of Justice, or his duly designated representative, whose
ruling thereon shall be binding. brando
(Emphasis added)
Indeed, these provisions, which are also found in P.D. No. 1508, have already been authoritatively
interpreted by this Court, and the duty of respondent judge was to follow the rulings of this Court. Her
insistence on her own interpretation of the law can only be due either to an ignorance of this Courts
ruling or to an utter disregard thereof. We choose to believe that her failure to apply our rulings to the
case before her was simply due to gross ignorance which, nevertheless, is inexcusable. In accordance
with the ruling in Ting v. Atal,[7] in which a judge who was similarly found guilty of gross ignorance of
the law was fined P2,000.00, respondent judge should likewise be fined the same amount.
WHEREFORE, respondent is hereby found guilty of gross ignorance of the law and is hereby ordered to
pay a FINE of TWO THOUSAND (P2,000.00) PESOS with a WARNING that repetition of the same or
similar acts will be dealt with more severely.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, Buena, and De Leon, Jr., JJ., concur. micks
[1] 117 SCRA 613 (1982).
[2] Id., at 615-617.
[3] E.g., Peaflor v. Panis, 117 SCRA 953 (1982); Agbayani v. Belen, 145 SCRA 635 (1986).
[4] 280 SCRA 579 (1997).
[5] 271 SCRA 328 (1997).
[6] 281 SCRA 415 (1997).
[7] 231 SCRA 80 (1994).