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PHILIPPINE SUPREME
COURT
DECISIONS
MA. TERESA VIDAL,
LULU MARQUEZ,
G.R.
No.
156228
-versus- MA. TERESA O.
ESCUETA,
D E C I S I O N
CALLEJO, SR., J.:chanroblesvirtuallawlibrary This is a Petition for Review of the Decision[1] dated July 23, 2002 of the Court of Appeals in CA-G.R. SP NO. 68895 which affirmed the Decision[2] of the Regional Trial Court (RTC) of Mandaluyong City, Branch 208, which reversed and set aside the Decision[3] of the Metropolitan Trial Court of Mandaluyong City (MTC), Branch 60; and granted the motion for execution filed by private respondent Ma. Teresa O. Escueta in Civil Case No. 17520.chanrobles virtuallaw libraryred The petition at bar stemmed from the following antecedents:chanrobles virtual law library When Abelardo Escueta died intestate on December 3, 1994, he was survived by his widow Remedios Escueta and their six children, including Ma. Teresa O. Escueta and her brother Herman O. Escueta. Part of his estate was a parcel of land located at No. 14 Sierra Madre corner Kanlaon Streets, Barangay Highway Hills, Mandaluyong City, covered by Transfer Certificate of Title (TCT) No. (77083) – 27568, and the house thereon. The property was leased to Rainier Llanera, who sublet the same to 25 persons. The heirs executed an extra-judicial settlement of estate over the property. They also executed a special power of attorney authorizing Ma. Teresa Escueta to sell the said property.[4]chanrobles virtuallaw libraryred Sometime in 1999, Ma. Teresa Escueta, as a co-owner of the property, filed an ejectment case against Llanera and the sub-lessees before the Lupon of Barangay Highway Hills, docketed as Barangay Case No. 99-09.[5]chanrobles virtuallaw libraryred In the meantime, on April 15, 1999, the heirs of Abelardo Escueta executed a deed of conditional sale 6 over the property including the house thereon, to Mary Liza Santos for P13,300,000.00 payable as follows:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
The parties further agreed that:chanroblesvirtuallawlibrary
On May 5, 1999, Escueta and Llanera, and the sub-lessees, executed an "Amicable Settlement,"[9] where they agreed that (a) the owners of the property would no longer collect the rentals due from the respondents therein (lessee and sub-lessees) starting May 1999, with the concomitant obligation of the respondents to vacate the property on or before December 1999; (b) time was the essence of the agreement, and that consequently, if the lessee and sub-lessees fail or refuse to vacate the property on or before December 1999, the barangay chairman was authorized without any court order to cause the eviction and removal of all the respondents on the property.[10] The amicable settlement was attested by Pangkat Chairman Jose Acong. The parties did not repudiate the amicable settlement within ten days from the execution thereof. Neither did any of the parties file any petition to repudiate the settlement.chanrobles virtuallaw libraryred The vendees having paid the down payment and second installment of the price of the property, the vendors caused the cancellation on December 17, 1999, of TCT No. 27568 and the issuance of TCT No. 15324 to and under the names of the vendees Mary Liza Santos, Susana Lim and Johnny Lim.[11] However, Escueta and the other vendors had yet to receive the balance of the purchase price of P1,000,000.00 because the respondents were still in the property.cralaw:red Llanera vacated the leased premises. Later, twenty of the sub-lessees also vacated the property. By January 2000, five sub-lessees, namely, Ma. Teresa Vidal, Lulu Marquez, Marcelo Trinidad, Carlos Sobremonte,[12] and Jingkee Ang remained in the property, and requested Escueta for extensions to vacate the property. Escueta agreed, but despite the lapse of the extensions granted them, the five sub-lessees refused to vacate the property.chanrobles virtuallaw libraryred Escueta opted not to have the sub-lessees evicted through the Punong Barangay as provided for in the amicable settlement. Neither did she file a motion with the Punong Barangay for the enforcement of the settlement. Instead, she filed on May 12, 2000, a verified "Motion for Execution" against the recalcitrant sub-lessees with the MTC for the enforcement of the amicable settlement and the issuance of a writ of execution. The pleading was docketed as Civil Case No. 17520, with Teresa Escueta as plaintiff, and the sub-lessees as defendants.[13]chanrobles virtuallaw libraryred The defendants opposed the motion[14] alleging that they were inveigled into executing the amicable settlement despite the fact that they had not violated any of the terms and conditions of the verbal lease of the property; they were coerced and forced to enter into such amicable settlement as it was the only way of prolonging their stay in the leased premises; and that they had been paying faithfully and religiously the monthly rentals in advance.chanrobles virtuallaw libraryred They also contended that the plaintiff came to court with unclean hands, as the property had been sold by the co-owners thereof on June 8, 1999, without notifying them. The real parties-in-interest as plaintiffs, would be the new owners of the property, and not the Escuetas. The defendants further asserted that the amicable settlement was not elevated to or approved by the MTC as required by Section 419 of the Local Government Code (LGC), nor approved by a competent court; hence, there was no judgment to enforce by a new motion for a writ of execution. As such, the plaintiff's motion was premature and procedurally improper. The defendants asserted that the plaintiff must first secure a certification to file action from the barangay and thereafter, file an action for ejectment against them as required by Section 417 of the LGC. The amicable settlement of the parties before the Lupon cannot be a substitute for an action for ejectment. Finally, they averred that they had been sub-lessees for more than ten years already; hence, had the right of first refusal under Section 6 of the Urban Land Reform Law (P.D. No. 1517). For her part, the plaintiff asserted that there having been no execution of the amicable settlement on or before November 6, 1999 by the Lupon, the settlement may now be enforced by action in the proper city or municipal court.chanrobles virtuallaw libraryred On February 22, 2001, the court issued an Order[15] denying the "Motion for Execution." The court held that the plaintiff was not the real party-in-interest as the subject property had already been sold and titled to Susana Lim, Johnny Lim and Mary Liza Santos. Only the vendees had the right to demand the ejectment of the defendants from the said property. The court further ruled that the defendants had the right of first refusal to purchase the property under Presidential Decree No. 1517. The MTC, however, did not rule on the issue of whether or not the plaintiff's motion for execution was premature.chanrobles virtuallaw libraryred Aggrieved, the plaintiff, now the appellant, appealed the order to the RTC where she contended that:chanrobles virtual law library
On August 31, 2001, the RTC rendered a decision holding that the plaintiff-appellant was still the owner of the property when the ejectment case was filed in the office of the barangay captain, and, as such, was the real party-in-interest as the plaintiff in the MTC. Moreover, under the deed of conditional sale between her and the buyers, it was stipulated therein that the purchase price of P1,000,000.00 would be delivered to the vendors only "upon the vacation of all the occupants of the subject property within six (6) months from date hereof" She was duty-bound to cause the eviction of the defendant from the property; hence, the appellant, as a co-owner, had a substantial interest in the property. The MTC further held that the sale, having been executed while the appellant's complaint was pending with the Lupon, the action in the MTC may be continued by the plaintiff-appellant.chanrobles virtuallaw libraryred As to the right of first refusal being asserted by the appellees, the court ruled that there was no showing that the land leased had been proclaimed to be within a specific Urban Land Reform Zone. In fact, the Housing and Land Use Regulatory Board had certified that the subject property was outside the area for priority development; thus, the appellees may not claim that they had been deprived of their preemptive right when no such right existed in the first place. The court did not rule on the third and fourth issues on the ground that the said issues were never raised by the parties. The decretal portion of the RTC decision reads as follows:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
A petition for review under Rule 42 was filed with the Court of Appeals by three of the appellees, now petitioners Ma. Teresa Vidal, Lulu Marquez and Carlos Sobremonte. The court, however, dismissed the petition on (1) procedural grounds, and (2) for lack of merit.[18]chanrobles virtuallaw libraryred On procedural grounds, the CA ruled that the petitioners failed to indicate the specific material dates, showing that their petition was filed on time as required by the rules, and in declaring that they failed to justify their failure to do so.chanrobles virtuallaw libraryred On the merits of the petition, the appellate court upheld the ruling of the RTC. The decretal portion of the decision of the CA reads:chanrobles virtual law library
In their petition at bar, the petitioners assert that the CA erred as follows:chanroblesvirtuallawlibrary
The petition is bereft of merit. On the procedural issue, the CA dismissed the petition before it for the petitioners' failure to comply with Section 2, par. 1, Rule 42 of the 1997 Rules of Civil Procedure.[20] The CA ratiocinated that there was no justification for a relaxation of the Rules, thus:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
The petitioners aver in this case that the failure of their counsel to include the material dates in their petition with the CA was, as stated in their Amended Manifestation, because the said counsel was suffering from a slight heart attack. The Court finds the petitioners' pretext flimsy. If the petitioners' counsel was able to prepare their petition despite her condition, there was no valid reason why she failed to include the material dates required under the Rules of Court. Besides, the petitioners stated in their petition that they had appended a copy of their Amended Manifestation, but failed to do so. If the rules were to be applied strictly, the CA could not be faulted for dismissing the petition.chanrobles virtuallaw libraryred However, in order to promote their objective of securing a just, speedy and inexpensive dispensation of every action and proceedings, the Rules are to be liberally construed.[22] Rules of procedure are intended to promote, not to defeat substantial justice and, therefore, should not be applied in a very rigid and technical sense. This Court ruled in Buenaflor vs. Court of Appeals, et al.[23] that appeal is an essential part of our judicial system and trial courts and the Court of Appeals are advised to proceed with caution so as not to deprive a party of the right to appeal and that every party litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, free from the constraints of technicalities. The Court has given due course to petitions where to do so would serve the demands of substantial justice and in the exercise of its equity jurisdiction.[24] In this case, the Court opts to apply the rules liberally to enable it to delve into and resolve the cogent substantial issues posed by the petitioners.chanrobles virtuallaw libraryred We agree with the contention of the petitioners that under Section 416 of the LGC, the amicable settlement executed by the parties before the Lupon on the arbitration award has the force and effect of a final judgment of a court upon the expiration of ten (10) days from the date thereof, unless the settlement is repudiated within the period therefor, where the consent is vitiated by force, violence or intimidation, or a petition to nullify the award is filed before the proper city or municipal court.[25] The repudiation of the settlement shall be sufficient basis for the issuance of a certification to file a complaint.[26] We also agree that the Secretary of the Lupon is mandated to transmit the settlement to the appropriate city or municipal court within the time frame under Section 418 of the LGC and to furnish the parties and the Lupon Chairman with copies thereof.[27] The amicable settlement which is not repudiated within the period therefor may be enforced by execution by the Lupon through the Punong Barangay within a time line of six months, and if the settlement is not so enforced by the Lupon after the lapse of the said period, it may be enforced only by an action in the proper city or municipal court as provided for in Section 417 of the LGC of 1991, as amended, which reads:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
Section 417 of the Local Government Code provides a mechanism for the enforcement of a settlement of the parties before the Lupon. It provides for a two-tiered mode of enforcement of an amicable settlement executed by the parties before the Lupon, namely, (a) by execution of the Punong Barangay which is quasi-judicial and summary in nature on mere motion of the party/parties entitled thereto;[28] and (b) by an action in regular form, which remedy is judicial. Under the first remedy, the proceedings are covered by the LGC and the Katarungang Pambarangay Implementing Rules and Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. Under the second 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.chanrobles virtuallaw libraryred Section 417 of the LGC grants a party a period of six months to enforce the amicable settlement by the Lupon through the Punong Barangay before such party may resort to filing an action with the MTC to enforce the settlement. The raison d' etre of the law is to afford the parties during the six-month time line, a simple, speedy and less expensive enforcement of their settlement before the Lupon.chanrobles virtuallaw libraryred The time line of six months is for the benefit not only of the complainant, but also of the respondent. Going by the plain words of Section 417 of the LGC, the time line of six months should be computed from the date of settlement. However, if applied to a particular case because of its peculiar circumstance, the computation of the time line from the date of the settlement may be arbitrary and unjust and contrary to the intent of the law. To illustrate: Under an amicable settlement made by the parties before the Lupon dated January 15, 2003, the respondents were obliged to vacate the subject property on or before September 15, 2003. If the time line of six months under Section 417 were to be strictly and literally followed, the complainant may enforce the settlement through the Lupon only up to July 15, 2003. But under the settlement, the respondent was not obliged to vacate the property on or before July 15, 2003; hence, the settlement cannot as yet be enforced. The settlement could be enforced only after September 15, 2003, when the respondent was obliged to vacate the property. By then, the six months under Section 417 shall have already elapsed. The complainant can no longer enforce the settlement through the Lupon, but had to enforce the same through an action in the MTC, in derogation of the objective of Section 417 of the LGC. The law should be construed and applied in such a way as to reflect the will of the legislature and attain its objective, and not to cause an injustice. As Justice Oliver Wendell Holmes aptly said, "courts are apt to err by sticking too closely to the words of the law where these words support a policy that goes beyond them. The Court should not defer to the latter that killeth but to the spirit that vivifieth."[29]chanrobles virtuallaw libraryred In light of the foregoing considerations, the time line in Section 417 should be construed to mean that if the obligation in the settlement to be enforced is due and demandable on the date of the settlement, the six-month period should be counted from the date of the settlement; otherwise, if the obligation to be enforced is due and demandable on a date other than the date of the settlement, the six-month period should be counted from the date the obligation becomes due and demandable.chanrobles virtuallaw libraryred Parenthetically, the Katarungang Pambarangay Implementing Rules and Regulations, Rule VII, Section 2 provides:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
By express provision of Section 417 of the LGC, an action for the enforcement of the settlement should be instituted in the proper municipal or city court. This is regardless of the nature of the complaint before the Lupon, and the relief prayed for therein. The venue for such actions is governed by Rule 4, Section 1 of the 1997 Rules of Civil Procedure, as amended. An action for the enforcement of a settlement is not one of those covered by the Rules on Summary Procedure in civil cases;[30] hence, the rules on regular procedure shall apply, as provided for in Section 1, Rule 5 of the Rules of Civil Procedure, as amended.[31] As to the requisite legal fees for the filing of an action in the first level court under Section 417 of the Local Government Code, indigents-litigants (a) whose gross income and that of their immediate family do not exceed ten thousand (P10,000.00) pesos a month if residing in Metro Manila, and five thousand (P5,000.00) pesos a month if residing outside Metro Manila, and (b) who do not own real property with an assessed value of more than fifty thousand (P50,000.00) pesos shall be exempt from the payment of legal fees. Section 18, Rule 141 of the Revised Rules of Court, as amended by A.M. No. 00-2-01-SC, is hereby further amended accordingly.chanrobles virtuallaw libraryred In this case, the parties executed their Amicable Settlement on May 5, 1999. However, the petitioners were obliged to vacate the property only in January 2000, or seven months after the date of the settlement; hence, the respondent may enforce the settlement through the Punong Barangay within six months from January 2000 or until June 2000, when the obligation of the petitioners to vacate the property became due. The respondent was precluded from enforcing the settlement via an action with the MTC before June 2000. However, the respondent filed on May 12, 2000 a motion for execution with the MTC and not with the Punong Barangay. Clearly, the respondent adopted the wrong remedy. Although the MTC denied the respondent's motion for a writ of execution, it was for a reason other than the impropriety of the remedy resorted to by the respondent. The RTC erred in granting the respondent's motion for a writ of execution, and the CA erred in denying the petitioners' petition for review.chanrobles virtuallaw libraryred Normally, the Court would remand the case to the Punong Barangay for further proceedings. However, the Court may resolve the issues posed by the petitioners, based on the pleadings of the parties to serve the ends of justice. It is an accepted rule of procedure for the Court to strive to settle the existing controversy in a single proceeding, leaving no root or branch to bear the seeds of future litigation.[32]chanrobles virtuallaw libraryred In this case, there is no question that the petitioners were obliged under the settlement to vacate the premises in January 2000. They refused, despite the extensions granted by the respondent, to allow their stay in the property. For the court to remand the case to the Lupon and require the respondent to refile her motion for execution with the Lupon would be an idle ceremony. It would only unduly prolong the petitioners' unlawful retention of the premises.[33] The RTC and the CA correctly ruled that the respondent is the real party-in-interest to enforce amicable settlement. Rule 3, Section 2 of the Rules of Court, as amended, reads:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
The party-in-interest applies not only to the plaintiff but also to the defendant. "Interest" within the meaning of the rules means material interest, an interest in issue and to be affected by the decree as distinguished from mere interest in the question involved, or a mere incidental interest.[34] A real party in interest is one who has a legal right.[35] Since a contract may be violated only by the parties thereto as against each other, in an action upon that contract, the real parties-in-interest, either as plaintiff or as defendant, must be parties to the said contract.[36] The action must be brought by the person who, by substantive law, possesses the right sought to be enforced.[37] In this case, the respondent was the party in the amicable settlement. She is the real party-in-interest to enforce the terms of the settlement because unless the petitioners vacate the property, the respondent and the other vendors should not be paid the balance of P1,000,000.00 of the purchase price of the property under the Deed of Conditional Sale. chanrobles virtuallaw libraryred The petitioners are estopped from assailing the amicable settlement on the ground of deceit and fraud. First. The petitioners failed to repudiate the settlement within the period therefor. Second. The petitioners were benefited by the amicable settlement. They were allowed to remain in the property without any rentals therefor until December 1998. They were even granted extensions to continue in possession of the property. It was only when the respondent filed the motion for execution that the petitioners alleged for the first time that the respondents deceived them into executing the amicable settlement.[38]chanrobles virtuallaw libraryred On the petitioners' claim that they were entitled to the right of first refusal under P.D. No. 1517, we agree with the disquisition of the trial court, as quoted by the Court of Appeals:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
Indeed, before a preemptive right under PD 1517 can be exercised, the disputed land should be situated in an area declared to be both an APD (Areas for Priority Development) and a ULRZ (Urban Land Reform Zones). Records show, and as not disputed by the petitioners, the disputed property is not covered by the aforementioned areas and zones.[39]chanrobles virtuallaw libraryred IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The petitioners and all those acting for and in their behalf are directed to vacate, at their own expense, the property covered by Transfer Certificate of Title No. 15324 of the Register of Deeds of Muntinlupa City and deliver possession of the property to the vendees Mary Liza Santos, Susana Lim and Johnny Lim. This is without prejudice to the right of the vendees to recover from the petitioners reasonable compensation for their possession of the property from January 2000 until such time that they vacate the property. Costs against the petitioners.cralaw:red SO ORDERED.chanrobles virtuallaw libraryred Davide, Jr., C.J.,
Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez,
Carpio, Austria-Martinez, Corona, Carpio Morales, Azcuna and Tinga, JJ., concur.chanrobles virtuallaw libraryred
Endnotes:chanroblesvirtuallawlibrary
[1]
Penned by Associate Justice Perlita J. Tria Tirona, with Associate
Justices
Buenaventura J. Guerrero and Rodrigo V. Cosico, concurring.chanrobles virtuallaw libraryred
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