Diu vs. Court of Appeals

Substantial compliance with the barangay conciliation requirement under Presidential Decree No. 1508 suffices, and the failure to constitute the Pangkat ng Tagapamayapa does not render the complaint dismissible where the parties had already confronted each other before the barangay chairman, no settlement was reached, and a Certification to File Action was issued. The conciliation procedure is not a jurisdictional requirement, and non-compliance therewith cannot affect the jurisdiction which the lower courts had already acquired over the subject matter and the defendants.

Petitioners Wilson and Dorcita Diu operated a store at Naval, Biliran, from which private respondent Patricia Pagba purchased merchandise on credit. The dispute arose from private respondents' failure to pay their indebtedness despite repeated demands. Presidential Decree No. 1508, the "Katarungang Pambarangay Law," required prior confrontation of the parties before the lupon chairman or the pangkat as a precondition to filing a complaint in court. The decree was later repealed by codification in the Local Government Code of 1991, which took effect on January 1, 1992, with Sections 410(b) and 412 substantially reproducing the former law's provisions.

Petitioners Wilson and Dorcita Diu operated a store at Naval, Biliran. On several occasions from January 8, 1988 up to April 18, 1989, private respondent Patricia Pagba purchased on credit various articles of merchandise from petitioners' store, all valued at P7,862.55, as evidenced by receipts of goods marked as Annexes "A" to "O." Private respondents failed to pay despite repeated demands.

Petitioners brought the matter before the Barangay Chairman of Naval, who set the case for hearing. Private respondents failed to appear at the first hearing. When the case was again set for hearing, the parties appeared but failed to reach an amicable settlement. Accordingly, the barangay chairman issued a Certification to File Action dated July 10, 1991, which stated that respondent Patricia Pagba admitted her indebtedness but refused to pay because, according to her, complainant had unsettled accounts with her husband. The certification was signed by Jhony C. Jerez as Lupon Pangkat Chairman and attested by Ireneo Docallos as Lupon/Pangkat Secretary.

Petitioners then filed their complaint for a sum of money before the Municipal Trial Court of Naval. Private respondents, in their Answer, admitted the indebtedness but interposed two counterclaims: one for P6,227.00 as alleged expenses for maintenance and repair of petitioners' boat, and another for P12,000.00 representing the cost of two tires which petitioners allegedly misappropriated. Private respondents also alleged that despite confrontations before the barangay chairman, petitioners refused to pay their just and valid obligations. Among their six affirmative defenses, each alleged in single short sentences, was that "the complaint states no cause of action," without any statement of the facts supporting such allegation. In paragraph 13 of their Answer, private respondents admitted the confrontations before the barangay chairman.

The MTC dismissed the complaint, ruling against the admissibility of the receipts for not having been properly identified in court, and held that the counterclaims had been settled by a compromise agreement approved on January 9, 1989 by the RTC in another action between the parties, Civil Case No. B-0719. On appeal, the RTC modified the decision, holding that the case fell under the Revised Rules on Summary Procedure, that formal offer and identification of the receipts were unnecessary, and that the receipts constituted evidence of indebtedness giving rise to the legal presumption of non-payment. The RTC ordered private respondent Patricia Pagba to pay P7,862.55 plus legal interest from July 1991, P1,000.00 as attorney's fees, and costs.

Private respondents appealed to the Court of Appeals, raising only two issues: whether the RTC erred in not making a factual finding of non-compliance with Presidential Decree No. 1508, and whether the RTC erred in not dismissing the appeal or case for non-compliance with the mandatory provisions of the decree. The CA set aside the RTC judgment, holding that since the barangay chairman's mediation efforts failed, the Pangkat ng Tagapamayapa should have been constituted, and that the failure to avail of the conciliation process rendered the complaint vulnerable to a timely motion to dismiss. Private respondents claimed the certification was "falsified" since no pangkat was constituted.

• Substantial Compliance: Petitioners argued that the confrontations before the Barangay Chairman satisfied the requirement of Presidential Decree No. 1508, notwithstanding the non-constitution of the pangkat, and that there was substantial compliance with the law.

• Estoppel: Petitioners invoked the doctrine in Tijam vs. Sibonghanoy, arguing that private respondents, having invoked the jurisdiction of the lower courts by filing their Answer and participating in the proceedings, were in estoppel to belatedly assail such jurisdiction.

• Waiver of Defense: Petitioners maintained that private respondents failed to specifically allege non-compliance with the barangay conciliation procedure in their Answer, constituting a waiver of that defense.

• Mandatory Conciliation: Private respondents argued that the Certification to File Action was "falsified" since no pangkat was constituted, and that petitioners had not complied with the mandatory provision of Presidential Decree No. 1508 on compulsory arbitration.

• Timely Objection: Private respondents contended that their allegation in their Answer that "the complaint states no cause of action" constituted a timely objection to the complaint for non-compliance with the conciliation requirement.

• Compliance with Barangay Conciliation: Whether the confrontations before the Barangay Chairman of Naval satisfied the requirement of Presidential Decree No. 1508, notwithstanding the non-constitution of the Pangkat ng Tagapamayapa.

• Estoppel: Whether private respondents were in estoppel to assail the jurisdiction of the lower courts for alleged non-compliance with Presidential Decree No. 1508.

• Waiver of Defense: Whether private respondents' failure to specifically allege non-compliance with the barangay conciliation procedure in their Answer constituted a waiver of that defense.

• Compliance with Barangay Conciliation: Yes. There was substantial compliance with Presidential Decree No. 1508, which does not require strict technical compliance with its procedural requirements. The parties' confrontations before the barangay chairman, which proved futile, sufficed, especially since Section 412 of the Local Government Code provides that confrontation before the lupon chairman OR the pangkat is sufficient compliance.

• Estoppel: Yes. Private respondents were clearly in estoppel to assail the jurisdiction of the two lower courts, having invoked that jurisdiction by filing their Answer and seeking affirmative relief, and having participated in the trial.

• Waiver of Defense: Yes. The failure of private respondents to specifically allege that there was no compliance with the barangay conciliation procedure constituted a waiver of that defense, since they only cryptically alleged lack of cause of action without supporting facts.

• Compliance with Barangay Conciliation: The Court noted that Presidential Decree No. 1508 was repealed by codification in the Local Government Code of 1991, which took effect on January 1, 1992, but that Sections 4 and 6 of the former law were substantially reproduced in Sections 410(b) and 412 of the latter. Section 412 provides that no complaint shall be filed in court "unless there has been a confrontation of the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon or pangkat chairman." While no pangkat was constituted, it was not denied that the parties met at the office of the barangay chairman for possible settlement, and the efforts proved futile. The Court held that Section 410(b), which mandates the constitution of the pangkat upon the chairman's failure in mediation, should be construed together with Section 412, as well as the circumstances peculiar to the case. Significantly, the barangay chairman or punong barangay is himself the chairman of the lupon under the Local Government Code. The Court found that the failure of the parties to appear before the pangkat caused no prejudice to private respondents, considering that they already refused conciliation before the barangay chairman, and their insistence on a meeting before the pangkat was merely a ploy for further delay.

• Estoppel: The Court applied the doctrine in Tijam vs. Sibonghanoy, holding that private respondents, having invoked the jurisdiction of the lower courts by filing their Answer and seeking affirmative relief, and having participated in the trial, could not be allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the courts to which they had voluntarily submitted themselves. The Court also noted that procedural laws are retrospective in that sense, citing People vs. Sumilang and Liam Law vs. Olympic Sawmill Co. The Court observed that private respondents did not at all assail the propriety or correctness of the RTC judgment holding them liable for the sum of money involved, and that their insistence on technical compliance with the barangay conciliation process was a dilatory maneuver.

• Waiver of Defense: The Court rejected the CA's finding that private respondents' allegation of lack of cause of action constituted a timely objection. The Court observed that said defense was only one of six affirmative defenses cryptically alleged in single short sentences, running "the implausible gamut from supposed defects in parties to res judicata and up to capacity to sue, without any statement of the facts on which they would rely to support such drivel." The Court held that the failure to specifically allege non-compliance with the barangay conciliation procedure constituted a waiver of that defense, especially since private respondents admitted the confrontations before the barangay chairman in paragraph 13 of their Answer. The Court further held that the conciliation procedure under Presidential Decree No. 1508 is not a jurisdictional requirement, and non-compliance therewith cannot affect the jurisdiction which the lower courts had already acquired over the subject matter and the defendants, citing Agbayani vs. Belen and Fernandez vs. Militante.

• Substantial Compliance with Barangay Conciliation — The requirement of prior confrontation before the lupon chairman or the pangkat under Presidential Decree No. 1508 and the Local Government Code does not demand strict technical compliance. Where the parties confronted each other before the barangay chairman, no settlement was reached, and a Certification to File Action was issued, there is substantial compliance even if the pangkat was not constituted. The Court applied this doctrine to uphold the validity of the conciliation proceedings despite the procedural irregularity.

• Estoppel by Invocation of Jurisdiction — A party who invokes the jurisdiction of a court by filing an answer and seeking affirmative relief, and who participates in the trial, cannot belatedly attack the jurisdiction of that court. The Court applied the doctrine from Tijam vs. Sibonghanoy to bar private respondents from assailing the lower courts' jurisdiction for alleged non-compliance with the conciliation requirement.

• Waiver of the Defense of Non-Compliance with Conciliation — The defense of non-compliance with the barangay conciliation procedure must be specifically pleaded in the answer; a general and cryptic allegation of lack of cause of action, without supporting facts, does not suffice. Failure to specifically raise the defense constitutes a waiver thereof.

• Non-Jurisdictional Character of Conciliation Requirement — The conciliation procedure under Presidential Decree No. 1508 is not a jurisdictional requirement, and non-compliance therewith cannot affect the jurisdiction which the lower courts had already acquired over the subject matter and the defendants.

• "While no pangkat was constituted, it is not denied that the parties met at the office of the barangay chairman for possible settlement. The efforts of the barangay chairman, however, proved futile as no agreement was reached. Although no pangkat was formed, we believe that there was substantial compliance with the law." — This passage articulates the core ratio decidendi: substantial compliance with the conciliation requirement suffices despite the procedural lapse of not constituting the pangkat.

• "The failure of private respondents to specifically allege that there was no compliance with the barangay conciliation procedure constitutes a waiver of that defense." — This passage establishes the rule that the defense of non-compliance with conciliation must be specifically pleaded, and its omission constitutes waiver.

• "Also, the conciliation procedure under Presidential Decree No. 1508 is not a jurisdictional requirement and non-compliance therewith cannot affect the jurisdiction which the lower courts had already acquired over the subject matter and private respondents as defendants therein." — This passage defines the non-jurisdictional character of the conciliation requirement, a frequently cited principle in subsequent jurisprudence.

• "To indulge private respondents in their stratagem will not only result in a circuitous procedure but will necessarily entail undue and further delay and injustice." — This passage reflects the Court's condemnation of the dilatory maneuver and its policy against allowing technicalities to obstruct the speedy dispensation of justice.

• Tijam vs. Sibonghanoy, L-21450, April 15, 1968, 23 SCRA 29 — Controlling precedent on estoppel; the Court applied its doctrine that a party who invokes a court's jurisdiction and seeks affirmative relief cannot belatedly attack that jurisdiction.

• Ramos vs. Court of Appeals, 174 SCRA 690 — Distinguished; the CA relied on this case for the proposition that the Punong Barangay has no right to dispense with referral to the pangkat, but the Court found the factual circumstances different.

• Bejer vs. Court of Appeals, 169 SCRA 566 — Distinguished; cited by the CA for the rule that failure to avail of conciliation renders the complaint vulnerable to a timely motion to dismiss, but the Court found the defense was not timely raised.

• People vs. Sumilang, 77 Phil. 764 (1946) — Cited for the principle that procedural laws are retrospective in that they apply to actions pending and undetermined at the time of their passage.

• Liam Law vs. Olympic Sawmill Co., L-30771, May 28, 1984, 129 SCRA 439 — Cited for the same principle on the retroactive application of procedural laws.

• Agbayani vs. Belen, G.R. No. 65629, November 24, 1986, 145 SCRA 635 — Cited for the proposition that the conciliation procedure is not a jurisdictional requirement.

• Fernandez vs. Militante, G.R. No. 59801, May 31, 1988, 161 SCRA 695 — Cited for the same proposition that non-compliance with the conciliation procedure does not affect jurisdiction.

• Section 4, Presidential Decree No. 1508 — The provision on the procedure for amicable settlement before the lupon chairman; the Court found it substantially reproduced in Section 410(b) of the Local Government Code.

• Section 6, Presidential Decree No. 1508 — The provision on conciliation as a precondition to filing a complaint in court; the Court found it substantially reproduced in Section 412 of the Local Government Code.

• Section 410(b), Local Government Code (R.A. No. 7160) — Provides that if the lupon chairman fails in his mediation effort within fifteen days from the first meeting of the parties, he shall set a date for the constitution of the pangkat; the Court construed this together with Section 412.

• Section 412, Local Government Code (R.A. No. 7160) — Provides that no complaint shall be filed in court unless there has been a confrontation of the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary; the Court relied on the disjunctive "or" to support substantial compliance.

• Section 399, Local Government Code (R.A. No. 7160) — Creates the lupong tagapamayapa composed of the punong barangay as chairman and ten to twenty members; cited to show that the barangay chairman is himself the chairman of the lupon.

• Section 22, Batas Pambansa Blg. 129 — The provision governing appeals from the MTC to the RTC; the procedural basis for the RTC's appellate jurisdiction in this case.

Narvasa, C.J., Puno, Mendoza and Francisco, JJ., concurred.