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ADR Case Digests 2

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 powers of attorney5 both dated August 3, 2007 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 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
(3) checks and Mabuhay Electronics Company’s 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