Pang-et v. Manacnes-Dao-as
REITERATIONFacts
The Antecedents: This case originated from an action for recovery of possession of real property filed by petitioner Rosaria Lupitan Pang-et against the spouses Leoncio and Florentina Manacnes, predecessors-in-interest of respondent Catherine Manacnes-Dao-as. The dispute concerned a parcel of land located in Sitio Abatan, Barrio Dagdag, Sagada. Procedural History: The case was initially filed before the Municipal Circuit Trial Court (MCTC) of Besao-Sagada. During pre-trial, the parties agreed to refer the matter to the Barangay Lupon for arbitration. The MCTC suspended proceedings and remanded the case to the Lupon. After the Lupon issued a Certification to File Action due to the Manacnes spouses' refusal to arbitrate, the MCTC ordered the Lupon to render an arbitration award. The Lupon issued an award favoring the petitioner, which the respondent's predecessor repudiated. The MCTC initially denied the repudiation, deeming the award final, and ordered its execution. However, the MCTC later dismissed the petitioner's action for enforcement of the arbitration award, finding the agreement and award void. The Regional Trial Court (RTC) reversed the MCTC's dismissal, remanding the case for further proceedings. Subsequently, the Court of Appeals (CA) reversed the RTC's decision, reinstating the MCTC's dismissal and finding the arbitration agreement and award void. The Petition: Petitioner Rosaria Lupitan Pang-et filed this Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Court of Appeals' Decision. Petitioner argues that the CA overlooked material facts, specifically that the original parties, through their counsels, mutually agreed to submit the case for arbitration. Petitioner contends that lawyers' representations during pre-trial bind their clients and that the Manacnes spouses should have raised their opposition earlier. The petitioner maintains that the parties are bound by the initial agreement to seek an amicable settlement through arbitration.
Issue(s)
Whether the parties are bound by their counsels' agreement during pre-trial to submit the case for arbitration. Whether the spouses Manacnes are estopped from questioning the validity of the Agreement for Arbitration and the Arbitration Award. Whether the Agreement for Arbitration and Arbitration Award are void for violating the Katarungang Pambarangay Law.
Ruling
The Supreme Court denied the petition and affirmed the Court of Appeals Decision. The Court ordered the MCTC to proceed with the trial of Civil Case No. 83 for Recovery of Possession of Real Property.
Ratio Decidendi
On the issue of whether parties are bound by their counsels' agreement to submit to arbitration: The Court clarified that the agreement made by the counsels during pre-trial was for the remand of the case to the Lupon for conciliation proceedings, not for an actual amicable settlement or arbitration. While parties are compelled to appear before the Lupon for confrontation, they are not compelled to enter into an amicable settlement or sign an agreement to arbitrate. The presence of the spouses Manacnes during the initial hearing before the Lupon was their acquiescence to the MCTC's order for conciliation, not to arbitration. Their subsequent refusal to sign the Agreement for Arbitration meant they did not submit to arbitration. On the issue of estoppel: The Court held that estoppel may not be applied against the Manacnes spouses because their defense is against a null and void act. The principle that an action or defense against a void act is imprescriptible applies. Since the spouses Manacnes refused to sign the Agreement for Arbitration, they never became privy to any agreement submitting the case for arbitration. Therefore, they cannot be bound by the Agreement for Arbitration or the ensuing arbitration award. The Court agreed with the MCTC that the agreement to arbitrate was null and void. On the issue of the validity of the Agreement for Arbitration and Arbitration Award: The Court found that the Agreement for Arbitration was void because it was not personally signed by the spouses Manacnes, violating Sections 413 and 415 of RA 7160, which mandate personal appearance and prohibit representatives except for minors and incompetents. Furthermore, the Arbitration Award was also void because it was written in English, a language not understood by the parties, violating Section 411 of RA 7160 and its implementing rules, which require settlements to be in a language or dialect known to the parties. The Court emphasized that the object of the Katarungang Pambarangay Law is the amicable settlement of disputes through voluntary and free agreement. Absent this voluntary submission, no binding settlement can be arrived at. The MCTC should have continued with the original case for recovery of possession once it was clear that the spouses Manacnes refused to submit to arbitration.
Main Doctrine
For an arbitration award under the Katarungang Pambarangay Law to be binding, there must be a voluntary and free agreement by the parties to submit their dispute to arbitration. If parties refuse to sign an agreement to arbitrate, they cannot be compelled to be bound by any subsequent arbitration award, and the principle of estoppel does not apply against them.