G.R. No. 115213 , December 19, 1995
Wilson Diu and Dorcita Diu, petitioners, vs. Court of Appeals, Peter Lyndon Bushnell and Patricia Pagba, respondents.

FACTS

Petitioners Wilson and Dorcita Diu filed a collection case against respondent Patricia Pagba before the Municipal Trial Court (MTC) of Naval, Biliran, to recover P7,862.55 for merchandise purchased on credit. Prior to filing, the parties underwent barangay conciliation but failed to reach a settlement, prompting the barangay chairman to issue a Certification to File Action. In their Answer, the respondents admitted the indebtedness but raised counterclaims. They also vaguely alleged that the complaint stated no cause of action but did not specifically plead non-compliance with the Katarungang Pambarangay Law (PD 1508).
The MTC dismissed the complaint on evidentiary grounds. On appeal, the Regional Trial Court (RTC) reversed the MTC and ruled in favor of the Diu spouses. The respondents then elevated the case to the Court of Appeals, arguing for the first time with specificity that the petitioners failed to comply with the mandatory conciliation under PD 1508. The Court of Appeals set aside the RTC decision, holding that there was no compliance with the barangay conciliation requirement and ordering dismissal without prejudice to refiling after proper compliance.

ISSUE

Whether the defense of non-compliance with the Katarungang Pambarangay conciliation procedure was properly raised and can be used to nullify the proceedings.

RULING

The Supreme Court granted the petition and reinstated the RTC decision. The Court held that the conciliation procedure under PD 1508 is not a jurisdictional requirement but a condition precedent. Non-compliance does not affect the court’s acquired jurisdiction over the subject matter and the parties.
Crucially, the defense of non-compliance was deemed waived. In their Answer before the MTC, the respondents failed to allege this defense specifically and with supporting facts as required by the rules of pleading. A general allegation that the complaint states no cause of action is insufficient. By voluntarily submitting to the court’s jurisdiction, actively participating in the trial, and raising the defense only belatedly on appeal, the respondents are estopped from challenging the proceedings on this ground. The law aims to promote amicable settlement but cannot be used as a technical trap to defeat substantial justice, especially when the party invoking it had admitted in their pleadings that confrontations before the barangay chairman had occurred.