On challenge via Petition for Review on Certiorari is the February 10, 2003 Order of the Regional Trial Court (RTC) of Isabela, Branch 23 at Roxas dismissing, on motion of herein respondent Marilou M. Pascual, the complaint filed against her by her brother-herein petitioner Dante M. Pascual, represented by his attorney-in-fact Reymel R. Sagario (Sagario), for non-compliance with the conciliation provision-pre condition to filing of complaint in court under R.A. 7160 (the Local Government Code).

Petitioner, a permanent resident of the United States of America, appointed Sagario as his attorney-in-fact by a Special Power of Attorney (SPA) dated April 10, 2002:

1. To file a case for the cancellation of Transfer Certificate of Title No. T-271656 issued in the name of Marilou M. Pascual as well as the Deed of Sale of Registered Land (Dec. No. 639;  Page No. 52;  Book No. XXI;  Series of 1994) and/or Reconveyance at the appropriate court;
   
   
2. To collect the monthly rentals from the tenant;
   
   
3. To enter into amicable settlement with Marilou M. Pascual or any other mode of payment/and/or dispute resolution;
   
   
4. To execute and sign any and all papers, contracts/documents which may be necessary relative to the above acts.
   

x x x^[1]

Pursuant to the SPA, Sagario filed on October 14, 2002 before the Isabela RTC at Roxas a complaint entitled "Dante M. Pascual, plaintiff v. Marilou M. Pascual and Register of Deeds, Defendants," docketed as Civil Case No. Br. 23-713-02, for Annulment of Transfer Certificate of Title No. T-271657 of Isabela and Deed of Absolute Sale of Registered Land and/or Reconveyance with Damages.^[2]

To the Complaint the defendant-herein respondent Marilou M. Pascual filed a Motion to Dismiss^[3] on two grounds one of which was non-compliance with the requirement under Section 412 of the Local Government Code,^[4] she contending that there is no showing that the dispute was referred to the barangay court before the case was filed in court.

By the assailed Order of February 10, 2003,^[5] Branch 23 of the Isabela RTC at Roxas granted respondent's Motion to Dismiss in this wise:

. . . RA 7160 repealing P.D. 1508 otherwise known as the Revised Katarungang Pambarangay provides under Section 409 "All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated."  Hence, the reliance of the plaintiff on Section 408 of R.A. 7160 is incorrect.  When real property or any interest therein is involved, the dispute shall be filed before the barangay where the property is located, regardless of the residence of the parties.  Besides, it is incorrect to say that the parties are not residents of the same place, Vira, Roxas, Isabela.  The Attorney-in-fact of the plaintiff in the person of Reymel R. Sagario is a resident of Vira, Roxas, Isabela, and he substitute (sic) Dante Pascual by virtue of said Special Power of Attorney.  Hence, said Attorney-in-fact should have brought the dispute before barangay Vira, Roxas, Isabela, where the property is located.  In the case of Royales vs. Intermediate Appellate Court 127 SCRA 470, "Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect the sufficiency of the plaintiff's cause of action and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity."^[6]  (Emphasis and underscoring supplied)

Petitioner's Motion for Reconsideration^[7] of the above-said order was denied by Order of March 24, 2003:^[8]

Consequently, the Court is [of] the opinion that the said Attorney-in-fact shall be deemed to be the real party in interest, reading from the tenor of the provisions of the Special Power of Attorney.  Being a real party in interest, the Attorney-in-fact is therefore obliged to bring this case first before the Barangay Court.  Sec. 3, Rule 3 of the Rules of Court provides that "Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest.

x x x

Being the real party in interest, the Attorney-in-fact may therefore bring the necessary complaint before the Lupon Tagapayapa and appear in person as if he is the owner of the land.^[9]  (Emphasis and underscoring supplied)

Hence, the present petition questioning "the palpable legal errors" of the RTC.

Petitioner argues that since he, not his attorney-in-fact Sagario, is the real party in interest, and since he actually resides abroad, the lupon would have no jurisdiction to pass upon the dispute involving real property, he citing Agbayani v. Belen.^[10]

Respondent submits, on the other hand, that Section 408, paragraph (f), of the Local Government Code, is qualified by paragraph (c) of Section 409 of the same Code the latter of which provides that "[a]ll disputes involving real property or any interest therein shall be brought in the barangay where the real property is located," hence, the use of the word "shall" makes it mandatory for the bringing of the dispute before the lupon.

That attorney-in-fact Sagario is a resident of the same barangay as that of hers, respondent argues in any event, brings the matter under the jurisdiction of the lupon, for Sagario, following Section 3 of Rule 3 of the 1997 Rules of Civil Procedure which provides:

Sec. 3.  Representative as parties.  -  Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest.  A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules.  An agent acting in his own name for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal,

being a substitute, becomes the real party-in-interest.

Respondent's submissions do not lie.

The pertinent provisions of the Local Government Code read:

SEC. 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:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five Thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) 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;  and

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice.

The court in which non-criminal cases not falling within the authority of the lupon under this Code are filed may, at any time before trial, motu proprio refer the case to the lupon concerned for amicable settlement.  (Emphasis supplied)

SEC. 409.  Venue.   (a)  Disputes between persons actually residing in the same barangay shall be brought for amicable settlement before the lupon of said barangay .

(b) Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant.

(c) All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated.

(d) Those arising at the workplace where the contending parties are employed or at the institution where such parties are enrolled for study shall be brought in the barangay where such workplace or institution is located.

Objections to venue shall be raised in the mediation proceedings before the punong barangay; otherwise, the same shall be deemed waived.  Any legal question which may confront the punong barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice or his duly designated representative whose ruling thereon shall be binding.  (Emphasis supplied)

In the 1982 case of Tavora v. Veloso,^[11] this Court held that where the parties are not actual residents in the same city or municipality or adjoining barangays, there is no requirement for them to submit their dispute to the lupon as provided for in Section 6 vis a vis Sections 2 and 3 of P.D. 1508 (Katarungang Pambarangay Law).

[B]y express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes where the parties are not actual residents of the same city or municipality, except where the barangays in which they actually reside adjoin each other.  (Underscoring supplied)

In the 2000 case of Vercide v. Hernandez,^[12] this Court, noting that the Tavora ruling, reiterated in other cases including the 1996 case of Agbayani^[13] cited by petitioner, was decided under the provisions of P.D. No. 1508 (Katarungang Pambarangay) Law which were, except for some modifications, echoed in Sections 408-409 of the Local Government Code which took effect on January 1, 1992, held that the Tavora ruling remained.

To construe the express statutory requirement of actual residency as applicable to the attorney-in-fact of the party-plaintiff, as contended by respondent, would abrogate the meaning of a "real party in interest" as defined in Section 2 of Rule 3^[14] of the 1997 Rules of Court vis a vis Section 3 of the same Rule which was earlier quoted but misread and misunderstood by respondent.

In fine, since the plaintiff-herein petitioner, the real party in interest, is not an actual resident of the barangay where the defendant-herein respondent resides, the local lupon has no jurisdiction over their dispute, hence, prior referral to it for conciliation is not a pre-condition to its filing in court.

The RTC thus erred in dismissing petitioner's complaint.

WHEREFORE, the petition is granted.  The assailed February 10, 2003 Order, as well as the March 24, 2003 Order denying reconsideration of the first, of Branch 23 of the Regional Trial Court of Isabela at Roxas is SET ASIDE.  Said court is accordingly directed to reinstate Civil Case No. 23-713-02 to its docket and take appropriate action thereon with dispatch.

SO ORDERED.

Panganiban, (Chairman), Corona, and Garcia, JJ., on leave.
Sandoval-Gutierrez, J., on leave.

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^[1] Original Records at 7.

^[2] Id. at 1.

^[3] Id. at 15-16.

^[4] 

Sec. 412.  Conciliation.  -  (a)  Pre-condition to filing of complaint in court.  -  No complaint, petition, action, or proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any other government office for adjudication, unless there has been a confrontation between 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 chairman or pangkat chairman or unless the settlement has been repudiated by the parties thereto.
(b) Where parties may go directly to court.  -  The parties may go directly to court in the following instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property, and support pendent lite;  and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities.  -  The customs and traditions of indigenous cultural communities shall be applied in settling disputes between members of the cultural communities.

^[5] Original Records at 23-24.

^[6] Ibid.

^[7] Id. at 25-31.

^[8] Id. at 35-36.

^[9] Ibid.

^[10] 145 SCRA 635 (1996).

^[11] 117 SCRA 613 (1982).

^[12] 330 SCRA 49 (2000).

^[13] Supra note 10.

^[14] SEC. 2.  Parties in interest.  -  A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.  Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.