G.R. No. L-48068 - Gonzales vs. Lopez

Antonio S. Carag, the decedent, owned a parcel of land encompassing roughly 6,991,921 square meters (approximately 700 hectares) in Tuguegarao, Cagayan, as evidenced by TCT No. 1278.
After his death (date undetermined), a Sp. Proc. No. 1273 was instituted in the Court of First Instance of Cagayan for the settlement of his estate.
The decedent had six children – Amparo, Rosario, Consuelo, Nicanor, Domingo, and Leonor (with Leonor having predeceased, leaving behind her own children and representatives).
Several heirs were involved, including those represented by Antonio Canillas, Dolores Canillas, and Helena T. Vda. de Canillas for the deceased Leonor, with other children or grandchildren not signing the subdivision contract.

On May 3, 1962, a contract was executed converting 100 hectares of the decedent’s land into a residential subdivision.
The contract designated three parties as the “Subdivisioners”: Eusebio M. Lopez, Soledad L. Dolor, and Eusebio Lopez, Jr.
Among the signatories from the decedent’s side were Amparo, Rosario, Consuelo, Nicanor, Domingo, and, representing deceased Leonor, selected family members.
Not all heirs, particularly other children and possibly some grandchildren of Leonor, were parties to or had signed the subdivision contract.

On September 19, 1971, Plaintiff Heirs Amparo and Rosario filed suit in Civil Case No. 151160 before the Court of First Instance of Rizal, seeking the annulment of the subdivision contract.
The grounds for annulment included:

The complaint was amended on September 28, 1972, to include all other heirs (Defendant Heirs) as parties to the case.

The Defendant Heirs moved to dismiss the case primarily on the grounds of no earnest compromise being attempted among family members and improper venue.
On June 6, 1975, the Court of First Instance of Rizal granted the motion to dismiss, dismissing the case chiefly on the venue and compromise issues without assessing testimonial or documentary evidence.

Error in holding that the absence of earnest efforts for a compromise among family members justified dismissal.
Error in finding that venue was improperly laid, as required by the subdivision contract.

Whether the trial court erred in dismissing the complaint for the lack of earnest efforts toward a compromise between family members despite the involvement of non-family parties (the Subdivisioners designated as “Capitalists”).

Consideration was given to whether the mandate for family members to attempt a compromise under Section 1(j), Rule 16, should apply when non-family parties are also involved.

Whether the trial court erred in determining that venue was improperly laid in the Court of First Instance of Rizal, given that:

The subdivision contract contains a clause (Section 20) specifying that all suits related to the contract must be filed in the Court of First Instance of the Province of Cagayan.
The plaintiffs-appellants were signatories to the contract and alleged fraud, raising the question as to whether the contractual venue clause remains binding pending an annulment action.