JURISPRUDENCE ON KATARUNGANG PAMBARANGAY

The Revised Katarungang Pambarangay Law under R.A. 7160,

otherwise known as the local Government Code of 1991, effective on
January 1, 1992, and which repealed P.D. 1508, introduced substantial
changes not only in the authority granted to the Lupong
Tagapamayapa but also in the procedure to be observed in the
settlement of disputes within the authority of the Lupon.

In order that the laudable purpose of the law may not be subverted
and its effectiveness undermined by indiscriminate, improper and/or
premature issuance of certifications to file actions in court by the
Lupon or Pangkat Secretaries, attested by the Lupon/Pangkat
Chairmen, respectively, the following guidelines are hereby issued for
the information of trial court judges in cases brought before them
coming from the Barangays: 
xxx

The law on the katarungang pambarangay was originally governed by

P.D. No. 1508 which was enacted on 11 June 1978. However, the
Local Government Code of 1991, specifically Chapter 7, Title I, Book
III thereof, 13 revised the law on the katarungang pambarangay. As a
consequence of this revision, P.D. No. 1508 was expressly repealed
pursuant to Section 534(b) of the Code. Pertinent portions of Chapter
7, Title I, Book III thereof read as follows:

Sec. 408. Subject Matter for Amicable Settlement; Exception Thereto.

— The luppon 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 appropriate lupon;

(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 anytime before trial, motu
proprio refer the case to the lupon concerned for amicable settlement.
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.
Sec. 410. Procedure for Amicable Settlement. — xxx
(c) Suspension of prescriptive period of offenses. — While the dispute
is under mediation, conciliation, or arbitration, the prescriptive periods
for offenses and cause of action under existing laws shall be
interrupted upon filing of the complaint with the punong barangay. The
prescriptive periods shall resume upon receipt by the complainant of
the complaint or the certificate of repudiation or of the certification to
file action issued by the lupon or pangkat secretary: Provided,
however, That such interruption shall not exceed sixty (60) days from
the filing of the complaint with the punong barangay. Xxx
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
pendente lite; and (4) Where the action may otherwise be barred by
the statute of limitations. xxx

Sec. 415. Appearance of Parties in Person. — In all katarungang

pambarangay proceedings, the parties must appear in person without
the assistance of counsel or representative, except for minors and
incompetents who may be assisted by their next-of-kin who are not
lawyers.
xxx

Although Section 8(a), Rule VI of the Katarungang Pambarangay Rules

is a rule of procedure that may be given retroactive effect, the Court
chooses not to do so for the same would work injustice on the part of
Villacin.32 Under Section 7, Rule VI of the Rules Implementing
Presidential Decree No. 1508, the Lupon was already allowed to issue
a certification for Villacin to file his action in court in view of the
spouses Sia's option not to appear anymore before the Lupon. To
apply Section 8(a), Rule VI of the Katarungang Pambarangay Rules
retroactively in this case would unfairly result in the creation of new
obligations or the imposition of additional duties on the part of the
Lupon before they could validly issue a certificate to file action in favor
of Villacin. To require compliance with rules that did not exist at the
time of the filing of the complaint, necessitating the filing of the case
anew, will only cause further delay in the resolution of this case. 
xxx

A simple reading of Section 417 of the Local Government Code readily

discloses the two-tiered mode of enforcement of an amicable
settlement. The provision reads: Section 417. Execution.- The
amicable settlement or arbitration award may be enforced by
execution by the lupon within six (6) months from the date of the
settlement. After the lapse of such time, the settlement may be
enforced by action in the appropriate city or municipal court.

Under this provision, an amicable settlement or arbitration award that

is not repudiated within a period of ten (10) days from the settlement
may be enforced by: first, execution by the Lupon within six (6)
months from the date of the settlement; or second, by an action in the
appropriate city or municipal trial court if more than six (6) months
from the date of settlement has already elapsed.

Under the first mode of enforcement, the execution of an amicable

settlement could be done on mere motion of the party entitled thereto
before the Punong Barangay.10 The proceedings in this case are
summary in nature and are governed by the Local Government Code
and the Katarungang Pambarangay Implementing Rules and
Regulations.

The second mode of enforcement, on the other hand, is judicial in

nature and could only be resortedto through the institution of an
action in a regular form before the proper City/Municipal Trial Court.11
The proceedings shall be governed by the provisions of the Rules of
Court. Indisputably, Angelita chose to enforce the kasunduan under
the second mode and filed a motion for execution, which was docketed
as Special Proceedings No. 45-99. The question for our resolution is:
Whether the MCTC, through Angelita’s motion for execution, is
expressly authorized to enforce the kasunduan under Section 417 of
the Local Government Code?

The Court rules in the affirmative.

It is undisputed that what Angelita filed before the MCTC was

captioned "motion for execution," rather than a petition/complaint for
execution. A perusal of the motion for execution, however, shows that
it contains the material requirements of an initiatory action.
xxx

At this juncture, it must be stressed that the object of the

Katarungang Pambarangay Law is the amicable settlement of disputes
through conciliation proceedings voluntarily and freely entered into by
the parties.15 Through this mechanism, the parties are encouraged to
settle their disputes without enduring the rigors of court litigation.
Nonetheless, the disputing parties are not compelled to settle their
controversy during the barangay proceedings before the Lupon or the
Pangkat, as they are free to instead find recourse in the courts16 in
the event that no true compromise is reached.

The key in achieving the objectives of an effective amicable settlement

under the Katarungang Pambarangay Law is the free and voluntary
agreement of the parties to submit the dispute for adjudication either
by the Lupon or the Pangkat, whose award or decision shall be binding
upon them with the force and effect of a final judgment of a court.17
Absent this voluntary submission by the parties to submit their dispute
to arbitration under the Katarungang Pambarangay Law, there cannot
be a binding settlement arrived at effectively resolving the case.
Hence, we fail to see why the MCTC further remanded the case to the
Lupon ng Tagapamayapa and insisted that the arbitration proceedings
continue, despite the clear showing that the spouses Manacnes refused
to submit the controversy for arbitration.

It would seem from the Order of the MCTC, which again remanded the
case for arbitration to the Lupon ng Tagapamayapa, that it is
compulsory on the part of the parties to submit the case for arbitration
until an arbitration award is rendered by the Lupon. This, to our
minds, is contrary to the very nature of the proceedings under the
Katarungang Pambarangay Law which espouses the principle of
voluntary acquiescence of the disputing parties to amicable
settlement.

What is compulsory under the Katarungang Pambarangay Law is that

there be a confrontation between the parties before the Lupon
Chairman or the Pangkat and that a certification be issued that no
conciliation or settlement has been reached, as attested to by the
Lupon or Pangkat Chairman, before a case falling within the authority
of the Lupon may be instituted in court or any other government office
for adjudication. 18 In other words, the only necessary pre-condition
before any case falling within the authority of the Lupon or the
Pangkat may be filed before a court is that there has been personal
confrontation between the parties but despite earnest efforts to
conciliate, there was a failure to amicably settle the dispute. It should
be emphasized that while the spouses Manacnes appeared before the
Lupon during the initial hearing for the conciliation proceedings, they
refused to sign the Agreement for Arbitration form, which would have
signified their consent to submit the case for arbitration. Therefore,
upon certification by the Lupon ng Tagapamayapa that the
confrontation before the Pangkat failed because the spouses Manacnes
refused to submit the case for arbitration and insisted that the case
should go to court, the MCTC should have continued with the
proceedings in the case for recovery of possession which it suspended
in order to give way for the possible amicable resolution of the case
through arbitration before the Lupon ng Tagapamayapa.
As reflected in Section 413 of the Revised Katarungang Pambarangay
Law, in order that a party may be bound by an arbitration award, said
party must have agreed in writing that they shall abide by the
arbitration award of the Lupon or the Pangkat. Like in any other
contract, parties who have not signed an agreement to arbitrate will
not be bound by said agreement since it is axiomatic that a contract
cannot be binding upon and cannot be enforced against one who is not
a party to it.19 In view of the fact that upon verification by the
Pangkat Chairman, in order to settle the issue of whether or not they
intend to submit the matter for arbitration, the spouses Manacnes
refused to affix their signature or thumb mark on the Agreement for
Arbitration Form, the Manacnes spouses cannot be bound by the
Agreement for Arbitration and the ensuing arbitration award since they
never became privy to any agreement submitting the case for
arbitration by the Pangkat.

xxx

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
Agbayani13 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 314 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. 

xxx

Thus it is very clear from the Rules that the willful refusal or failure to
appear on the part of respondent is sufficient basis for the complainant
present to be given a certification to file action. The issuance of a
certification to file action means that the complainant may already
bring his case to the court or other government office for adjudication.

Section 4[b] of PD No. 1508 likewise provides that if the Punong

Barangay fails in his mediation efforts within fifteen [15] days from the
first meeting of the parties, he shall forthwith set the date for the
constitution of the Pangkat. However, such referral to the Pangkat is
mandatory only in those cases where both parties have submitted
themselves to the Lupon for conciliation and conciliation has failed.

In instances where one party fails to appear for no justifiable reason,

convening the Pangkat as a necessary second step will serve no useful
purpose. It will accomplish nothing in view of a party's unwillingness,
as reflected in his unjustified absence, to settle the dispute outside the
regular courts. In that case, the only feasible alternative for the Lupon
is to issue the certification allowing complainant to bring the
controversy to court.

It is evident that the respondents have not come to court with clean
hands. The desired conciliation at the barangay level failed to
materialize due to their non-appearance. They should not be
subsequently allowed to frustrate petitioner's cause of action by
invoking that situation which they themselves created.
xxx

Section 407. Legal Advice on Matters Involving Questions of Law. -

The provincial, city legal officer or prosecutor or the municipal legal
officer shall render legal advice on matters involving questions of law
to the punong barangay or any lupon or pangkat member whenever
necessary in the exercise of his functions in the administration of the
katarungang pambarangay.
xxx

It is significant that the above-quoted circular embodying the directive

"to desist from receiving complaints, petitions, actions and
proceedings in cases falling within the authority of said Lupons," has
been addressed not only to judges of city and municipal courts, but
also to all the judges of the courts of first instance, circuit criminal
courts, juvenile and domestic courts and courts of agrarian relations,
now known as regional trial courts under B.P. No. 129. The said
circular was noted by president Ferdinand E. Marcos in a Letter of
Implementation, dated November 12, 1979, the first paragraph of
which reads as follows: "with the view to easing up the log-jam of
cases and solving the backlogs in the case of dockets of all
government offices involved in the investigation, trial and adjudication
of cases, it is hereby ordered that immediate implementation be made
by all government officials and offices concerned of the system of
amicably settling disputes at the barangay level as provided for in the
Katarungang Pambarangay Law [Presidential Decree No. 1508]."

Therefore, for the guidance of the bench and the bar, We now declare
that the conciliation process at the barangay level, prescribed by P.D.
1508 as a pre-condition for filing a complaint in court, is compulsory
not only for cases falling under the exclusive competence of the
metropolitan and municipal trial courts, but for actions cognizable by
the regional trial courts as well.

xxx
From the provisions of P.D. No. 1508, it is clear that the barangay
court or Lupon has jurisdiction over disputes between parties who are
actual residents of barangays located in the same city or municipality
or adjoining barangays of different cities or municipalities. The Lupon
of the barangay ordinarily has the authority to settle amicably all types
of disputes involving parties who actually reside in the same
municipality, city or province. Where the complaint does not state that
it is one of the excepted cases, or it does not allege prior availment of
said conciliation process, or it does not have a certification that no
conciliation or settlement had been reached by the parties, the case
could be dismissed on motion. In the instant case, the fact that
petitioners and private respondent, reside in the same municipality of
Obando, Bulacan does not justify compulsory conciliation under P.D.
No. 1508 where the other co-defendants reside in barangays of
different municipalities, cities and provinces.

xxx

As correctly pointed out by the Solicitor General in his comment to the

petition, even from the three "WHEREAS" clauses of P.D. No. 1508 can
be gleaned clearly the decree's intended applicability only to courts of
justice, and not to labor relations commissions or labor arbitrators'
offices. The express reference to "judicial resources", to "courts of
justice", "court dockets", or simply to "courts" are significant. On the
other band, there is no mention at all of labor relations or
controversies and labor arbiters or commissions in the clauses
involved.

In addition, Letter of Instructions No. 956 and Letter of

Implementation No. 105, both issued on November 12, 1979 by the
former President in connection with the implementation of the
Katarungang Pambarangay Law, affirm this conclusion. These Letters
were addressed only to the following officials: all judges of the Courts
of first Instance, Circuit Criminal Courts, Juvenile and Domestic
Relations Courts, Courts of Agrarian Relations, City Courts and
Municipal Courts, and all Fiscals and other Prosecuting Officers. These
presidential issuances make clear that the only official directed to
oversee the implementation of the provisions of the Katarungang
Pambarangay Law (P.D. No. 1508) are the then Minister of Justice, the
then Minister of Local Governments and Community Development, and
the Chief Justice of the Supreme Court. If the contention of the
petitioner were correct, the then Minister (now Secretary) of Labor and
Employment would have been included in the list, and the two
presidential issuances also would have been addressed to the labor
relations officers, labor arbiters, and the members of the National
Labor Relations Commission. Expressio unius est exclusio alterius.

Nor can we accept the petitioner's contention that the "other

government office" referred to in Section 6 of P.D. No. 1508 includes
the Office of the Labor Arbiter and the Med-Arbiter. The declared
concern of the Katarungan Pambarangay Law is "to help relieve the
courts of such docket congestion and thereby enhance the quality of
justice dispensed by the courts." Thus, the" other government office"
mentioned in Section 6 of P.D. No. 1508 refers only to such offices as
the Fiscal's Office or, in localities where there is no fiscal, the Municipal
Trial Courts, where complaints for crimes (such as those punishable by
imprisonment of not more than 30 days or a, fine of not more than P
200.00) falling under the jurisdiction of the barangay court but which
are not amicably settled, are subsequently filed for proper disposition.
xxx

Does P.D. 1508 (Katarungang Pambarangay Law), which requires the

compulsory process of conciliation as a pre-condition for filing a case in
court, apply where the plaintiffs are permanent residents of another
province but, at the time of the institution of the action, are
temporarily residing for a transient purpose in the same city where the
defendants reside?

It will be noted that the first preambular paragraph of P.D. 1508 15

provides: Whereas, the perpetuation and official recognition of the
time-honored tradition of amicably settling disputes among family and
barangay members at the barangay level without judicial recourse
would promote the speedy administration of justice and implement the
constitutional mandate to preserve and develop Filipino culture and to
strengthen the family as a basic social institution;' xxx.
Evidently, therefore, the primary purpose of P.D. 1508 is to provide
the conciliation mechanism, as an alternative to litigations in dispute
settlement, to member of the corresponding barangays who are
actually residing therein. Residence alone, without membership, in said
barangays would not be an accurate and reliable criterion, considering
that such residence may be actual but be merely temporary, transient
or categorized into other permutations as in the case of a house guest
or a sojourner on a visit of a day or two. On the other hand, mere
membership in a barangay, without actual residence therein, should
not suffice since absentee membership would not subserve the avowed
purpose of P.D. 1508 for lack of the common bond and sense of
belonging generally fostered in members of an Identified
aggroupment.
xxx

Thus, by 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.

It is true that immediately after specifying the barangay whose Lupon

shall take cognizance of a given dispute, Sec. 3 of PD 1508 adds:

"However, all disputes which involve real property or any interest

therein shall be brought in the barangay where the real property or
any part thereof is situated."

Actually, however, this added sentence is just an ordinary proviso and

should operate as such. marinella

The operation of a proviso, as a rule, should be limited to its normal

function, which is to restrict or vary the operation of the principal
clause, rather than expand its scope, in the absence of a clear
indication to the contrary.2

To be sure, the Court was interpreting in that case the provisions of

P.D. No. 1508 which, except for some modifications, are applicable to
the case before respondent judge because they are now found in
§§408-409 of R.A. No. 7160 which took effect on January 1, 1992. The
ruling in Tavora v. Veloso, reiterated in other cases,3 should be
familiar to the bench and the bar. As we have held in Espiritu v.
Jovellanos,4 the phrase "Ignorance of the law excuses no one" has a
special application to judges who, under the injunction of Canon 1.01
of the Code of Judicial Conduct, "should be the embodiment of
competence, integrity, and independence." In Bacar v. De Guzman,5 it
was held that when the law violated is basic, the failure to observe it
constitutes gross ignorance. Reiterating this ruling, it was emphasized
in Almeron v. Sardido6 that the disregard of an established rule of law
amounts to gross ignorance of the law and makes the judge subject to
disciplinary action.

In the case at bar, respondent showed patent ignorance ¾ if not

disregard ¾ of this Court’s rulings on the jurisdiction of the Lupong
Tagapamayapa by her erroneous quotations of the provisions of the
Katarungang Pambarangay Rules implementing R.A. No. 7160. While a
judge may not be held administratively accountable for every
erroneous order or decision he renders, his error may be so gross or
patent that he should be administratively disciplined for gross
ignorance of the law and incompetence.

In this case, respondent at first cited P.D. No. 1508, §3 as basis of her
action. When her attention was called to the fact that this had been
repealed by §409(c) of R.A. No. 7160, respondent, who obviously was
more intent in justifying her previous order than correcting her error,
quoted out of context the provisions of the Katarungang Pambarangay
Rules implementing the Katarungang Pambarangay provisions of R.A.
No. 7160. She thus violated Canon 3 of the Code of Judicial Conduct
which provides that "In every case, a judge shall endeavor diligently to
ascertain the facts and the applicable law unswayed by partisan
interest, public opinion or fear of criticism."

Contrary to respondent’s interpretation, it is clear even from the

Katarungang Pambarangay Rules that recourse to barangay
conciliation proceedings is not necessary where the parties do not
reside in the same municipality or city or in adjoining barangays. Rule
VI of the same states in pertinent part:

SECTION 2. Subject matters for settlement. - All disputes may be the

subject of proceedings for amicable settlement under these rules
except the following enumerated cases:

(a) Where one party is the government, or any subdivision or

instrumentality thereof; alonzo

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

(c) Offenses for which the law prescribes a maximum penalty of

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 to agree to submit their
differences to amicable settlement by an appropriate lupon;

(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 foregoing exceptions notwithstanding, the court in which non-

criminal cases not falling within the authority of the lupon under these
Katarungang Pambarangay Law and Rules are filed may, at any time
before trial, motu proprio refer the case to the lupon concerned for
amicable settlement.
SECTION 3. Venue. The place of settlement shall be subject to the
following rules:

(a) Where the parties reside in the same barangay, the dispute shall
be brought for settlement in said barangay;

(b) Where the parties reside in different barangays in the same city or
municipality, the dispute shall be settled in the barangay where the
respondent or any one of the respondents actually resides, at the
choice of the complainant;

(c) Dispute involving real property shall be brought for settlement in

the barangay where the real property or larger portion thereof is
situated;

(d) Disputes 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;

(e) Any objection relating to venue shall be raised before the Punong
Barangay during the mediation proceedings before him. Failure to do
so shall be deemed a waiver of such objection;

(f) 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. brando

Indeed, these provisions, which are also found in P.D. No. 1508, have
already been authoritatively interpreted by this Court, and the duty of
respondent judge was to follow the rulings of this Court. Her insistence
on her own interpretation of the law can only be due either to an
ignorance of this Court’s ruling or to an utter disregard thereof. We
choose to believe that her failure to apply our rulings to the case
before her was simply due to gross ignorance which, nevertheless, is
inexcusable. In accordance with the ruling in Ting v. Atal,7 in which a
judge who was similarly found guilty of gross ignorance of the law was
fined P2,000.00, respondent judge should likewise be fined the same
amount.

xxx

Indeed, the Revised Katarungang Pambarangay Law8 provides that an

amicable settlement reached after barangay conciliation proceedings
has the force and effect of a final judgment of a court if not repudiated
or a petition to nullify the same is filed before the proper city or
municipal court within ten (10) days from its date.9 It further provides
that the settlement may be enforced by execution by the lupong
tagapamayapa within six (6) months from its date, or by action in the
appropriate city or municipal court, if beyond the six-month period.10
This special provision follows the general precept enunciated in Article
2037 of the Civil Code, viz.:

A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a
judicial compromise.

Thus, we have held that a compromise agreement which is not

contrary to law, public order, public policy, morals or good customs is
a valid contract which is the law between the parties themselves.11 It
has upon them the effect and authority of res judicata even if not
judicially approved,12 and cannot be lightly set aside or disturbed
except for vices of consent and forgery.13

However, in Heirs of Zari, et al. v. Santos,14 we clarified that the

broad precept enunciated in Art. 2037 is qualified by Art. 2041 of the
same Code, which provides:

If one of the parties fails or refuses to abide by the compromise, the

other party may either enforce the compromise or regard it as
rescinded and insist upon his original demand.

We explained, viz:

[B]efore the onset of the new Civil Code, there was no right to rescind
compromise agreements. Where a party violated the terms of a
compromise agreement, the only recourse open to the other party was
to enforce the terms thereof.

When the new Civil Code came into being, its Article 2041 x x x
created for the first time the right of rescission. That provision gives to
the aggrieved party the right to "either enforce the compromise or
regard it as rescinded and insist upon his original demand." Article
2041 should obviously be deemed to qualify the broad precept
enunciated in Article 2037 that "[a] compromise has upon the parties
the effect and authority of res judicata. (underscoring ours)
In exercising the second option under Art. 2041, the aggrieved party
may, if he chooses, bring the suit contemplated or involved in his
original demand, as if there had never been any compromise
agreement, without bringing an action for rescission.15 This is because
he may regard the compromise as already rescinded16 by the breach
thereof of the other party.

Thus, in Morales v. National Labor Relations Commission17 we upheld

the National Labor Relations Commission when it heeded the original
demand of four (4) workers for reinstatement upon their employer’s
failure to comply with its obligation to pay their monetary benefits
within the period prescribed under the amicable settlement. We
reiterated the rule that the aggrieved party may either (1) enforce the
compromise by a writ of execution, or (2) regard it as rescinded and
so insist upon his original demand upon the other party’s failure or
refusal to abide by the compromise. We also recognized the options in
Mabale v. Apalisok,18 Canonizado v. Benitez,19 and Ramnani v. Court
of Appeals,20 to name a few cases.

In the case at bar, the Revised Katarungang Pambarangay Law

provides for a two-tiered mode of enforcement of an amicable
settlement, to wit: (a) by execution by the Punong Barangay which is
quasi-judicial and summary in nature on mere motion of the party
entitled thereto; and (b) an action in regular form, which remedy is
judicial.21However, the mode of enforcement does not rule out the
right of rescission under Art. 2041 of the Civil Code. The availability of
the right of rescission is apparent from the wording of Sec. 41722
itself which provides that the amicable settlement "may" be enforced
by execution by the lupon within six (6) months from its date or by
action in the appropriate city or municipal court, if beyond that period.
The use of the word "may" clearly makes the procedure provided in
the Revised Katarungang Pambarangay Law directory23 or merely
optional in nature.

Thus, although the "Kasunduan" executed by petitioner and

respondent before the Office of the Barangay Captainhad the force and
effect of a final judgment of a court, petitioner’s non-compliance paved
the way for the application of Art. 2041 under which respondent may
either enforce the compromise, following the procedure laid out in the
Revised Katarungang Pambarangay Law, or regard it as rescinded and
insist upon his original demand. Respondent chose the latter option
when he instituted Civil Case No. 5139-V-97 for recovery of unrealized
profits and reimbursement of advance rentals, moral and exemplary
damages, and attorney’s fees. Respondent was not limited to claiming
₱150,000.00 because although he agreed to the amount in the
"Kasunduan," it is axiomatic that a compromise settlement is not an
admission of liability but merely a recognition that there is a dispute
and an impending litigation24 which the parties hope to prevent by
making reciprocal concessions, adjusting their respective positions in
the hope of gaining balanced by the danger of losing.25 Under the
"Kasunduan," respondent was only required to execute a waiver of all
possible claims arising from the lease contract if petitioner fully
complies with his obligations thereunder.26 It is undisputed that
herein petitioner did not.
xxx

Section 415 of the LGC of 19917, on the subject Katarungang

Pambarangay, provides:

Section 415. Appearance of Parties in Person. - In all katarungang

pambarangay proceedings, the parties must appear in person without
the assistance of the counsel or representative, except for minors and
incompetents who may be assisted by their next of kin who are not
lawyers.

The above-quoted provision clearly requires the personal appearance

of the parties in katarungan pambarangay conciliation proceedings,
unassisted by counsel or representative. The rationale behind the
personal appearance requirement is to enable the lupon to secure first
hand and direct information about the facts and issues,8 the exception
being in cases where minors or incompetents are parties. There can be
no quibbling that laymen of goodwill can easily agree to conciliate and
settle their disputes between themselves without what sometimes is
the unsettling assistance of lawyers whose presence could sometimes
obfuscate and confuse issues.9 Worse still, the participation of lawyers
with their penchant to use their analytical skills and legal knowledge
tend to prolong instead of expedite settlement of the case.

The prohibition against the presence of a lawyer in a barangay

conciliation proceedings was not, to be sure, lost on respondent. Her
defense that the aforequoted Section 415 of the LGC does not apply
since complainant addressed her Sumbong to the barangay captain of
Brgy. San Pascual who thereafter proceeded to hear the same is
specious at best. In this regard, suffice it to state that complainant
wrote her Sumbong with the end in view of availing herself of the
benefits of barangay justice. That she addressed her Sumbong to the
barangay captain is really of little moment since the latter chairs the
Lupong Tagapamayapa.10

Lest it be overlooked, the prohibition in question applies to all

katarungan barangay proceedings. Section 412(a)11 the LGC of 1991
clearly provides that, as a precondition to filing a complaint in court,
the parties shall go through the conciliation process either before the
lupon chairman or the lupon or pangkat. As what happened in this
case, the punong barangay, as chairman of the Lupon Tagapamayapa,
conducted the conciliation proceedings to resolve the disputes between
the two parties.

Given the above perspective, we join the IBP Commission on Bar

Discipline in its determination that respondent transgressed the
prohibition prescribed in Section 415 of the LGC. However, its
recommended penalty of mere admonition must have to be modified.
Doubtless, respondent’s conduct tended to undermine the laudable
purpose of the katarungan pambarangay system. What compounded
matters was when respondent repeatedly ignored complainant’s
protestation against her continued appearance in the barangay
conciliation proceedings.

xxx

SECTION 1. Authority of the OADR. All powers, functions, and duties

previously vested by EO No. 523 upon OP over the development, use,
implementation, promotion, monitoring, coordination, expansion,
evaluation, and study of ADR programs and services in the Executive
Branch, including all its departments, administrative offices, quasi-
judicial agencies, and government-owned or controlled corporations
(GOCCs) (hereinafter collectively referred to as agencies), are hereby
transferred to the OADR. xxx

SECTION 8. Non-applicability to the Katarungang Pambarangay

System. This Order shall not apply to the management, oversight, and
implementation of the Katarungang Pambarangay System, and shall
not be interpreted to repeal, amend or modify the jurisdiction of the
Katarungang Pambarangay System under Republic Act No. 7160,
otherwise known as the "Local Government Code of 1991." This
notwithstanding, all ADR training programs relative to Katarungang
Pambarangay System shall be submitted to the OADR for prior
approval.

xxx

It is true that an amicable settlement reached at the barangay

conciliation proceedings, like the Kasunduang Pag-aayos in this case,
is binding between the contracting parties and, upon its perfection, is
immediately executory insofar as it is not contrary to law, good
morals, good customs, public order and public policy.16 This is in
accord with the broad precept of Article 2037 of the Civil Code, viz:

A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a
judicial compromise.

Being a by-product of mutual concessions and good faith of the

parties, an amicable settlement has the force and effect of res judicata
even if not judicially approved.17 It transcends being a mere contract
binding only upon the parties thereto, and is akin to a judgment that is
subject to execution in accordance with the Rules.18 Thus, under
Section 417 of the Local Government Code,19 such amicable
settlement or arbitration award may be enforced by execution by the
Barangay Lupon within six (6) months from the date of settlement, or
by filing an action to enforce such settlement in the appropriate city or
municipal court, if beyond the six-month period.

Under the first remedy, the proceedings are covered by the Local
Government Code and the Katarungang Pambarangay Implementing
Rules and Regulations. The Punong Barangay is called upon during the
hearing to determine solely the fact of non-compliance of the terms of
the settlement and to give the defaulting party another chance at
voluntarily complying with his obligation under the settlement. Under
the second remedy, the proceedings are governed by the Rules of
Court, as amended. The cause of action is the amicable settlement
itself, which, by operation of law, has the force and effect of a final
judgment.20

It must be emphasized, however, that enforcement by execution of

the amicable settlement, either under the first or the second remedy,
is only applicable if the contracting parties have not repudiated such
settlement within ten (10) days from the date thereof in accordance
with Section 416 of the Local Government Code. If the amicable
settlement is repudiated by one party, either expressly or impliedly,
the other party has two options, namely, to enforce the compromise in
accordance with the Local Government Code or Rules of Court as the
case may be, or to consider it rescinded and insist upon his original
demand. This is in accord with Article 2041 of the Civil Code, which
qualifies the broad application of Article 2037, viz:

If one of the parties fails or refuses to abide by the compromise, the

other party may either enforce the compromise or regard it as
rescinded and insist upon his original demand.

In the case of Leonor v. Sycip,21 the Supreme Court (SC) had the

occasion to explain this provision of law. It ruled that Article 2041 does
not require an action for rescission, and the aggrieved party, by the
breach of compromise agreement, may just consider it already
rescinded, to wit:

It is worthy of notice, in this connection, that, unlike Article 2039 of

the same Code, which speaks of "a cause of annulment or rescission of
the compromise" and provides that "the compromise may be annulled
or rescinded" for the cause therein specified, thus suggesting an action
for annulment or rescission, said Article 2041 confers upon the party
concerned, not a "cause" for rescission, or the right to "demand" the
rescission of a compromise, but the authority, not only to "regard it as
rescinded", but, also, to "insist upon his original demand". The
language of this Article 2041, particularly when contrasted with that of
Article 2039, denotes that no action for rescission is required in said
Article 2041, and that the party aggrieved by the breach of a
compromise agreement may, if he chooses, bring the suit
contemplated or involved in his original demand, as if there had never
been any compromise agreement, without bringing an action for
rescission thereof. He need not seek a judicial declaration of
rescission, for he may "regard" the compromise agreement already
"rescinded".22 (emphasis supplied)

As so well stated in the case of Chavez v. Court of Appeals,23 a party's

non-compliance with the amicable settlement paved the way for the
application of Article 2041 under which the other party may either
enforce the compromise, following the procedure laid out in the
Revised Katarungang Pambarangay Law, or consider it as rescinded
and insist upon his original demand. To quote:

In the case at bar, the Revised Katarungang Pambarangay Law

provides for a two-tiered mode of enforcement of an amicable
settlement, to wit: (a) by execution by the Punong Barangay which is
quasi-judicial and summary in nature on mere motion of the party
entitled thereto; and (b) an action in regular form, which remedy is
judicial. However, the mode of enforcement does not rule out the right
of rescission under Art. 2041 of the Civil Code. The availability of the
right of rescission is apparent from the wording of Sec. 417 itself
which provides that the amicable settlement "may" be enforced by
execution by the lupon within six (6) months from its date or by action
in the appropriate city or municipal court, if beyond that period. The
use of the word "may" clearly makes the procedure provided in the
Revised Katarungang Pambarangay Law directory or merely optional in
nature.

Thus, although the "Kasunduan" executed by petitioner and

respondent before the Office of the Barangay Captain had the force
and effect of a final judgment of a court, petitioner's non-compliance
paved the way for the application of Art. 2041 under which respondent
may either enforce the compromise, following the procedure laid out in
the Revised Katarungang Pambarangay Law, or regard it as rescinded
and insist upon his original demand. Respondent chose the latter
option when he instituted Civil Case No. 5139-V-97 for recovery of
unrealized profits and reimbursement of advance rentals, moral and
exemplary damages, and attorney's fees. Respondent was not limited
to claiming ₱150,000.00 because although he agreed to the amount in
the "Kasunduan," it is axiomatic that a compromise settlement is not
an admission of liability but merely a recognition that there is a
dispute and an impending litigation which the parties hope to prevent
by making reciprocal concessions, adjusting their respective positions
in the hope of gaining balanced by the danger of losing. Under the
"Kasunduan," respondent was only required to execute a waiver of all
possible claims arising from the lease contract if petitioner fully
complies with his obligations thereunder. It is undisputed that herein
petitioner did not.24 (emphasis supplied and citations omitted)

In the instant case, the respondent did not comply with the terms and
conditions of the Kasunduang Pag-aayos. Such non-compliance may
be construed as repudiation because it denotes that the respondent
did not intend to be bound by the terms thereof, thereby negating the
very purpose for which it was executed. Perforce, the petitioner has
the option either to enforce the Kasunduang Pag-aayos, or to regard it
as rescinded and insist upon his original demand, in accordance with
the provision of Article 2041 of the Civil Code. Having instituted an
action for collection of sum of money, the petitioner obviously chose to
rescind the Kasunduang Pag-aayos. As such, it is error on the part of
the CA to rule that enforcement by execution of said agreement is the
appropriate remedy under the circumstances.

Considering that the Kasunduang Pag-aayos is deemed rescinded by

the non-compliance of the respondent of the terms thereof, remanding
the case to the trial court for the enforcement of said agreement is
clearly unwarranted.

The petitioner avers that the CA erred in remanding the case to the
trial court for the enforcement of the Kasunduang Pag-aayos as it
prolonged the process, "thereby putting off the case in an indefinite
pendency."25 Thus, the petitioner insists that she should be allowed to
ventilate her rights before this Court and not to repeat the same
proceedings just to comply with the enforcement of the Kasunduang
Pag-aayos, in order to finally enforce her right to payment.26

The CA took off on the wrong premise that enforcement of the

Kasunduang Pag-aayos is the proper remedy, and therefore erred in
its conclusion that the case should be remanded to the trial court. The
fact that the petitioner opted to rescind the Kasunduang Pag-aayos
means that she is insisting upon the undertaking of the respondent
under the original loan contract. Thus, the CA should have decided the
case on the merits, as an appeal before it, and not prolong the
determination of the issues by remanding it to the trial court.
Pertinently, evidence abounds that the respondent has failed to comply
with his loan obligation. In fact, the Kasunduang Pag-aayos is the well
nigh incontrovertible proof of the respondent’s indebtedness with the
petitioner as it was executed precisely to give the respondent a second
chance to make good on his undertaking. And since the respondent
still reneged in paying his indebtedness, justice demands that he must
be held answerable therefor.
xxx

Starting August 1, 1989, trial judges of lower courts other than the
regional trial courts and Shari'a district courts shall hold regular
dialogues/conferences in coordination with appropriate government
agencies at least once every two months to the extent allowed by law
with barangay Captains, the Lupon Secretary and the Lupon Members
in their respective territorial jurisdiction;

Said dialogues/conferences shall be for the following purposes:

a. To apprise all members of the Lupon and arbitrators under the

Katarungang Pambarangay Law (P.D. 1508) of the proper
interpretation and application of said law and its implementing Rules;
and

b. To bring to the attention of the participating judges the legal

problems confronting the Lupon in effecting the mandate of P.D. 1508
and other related laws so that the former can suggest practical and
lawful ways to remedy the same.

b. To bring to the attention of the participating judges the legal

problems confronting the Lupon in effecting the mandate of P.D. 1508
and other related laws so that the former can suggest practical and
lawful ways to remedy the
same. https://www.lawphil.net/courts/supreme/ac/ac_29_1989.html

xxx

SECTION 3. Venue — Dispute between or among persons actually

residing in the same barangay shall be brought to amicable settlement
of different barangay. 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. However, all dispute which
involve real property or interest therein shall be brought in the
barangay where the real property or any part thereof is situated.

The Lupon shall have no authority over disputes:

(1) involving parties who actually reside in barangays of different cities

or municipalities, except where such barangays adjoin each other; and
xxx

From the foregoing provisions of the Katarungang Pambarangay Law,

it is crystal clear that only disputes between parties who are actual
residents of barangays located in the same city or municipality, or
residents of adjoining barangays located in two different
municipalities, are within the jurisdiction of the barangay court.
Unfortunately, the respondent judge failed to see the error of his
position divesting himself of jurisdiction and insisting that the
complaint should first be presented before the barangay court.

xxx

As stated earlier, Section 9 of P.D. 1508 mandates personal

confrontation of the parties because: . . . a personal confrontation
between the parties without the intervention of a counsel or
representative would generate spontaneity and a favorable disposition
to amicable settlement on the part of the disputants. In other words,
the said procedure is deemed conducive to the successful resolution of
the dispute at the barangay level.
https://www.lawphil.net/judjuris/juri1992/jul1992/gr_96914_1992.ht
ml

xxx

Indeed, the Revised Katarungang Pambarangay Law provides that an

amicable settlement reached after barangay conciliation proceedings
has the force and effect of a final judgment of a court if not repudiated
or a petition to nullify the same is filed before the proper city or
municipal court within ten (10) days from its date. It further provides
that the settlement may be enforced by execution by the lupong
tagapamayapa within six (6) months from its date, or by action in the
appropriate city or municipal court, if beyond the six-month period.
This special provision follows the general precept enunciated in Article
2037 of the Civil Code, viz.: A compromise has upon the parties the
effect and authority of res judicata; but there shall be no execution
except in compliance with a judicial compromise.1âwphi1 Thus, we
have held that a compromise agreement which is not contrary to law,
public order, public policy, morals or good customs is a valid contract
which is the law between the parties themselves. It has upon them the
effect and authority of res judicata even if not judicially approved, and
cannot be lightly set aside or disturbed except for vices of consent and
forgery.

xxx

Also, there was no need to refer the dispute between the parties
herein . to the barangay for conciliation pursuant to the Katarungang
Pambarangay Law.42 It bears stressing that only individuals may be
paiiies to barangay · conciliation proceedings either as complainants or
respondents. Complaints by or against corporations, partnerships or
other juridical entities may not be filed with, received or acted upon by
the barangay for conciliation.

xxx

The barangay justice system was established primarily as a means of

easing up the congestion of cases in the judicial courts. This could be
accomplished through a proceeding before the barangay courts which,
according to the conceptor of the system, the late Chief Justice Fred
Ruiz Castro, is essentially arbitration in character, and to make it truly
effective, it should also be compulsory. With this primary objective of
the barangay justice system in mind, it would be wholly in keeping
with the underlying philosophy of Presidential Decree No. 1508,
otherwise known as the Katarungang Pambarangay Law, and the
policy behind it would be better served if an out-of-court settlement of
the case is reached voluntarily by the parties.

The primordial objective of Presidential Decree No. 1508 is to reduce

the number of court litigations and prevent the deterioration of the
quality of justice which has been brought by the indiscriminate filing of
cases in the courts.18 To ensure this objective, Section 6 of
Presidential Decree No. 150819 requires the parties to undergo a
conciliation process before the Lupon Chairman or the Pangkat ng
Tagapagkasundo as a precondition to filing a complaint in court subject
to certain exceptions20 which are inapplicable to this case. The said
section has been declared compulsory in nature.21 Presidential Decree
No. 1508 is now incorporated in Republic Act No. 7160, otherwise
known as The Local Government Code, which took effect on 1 January
1992.

xxx

It is well-noted that the Supreme Court held that where the case is
covered by P.D. 1508 (Katarungang Pambarangay Law), the
compulsory process of arbitration required therein is a pre-condition
for filing a complaint in court. Where the complaint (a) did not state
that it is one of the excepted cases, or (b) it did not allege prior
availment of said conciliation process, or (c) did not have a
certification that no conciliation or settlement had been reached by the
parties, the case should be dismissed x x x. While the foregoing
doctrine is handed down in civil cases, it is submitted that the same
should apply to criminal cases covered by, but filed without complying
with, the provisions of P.D. 1508 x x x.