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Government Code of 1991, effective on January 1, 1992, and which repealed P.D. 1508, introduced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:

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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No. 1508 was expressly repealed pursuant to Section 534(b) of the Code.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. https://www.lawphil.net/sc_res/2014/pdf/gr_114797_2014.pdf

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. (Local Government Code)

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. https://www.lawphil.net/judjuris/juri2005/mar2005/gr_159411_2005.html

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.
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.

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.

xxx

The case of Alinsugay v. Cagampang, 7 which was applied by respondent court, is not on all fours with
the petition at bar. There the parties claiming non-compliance with P.D. 1508 were the very parties who
did not appear at the mediation proceedings before the Punong Barangay. The defendants in the case
were the respondents who had earlier disregarded the Katarungang Pambarangay Law and were later
inconsistently invoking its provisions.

In the case before us, it is Manuel Ramos, the respondent in the barangay proceedings, who actually
appeared therein and is now invoking the non-appearance of Domingo Ramos, the complainant himself.
Domingo, the herein private respondent, is the party who did not appear to support his own complaint
before the Punong Barangay. He invoked the Punong Barangay's jurisdiction and then disregarded it.
Under Section 4(d), he is now barred, as complainant in the barangay proceedings, "from seeking judicial
recourse for the same cause of action."

Domingo argues that he did appear through his wife, but this was not permitted by P.D. No. 1508. Its
Section 9 reads:
Appearance of parties in person. — In all proceedings provided for herein, the parties must appear in
person without the assistance of counsel/representative, with the exception of minors and incompetents
who may be assisted by their next of kin who are not lawyers.

In Alinsugay, the Court said that "where one party fails to appear for no justifiable reason, convening the
Pangkat as a necessary second step will serve no useful purpose." True, but we must stress the word
justifiable. Mere refusal to appear at the confrontation as required by the law, when the party invoking
P.D. 1508 is the one who disregarded it, is not a justifiable reason.

It remains to add that the other purpose of the Katarungang Pambarangay Law is to relieve the trial
courts of cases among neighbors that hopefully can be settled through the mediation of their peers in
peaceful and even friendly confrontations. This purpose could be defeated if such cases were allowed
immediate access to the already clogged judicial dockets simply because one of the parties is unwilling to
submit to justice at the barangay level.