Remedies when there is failure to

comply with ‘barangay’ settlement

Dear PAO,
I want to seek advice for my aunt. She borrowed money from her co-
worker last January 5, 2017, and payable after four months or on May
5, 2017. Unfortunately, she was unable to pay because of financial
constraints. Her co-worker wanted to settle the matter, so she brought
the matter to barangay (village) authorities. They reached an amicable
settlement on May 20, 2017 to the effect that my aunt conceded to pay
her in five equal monthly instalLments, the last installment to be made
on October 20, 2017.

I can honestly say that my aunt tried her best to pay her debt but,
unfortunately, she was still unable to do so. Now, she told me that her
co-worker threatened to sue her in court for the full amount with
damages. Is this really possible? I mean, can she really bring a case to
court given that they have already reached an amicable settlement?
Shouldn’t she just be allowed to enforce or execute their settlement
before the barangay? My aunt is really worried because she does not
want to have a case filed against her in court. Please advise us.
Robby

Dear Robby,
Republic Act (RA) 7610 or the Local Government Code of 1991
provides a channel for parties to settle their disputes without having to
go to court. It is clearly provided under Section 408 of the Local
Government Code (LGC) that the lupon (council) of each barangay
(village) has authority to bring together parties actually residing in the
same city or municipality for amicable settlement of all disputes, save
those exceptions mentioned therein. An amicable settlement
appropriately reached before the barangay has a binding effect and it
may thereafter be enforced. As stated under the LGC:

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“SECTION 416. The amicable settlement and arbitration award shall
have the force and effect of a final judgment of a court upon the
expiration of ten (10) days from the date thereof, unless repudiation of
the settlement has been made or a petition to nullify the award has
been filed before the proper city or municipal court.

xxx

SECTION 417. The amicable settlement and arbitration award may be

enforced by execution by the lupon within six (6) months from the
date of settlement. After the lapse of such time, the settlement may be
enforced by action in the appropriate city or municipal court.”

Accordingly, your aunt’s co-worker has the option of enforcing the

subject settlement they reached before the barangay, but only within
six (6) months from reaching such settlement or enforce it by filing an
appropriate action before the proper court.

We wish to further emphasize that the remedies mentioned under

Section 417 of the same code do not rule out the possible availment of
another remedy mentioned under our civil laws, which is to regard the
amicable settlement as rescinded and insist upon his original demand
by court action. As stated under Article 2041 of the New Civil Code:

“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.”
Our Supreme Court explained in the case of Miguel vs. Montanez
(G.R. No. 191336; January 25, 2012; ponente, Associate Justice
Bienvenido Reyes):

“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.

xxx

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 [implicitly],
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.

xxx

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 that 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.

x x x”

We hope that we were able to answer your queries. Please be

reminded that this advice is based solely on the facts you have
narrated and our appreciation of the same. Our opinion may vary
when other facts are changed or elaborated.