G.R. No.

191336               January 25, 2012

CRISANTA ALCARAZ MIGUEL, Petitioner, vs. JERRY D. MONTANEZ, Respondent.

DECISION

REYES, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Crisanta Alcaraz
Miguel (Miguel) seeks the reversal and setting aside of the September 17, 2009 Decision1 and February 11, 2010
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 100544, entitled "Jerry D. Montanez v. Crisanta Alcaraz
Miguel."

Antecedent Facts

On February 1, 2001, respondent Jerry Montanez (Montanez) secured a loan of One Hundred Forty-Three Thousand
Eight Hundred Sixty-Four Pesos (₱143,864.00), payable in one (1) year, or until February 1, 2002, from the petitioner.
The respondent gave as collateral therefor his house and lot located at Block 39 Lot 39 Phase 3, Palmera Spring,
Bagumbong, Caloocan City.

Due to the respondent’s failure to pay the loan, the petitioner filed a complaint against the respondent before the Lupong
Tagapamayapa of Barangay San Jose, Rodriguez, Rizal. The parties entered into a Kasunduang Pag-aayos wherein the
respondent agreed to pay his loan in installments in the amount of Two Thousand Pesos (₱2,000.00) per month, and in
the event the house and lot given as collateral is sold, the respondent would settle the balance of the loan in full.
However, the respondent still failed to pay, and on December 13, 2004, the Lupong Tagapamayapa issued a certification
to file action in court in favor of the petitioner.

On April 7, 2005, the petitioner filed before the Metropolitan Trial Court (MeTC) of Makati City, Branch 66, a complaint for
Collection of Sum of Money. In his Answer with Counterclaim,3 the respondent raised the defense of improper venue
considering that the petitioner was a resident of Bagumbong, Caloocan City while he lived in San Mateo, Rizal.

After trial, on August 16, 2006, the MeTC rendered a Decision,4 which disposes as follows:

WHEREFORE, premises considered[,] judgment is hereby rendered ordering defendant Jerry D. Montanez to pay plaintiff
the following:

1. The amount of [Php147,893.00] representing the obligation with legal rate of interest from February 1, 2002
which was the date of the loan maturity until the account is fully paid;

2. The amount of Php10,000.00 as and by way of attorney’s fees; and the costs.

SO ORDERED. 5

On appeal to the Regional Trial Court (RTC) of Makati City, Branch 146, the respondent raised the same issues cited in
his Answer. In its March 14, 2007 Decision,6 the RTC affirmed the MeTC Decision, disposing as follows:

WHEREFORE, finding no cogent reason to disturb the findings of the court a quo, the appeal is hereby DISMISSED, and
the DECISION appealed from is hereby AFFIRMED in its entirety for being in accordance with law and evidence.

SO ORDERED.7

Dissatisfied, the respondent appealed to the CA raising two issues, namely, (1) whether or not venue was improperly laid,
and (2) whether or not the Kasunduang Pag-aayos effectively novated the loan agreement. On September 17, 2009, the
CA rendered the assailed Decision, disposing as follows:

WHEREFORE, premises considered, the petition is hereby GRANTED. The appealed Decision dated March 14, 2007 of
the Regional Trial Court (RTC) of Makati City, Branch 146, is REVERSED and SET ASIDE. A new judgment is entered
dismissing respondent’s complaint for collection of sum of money, without prejudice to her right to file the necessary
action to enforce the Kasunduang Pag-aayos.

SO ORDERED.8

Anent the issue of whether or not there is novation of the loan contract, the CA ruled in the negative. It ratiocinated as
follows:

Judging from the terms of the Kasunduang Pag-aayos, it is clear that no novation of the old obligation has taken
place.1âwphi1 Contrary to petitioner’s assertion, there was no reduction of the term or period originally stipulated. The
original period in the first agreement is one (1) year to be counted from February 1, 2001, or until January 31, 2002. When
the complaint was filed before the barangay on February 2003, the period of the original agreement had long expired
without compliance on the part of petitioner. Hence, there was nothing to reduce or extend. There was only a change in
the terms of payment which is not incompatible with the old agreement. In other words, the Kasunduang Pag-aayos
merely supplemented the old agreement.9

The CA went on saying that since the parties entered into a Kasunduang Pag-aayos before the Lupon ng Barangay, such
settlement has the force and effect of a court judgment, which may be enforced by execution within six (6) months from
the date of settlement by the Lupon ng Barangay, or by court action after the lapse of such time.10 Considering that more
than six (6) months had elapsed from the date of settlement, the CA ruled that the remedy of the petitioner was to file an
action for the execution of the Kasunduang Pag-aayos in court and not for collection of sum of money.11 Consequently, the
CA deemed it unnecessary to resolve the issue on venue.12

The petitioner now comes to this Court.

Issues

(1) Whether or not a complaint for sum of money is the proper remedy for the petitioner, notwithstanding the
Kasunduang Pag-aayos;13 and

(2) Whether or not the CA should have decided the case on the merits rather than remand the case for the
enforcement of the Kasunduang Pag-aayos.14

Our Ruling

Because the respondent failed to comply with the terms of the Kasunduang Pag-aayos, said agreement is deemed
rescinded pursuant to Article 2041 of the New Civil Code and the petitioner can insist on his original demand. Perforce,
the complaint for collection of sum of money is the proper remedy.

The petitioner contends that the CA erred in ruling that she should have followed the procedure for enforcement of the
amicable settlement as provided in the Revised Katarungang Pambarangay Law, instead of filing a collection case. The
petitioner points out that the cause of action did not arise from the Kasunduang Pag-aayos but on the respondent’s
breach of the original loan agreement.15

This Court agrees with the petitioner.

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.

WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is SET ASIDE and the Decision
of the Regional Trial Court, Branch 146, Makati City, dated March 14, 2007 is REINSTATED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

JOSE PORTUGAL PEREZ MARIA LOURDES P. A. SERENO

Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE*
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice

G.R. No. 164594               April 22, 2015

MICHAEL SEBASTIAN, Petitioner, vs. ANNABEL LAGMAY NG, represented by her Attorney-in-fact,

ANGELITA LAGMAY, Respondent.

DECISION

BRION, J.:

We resolve the petition for review on certiorari,  filed by petitioner Michael Sebastian (Michael), assailing the March
1

31, 2004 Decision,  and the July 15, 2004 Resolution  of the Court of Appeals (CA) in CA-G.R. SP No. 65450.
2 3

The CA decision reversed and set aside the decision of the Regional Trial Court (RTC) of Palayan City, Branch 40,
in SP. Proc. Case No. 0096-P.

Factual Background

Sometime in 1997, Angelita Lagmay (Angelita), acting as representative and attorney-in-fact of her daµghter
Annabel Lagmay Ng (Annabel), filed a complaint before the Barangay Justice of Siclong, Laur, Nueva Ecija. She
sought to collect from Michael the sum of ₱350,000.00 that Annabel sent to Michael. She claimed that Annabel and
Michael were once sweethearts, and that they agreed to jointly invest their financial resources to buy a truck. She
alleged that while Annabel was working in Hongkong, Annabel sent Michael the amount of ₱350,000.00 to purchase
the truck. However, after Annabel and Michael’s relationship has ended, Michael allegedly refused to return the
money to Annabel, prompting the latter to bring the matter before the Barangay Justice.

On July 9, 1997, the parties entered into an amicable settlement, evidenced by a document denominated as
"kasunduan"  wherein Michael agreed to pay Annabel the amount of ₱250,000.00 on specific dates. The kasunduan
4

was signed by Angelita (on behalf of Annabel), Michael, and the members of the pangkat ng tagapagkasundo. The
kasunduanreads: KASUNDUAN

Nagkasundo ang dalawang panig napagkayari ng labing apat na buwan (14 months) simula ngayong July 9, 1997
hanggang September 1998 ay kailangan ng maibigay ni Mr. Sebastian ang pera ni Ms. Anabelle Lagmay.

At napagkasunduan ay dalawang hulog ang halagang ₱250,000.00 na pera ni Ms.Lagmay at simula ng pagbibigay
ni Mr. Sebastian ay sa buwan ng September 1998.
At upang may katunayan ang lahat ng napag usapan ay lumagda sa ibaba nito at sa harap ng mga saksi ngayong
ika-9 ng Hulyo, 1997

Mrs. Angelita Lagmay – (Lagda)

Mr. Michael Sebastian – (Lagda)

Saksi: Kagawad Rolando Mendizabal – (Lagda)

Hepe Quirino Sapon – (Lagda)

Benjamin Sebastian – (Lagda)

Jun Roxas - (Lagda)

Angelita alleged that the kasunduan was not repudiated within a period of ten (10) days from the settlement, in
accordance with the Katarungang Pambarangay Law embodied in the Local Government Code of 1991 [Republic
Act (R.A.) No. 7160], and Section 14 of its Implementing Rules. When Michael failed to honor the kasunduan,
Angelita brought the matter back to the Barangay, but the Barangay Captain failed to enforce the kasunduan, and
instead, issued a Certification to File Action.

After about one and a half years from the date of the execution of the kasunduan or on January 15, 1999, Angelita
filed with the Municipal Circuit Trial Court (MCTC) of Laur and Gabaldon, Nueva Ecija, a Motion for Execution of the
kasunduan.

Michael moved for the dismissal of the Motion for Execution, citing as a ground Angelita’s alleged violation of
Section 15, Rule 13 of the 1997 Rules of Civil Procedure.

On January 17, 2000, the MCTC rendered a decision  in favor of Annabel, the dispositive portion of which reads, as
5

follows:

WHEREFORE, the plaintiff through counsel has satisfactorily proven by preponderance of evidence based on
Exhibits "A," "B," "C," "D," and "F," that defendant has obligation to the plaintiff in the amount of ₱250,000.00.

IN VIEW OF THE FOREGOING, the Motion for Execution filed by the plaintiff is hereby granted based on Sec. 2,
Rule 7 of the Implementing Rules and Regulations of Republic Act No. 7160, and therefore, defendant is hereby
ordered within 15 days upon receipt of this decision to pay the plaintiff the amount of ₱250,000.00 as evidenced by
the Kasunduan (Exhibit "C") with legal interests from July 9, 1997 until said obligation is fully paid, and to pay
attorney’s fees for the plaintiff’s counsel in the amount of ₱15,000.00 and to pay the cost of the suit.

SO ORDERED.

Michael filed an appeal with the RTC arguing that the MCTC committed grave abuse of discretion in prematurely
deciding the case. Michael also pointed out that a hearing was necessary for the petitioner to establish the
genuineness and due execution of the kasunduan. The Regional Trial Court’s Ruling

In its November 13, 2000 Decision,  the RTC, Branch 40 of Palayan City upheld the MCTC decision, finding Michael
6

liable to pay Annabel the sum of ₱250,000.00. It held that Michael failed to assail the validity of the kasunduan, or to
adduce any evidence to dispute Annabel’s claims or the applicability of the Implementing Rules and Regulations of
R.A. No. 7160. The dispositive portion of the decision reads:

WHEREFORE, the assailed Decision and Order of the lower court is hereby MODIFIED in that the appellant is
ordered to pay the appellee the amount of Two hundred Fifty Thousand pesos (₱250,000.00) plus twelve percent
interest(12%) per annum from September,1998 up to the time it is actually paid and fifty Thousand
Pesos(₱50,000.00) representing attorney's fees.

Michael filed a Motion for Reconsideration arguing that: (i) an amicable settlement or arbitration award can be
enforced by the Lupon within six (6) months from date of settlement or after the lapse of six (6) months, by ordinary
civil action in the appropriate City or Municipal Trial Court and not by a mere Motion for execution; and (ii) the MCTC
does not have jurisdiction over the case since the amount of ₱250,000.00 (as the subject matter of the kasunduan)
is in excess of MCTC’s jurisdictional amount of ₱200,000.00. 7

In its March 13, 2001 Order, the RTC granted Michael’s Motion for Reconsideration, and ruled that there is merit in
the jurisdictional issue he raised. It dismissed Angelita’s Motion for Execution, and set aside the MCTC Decision.
The dispositive portion of the said Order reads: WHEREFORE, the Motion for Reconsideration is GRANTED. The
Decision of the Court dated November 13, 2000 is hereby SET ASIDE. The Decision of the Municipal Trial Court of
Laur, Nueva Ecija dated January 17, 2000 is likewise SET ASIDE and the Motion for Execution of Kasunduan is
DISMISSED, the said court having had no jurisdiction to hear and decide the matter. 8
Angelita moved for the reconsideration of the March 13, 2001 Order, but the motion was subsequently denied.
Aggrieved, she filed a Petition for Review 9with the CA.

The Court of Appeal’s Ruling

On August 2, 2001, the CA initially dismissed the petition for review on a mere technical ground of failure to attach
the Affidavit of Service. Angelita moved for reconsideration, attaching in her motion the Affidavit of Service. The CA
granted the motion.

On March 31, 2004, the CA rendered its decision granting the petition, and reversing the RTC’s decision. The CA
declared that the "appropriate local trial court" stated in Section 2, Rule VII of the Implementing Rules of R.A. No.
7160 refers to the municipal trial courts. Thus, contrary to Michael’s contention, the MCTC has jurisdiction to enforce
any settlement or arbitration award, regardless of the amount involved.

The CA also ruled that Michael’s failure to repudiate the kasunduan in accordance with the procedure prescribed
under the Implementing Rules of R.A. No. 7160, rendered the kasunduan final. Hence, Michael can no longer assail
the kasunduan on the ground of forgery.

Michael moved to reconsider this decision, but the CA denied his motion in its resolution dated July 15, 2004.
Hence, this petition.

The Petition

In the present petition for review on certiorari, Michael alleges that the kasunduan cannot be given the force and
effect of a final judgment because it did not conform to the provisions of the Katarungang Pambarangay law
embodied in Book III, Title One, Chapter 7 of R.A. No. 7160. He points out the following irregularities in the
kasunduan’s execution, and claims that the agreement forged between him and Angelita was fictitious and
simulated:

(1) there was no record of the complaint in the Barangay;

(2) there was no notice of mediation sent to him;

(3) there was no constitution of the Pangkat Ng Tagapagasundo;

(4) the parties were never called upon to choose the three (3) members from among the Lupon members;

(5) he had no participation in the execution of the kasunduan;

(6) his signature in the kasunduan was forged;

(7) he did not personally appear before the Barangay;

(8) there was no attestation clause;

(9) the kasunduan was neither reported nor filed before the MCTC; and

(10) Annabel, the real party in interest, did not personally appear before the Barangay as required by the
law.

Michael additionally claims that the kasunduan is merely in the nature of a private document. He also reiterates that
since the amount of ₱250,000.00 – the subject matter of the kasunduan – is in excess of MCTC’s jurisdictional
amount of ₱200,000.00, the kasunduan is beyond the MCTC’s jurisdiction to hear and to resolve. Accordingly, the
proceedings in the Barangay are all nullity.

The Issues

The issues to be resolved in the present petition are:

1. Whether or not the MCTC has the authority and jurisdiction to execute the kasunduan regardless of the
amount involved;

2. Whether or not the kasunduan could be given the force and effect of a final judgment; and

3. Whether or not the kasunduan can be enforced.

The Court’s Ruling

We deny the petition.

A perusal of the body of the motion for

execution shows that it is actually in the
nature of an action for execution; hence, it
was a proper remedy;

We note at the outset that Michael raised – in his brief before the CA – the issue of wrong remedy. He alleged that
Angelita’s recourse should have been to file a civil action, not a mere motion for execution, in a regular court.
However, the CA failed to address this issue and only ruled on the issues of the kasunduan’s irregularities and the
MCTC’s jurisdiction.

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. [Emphasis ours.]

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.  The proceedings in this case are summary in nature and are
10

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.  The proceedings shall be
11

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.

First, the motion is sufficient in form  and substance.  It is complete with allegations of the ultimate facts constituting
12 13

the cause of action; the names and residences of the plaintiff and the defendant; it contains the prayer for the MCTC
to order the execution of the kasunduan; and there was also a verification and certification against forum shopping.

Furthermore, attached to the motion are: 1) the authenticated special power of attorney of Annabel, authorizing
Angelita to file the present action on her behalf; and 2) the copy of the kasunduan whose contents were quoted in
the body of the motion for execution.

It is well-settled that what are controlling in determining the nature of the pleading are the allegations in the body
and not the caption. 14

Thus, the motion for execution that Angelita filed was intended to be an initiatory pleading or an original action that
is compliant with the requirement under Section 3, Rule 6 of the Rules of Court that the complaint should allege the
plaintiff’s cause of action and the names and residences of the plaintiff and the defendant.

Angelita’s motion could therefore be treated as an original action, and not merely as a motion/special proceeding.
For this reason, Annabel has filed the proper remedy prescribed under Section 417 of the Local Government Code.

However, Angelita should pay the proper docket fees corresponding to the filing of an action for execution. The
docket fees shall be computed by the Clerk of Court of the MCTC, with due consideration, of course, of what
Angelita had already paid when her motion for execution was docketed as a special proceeding.

The kasunduan has the force and effect of a final judgment.

Under Section 416 of the Local Government Code, 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 of its execution,
unless the settlement or award has been repudiated or a petition to nullify the award has been filed before the
proper city or municipal court.

Moreover, Section 14, Rule VI of the Katarungang Pambarangay Implementing Rules states that the party’s failure
to repudiate the settlement within the period of ten (10) days shall be deemed a waiver of the right to challenge the
settlement on the ground that his/her consent was vitiated by fraud, violence or intimidation.

In the present case, the records reveal that Michael never repudiated the kasunduan within the period prescribed by
the law.  Hence, the CA correctly ruled that the kasunduan has the force and effect of a final judgment that is ripe
1âwphi1

for execution.

Furthermore, the irregularities in the kasunduan’s execution, and the claim of forgery are deemed waived since
Michael never raised these defenses in accordance with the procedure prescribed under the Local Government
Code. Thus, we see no reason to discuss these issues in the present case.

The MCTC has the authority and jurisdiction

to enforce the kasunduan regardless of the amount involved.

The Court also finds that the CA correctly upheld the MCTC’s jurisdiction to enforce any settlement or arbitration
award issued by the Lupon.

We again draw attention to the provision of Section 417 of the Local Government Code that after the lapse of the six
(6) month period from the date of the settlement, the agreement may be enforced by action in the appropriate city or
municipal court.

The law, as written, unequivocally speaks of the "appropriate city or municipal court" as the forum for the execution
of the settlement or arbitration award issued by the Lupon. Notably, in expressly conferring authority over these
courts, Section 417 made no distinction with respect to the amount involved or the nature of the issue involved.
Thus, there can be no question that the law’s intendment was to grant jurisdiction over the enforcement of
settlement/arbitration awards to the city or municipal courts the regardless of the amount. A basic principle of
interpretation is that words must be given their literal meaning and applied without attempted interpretation where
the words of a statute are clear, plain and free from ambiguity.15

WHEREFORE, premises considered, we hereby DENY the petitioner's petition for review on certiorari, and AFFIRM
the March 31, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 65450.

Angelita Lagmay is ORDERED to pay the proper docket fees to be computed by the Clerk of Court of the Municipal
Circuit Trial Court of Laur and Gabaldon, Nueva Ecija, with due consideration of what she had paid when her motion
for execution was docketed as a special proceeding.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

MARIANO C. DEL CASTILLO JOSE CATRAL MENDOZA

Associate Justice Associate Justice

MARVIC M.V.F. LEONEN

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice