G.R. No. 164594. April 22, 2015.

*
 
MICHAEL SEBASTIAN, petitioner, vs. ANNABEL
LAGMAY NG, represented by her Attorney-in-fact,
ANGELITA LAGMAY, respondent.

Local Government Code; Amicable Settlement; 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 (MTC) if more than six (6) months from the
date of settlement has already elapsed.—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.
Same; Same; Under Section 416 of the Local Government
Code (LGC), 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.—
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

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*  SECOND DIVISION.

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Sebastian vs. Ng

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.
Statutory Construction; 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.—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.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
  N.V. Flora Law Office for petitioner.
  Wilfredo H. Serra for respondent.

 
BRION, J.:
 
We resolve the petition for review on certiorari,1 filed by
petitioner Michael Sebastian (Michael), assailing the
March 31,

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1  Rollo, pp. 3-35.

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Sebastian vs. Ng
 2004 Decision,2 and the July 15, 2004 Resolution3 of the
Court of Appeals (CA) in C.A.-G.R. S.P. No. 65450.
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 daughter
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 P350,000.00 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 P350,000.00 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”4 wherein Michael agreed to pay Annabel the
amount of P250,000.00 on specific dates. The kasunduan
was signed by Angelita (on behalf of Annabel), Michael,
and the members of the pangkat ng tagapagkasundo. The
kasunduan reads:

KASUNDUAN
Nagkasundo ang dalawang panig na pagkayari ng labing apat
na buwan (14 months) simula ngayong July

_______________

2  Id., at pp. 41-47; penned by Associate Justice Hakim S. Abdulwahid

and concurred in by Associate Justices Delilah Vidallon-Magtolis and
Andres B. Reyes, Jr.
3  Id., at p. 76.
4  Id., at p. 85.

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Sebastian vs. Ng

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
P250,000.00 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.
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62 SUPREME COURT REPORTS ANNOTATED

Sebastian vs. Ng

On January 17, 2000, the MCTC rendered a decision5 in

favor of Annabel, the dispositive portion of which reads, as
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 P250,000.00.
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
P250,000.00 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 P15,000.00 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,6 the RTC, Branch 40
of Palayan City upheld the MCTC decision, finding Michael
liable to pay Annabel the sum of P250,000.00. It held that
Michael failed to assail the validity of the kasunduan, or to
adduce any evidence to dispute Annabel’s claims or the
appli-

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5  Id., at pp. 119-121.

6  CA Rollo, pp. 78-83.

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Sebastian vs. Ng

cability 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
(P250,000.00) plus twelve percent interest (12%) per annum from
September, 1998 up to the time it is actually paid and fifty
Thousand Pesos (P50,000.00) 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   P250,000.00   (as the subject matter of the
kasunduan) is in excess of MCTC’s jurisdictional amount of
 P200,000.00.7
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

_______________

7  Id., at pp. 131-149.

8  Id., at pp. 159-161.

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Sebastian vs. Ng

Angelita moved for the reconsideration of the March 13,

2001 Order, but the motion was subsequently denied.
Aggrieved, she filed a Petition for Review9 with the CA.
 
The Court of Appeals’ 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

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9  Id., at pp. 171-179.

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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 P250,000.00 — the
subject matter of the kasunduan — is in excess of MCTC’s
jurisdictional amount of   P200,000.00, 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;  
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Sebastian vs. Ng

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.
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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
_______________

10   The Katarungang Pambarangay Implementing Rules and

Regulations issued by the Department of Interior and Local Government
provides:
SECTION 3. Motion for Execution.—The disputant/s may file a
motion with the Punong Barangay, copy furnished to the other
disputant/s, for the execution of a final settlement or award which has not
been complied with.
SECTION 4. Hearing.—On the day the motion for execution is filed,
the Punong Barangay shall set the same for hearing on a date agreed to
by the movant, which shall not be later than five (5) days from the date of
the filing of the motion. The Punong Barangay shall give immediate notice
of hearing to the other party.
During the hearing, the Punong Barangay shall ascertain the fact of
noncompliance with the terms of the settlement or award. Upon such
determination of noncompliance, the Punong Barangay shall strongly urge
the party obliged to voluntarily comply with the settlement or award.
SECTION 5. Issuance, form and contents of the notice of the execution.
—The Punong Barangay shall within [5] days from the day of hearing,
determine whether or not voluntary compliance can be secured. Upon the
lapse of said five-day period, there being no voluntary compliance, he shall
issue a notice of execution in the name of the Lupong Tagapamayapa. The
said notice must intelligently refer to the settlement or award and the
amount actually due thereunder if it be for money, or the terms thereof
which must be complied with.
SECTION 6. Procedure for execution:
a. If the execution be for the payment of money, the party obliged is
allowed a period of five [5] days to make a voluntary payment, failing
which, the Punong Barangay shall take possession of sufficient personal
property located in the barangay of the party obliged to satisfy the
settlement or award from the proceeds of the sale thereof with legal
interest such sale to be

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Sebastian vs. Ng

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 resorted to 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
_______________

conducted in accordance with the procedure herein provided. If

sufficient personal property exists, the party obliged is allowed to point
out which of them shall be taken possession of ahead of the others. If
personal property is not sufficient to satisfy the settlement or award, the
deficiency shall be satisfied in accordance with the applicable provisions of
the Rules of Court.
b. If it be for the delivery or restitution of property located in the
barangay, the Punong Barangay shall oust therefrom the person against
whom the settlement or award is rendered and place the place the party
entitled thereto in possession of such property.
If it be for the delivery or restitution of property located in another
barangay of the same city or municipality, the Punong Barangay issuing
the notice shall authorize the Punong Barangay of the barangay where
the property is situated to take possession of the property and to act in
accordance with paragraph [b] hereof.
d. If a settlement or award directs to a party to execute a conveyance
of land, or to deliver deeds or other documents, or to perform any other
specific act, and the party fails to comply within the time specified, the
Punong Barangay may direct the Lupon Secretary to perform the act at
the cost of the disobedient party and the act when so done shall like
effects as if done by the party.
11  Miguel v. Montanez, G.R. No. 191336, January 25, 2012, 664 SCRA
345; Chavez v. Court of Appeals, G.R. No. 159411, March 18, 2005, 453
SCRA 843.

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Sebastian vs. Ng

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 form12 and
substance.13 It is complete with allegations of the ultimate
facts constituting the cause of action; the names and
residences of the plaintiff and the defendant; it contains
the prayer for the MCTC to

_______________
 12  A pleading is sufficient in form when it contains the following: (1) A
Caption, setting forth the name of the court, the title of the action
indicating the names of the parties, and the docket number which is
usually left in blank, as the Clerk of Court has to assign yet a docket
number; (2) The Body, reflecting the designation, the allegations of the
party’s claims or defenses, the relief prayed for, and the date of the
pleading; (3) The Signature and Address of the party or counsel; (4)
Verification. This is required to secure an assurance that the allegations
have been made in good faith, or are true and correct and not merely
speculative; (5) A Certificate of Non-forum Shopping, which although not
jurisdictional, the same is obligatory;   (6) An Explanation in case the
pleading is not filed personally to the Court. Likewise, for pleading
subsequent to the complaint, if the same is not served personally to the
parties affected, there must also be an explanation why service was not
done personally. (Munsalud v. National Housing Authority, G.R. No.
167181, December 23, 2008, 575 SCRA 144)
13   Substance is one which relates to the material allegations in the
pleading.  It is determinative of whether or not a cause of action exists.  It
is the central piece, the core, and the heart constituting the controversy
addressed to the court for its consideration. It is the embodiment of the
essential facts necessary to confer jurisdiction upon the court. (Id.)

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Sebastian vs. Ng

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

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14  Id.

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Sebastian vs. Ng

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 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.

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Sebastian vs. Ng

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 C.A.-G.R. S.P. 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.

Carpio (Chairperson), Del Castillo, Mendoza and

Leonen, JJ., concur.

Petition denied, judgment affirmed.

_______________

15   Globe-Mackay Cable and Radio Corporation v. NLRC, G.R. No.

82511, March 3, 1992, 206 SCRA 701, 711.

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Sebastian vs. Ng

Notes.—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. (Pang-et vs. Manacnes-
Dao-as, 517 SCRA 292 [2007])
Mathematical computations, the propriety of arbitral
awards, claims for “other costs” and “abandonment” are
factual questions. (Shinryo [Philippines] Company, Inc. vs.
RRN, Incorporated, 634 SCRA 123 [2010])
——o0o——

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