Facts: Jerry obtained a loan from Crisanta. Due to the Jerry's failure to pay the loan, Crisanta filed a complaint before the barangay. The parties entered into a Kasunduang Pag-aayos wherein the respondent agreed to pay his loan in installments. However, Jerry still failed to pay. The Lupong Tagapamayapa issued a certification to file action in court in favor of Crisanta who then filed a collection suit against Jerry before the Metropolitan Trial Court. MTC ruled in favor of Crisanta. RTC affirmed the decision. The CA, however, ruled that the remedy of Crisanta was to file an action for the execution of the Kasunduang Pag-aayos in court and not for collection of sum of money considering that more than six (6) months had elapsed from the date of settlement.
Issue: Whether or not a complaint for sum of money is the proper remedy
Held: Under Section 417 of the Local Government Code, an 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.
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the compromise in accordance with the Local Government Code or Rules of Court as the case may be, or to consider it rescinded and insist upon his original demand.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parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand.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 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 Perforce, the petitioner has the option either to enforce the Kasunduang Pag-aayos, or to regard it as rescinded and insist upon his original demand, in accordance with the provision of Article 2041 of the Civil Code.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. (Miguel vs Montanez, G.R. No. 191336, January 25, 2012)
