G.R. No. 51143 and G.R. No. 51150, March 22, 1990
DOROTEO M. DE GUIA, ET AL., petitioners, vs. THE HON. MANUEL V. ROMILLO, JR., ET AL., respondents.

LORENZO BACALLA, ET AL., petitioners, vs. HON. MANUEL V. ROMILLO, JR., ET AL., respondents.

FACTS

The petitioners were defendants in an ejectment case filed on May 17, 1973, by the registered owners of a parcel of land in Parañaque. The parties initially stipulated that the defendants were lessees occupying the premises since 1952 on a month-to-month basis, with no definite lease period. They had constructed their residences with the owners’ consent, had not defaulted on rentals, and had consigned payments after the plaintiffs refused to accept them. The plaintiffs demanded vacation of the premises by the end of April 1973 for their intended commercial development.
Subsequently, the parties submitted a Second Stipulation of Facts on April 8, 1974. This document admitted that the plaintiffs and each defendant had entered into separate written contracts executed on October 31, 1972, for a fixed period of three years starting January 1, 1973, and ending December 31, 1975. The Municipal Trial Court, however, rendered a decision fixing a different lease period of three and a half years from the filing of the complaint. On appeal, the Court of First Instance affirmed this decision. The defendants then elevated the case to the Supreme Court, arguing their indefinite leases were protected from ejectment by P.D. No. 20 and that Articles 1682 and 1687 of the Civil Code were suspended.

ISSUE

Whether the Court of First Instance committed a reversible error in affirming the ejectment order against the petitioners.

RULING

The Supreme Court denied the petition, ruling that the Court of First Instance did not err. The legal logic centers on the effect of the Second Stipulation of Facts. The petitioners’ original verbal, indefinite leases were judicially transformed into written leases for a definite three-year term (January 1, 1973, to December 31, 1975) through that stipulation. This constituted a judicial compromise between the parties. Under Article 2037 of the Civil Code, a judicial compromise is immediately executory and has the force and effect of res judicata; it is a final judgment that cannot be altered except for vices of consent or forgery.
Consequently, the trial court’s authority was limited to approving the parties’ agreement. It could not unilaterally create a new contract by fixing a different lease period. The court’s error in setting a period ending in October 1976 was immaterial, as the correct, binding period under the compromise had already expired on December 31, 1975. The petitioners’ right to occupy the premises terminated on that date. Therefore, the lessors’ right to eject them for non-fulfillment of the compromise terms was long overdue. The defense based on P.D. No. 20 became inapplicable as the lease was no longer indefinite but for a fixed term that had ended. The order to vacate was thus justified.