G.R. No. L-49698 May 3, 1994
MARIO V. AMARANTE, petitioner, vs. COURT OF APPEALS and ANTONIO VALENCIA, respondents.

FACTS

Since 1971, petitioner Mario V. Amarante has been the lessee of a residential house in Pasay City owned by private respondent Antonio Valencia. The lease was oral, with rentals paid monthly and covered by the Rent Control Law. On January 7, 1977, private respondent asked petitioner to sign a written contract limiting the lease period to December 31, 1977, which petitioner declined. Consequently, private respondent refused to accept further rental payments, prompting petitioner to file a Petition for Consignation of Rentals before the City Court of Pasay on April 14, 1977. After private respondent’s motion to dismiss was denied and he filed his answer, the trial court, upon petitioner’s motion, enjoined private respondent from demolishing the leased premises. During the hearing on July 28, 1977, the trial judge asked petitioner if he was willing to vacate the premises. Petitioner maintains he answered “yes” but only if he could find another suitable place at the same rental rate, while private respondent contends the acceptance was absolute. The trial judge considered petitioner’s acquiescence as an unqualified agreement to vacate by December 1977. Consequently, on August 12, 1977, the trial court issued an order granting petitioner until December 1977 to vacate and ordering private respondent to accept the rentals. Petitioner’s motions for reconsideration were denied. Petitioner then filed a Petition for Certiorari before the Court of First Instance (now RTC), which was dismissed for being filed out of time. The Court of Appeals affirmed the dismissal, holding that the August 12, 1977 order was a judgment based on an oral compromise, a final disposition of the action, and any error should have been rectified by appeal, not certiorari.

ISSUE

Whether the trial court’s order dated August 12, 1977, which disposed of the action for consignation by granting petitioner until December 1977 to vacate the leased premises, is a valid judgment based on an oral compromise.

RULING

Yes. The Supreme Court sustained the Court of Appeals, ruling that the order of August 12, 1977 was a valid judgment based on an oral compromise. The Court found that the order was issued based on the manifestations made by the parties during the July 28, 1977 hearing, particularly petitioner’s statement that he was willing to vacate by December 1977. The records did not disclose any condition imposed by petitioner to his assent. Since private respondent agreed to accept the monthly rentals, the action for consignation was effectively terminated. The Court held that whether the trial court correctly interpreted petitioner’s manifestation was a question of fact, which was final and binding, as more weight should be accorded to the trial judge’s direct observations of the parties’ demeanor. The Court noted that compromises are generally favored and cannot be set aside if the parties acted in good faith and made reciprocal concessions. Furthermore, under the Rent Control Law, a lease on a month-to-month basis is for a definite period and can be validly terminated at the end of any month upon prior notice. The Court also emphasized that petitioner failed to appeal the trial court’s order within the reglementary period, instead filing an untimely petition for certiorari, causing the order to become final and executory. Therefore, the petition for review was denied.