1. AGREEMENT OF FACTS BY PARTIES APPROVED BY COURT; TERMINATES CONTROVERSY. — The stipulation of facts or written agreement entered into by the parties approved by the Court which enjoined them to comply strictly with its terms, settled and ended the controversy between them.

2. LESSOR AND LESSEE; OPTION IN ARTICLE 1678 FOR LESSOR; WHERE PERIOD OF LEASE IS FIXED IN ARTICLE 1687 NOT APPLICABLE. — Article 1678 of the New Civil Code gives the lessor and not the lessee the option provided for therein. When the period of lease is fixed Article 1687 of said Code is not applicable.

Petitioners seek to annul an order of the respondent court in case No. 11849, dated 17 November 1955, ordering them to remove their house from a part of the parcel of land involved in the litigation within fifteen days from receipt of notice of the order, with a warning that if within that period they should fail to do so, the respondent court would order its immediate demolition (Annex F), on the ground of excess of jurisdiction or grave abuse of discretion. They pray that the respondent court be enjoined from issuing the order of demolition. On 27 December 1955 this Court issued the writ of preliminary injunction prayed for upon the filing of the required bond.

Since 1 April 1939, the petitioners were the lessees of part of a residential lot in the municipality of San Carlos, province of Pangasinan, owned by the respondents Petrona Gutierrez and Josefa Gutierrez, on which they built a residential house claimed to be worth P8,000. The terms of the lease was ten years. On 22 August 1951 the respondents brought an action in the Court of First Instance of Pangasinan against the petitioners praying that as the contract of lease had expired on 1 April 1949, the petitioners be ordered to vacate the part of the parcel of land leased by them (civil No. 11849, Annex A). The petitioners pleaded, among others, that the contract had been extended for another ten years (Annex B). On 1 April 1952 when the case was called for hearing, the parties entered into a written agreement, which reads, as follows:chanrob1es virtual 1aw library

Parties accompanied by their respective counsel respectfully submit the following agreement, to wit:chanrob1es virtual 1aw library

1. That plaintiffs agree to extend the period of lease of their land referred to in the complaint for a period of three (3) years from date hereof;

2. That defendants agree to pay a monthly rental of P25.00 from date hereof, payable in advance within the first ten (10) days of every month, except the rentals for the first six (6) months of this lease in the amount of P150.00 which will be paid by the defendants within fifteen days from today;

3. That failure of the defendants to pay two successive months rentals, shall entitle the plaintiffs to ask for a writ of execution evicting the defendants from the premises under lease;

4. That defendants agree to pay another sum of P50.00 payable within fifteen (15) days from today, in payment of back rentals;

5. That defendants renounce all claims of alleged debts of plaintiffs mentioned under paragraph VIII of their answer to the complaint;

6. That the present owners of the land in question are the spouses Ramon Anastacio and Josefa Gutierrez;

WHEREFORE, parties hereto, assisted by their respective counsel, respectfully pray that judgment be rendered in accordance with the foregoing agreement. (Annex C.)

Conformably to the prayer, the respondent court rendered "judgment approving the same and enjoins (enjoining) the parties to comply strictly with its terms."cralaw virtua1aw library

After the expiration of the three year period agreed upon by the parties in paragraph 1 of the above transcribed written agreement, on 24 June 1955 the respondents filed a motion in the case praying that the respondent court issue an order commanding the provincial sheriff to demolish the residential house erected on a part of the parcel of land in question (Annex D). The petitioners objected to the motion and averred that since they had introduced useful improvements on the land consisting of a residential house worth P8,000, they have a right to demand that the respondents pay them one-half of the value of the said improvements pursuant to article 1678 of the new Civil Code; that as the respondents had received monthly rentals from April to September 1955, inclusive, the respondent court could fix a longer period of lease, in accordance with article 1687 of the same Code; and that as the respondents had been sued by the petitioners for damages in the same court, the respondent court could stay the execution in the case (No. 11849) until after the action for damages shall have been decided finally, citing in support of the last contention the rule in the case of Chua A. H. Lee v. Mapa, 51 Phil. 624 (Annex E). On 17 November 1955 the respondent court issued the order assailed and sought to be annulled in this proceedings (Annex F).

The stipulation of facts or written agreement entered into by the parties on 1 April 1952 hereinabove transcribed, approved by the court which enjoined the parties to comply strictly with its terms, settled and ended the controversy between them. The terms thereof had been faithfully complied with by both parties and the three years period of the lease therein agreed upon had already expired. The judgment is final and executory and it may be executed within five (5) years from the entry thereof. 1

The petitioners claim that they are entitled to reimbursement of one-half of the value of the improvements erected on the land in question pursuant to article 1678 of the new Civil Code; that as the respondents had received monthly rentals from April to September 1955, inclusive, the respondent court could fix a longer period of lease, as provided for in article 1687 of the same Code; and that as the respondents were sued by them for damages in the same court, the latter could grant a stay of execution until after the action for damages shall have been decided finally. On the other hand, the respondents deny the petitioners’ claim and that they have cashed the two postal money orders in the amount of P25 each sent to them by the petitioners by registered mail.

The trial Court correctly held that article 1678 of the new Civil Code gives the lessor and not the lessee the option provided for therein; that article 1687 of the Same Code is not applicable because the period of the lease is fixed; and that neither is the rule in the case of Chua A. H. Lee v. Mapa, supra, applicable, because the trial court did not deem it equitable to stay execution despite the bringing of the action for damages by the lessees against the lessors.

The writ prayed for is denied, with costs against the petitioners. The writ of preliminary injunction heretofore issued is dissolved.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Endencia and Felix, JJ concur.

Footnote

1. Section 6, Rule 39.