G.R. No. L-77227 November 29, 1988
COMMANDER REALTY, INC., petitioner, vs. THE COURT OF APPEALS and RUDY VELAYO, INC., respondents.

FACTS

This case involves a motion for reconsideration of a Supreme Court decision dated May 9, 1988. In that decision, the Court ordered private respondent Rudy Velayo, Inc. (Velayo) to pay petitioner Commander Realty, Inc. (Commander) compensation for the use and occupation of leased premises. The award was set at P15,000 monthly from September 1980 to September 1983, P20,000 from September 1983 to September 1985, and P25,000 from September 1985 to November 1987, when Velayo vacated the property.
Velayo, in its motion, brought to the Court’s attention that the issue of rentals for the period from September 1980 to September 1985 had already been conclusively settled in a prior case. The Court of Appeals, in a decision affirmed by the Supreme Court in G.R. No. 76659, had fixed the monthly rental for that period at P10,000, which Velayo claimed had been “religiously paid.” Velayo further contended there was no factual basis for the P25,000 award from September 1985 onward, as it had not yet filed its Answer in the underlying ejectment case. Commander, however, insisted its action was for damages due to usurpation, claiming deprivation of P65,000 monthly, and prayed for further damages.

ISSUE

Whether the Supreme Court’s prior award of reasonable compensation for use and occupation in its May 9, 1988 decision should be modified in light of a final and executory judgment in a related case fixing the rental for a specific period and the circumstances surrounding the subsequent period.

RULING

The Supreme Court granted the motion for reconsideration and modified its earlier decision. The legal logic is anchored on the principles of finality of judgment and judicial economy. The Court recognized that the monthly rental for the period from September 4, 1980, to September 4, 1985, had been definitively fixed at P10,000 by the Court of Appeals, a decision which this Court had already affirmed in G.R. No. 76659. Since that prior judgment had become final and executory, the doctrine of conclusiveness of judgment or bar by prior judgment precluded its re-litigation. The Court, therefore, deleted the portion of its award covering that period.
For the subsequent period from September 5, 1985, to November 30, 1987, the Court, in the interest of settling the protracted controversy finally, exercised its equitable discretion. It reduced the compensation from P25,000 to P20,000 monthly. This adjustment was deemed reasonable and equitable, with the Court taking judicial notice of the general increase in real estate rentals for business establishments, effectively doubling the previously adjudicated rate. Commander’s prayer for an additional P1 million in damages was denied, as the Court clarified that the cause of action was fundamentally one for unlawful detainer (for the recovery of possession and accrued rentals), not an independent action for damages arising from tort or breach of contract. The dispositive portion was amended to order Velayo to pay P20,000 monthly for the stated period, with legal interest.