G.R. No. 116665 March 20, 1996
Melquiades D. Azcuna, Jr., petitioner, vs. Court of Appeals, et. al., respondents.

FACTS

Petitioner Azcuna leased three commercial units from private respondent Barcelona under a one-year contract from July 1, 1992, to June 30, 1993, renewable by agreement. Upon the contract’s expiration without renewal, Azcuna failed to vacate and surrender the premises despite demands. Barcelona filed an ejectment suit. The Municipal Trial Court ruled in Barcelona’s favor, ordering Azcuna to vacate, pay monthly rentals for his continued use starting July 1, 1993, and pay P3,000.00 per day as damages for failure to peacefully turn over the units, plus attorney’s fees. The Regional Trial Court and the Court of Appeals affirmed the decision in full.
Azcuna elevated the case to the Supreme Court, contesting only the award of P3,000.00 per day as damages. He argued that in ejectment cases, the only recoverable damages are the fair rental value or reasonable compensation for use and occupation, citing jurisprudence like Felesilda v. Villanueva. He contended that other damages must be pursued in an ordinary civil action.

ISSUE

Whether the award of P3,000.00 per day as damages, in addition to the accrued rentals, is proper in an ejectment case.

RULING

Yes, the award is proper. The petitioner’s reliance on the cited doctrine is misplaced. The cases of Felesilda, Shoemart, and Hualam involved claims for additional damages other than liquidated damages. Here, the P3,000.00 daily award constitutes liquidated damages, which are those agreed upon by the parties to be paid in case of breach, as defined under Article 2226 of the Civil Code.
Paragraph 10 of the lease contract explicitly stipulated that upon termination, the lessee must peaceably deliver the premises, and in case of failure, the lessor has the right to charge P1,000.00 per day per unit as damages. With three units leased, this correctly totals P3,000.00 daily. This stipulation is a valid liquidated damages clause, not contrary to law, morals, good customs, public order, or public policy. The award enforces this contractual agreement, which is separate from the reasonable compensation for use and occupation awarded under Section 8, Rule 70 of the Rules of Court.
The Court, citing the controlling precedent of Gozon v. Vda. de Barrameda, held that while inferior courts have exclusive jurisdiction over ejectment and generally limit damages to reasonable compensation, they may award liquidated damages when previously stipulated in the contract. Such stipulated damages are directly due to the unlawful occupation and breach of the lease agreement. Petitioner, having freely entered into the contract, cannot evade this liability. The petition was denied.