CASE DIGEST: Azcuna vs. Court of Appeals

 

MELQUIADES D. AZCUNA, JR., petitioner, vs. COURT OF APPEALS, ET AL., respondents

G.R. No. 116665. March 20, 1996.

 

DOCTRINE:

The freedom of the contracting parties to make stipulations in their contract provided they are not contrary to law, morals, good customs, public order or public policy is settled.— This is clearly an agreement for liquidated damages— entitling private respondent to claim a stipulated amount by way of damages (correctly totalling P3,000.00 per day as there were three (3) units being leased by petitioner) over and above other damages still legally due him, i.e., the fair rental value for the use and occupation of the property as provided for in Section 8, Rule 70 of the Rules of Court. The freedom of the contracting parties to make stipulations in their contract provided they are not contrary to law, morals, good customs, public order or public policy is so settled, and the Court finds nothing immoral or illegal with the indemnity/penalty clause of the lease contract (paragraph 10) which does not appear to have been forced upon or fraudulently foisted on petitioner. Petitioner cannot now evade further liability for liquidated damages, for “after entering into such an agreement, petitioner cannot thereafter turn his back on his word with a plea that on him was inflicted a penalty shocking to the conscience and impressed with inequity as to call for the relief sought on the part of a judicial tribunal.”

FACTS:

Under a 1 year lease contract commencing on July 1, 1992 and ending on June 30, 1993 but renewable upon agreement, herein petitioner Azcuna, Jr., as lessee, occupied three (3) units (C, E and F) of the building owned by private respondent Barcelona’s family. Came expiration date of the lease without an agreed renewal thereof and coupled by petitioner’s failure to surrender the leased units despite private respondent’s demands, private respondent filed before the Municipal Trial Court an ejectment case against petitioner. Judgment of that inferior court, affirmed in its entirety by the Regional Trial Court and herein public respondent Court of Appeals on subsequent appeals taken by petitioner, favored private respondent.

Petitioner now comes to the Court via the instant petition not to contest his ouster from the leased premises nor the amount of monthly rental he was adjudged to pay until he vacates the same, but only to take particular exception to respondent CA’s decision insofar as it affirmed the municipal trial court’s award of P3,000.00 per day as damages. It is petitioner’s claim that such award, in addition to the fair rental value or reasonable compensation for the use and occupation of the premises, is improper in the light of the doctrine enunciated in the cases of “Felesilda v. Villanueva,” “Shoemart, Inc. v. CA” and “Hualam Construction and Development Corp. v. CA” cited by petitioner, that “the only damages that can be recovered in an ejectment suit are the fair rental value or the reasonable compensation for the use and occupation of the real property. Other damages must be claimed in an ordinary action.”

ISSUE:

WON the MTC erred in awarding P3k per day as damages

RULING:

Petitioner’s reliance on such doctrine is misplaced, inasmuch as the “Felesilda,” “Shoemart” and “Hualam” cases dealt with additional damages and charges other than liquidated damages, defined as “x x x those agreed upon by the parties to a contract, to be paid in case of breach thereof.” Here, the municipal trial court, in making the “P3,000.00 per day” award, was merely enforcing what was stipulated upon in black and white by private respondent-lessor and petitioner-lessee appearing in paragraph 10 of the lease contract which reads:

“That after the termination of the lease, the LESSEE shall peaceably deliver to the LESSOR the leased premises vacant and unencumbered and in good tenantable conditions minus the ordinary wear and tear. In case the LESSEE’s failure or inability to do so, LESSOR has the right to charge the LESSEE P1,000.00 per day as damages without prejudice to other remedies which LESSOR is entitled in the premise.”

This is clearly an agreement for liquidated damages— entitling private respondent to claim a stipulated amount by way of damages (correctly totalling P3,000.00 per day as there were three (3) units being leased by petitioner) over and above other damages still legally due him, i.e., the fair rental value for the use and occupation of the property as provided for in Section 8, Rule 70 of the Rules of Court. The freedom of the contracting parties to make stipulations in their contract provided they are not contrary to law, morals, good customs, public order or public policy is so settled, and the Court finds nothing immoral or illegal with the indemnity/penalty clause of the lease contract which does not appear to have been forced upon or fraudulently foisted on petitioner. Petitioner cannot now evade further liability for liquidated damages, for “after entering into such an agreement, petitioner cannot thereafter turn his back on his word with a plea that on him was inflicted a penalty shocking to the conscience and impressed with inequity as to call for the relief sought on the part of a judicial tribunal.”

DISPOSITIVE:

WHEREFORE, the instant petition for review by way of certiorari is hereby DENIED. SO ORDERED.