Remington Industrial Sales Corp. v. Chinese Young Men's Christian Assn.
REITERATIONFacts
The Antecedents: Respondent YMCA owns a building in Binondo, Manila, and leased units to petitioner Remington Industrial Sales Corporation (RISC). RISC leased Unit No. 963 on the second floor from December 1, 1993, to November 30, 1995, and Unit No. 966 on the ground floor from December 1, 1995, to November 30, 1997. RISC removed a partition between Unit 966 and an adjoining unit leased by its sister company, using the combined space as its office, hardware store, and display shop, and also as a passageway to Unit 963, which served as its staff room. On February 27, 1997, YMCA formally terminated the lease for the second-floor unit, demanding RISC vacate by March 31, 1997. Before this deadline, RISC filed an action for the fixing of the lease period for the second-floor unit, while YMCA subsequently filed an ejectment action against RISC. Procedural History: The two cases were consolidated before the Metropolitan Trial Court (MeTC) of Manila. During this period, RISC filed a petition for consignation of rentals, alleging YMCA refused to accept payments for the ground floor units. RISC later filed a Formal Surrender of the Leased Premises. The MeTC, on August 11, 1998, rendered a decision extending the lease for the second-floor unit by three years and dismissed YMCA's ejectment complaint. RISC then filed a motion to constitute a passageway, claiming it lacked ingress and egress to its second-floor unit. An ocular inspection revealed RISC retained the keys to the ground floor units, which YMCA claimed prevented it from accessing the premises. YMCA offered to constitute a passageway if RISC surrendered possession of the ground floor unit. Since RISC was not in actual possession, YMCA demanded payment for back rentals. After RISC repudiated these demands, YMCA filed two ejectment cases on October 26, 2000, one against RISC for Unit No. 966. The MeTC ruled in favor of YMCA, ordering RISC to vacate and pay back rents. The Regional Trial Court (RTC) reversed this, dismissing the complaint. The Court of Appeals (CA) then reversed the RTC, reinstating the MeTC decision. This Court, in its January 22, 2007 decision, granted RISC's petition, setting aside the CA decision and reinstating the RTC decision dismissing the ejectment case. The Petition: Respondent YMCA filed a motion for reconsideration of this Court's January 22, 2007 decision. YMCA argued that RISC had not constructively delivered possession of the ground floor units despite filing the Formal Surrender of the Leased Premises and vacating the premises on July 1, 1998. YMCA contended that RISC's continued use of the premises as a passageway, the padlocking of the gates, and the non-turnover of keys constituted an unlawful withholding of possession. The Court granted the motion for reconsideration, vacating its previous decision. It held that while RISC's filing of the formal surrender and vacating the premises constituted constructive delivery, RISC failed to place the premises at YMCA's disposal without impediment by retaining the keys and padlocking the unit. Therefore, RISC unlawfully withheld possession from July 1, 1998, until it finally vacated on March 12, 2004, and was liable for reasonable compensation for its continued occupancy.
Issue(s)
Whether the filing of a 'Formal Surrender of Leased Premises' and the physical vacating of the area constitute a sufficient return of the leased property to the lessor under Article 1665 of the Civil Code, and whether RISC's actions constituted an unlawful withholding of possession. Whether RISC is liable for reasonable compensation for the use of the premises as a passageway despite the formal surrender, and if so, what is a fair and reasonable amount considering the limited use and the lessor's negligence.
Ruling
The Motion for Reconsideration is GRANTED. The Decision dated January 22, 2007, is VACATED. A new judgment is entered REINSTATING and AFFIRMING the Decision of the Metropolitan Trial Court of Manila with the MODIFICATION that petitioner is ordered to PAY respondent P11,000.00 a month from July 1, 1998, until March 12, 2004, as reasonable compensation.
Ratio Decidendi
On Issue 1: The Court ruled that the filing of the 'Formal Surrender of Leased Premises' and the actual emptying of the premises constituted only constructive delivery, which did not transfer actual control to YMCA. Under Article 1665 of the Civil Code, the lessee is obligated to return the thing leased as he received it. Citing legal authorities, the Court emphasized that it is not enough for the lessee to vacate; he must place the thing at the disposal of the lessor so that the latter can receive it without any obstacle. This includes the specific duty to return the keys to the lessor. Since RISC kept the premises padlocked and failed to provide YMCA with the keys, YMCA was effectively deprived of the use and control of its property. Therefore, RISC's actions constituted an unlawful withholding of possession despite the formal manifestation of surrender. On Issue 2: The Court held that RISC is liable for reasonable compensation for its continued occupancy and withholding of the premises from July 1, 1998, until it finally surrendered the keys on March 12, 2004. Under Section 17, Rule 70 of the Rules of Court, the trial court may award reasonable compensation for the use and occupation of the premises, which partakes of the nature of actual damages. The Court found that the stipulated rent of P22,531.00 should be equitably reduced to P11,000.00. This reduction is based on two factors: first, the premises were used only as a passageway because YMCA failed to provide an alternative access to the second floor; and second, YMCA was negligent in waiting over a year to demand back rentals. Applying the principle against unjust enrichment and considering the mutual negligence of the parties, the Court determined that P11,000.00 was a fair and reasonable amount for the limited use of the area.
Main Doctrine
The obligation of the lessee to return the leased premises upon the expiration of the lease period is not satisfied by mere physical vacation of the property. To be effective, the return must involve placing the thing at the disposal of the lessor so that the latter can receive it without any obstacle, which includes the turnover of keys and the removal of all impediments to the lessor's control. Failure to provide the lessor with the means of access, such as keeping the premises padlocked, constitutes an unlawful withholding of possession, rendering the lessee liable for reasonable compensation for the period of such withholding.