G.R. No. 171858 ; August 31, 2007
Remington Industrial Sales Corporation, Petitioner, vs. Chinese Young Men’s Christian Association of the Phil. Islands (Manila Downtown YMCA), Respondent.

FACTS

Respondent YMCA leased separate ground floor and second-floor units to petitioner RISC. After the lease for the second-floor unit was terminated, RISC filed an action to fix the lease period, while YMCA filed an ejectment case. These were consolidated. RISC later filed a consignation case for ground floor unit rentals and a “Formal Surrender of the Leased Premises,” to which YMCA did not object. The trial court closed the consignation case after RISC delivered checks for the rent. However, RISC continued to use the vacated ground floor unit as a passageway to its second-floor unit, padlocking it and withholding the keys, claiming it was the only ingress/egress.
YMCA subsequently sent statements of account for rental arrears and, after RISC’s repudiation, a Notice of Termination of Lease demanding vacation and payment. YMCA then filed a new ejectment case for the ground floor unit. The Metropolitan Trial Court (MeTC) ruled for YMCA, ordering RISC to vacate and pay back rents. The Regional Trial Court (RTC) reversed, dismissing the complaint. The Court of Appeals reinstated the MeTC decision, prompting RISC’s petition. This Court initially granted RISC’s petition, reinstating the RTC’s dismissal, but YMCA filed a motion for reconsideration.

ISSUE

Whether petitioner RISC unlawfully withheld possession of the leased ground floor premises after its purported surrender, thereby justifying an action for ejectment and liability for compensation.

RULING

The motion for reconsideration is GRANTED. The Court reversed its initial Decision, reinstating the MeTC’s ejectment order with modification. The legal logic is that a lessee’s surrender of possession must be actual and complete. While RISC filed a formal surrender and vacated the premises, its subsequent acts—using the unit as a passageway, padlocking the gates, and refusing to surrender the keys—constituted a continued exercise of control and dominion. This effectively deprived YMCA of beneficial possession, constituting unlawful withholding under the rules on ejectment.
The Court emphasized that the lessee’s duty to return possession at the lease’s end is absolute. RISC’s claim of necessity for a passageway did not justify retaining control; its proper recourse was a separate action to compel the constitution of an easement, not self-help. Since YMCA was unlawfully deprived of possession, the ejectment action was proper. However, for the period RISC retained use after the purported surrender, its liability is for reasonable compensation for use and occupancy, not back rents under the expired lease. Thus, RISC is ordered to pay YMCA reasonable compensation from July 1, 1998, until it fully vacated.