G.R. No. 176341 , July 7, 2014
PRO-GUARD SECURITY SERVICES CORPORATION, Petitioner, vs. TORMIL REALTY AND DEVELOPMENT CORPORATION, Respondent.

FACTS

Manuel A. Torres, Jr. assigned three parcels of land in Pasay City to respondent Tormil Realty and Development Corporation in exchange for shares of stock, but titles remained in Manuel’s name. Manuel later revoked the transaction and, with Edgardo Pabalan, established Torres Pabalan Realty, Incorporated, assigning the same properties to it. The Torres Building was constructed on the land. Tormil filed an SEC case to compel Manuel to transfer the titles. During the pendency of the SEC case, petitioner Pro-Guard Security Services Corporation entered into a lease agreement with Edgardo Pabalan (acting for Torres-Pabalan) in March 1994 for a unit in the building, paying via security services. The SEC ruled in favor of Tormil, a decision ultimately affirmed by the Supreme Court, becoming final in December 1997. Titles and tax declarations were transferred to Tormil by October 1998. On November 5, 1998, Tormil sent letters to Pro-Guard and others asking them to validate possession/enter a lease and settle rentals. After no response, Tormil sent demands to vacate on November 16, 1998. Tormil then filed ejectment suits. The Metropolitan Trial Court (MeTC) ruled for Tormil, ordering Pro-Guard to vacate and pay a monthly rental of ₱20,000.00 from June 1995 until vacated. The Regional Trial Court (RTC) and the Court of Appeals (CA) affirmed. Pro-Guard, while no longer contesting Tormil’s right to possess, challenged the reckoning date for rental payments, arguing it should be from the demand to vacate, not from the start of its occupancy.

ISSUE

Whether the Court of Appeals erred in affirming the lower courts’ decision reckoning the payment of ₱20,000.00 monthly rental from June 1995, instead of from the date of the demand to vacate.

RULING

The Supreme Court ruled that the rental compensation should be reckoned from the time of the demand to vacate, not from the start of Pro-Guard’s occupancy. The Court explained that in an unlawful detainer case, the defendant’s possession is initially lawful but becomes unlawful upon termination of the right to possess. Pro-Guard’s possession from March 1994 was by tolerance of Tormil, pending the resolution of the SEC case. Its right to possess was terminated only upon Tormil’s demand to vacate in November 1998, after Tormil’s ownership was established. Therefore, Pro-Guard’s obligation to pay rentals to Tormil accrues from the date of that demand. The Court modified the CA decision accordingly.