G.R. No. 171858 - Remington Industrial Sales Corp. vs. Chinese Young Men's Christian Association of the Philippines Islands

Respondent YMCA is the owner of a two-story building in Binondo, Manila, and is the lessor in multiple lease arrangements.
Petitioner Remington Industrial Sales Corporation (RISC) entered into a lease for Unit No. 963 (second floor) from December 1, 1993 to November 30, 1995.
Petitioner also leased Unit No. 966 (ground floor) from December 1, 1995 to November 30, 1997, while an adjacent unit, Unit No. 964, was leased to petitioner’s sister company RSC.
The petitioner removed the partition between Units 964 and 966 to combine the spaces, using them as an office, hardware store, and display shop, as well as creating a passageway to Unit No. 963 (which was used as a staff room).

On February 27, 1997, respondent formally terminated the lease over the second floor unit, giving RISC until March 31, 1997 to vacate the premises.
Prior to the expiration of the prescribed vacating period, RISC filed an action for the Fixing of Lease Period over the unit, while respondent simultaneously instituted an ejectment case against petitioner.
Both cases were later consolidated before Branch 26 of the Metropolitan Trial Court of Manila (MeTC-Manila).
In parallel, petitioner filed a Petition for Consignation of Rentals, alleging that respondent wrongfully refused to receive rental payments for the ground floor units.
During the proceedings, petitioner submitted a Formal Surrender of the Leased Premises. Although respondent did not object to the surrender, petitioner continued to use the premises, particularly as a passageway, and kept the property padlocked, thereby withholding keys.

Despite the delivery of two checks covering the rents for the ground floor units and an order by the trial court declaring the consignation case closed, petitioner continued to use the premises as the sole access to the second floor unit.
An ocular inspection revealed that petitioner still possessed the keys to the ground floor units while the premises remained padlocked, effectively barring respondent from taking actual control.
Respondent, having never been in actual possession, repeatedly demanded payment for rental arrears through several Statements of Account, and eventually issued a Notice of Termination of Lease accompanied by further rental arrears claims.
Two ejectment cases were later initiated: one against petitioner’s sister company RSC for Unit No. 964 and another against petitioner RISC for Unit No. 966.
The ejectment case against RSC yielded conflicting decisions at the MeTC, RTC, and Court of Appeals levels, while the ejectment case against petitioner (RISC) was ultimately reversed by the Court of Appeals after prior decisions by the MeTC and RTC.

Petitioner argued that its filing of the Formal Surrender of the Leased Premises and the consequent emptying of the premises on July 1, 1998, constituted constructive delivery, thereby terminating the lease.
However, respondent countered that the use of the premises as a passageway, the continued padlocking, and the failure to hand over the keys meant that petitioner had unlawfully withheld actual possession.
Respondent relied on the principle that, in a lease, actual delivery must include making the property available to the lessor without hindrance, not merely an administrative surrender.
Subsequent lower court rulings and evidentiary findings (including a Commissioner’s Report and a physical inspection) supported respondent’s contention that petitioner’s constructive delivery did not suffice for an effective turnover of possession.

Whether the filing of the Formal Surrender of the Leased Premises and the subsequent emptying of the property on July 1, 1998, constituted an effective constructive delivery amounting to actual possession by the respondent.
Whether petitioner’s continued use of the ground floor units as a passageway, the act of padlocking the premises, and failure to turn over the keys legally amount to unlawful withholding of possession.
Whether respondent is entitled to claim and be awarded reasonable compensation (back rental payment) for petitioner’s continued occupancy of the leased premises after the effective termination of the lease.
How the principles of constructive versus actual delivery should be applied in determining the termination of lease rights and attendant obligations under Philippine law.