Republic v. Great Riverland Development Corp.

SECOND DIVISION

[G.R. No. 218455. November 29, 2021.]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRIVATIZATION AND MANAGEMENT OFFICE, petitioner, vs.GREAT RIVERLAND DEVELOPMENT CORPORATION AND SOBROS PAPER PRODUCTS CO., INC., respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Second Division, issued a Resolution dated29 November 2021which reads as follows:

"G.R. No. 218455 (Republic of the Philippines, represented by the Privatization and Management Office v. Great Riverland Development Corporation and Sobros Paper Products Co., Inc.). — Before this Court is a Petition for Review on Certiorari1 dated July 20, 2015 filed by petitioner Republic of the Philippines, represented by the Privatization and Management Office (PMO), praying for the reversal of the Decision 2 dated December 3, 2014 and the Resolution 3 dated May 25, 2015 of the Court of Appeals (CA) in CA-G.R. CV No. 100628, which affirmed in toto the Decision 4 dated June 14, 2012 of the Regional Trial Court (RTC), Branch 62, Makati City, in Civil Case No. 08-852.

The Factual Antecedents

In July 2004, the PMO offered for public bidding a 90,714-square meter property in Barangay San Isidro, Talakag, Bukidnon, consisting of land, buildings, machinery and other equipment (the MENDECO Compound). 5 Under the Asset Specific Bidding Rules (ASBR) 6 issued by PMO, the sale of the MENDECO Compound will be on an "as-is, where-is" basis, 7 and turnover of the same will be made upon the signing of the necessary Contract of Sale. 8

Respondent Great Riverland and Development Corporation (GRDC) submitted its bid, came out as the highest bidder, and was awarded the MENDECO Compound for P20,000,000.00. Thereafter, on February 10, 2005, PMO and GRDC executed a Deed of Absolute Sale, 9 which was later modified on May 10, 2005 to include a description of the facilities. 10 CAIHTE

The Deed of Absolute Sale provides, among others, that the sale of the MENDECO Compound in favor of GRDC is on an "as-is, where-is" basis. Further, the Deed of Absolute Sale contains a provision with respect to a 150-day grace period given to Sobros Paper Products Co., Inc. (Sobros) under a Contract of Lease between Sobros and PMO, to wit:

1. The sale of the PROPERTY is on an "as-is, where-is" basis, and the VENDEE hereby confirms that it has independently and without reliance on the representations made by the VENDOR and based on such documents and information as it has deemed appropriate, conducted its own examination of the actual condition and status of the PROPERTY, including the existence of the 150-day grace period given to Sobros Paper Products Company, Inc. (SOBROS) under the Contract of Lease entered into between MENDECO (in behalf of the VENDOR) and SOBROS dated April 26, 2004, to pull-out its machinery, equipment, fixtures and other chattels located in the sold parcel of land, and that based on its own independent assessment and evaluation of the actual condition and status of the PROPERTY, the VENDEE decided to purchase the same and enter into this Deed of Absolute Sale. 11 (Emphasis supplied)

On March 8, 2005, after the execution of the Deed of Absolute Sale between PMO and GRDC, PMO turned over the MENDECO Compound to GRDC. PMO pulled out its security guards previously guarding the premises and all of its employees within the MENDECO Compound. However, PMO was unable to withdraw its security paper equipment stored in the Pulp and Decorticating Mill Building inside the MENDECO Compound. 12

On November 3, 2006, or more than one year and three months after the execution of the Deed of Absolute Sale and the supposed complete turnover of the MENDECO Compound, GRDC formally demanded that PMO: first, remove the security paper equipment from the Pulp and Decorticating Mill Building; and second, pay rent or storage fees in the amount of P200,000.00 per month for the use of the Pulp and Decorticating Mill Building within the MENDECO Compound. 13

On November 28, 2006, PMO sent a letter 14 to GRDC, requesting for an extension of 90 days from December 3, 2006 or until March 3, 2007, to pull out or dispose of the security paper equipment. In its letter, PMO also disputed the demand for the payment of rentals as the use of the Pulp and Decorticating Mill Building was with the knowledge and consent of GRDC. Moreover, PMO stated that: (1) the amount of P200,000.00 per month was excessive; and (2) assuming that GRDC is entitled to rental payments, the same should be reckoned from November 3, 2006, the date when GRDC made its formal demand. 15

GRDC did not respond to PMO's letter, which led to PMO believing that its request for extension was granted. 16 DETACa

Notably, despite the 90-day extension requested by PMO, it was only on March 29, 2007 that PMO again wrote to GRDC, informing the latter that the Privatization Council of PMO has already approved the offer of Sobros for the purchase of the security paper equipment. PMO then requested GRDC for a meeting to facilitate the smooth turnover of the same. However, on April 17, 2007, GRDC turned down PMO's request and pointed out that its demand for rental payments must first be addressed by PMO before it contemplates any "smooth turnover" of the security paper equipment. 17

Meanwhile, on January 25, 2008, PMO and Sobros executed a Deed of Absolute Sale 18 over the security paper equipment. Such Deed of Absolute Sale provides, among others, that the sale of the security paper equipment is on an "as-is, where-is" basis, and that Sobros is in charge of pulling out the same from the MENDECO Compound:

1. The sale of the PROPERTY is on an "as-is, where-is" basis, and the VENDEE hereby confirms that it has, independently and without reliance on the representations made by the VENDOR, and based on such documents and information as it has deemed appropriate, conducted its own examination of the PROPERTY, and on that basis made its independent decision to purchase the same and enter into this Deed of Absolute Sale.

2. That the VENDEE is fully aware that the "Property" are presently stored and/or located at the former Menzi compound at Brgy. San Isidro, Talakag, Bukidnon and that it shall be the responsibility of the VENDEE to pull out the "Property" and for this purpose shall shoulder and/or pay the transfer costs and other expenses incidental to the sale and pull-out of the PROPERTY[.] 19 (Emphasis supplied)

On February 19, 2008, Sobros attempted to withdraw the security paper equipment from the Pulp and Decorticating Mill Building found within the MENDECO Compound. However, GRDC refused to allow Sobros to take the equipment out of the MENDECO Compound on the ground that the rent or storage fees for the warehousing of the security paper equipment inside the Pulp and Decorticating Mill Building were not yet paid. 20

Thus, on March 3, 2008, Mr. George So, the President of Sobros, wrote a letter 21 to PMO, asking it to correspond with GRDC so that Sobros will be allowed to pull out the security paper equipment from the MENDECO Compound. The letter reads:

Dear Sir

I am writing [to] your office because my people at Talakag are having a problem with the pull-out of some of the equipment from the crates of the Security Paper building stored in the property of Mr. Alvarez. The manager assigned there would not allow my people to pull-out the equipment because of PMO's nonpayment of storage fees to Mr. Alvarez.

It is in this regard, that I am requesting your good office to please interfere and talk to Mr. Alvarez to allow us to pull out the subject equipment my company has purchased. I think that my company should not be included in your problem with Mr. Alvarez. ATICcS

Hoping that you will assist us on the above. Thank you in advance. 22

Relevantly, neither PMO nor Sobros paid the storage fees demanded by GRDC; thus, the security paper equipment remained inside the MENDECO Compound. 23

Proceedings before the RTC

On October 16, 2008, GRDC filed a Complaint 24 against PMO before the RTC, seeking to: (1) collect rental payments in the amount of P200,000.00 per month; (2) gain complete possession and control of the Pulp and Decorticating Mill Building inside the MENDECO Compound; and (3) collect attorney's fees and exemplary damages. 25

On December 4, 2008, PMO filed its Answer (with Third-Party Complaint), 26 where it argued that the sale of the MENDECO Compound to GRDC was on an "as-is, where-is" basis and that GRDC entered into the sale knowing that the crates containing the security paper equipment were already inside the Pulp and Decorticating Mill Building at the time of the sale. 27 PMO likewise alleged that GRDC was not entitled to the exorbitant rents demanded, and if at all, any rental payment should be reckoned from November 3, 2006, the time of formal demand. 28 Finally, PMO attached to its answer an Appraisal Report 29 dated May 16, 2004, showing that based on the area of the Pulp and Decorticating Mill Building (which is 2,220 square meters out of the 90,714-square meter area of the whole MENDECO Compound), the rent for the use of the same should only be P32,567.40 per month. 30

Meanwhile, with respect to its Third-Party Complaint against Sobros, PMO emphasized that: (1) their Deed of Absolute Sale provides that such sale is on an "as-is, where-is" basis; and (2) it was Sobros's obligation to pull out the security paper equipment from the MENDECO Compound. Thus, PMO argued that Sobros should be held liable for the rental payments demanded by GRDC. 31

On March 19, 2009, Sobros filed its Answer to the Third-Party Complaint, 32 where it argued that it had no knowledge of the existing dispute between GRDC and PMO with regard to the payment of rental or storage fees. Moreover, Sobros alleged that nowhere in the Deed of Absolute Sale does it state that Sobros will assume the payment of such fees. In fact, Sobros emphasized that PMO expressly guaranteed that PMO will shoulder any storage fees that may be adjudged in connection with the storage of the security paper equipment in the MENDECO Compound. 33

After due proceedings, the RTC ruled in favor of GRDC and ordered PMO to pull out the security paper equipment and to pay rent in the amount of P7,915.00 per month from the date of formal demand until the Pulp and Decorticating Mill Building is fully vacated, with legal interest. The RTC, citing the case of Asset Privatization Trust v. T.J. Enterprises, 34 ruled that the phrase "as-is, where-is" only pertains to the physical condition of the thing sold, and not its legal situation. In this case, PMO was already in delay when it failed to withdraw the security paper equipment and deliver complete possession of the Pulp and Decorticating Mill Building to GRDC; thus, GRDC was entitled to rental payments. With respect to the rate of such rental payments, however, the RTC stated that the rate of P7,915.00 per month is reasonable and proper under the circumstances of the case. 35 AIDSTE

As regards the Third-Party Complaint filed against Sobros, the RTC found that PMO failed to disclose to Sobros the issue on the rental payments between PMO and GRDC. Moreover, the RTC found that the Deed of Absolute Sale executed between Sobros and PMO does not contain any provision stating that Sobros must shoulder such rental payments. 36

Thus, in a Decision 37 dated June 14, 2012, the RTC resolved the case in favor of GRDC and dismissed the Third-Party Complaint against Sobros:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff Great Riverland Development Corporation, & against defendant Republic of the Philippines represented by the Privatization & Management Office, who is hereby ordered to pay plaintiff reasonable rental fees in the amount of P7,915.00 per month reckoned from November 2006, plus interest thereon at 6% per annum from default until full payment shall have been paid & Php200,000.00 as reasonable attorney's fees, plus cost of suit.

Consequently, defendant is hereby ordered to cause the withdrawal of the security paper equipment from the Pulp & Decorticating Mill Building inside the Mendeco Paper Mill.

Considering that defendant failed to prove by preponderance of evidence on its 3rd party complaint against Sobros Paper Products, Inc., the same is hereby dismissed together with Sobros' counterclaims.

SO ORDERED. 38

Appeal before the CA

Aggrieved by the RTC's decision, PMO appealed to the CA, raising the following assignment of errors:

1. THE TRIAL COURT COMMITTED A REVERSIBLE ERROR WHEN IT DID NOT RULE THAT GRDC IS NOT ENTITLED TO RENTAL ON THE GROUND THAT THE DAMAGE IT ALLEGEDLY SUSTAINED IS DAMNUM ABSQUE INJURIA.

2. THE TRIAL COURT COMMITTED A REVERSIBLE ERROR WHEN IT AWARDED ATTORNEY'S FEES AND INTEREST TO GRDC IN THE ABSENCE OF ANY FACTUAL AND LEGAL BASIS THEREFOR.

3. THE TRIAL COURT COMMITTED A REVERSIBLE ERROR WHEN IT DID NOT HOLD SOBROS LIABLE FOR THE PAYMENT OF RENTAL TO GRDC FROM THE TIME PMO TURNED OVER THE SECURITY PAPER EQUIPMENT TO SOBROS. 39

On December 3, 2014, the CA rendered a decision, affirming in toto the decision of the RTC, to wit:

WHEREFORE, the Decision dated 14 June 2012, of the Regional Trial Court, Branch 62, Makati City, in Civil Case No. 08-852 for Specific Performance/Sum of Money/Damages is AFFIRMEDin toto. AaCTcI

SO ORDERED.40

In denying PMO's appeal, the CA applied the principle of unjust enrichment found in Article 22 of the Civil Code, 41 and ruled that PMO will be unjustly enriched if it is allowed to use the Pulp and Decorticating Mill Building as a warehouse for storing the security paper equipment without paying rent to GRDC. 42 Moreover, the CA ruled that notwithstanding the "as-is, where-is" clause found in the Deed of Absolute Sale between PMO and GRDC, the same does not relieve PMO of its obligation to place full control of the MENDECO Compound to GRDC. 43

Meanwhile, with regard to the sale of the security paper equipment between Sobros and PMO, the CA explained that, while as a general rule, the execution of a public instrument shall be equivalent to the delivery of the thing sold, such execution of a public instrument only gives rise to a prima facie presumption of delivery. Such presumption is destroyed when the delivery of the thing sold is not effected because of a legal impediment. On this note, the CA stated that it is necessary that the vendor shall have control over the thing sold so that at the moment of sale, its material delivery could be made in favor of the vendee. Thus, a person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument. 44

In this case, the CA found that there was no constructive delivery of the security paper equipment despite the execution of the Deed of Absolute Sale between PMO and Sobros since it was not PMO, but GRDC, which has actual possession of the said equipment. Likewise, the CA ruled that despite the "as-is, where-is" clause found in the Deed of Absolute Sale between PMO and Sobros, PMO is not relieved of its responsibility to deliver the security paper equipment to Sobros — which responsibility includes the obligation to pay the rent or storage fees so that such equipment may be delivered and placed in the possession of Sobros. 45

PMO filed a motion for reconsideration, but the same was denied in the CA's Resolution 46 dated May 25, 2015.

The instant petition

On July 20, 2015, PMO filed the instant petition where it raised the following issues:

I. WHETHER OR NOT PMO IS LIABLE TO PAY RENTAL OR DAMAGES FROM THE TIME GRDC REFUSED, WITHOUT JUST AND LEGAL GROUND, THE WITHDRAWAL OR REMOVAL OF THE SECURITY PAPER EQUIPMENT FROM THE PULP AND DECORTICATING MILL BUILDING.

II. WHETHER OR NOT PMO IS LIABLE TO PAY RENTAL OR DAMAGES DESPITE THE LACK OF A VALID AND EFFECTIVE DEMAND FOR THE WITHDRAWAL OR REMOVAL OF THE SECURITY PAPER EQUIPMENT FROM THE PULP AND DECORTICATING MILL BUILDING.

III. WHETHER OR NOT GRDC IS ENTITLED TO ATTORNEY'S FEES AND INTEREST IN THE ABSENCE OF ANY OF THE CIRCUMSTANCES MENTIONED IN ARTICLES 2208 AND 2213 OF THE NEW CIVIL CODE THAT WOULD HAVE WARRANTED GRDC'S ENTITLEMENT THERETO AND THE FACT THAT THE FILING OF THE COMPLAINT WAS A RESULT OF GRDC'S UNJUST REFUSAL TO ALLOW THE WITHDRAWAL OR REMOVAL OF THE SECURITY PAPER EQUIPMENT. EcTCAD

IV. WHETHER OR NOT SOBROS SHOULD BE HELD LIABLE FOR THE PAYMENT OF RENTAL OR DAMAGES FROM THE TIME THE SECURITY PAPER EQUIPMENT WERE TURNED OVER TO IT.47

In its petition, PMO argued that it is not liable for damages or rental payments to GRDC because the latter unjustifiably refused to release the security paper equipment from the MENDECO Compound. 48 PMO likewise argued that GRDC effectively "held hostage" the security paper equipment when it demanded rental payment in an unconscionable and ridiculous amount of P200,000.00 per month, which act is not allowed by any law or jurisprudence. Moreover, PMO emphasized that GRDC's prayer in its complaint — that PMO deliver to GRDC complete possession and control of the Pulp and Decorticating Mill Building — is diametrically opposed to GRDC's own acts of disallowing the withdrawal of the security paper equipment. Clearly, GRDC cannot seek judicial intervention to exact performance of an obligation that it prevented from being performed. Thus, PMO cannot be made liable for damages that GRDC may have suffered after the latter's unwarranted refusal to allow the withdrawal of the security paper equipment, since such damage is damnum absque injuria. 49

PMO likewise argued in the petition that it cannot be made liable for the payment of damages, considering that there was no valid and effective demand for the removal of the security paper equipment. PMO stressed that when it asked for a 90-day extension to remove the security paper equipment from the Pulp and Decorticating Mill Building, GRDC failed to respond. Thus, PMO assumed that GRDC granted such request. 50 Considering GRDC's silence, it can be conclusively presumed that it had acceded to PMO's request for extension, in accordance with Section 2, Rule 131 51 and Section 32, Rule 130 52 of the Rules of Court. Thus, there was no valid demand on the part of GRDC, and consequently, PMO cannot be considered in delay nor liable for damages. 53

PMO contended that GRDC is not entitled to any attorney's fees or interest because the filing of the case resulted from GRDC's unjust refusal to release the security paper equipment. Without GRDC's unscrupulous demand and uncompromising posture, there would have been no necessity for court intervention. 54 Moreover, as regards the claim for interest, PMO argued that, according to the case of Lim v. Court of Appeals, 55 interest cannot be imposed until the finality of the court's judgment. 56

Finally, PMO averred in its petition that Sobros should be held liable for the payment of damages or rent from the time it turned over the security paper equipment to Sobros. PMO claimed that it had already turned over the security paper equipment on February 19, 2008, and after such turnover, ownership of the same was already transferred to Sobros. Thus, any liability to pay rent or storage fees from such date should be borne by Sobros. 57

GRDC's Comment

On February 26, 2016, GRDC filed its Comment, 58 where it argued that under Articles 1169 59 and 1170 60 of the Civil Code, PMO is liable for damages because it incurred delay in delivering to GRDC complete control and dominion over the MENDECO Compound. Since PMO failed to take out the security paper equipment from the Pulp and Decorticating Mill Building, GRDC was deprived of the full use of the premises. Likewise, GRDC averred that the CA correctly ruled that PMO will be unjustly enriched if it is allowed to use the Pulp and Decorticating Mill Building without paying rent to GRDC. 61 HSAcaE

However, with respect to the rate of rental payments, GRDC contended that the rate should be P32,567.40 per month, contrary to the amount of rent granted by the RTC and the CA, which is P7,915.00 per month. GRDC emphasized that PMO, in its answer, expressly admitted that GRDC's right to reasonable rent should be P32,567.40 per month; thus, PMO should be bound thereby. 62

Finally, GRDC argued that it is entitled to: (1) attorney's fees in accordance with Article 2208 63 of the Civil Code, because PMO's act of failing to deliver the security paper equipment compelled GRDC to litigate; and (2) legal interest in the rate of 6%, in view of the Court's ruling in Booc v. Five Star Marketing Co., Inc.64

Sobros's Comment

On February 11, 2016 and March 22, 2016, Sobros filed its Comment, 65 where it reiterated that it has no obligation to pay rent or storage fees that may be due to GRDC. Sobros highlighted that the mere execution of the Deed of Absolute Sale between Sobros and PMO was not tantamount to delivery of the security paper equipment because Sobros failed to take actual possession thereof. 66 Moreover, Sobros contended that the fact that the sale of the security paper equipment was on an "as-is, where-is" basis does not mean that Sobros had already agreed to shoulder PMO's obligation to pay rent or storage fees. 67

PMO's Reply

On December 28, 2016, PMO filed its Consolidated Reply, 68 where it reiterated the arguments it raised in the petition, and likewise argued that, as to the rate of rental fees, GRDC should not be allowed to claim a higher amount (P32,567.40 per month, compared to the P7,915.00 per month adjudged by the RTC and the CA) because GRDC did not file an appeal, and thus, is estopped from assailing the same. 69

The Court's Ruling

The Court denies the petition.

PMO is liable for the payment of

The Court finds that the CA did not err when it ruled that PMO will be unjustly enriched if it does not pay reasonable rent in favor of GRDC.

To recount, under the ASBR, PMO was required to turn over the MENDECO Compound upon the signing of the Deed of Absolute Sale. The Deed of Absolute Sale was executed on February 10, 2005, and was later modified on May 10, 2005. Thus, as early as February 10, 2005, PMO was obliged to deliver possession of the whole MENDECO Compound to GRDC. However, PMO failed to do so because of the presence of the security paper equipment in the Pulp and Decorticating Mill Building. In other words, GRDC was unable to acquire full possession of the whole MENDECO Compound.

In this regard, the CA correctly ruled that PMO will be unjustly enriched if it is allowed to use the Pulp and Decorticating Mill Building as a warehouse to store its security paper equipment without paying rent to GRDC, in accordance with Article 22 of the Civil Code, which provides:

Article 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

The principle of unjust enrichment has been exhaustively explained by the Court in several case law. Notably, the ruling in Spouses Golez v. Nemeño, 70 is instructive and is applicable in this case:

This Court finds no reason to depart from the ruling of the courts a quo that petitioners should pay respondent for back rentals. x x x However, the destruction of the building should not in any way be made a basis to exempt petitioners from paying rent for the period they made use of the leased property. Otherwise, this will be a clear case of unjust enrichment. As held in P.C. Javier & Sons, Inc. v. Court of Appeals: HESIcT

x x x The fundamental doctrine of unjust enrichment is the transfer of value without just cause or consideration. The elements of this doctrine are: enrichment on the part of the defendant; impoverishment on the part of the plaintiff; and lack of cause. The main objective is to prevent one to enrich himself at the expense of another. It is commonly accepted that this doctrine simply means that a person shall not be allowed to profit or enrich himself inequitably at another's expense.

In the instant case, there is no dispute that petitioners used the property for several years for their own benefit having operated a restaurant thereon. Therefore, it would be the height of injustice to deprive respondent of compensation due him on the use of his property by petitioners. The fact that the parties agreed to a different mode of payment — in this case, a building — does not in any way exempt petitioners from paying compensation due to respondent for the use of the latter's property because the building was destroyed. 71 (Emphasis and underscoring supplied; citation omitted)

Thus, contrary to the assertion of PMO that GRDC unjustly refused to release the security paper equipment, GRDC's act is supported by both law and jurisprudence vis-à-vis the principle of unjust enrichment. Undeniably, before the security paper equipment is released to PMO, it should first pay rentals to GRDC because, applying the ruling in Spouses Golez, it will be the height of injustice to deprive GRDC of compensation due to it for the use of its property by PMO.

The "as-is, where-is" clause found in

The Court likewise finds that the CA correctly held that the "as-is, where-is" clause does not relieve PMO from its liability to pay rent or storage fees. As aptly pointed out by the CA, such clause found in the Deed of Absolute Sale does not relieve PMO of its obligation to place full control of the MENDECO Compound to GRDC. As held in Asset Privatization Trust v. T.J. Enterprises: 72

On the second issue, petitioner posits that the sale being in an as-is-where-is basis, respondent agreed to take possession of the things sold in the condition where they are found and from the place where they are located. The phrase as-is where-is basis pertains solely to the physical condition of the thing sold, not to its legal situation. It is merely descriptive of the state of the thing sold. Thus, the as-is where-is basis merely describes the actual state and location of the machinery and equipment sold by petitioner to respondent. The depiction does not alter petitioner's responsibility to deliver the property to respondent. 73 (Emphasis supplied)

Simply put, notwithstanding the "as-is, where-is" clause in the Deed of Absolute Sale, PMO was still duty-bound to deliver the whole MENDECO Compound to GRDC. Such delivery requires placing GRDC in full control and possession of the same in accordance with Article 1497 of the Civil Code, which reads:

Article 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vender. (Emphasis supplied)

Thus, because of PMO's failure to place GRDC in full control and possession of the whole MENDECO Compound, it is clear that no delivery was made, and PMO incurred delay in the performance of its obligation. caITAC

PMO incurred delay in the

As already discussed, PMO incurred delay in the delivery of the whole MENDECO Compound to GRDC. To be clear, PMO was required to deliver possession of the MENDECO Compound as early as February 10, 2005 when the Deed of Absolute Sale was executed. In this regard, however, it must be recalled that the Deed of Absolute Sale contained a provision with respect to a 150-day grace period in favor of Sobros. This means that, when GRDC signed the Deed of Absolute Sale, it was informed that the Pulp and Decorticating Mill Building inside the MENDECO Compound can only be delivered to it upon the expiration of the 150-day grace period from February 10, 2005, or on July 10, 2005. Still, by the said date, the security paper equipment was not withdrawn from the Pulp and Decorticating Mill Building. In other words, PMO reneged in its obligation and failed to deliver possession of the whole MENDECO Compound at the time it was required to do so.

Thus, on November 3, 2006, or over one year and three months after the time when PMO was required to deliver possession of the whole MENDECO Compound, GRDC was constrained to send a formal demand, asking PMO to withdraw the security paper equipment from the Pulp and Decorticating Mill Building, upon the payment of reasonable rent. Clearly, GRDC made a valid and effective demand.

On this note, PMO argued that there was no valid demand because GRDC failed to respond to PMO's request for a 90-day extension from December 3, 2006 or until March 3, 2007. Such argument is bereft of any merit because even assuming that GRDC grants the extension, the fact that it made a valid and effective demand is not erased. Worse, upon the expiration of the 90-day extension, PMO still failed to remove the security paper equipment from the Pulp and Decorticating Mill Building.

From these undisputed facts, it cannot be denied that PMO indeed, incurred delay.

Articles 1169 and 1170 of the Civil Code explain the nature of delay and the consequences thereof, viz.:

Article 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist:

(1) When the obligation or the law expressly so declare; or

(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.

Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. (Emphasis supplied)

From the foregoing, it is abundantly clear that PMO incurred delay from the time GRDC made its demand to remove the security paper equipment from the Pulp and Decorticating Mill Building on November 3, 2006. Thus, from the said date, PMO is liable for damages in the form of rental payments for the use of the Pulp and Decorticating Mill Building. cDHAES

GRDC is entitled to the payment of

As regards the rate of rental payments that GRDC is entitled to, the Court is convinced that the reasonable rate for rental payments is P32,567.40 per month, and not P7,915.00 per month as adjudged by the RTC and affirmed by the CA.

As pointed out by GRDC, PMO expressly admitted in its answer that GRDC's right to reasonable rent should be P32,567.40 per month. Paragraph 18 of PMO's answer reads:

18. Further, there is no basis for plaintiff's claim that P200,000.00 constitutes a reasonable monthly rent. On the contrary, the total amount of P9,600,000.00 being demanded as accumulated rentals is far from being reasonable (paragraph 17, Complaint) for the following reasons:

a.) The fair rental value of all the buildings, as reported in the May 16, 2004 Appraisal of Property by eValue Phils., Inc., copy of which is hereto attached as Annex 3, in the MENDECO property with a total area of 12,641 square meters as of May 14, 2004 is P185,401.00 or P14.67 per square meter. Considering that the Pulp and Decorticating Building has an area of 2,220 square meters, the reasonable monthly rent therefor is P32,567.40[.] 74

Despite such admission, the RTC decreased the amount of rent that GRDC is entitled to, supposedly because "[u]nder the Appraisal Report, the fair rental value of the Mendeco property was also assessed collectively & individually for the different structures & facilities within the property & specifically showed that the fair rental value for the 2,220-square meter floor area of the Pulp & Decorticating Mill Building is at P7,915.00 per month, a rate reasonable [and] proper under the circumstances in this case." 75

However, a perusal of the Appraisal Report 76 does not support the RTC's conclusion. The Appraisal Report gave the following conclusion as regards the fair market value and the fair rental value of the whole MENDECO Compound:

CONCLUSION

Based on our investigation and analysis of all relevant facts and as supported by the accompanying inventory and narrative report on the land, it is our opinion that the Fair Market Value and Fair Rental Value of the property appraised as of May 14, 2004 subject to the attached limiting conditions are reasonably represented as follows:

	Fair Market Value	Fair Rental Value (per month)
Land	PhP8,938,000.00	PhP34,460.00
Standing crops	PhP53,500.00	-
Buildings	PhP11,437,500.00	PhP185,401.00
Other Land Improvements	PhP162,000.00	P3,205.00
Machinery and Equipment	PhP392,000.00	PhP15,740.00
Spare Parts Inventory	PhP90,000.00	-
Grand Total	PhP21,073,300.00	PhP238,806.0077

Considering that the total area of "Buildings" in the MENDECO Compound is 12,641 square meters, the fair rental value per square meter is P14.67. Thus, the reasonable monthly rent for the Pulp and Decorticating Mill Building, which comprises 2,200 square meters is P32,567.40. ASEcHI

Indeed, the Court notes PMO's observation that GRDC did not appeal the issue as regards the rate of reasonable rent it is entitled to. Nonetheless, it is worthy to note that the Court is empowered to make its own judgment, precisely because when a case is appealed, the Court has the power to review the case in its entirety.

In United Coconut Planters Bank v. Spouses Uy, 78 the Court explained that the respondents therein need not file their own appeal to assail the issues they found questionable, because when a case is on appeal, the appellate court has the power to review the case in its entirety, viz.:

UCPB countered that the only issue to be resolved in the present petition is the actual amount of its liability. It explained that the assailed CA decision had become final and executory after respondents failed to appeal the same. UCPB pointed out that the issues respondents raised were already ventilated before the appellate court. It believed that respondents should have filed their own appeal to assail the issues they found questionable.

It must be remembered that when a case is appealed, the appellate court has the power to review the case in its entirety. In Heirs of Alcaraz v. Republic of the Phils., the Court explained that an appellate court is empowered to make its own judgment as it deems to be a just determination of the case, to wit:

In any event, when petitioners interposed an appeal to the Court of Appeals, the appealed case was thereby thrown wide open for review by that court, which is thus necessarily empowered to come out with a judgment as it thinks would be a just determination of the controversy. Given this power, the appellate court has the authority to either affirm, reverse or modify the appealed decision of the trial court. To withhold from the appellate court its power to render an entirely new decision would violate its power of review and would, in effect, render it incapable of correcting patent errors committed by the lower courts.

Thus, when UCPB appealed the present controversy before the Court, it was not merely limited to determine whether the CA accurately set UCPB's liability against respondents. It is also empowered to determine whether the appellate court's determination of liability was correct in the first place. This is especially true considering that the issue of the nature of UCPB's liability is closely intertwined and inseparable from the determination of the amount of its actual liability. 79 (Emphasis supplied; citations omitted)

Given the foregoing, it is clear that the Court may modify the amount of rental payments that GRDC is entitled to despite its failure to file its own appeal. Thus, based on PMO's own admission in its answer, and the amounts stated in the Appraisal Report, GRDC is entitled to reasonable rent in the amount of P32,567.40 per month, reckoned from the time of demand on November 3, 2006.

GRDC is likewise entitled to

The Court finds that the CA did not err when it affirmed the award of attorney's fees and legal interest in favor of GRDC.

Article 2208 of the Civil Code provides:

Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

xxx xxx xxx

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; ITAaHc

xxx xxx xxx

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;

xxx xxx xxx

(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable. (Emphasis supplied)

In this case, and as explained above, GRDC had a valid and just claim for rentals. PMO's refusal to pay the same to be able to withdraw the security paper equipment compelled GRDC to litigate and seek judicial intervention. Thus, the RTC and the CA correctly found that the payment of attorney's fees in favor of GRDC is just and equitable under the circumstances.

As regards the payment of interest, the Court finds that GRDC is also entitled to the same.

To reiterate, in the petition, PMO cited the case of Lim v. Court of Appeals, 80 to support its argument that GRDC is not entitled to legal interest because in the said case, the Court declared that legal interest at the rate of six percent (6%) per annum should only begin from the date the judgment of the court attains finality:

However, we are constrained to depart from the conclusion of the lower courts that upon the award of compensatory damages legal interest should be imposed beginning 22 July 1990, i.e., the date of the accident. Upon the provisions of Art. 2213 of the Civil Code, interest "cannot be recovered upon unliquidated claims or damages, except when the demand can be established with reasonable certainty." It is axiomatic that if the suit were for damages, unliquidated and not known until definitely ascertained, assessed and determined by the courts after proof, interest at the rate of six percent (6%) per annum should be from the date the judgment of the court is made (at which time the quantification of damages may be deemed to be reasonably ascertained).

The Court cannot sustain PMO's argument. Article 2213 of the Civil Code provides:

Article 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the demand can be established with reasonable certainty.

In this case, and unlike in Lim v. Court of Appeals, 81 the fact that GRDC made a valid demand cannot be disputed. Moreover, in Federal Builders, Inc. v. Foundation Specialists, Inc., 82 the Court categorically declared that when the demand is established with reasonable certainty, interest shall begin to run from the time such demand is made:

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

xxx xxx xxx

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. CHTAIc

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. 83 (Emphasis supplied)

Thus, as held in Federal Builders, Inc. v. Foundation Specialists, Inc., 84 not only does interest begin to run from the moment that demand is made, the total amount adjudged by the court shall also incur legal interest counted from the finality of the decision until full payment.

All in all, the Court sustains the award of attorney's fees and interest in favor of GRDC, with the qualification that the whole amount adjudged shall likewise earn legal interest at the rate of six percent (6%) per annum.

Sobros cannot be made to pay the

On January 25, 2008, PMO and Sobros executed a Deed of Absolute Sale over the security paper equipment located in the Pulp and Decorticating Mill Building within the MENDECO Compound. According to PMO, from the time it turned over the security paper equipment to Sobros, Sobros should be made liable for the payment of rent or storage fees to GRDC.

In this regard, Article 1498 of the Civil Code provides the general rule that the execution of a public instrument evidencing a sale is equivalent to the legal or constructive delivery of the thing sold, if the contrary cannot be inferred. However, as aptly pointed out by the CA, the execution of a public instrument only gives rise to a prima facie presumption of delivery. As held in Heirs of Jose Extremadura v. Extremadura: 85

Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof." Related to this article is Article 1497 of the same Code which provides that "[t]he thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee."

Article 1498 of the Civil Code lays down the general rule that the execution of a public instrument "shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred." However, the execution of a public instrument gives rise only to a prima facie presumption of delivery, which is negated by the failure of the vendee to take actual possession of the land sold. A person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument. 86 (Emphasis supplied; citations omitted)

In this case, PMO did not have actual possession of the security paper equipment at the time the Deed of Absolute Sale was executed. In other words, PMO could not have validly transferred possession of the same to Sobros upon the execution of the Deed of Absolute Sale, and the presumption of constructive delivery cannot be applied.

Moreover, and similar to the Deed of Absolute Sale between PMO and GRDC, the "as-is, where-is" clause in the Deed of Absolute Sale between PMO and Sobros cannot relieve PMO of its obligation to deliver possession of the security paper equipment to Sobros. The "as-is, where-is" clause likewise cannot shift the burden of paying the rent or storage fees from PMO to Sobros. EATCcI

Considering that Sobros was unable to take possession and full control of the security paper equipment, it is beyond cavil that it should not be made liable to pay any rent or storage fees in connection to the storage of such security paper equipment.

All things considered, the Court finds that the CA did not err when it affirmed the RTC's dismissal of the Third-Party Complaint against Sobros.

WHEREFORE, premises considered, the Petition for Review on Certiorari dated July 20, 2015 filed by the Republic of the Philippines, represented by the Privatization and Management Office, is DENIED. The Decision dated December 3, 2014 and the Resolution dated May 25, 2015 of the Court of Appeals in CA-G.R. CV No. 100628, are AFFIRMED with MODIFICATION.

The Privatization and Management Office is ordered to pay Great Riverland and Development Corporation reasonable rental fees in the amount of P32,567.40 per month, plus interest at six percent (6%) per annum from date of default on November 3, 2006 until the actual eviction and removal of the security paper equipment from the MENDECO Compound, attorney's fees in the amount of P200,000.00, and costs of suit. Legal interest at the rate of six percent (6%) per annum is likewise imposed on the sums due from finality of this ruling until full payment.

SO ORDERED."Hernando, J., on official leave.

By authority of the Court:

TERESITA AQUINO TUAZONDivision Clerk of Court

By:

(SGD.) MA. CONSOLACION GAMINDE-CRUZADADeputy Division Clerk of Court

Footnotes

1. Rollo, pp. 10-41.

2. Id. at 43-49. Penned by Associate Justice Ricardo R. Rosario (now a member of the Court) with Associate Justices Rebecca C. De Guia-Salvador and Leoncia Real-Dimagiba concurring.

3. Id. at 51.

4. Id. at 52-60. Penned by Judge Selma Palacio Alaras.

5. Id. at 44.

6. Id. at 84-87.

7. Par. 2 of the ASBR provides:

2. SALE IS ON "AS-IS, WHERE-IS" BASIS: In submitting a bid for the above-mentioned assets, the bidder clearly understands that the assets are being offered on an "as-is, where-is" basis. The bidder further acknowledges that it/he/she has been given every opportunity to examine the assets offered and accepts PMO's disclaimer of any warranty, implied or otherwise, that the assets conform precisely to the description of the [Asset Specific Catalogue], the latter having been prepared solely on the basis of information made available to the PMO.

8. Par. 10 of the ASBR provides:

10. TURNOVER OF ASSETS TO THE WINNING BIDDER: The winning bidder understands that actual possession of the properties shall be turned over by the PMO to it/him/her upon signing of [the] pertinent sale contract for the assets.

9. Rollo, pp. 91-96.

10. Id. at 44.

11. Id. at 94.

12. Id. at 17-18.

13. Id. at 44.

14. Id. at 18.

15. Id.

16. Id.

17. Id.

18. Id. at 104-109.

19. Id. at 105-106.

20. Id. at 45.

21. Id. at 116.

22. Id.

23. Id. at 45.

24. Id. at 61-68.

25. Id. at 66.

26. Id. at 69-83.

27. Id. at 73-74.

28. Id. at 76.

29. Id. at 97-103.

30. Id. at 76-77; The Appraisal Report provides that the fair rental value of "Buildings," with a total area of 12,641 square meters as of May 14, 2004 is P185,401.00 per month, or P14.67 per square meter. Considering that the Pulp and Decorticating Mill Building has an area of 2,220 square meters, the reasonable monthly rent therefor is P32,567.40.

31. Id. at 78-80.

32. Id. at 110-115.

33. Id. at 111-112.

34. 605 Phil. 563, 570 (2009).

35. Rollo, pp. 58-59.

36. Id. at 59.

37. Id. at 52-60.

38. Id. at 60.

39. Id. at 46.

40. Id. at 48.

41. Article 22 of the Civil Code provides:

Article 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

42. Rollo, p. 46.

43. Id. at 46-47.

44. Id. at 47.

45. Id. at 47-48.

46. Id. at 51.

47. Id. at 19-20.

48. Id. at 21.

49. Id. at 24-27.

50. Id. at 29-30.

51. Section 2, Rule 131 of the Rules of Court provides:

Section 2. Conclusive presumptions. — The following are instances of conclusive presumptions:

(a) Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsity it;

(b) The tenant is not permitted to deny the title of his landlord at the time of commencement of the relation of landlord and tenant between them.

52. Section 32, Rule 130 of the Rules of Court provides:

Section 32. Admission by silence. — An act or declaration made in the presence and within the hearing or observation of a party who does or says nothing when the act or declaration is such as naturally to call for action or comment if not true, and when proper and possible for him to do so, may be given in evidence against him.

53. Rollo, pp. 30-31.

54. Id. at 34.

55. 424 Phil. 457, 467 (2002).

56. Rollo, pp. 34-35.

57. Id. at 35-36.

58. Id. at 140-159.

59. Article 1169 of the Civil Code provides:

Article 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist:

(1) When the obligation or the law expressly so declare; or

(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.

60. Article 1170 of the Civil Code provides:

Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

61. Rollo, pp. 148-149.

62. Id. at 150-151.

63. Article 2208 of the Civil Code provides:

Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

xxx xxx xxx

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

xxx xxx xxx

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;

xxx xxx xxx

(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

64. 563 Phil. 368, 383 (2007); rollo, pp. 152-153.

65. Rollo, pp. 122-131 and pp. 160-164.

66. Id. at 125-126.

67. Id. at 129.

68. Id. at 177-190.

69. Id. at 182-183.

70. 770 Phil. 179 (2015).

71. Id. at 195-196.

72. Supra note 34.

73. Id. at 570.

74. Rollo, pp. 76-77.

75. Id. at 59.

76. Id. at 97-103.

77. Id. at 99.

78. 823 Phil. 284 (2018).

79. Id. at 293-294.

80. Supra note 55.

81. Id.

82. 742 Phil. 433 (2014).

83. Id. at 444-445.

84. Supra note 81.

85. 787 Phil. 414 (2016).

86. Id. at 423.