SAGRADA ORDEN v NATIONAL COCONUT CORPORATION

Facts:

Plaintiff Sagrada Orden owned a piece of real property in Pandacan, Manila. During the Japanese
occupation, the land was acquired by a Japanese corporation Taiwan Tekkoshho. After the liberation,
the Alien Property Custodian of the United States took possession, control, and custody of the real
property.

During the year 1946, the property was occupied by the Copra Export Management Company under the
custodianship agreement with United States Alien Property Custodian, and when it vacated, the
property occupied by defendant National Coconut Corporation.

Sagrada Orden made claim to the property before the Alien Property Custodian of the United States but
was denied. So plaintiff brought an action in court to annul the sale of property of Taiwan Tekkosho, and
recover its possession.

The case did not come for trial because the parties presented a joint petition in which it is claimed by
Sagrada Orden that the sale in favor of Taiwan Tekkosho was null and void because it was executed
under threats, duress, and intimidation, and that the title be re-issued to Sagrada Orden.

The court rendered judgment releasing the defendant from liability, but reversing to the plaintiff the
right to recover from the defendant reasonable rentals for the use and occupation of the premises. The
present action to recover the reasonable rentals from August 1946, the date when defendant began to
occupy, to the date it vacated it. The defendant did not contest its liability for the rentals at the rate of
P3, 000 per month from February 28, 1949, but resisted the claim therefore prior to that date.

Defendant contends that it occupied the property in good faith, under no obligation to pay rentals for
the use and occupation. Judgment rendered for the plaintiff to recover from the defendant the sum of
P3, 000 a month, from August, 1946, to the date the defendant vacates the premises. Thus this appeal
made by defendant.

Issue: Whether or not the defendant company is liable to pay rentals from August 1946 to the date it
vacated.

Decision: NO. If defendant-appellant is liable at all, its obligations, must arise from any of the four
sources of obligations, namely, law, contract or quasi-contract, crime, or negligence.

Defendant-appellant is not guilty of any offense at all, because it entered the premises and occupied it
with the permission of the entity which had the legal control and administration thereof, the Alien
Property Administration. Neither was there any negligence on its part.
There was also no privity between the Alien Property Custodian and the Taiwan Tekkosho, which had
secured the possession of the property from the plaintiff-appellee by the use of duress, such that the
Alien Property Custodian or its permittee (defendant-appellant) may be held responsible for the
supposed illegality of the occupation of the property by the said Taiwan Tekkosho.

The Alien Property Administration had the control and administration of the property not as successor
to the interests of the enemy holder of the title, the Taiwan Tekkosho. Neither is it a trustee of the
former owner, the plaintiff-appellee herein, but a trustee of then Government of the United States, in its
own right, to the exclusion of, and against the claim or title of, the enemy owner.

From August, 1946, when defendant-appellant took possession, to the late of judgment on February 28,
1948, Alien Property Administration had the absolute control of the property as trustee of the
Government of the United States, with power to dispose of it by sale or otherwise, as though it were the
absolute owner.

Therefore, even if defendant-appellant were liable to the Alien Property Administration for rentals,
these would not accrue to the benefit of the plaintiff-appellee, the owner, but to the United States
Government.