G.R. No.

L-3756             June 30, 1952

SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS, plaintiff-

appellee,
vs.
NATIONAL COCONUT CORPORATION, defendant-appellant.

FACTS:

Plaintiff-appellee owned a piece of real property in Pandacan, Manila. During the

Japanese Occupation, the land was acquired by Taiwan Tekkosho, a Japanese
Corporation. After the liberation, the Alien Property Custodian of the United States of
America took possession, control and custody of the real property. In 1946, the property
was occupied by the Copra Export Management Company under the custodianship
agreement with Unites States Alien Property Custodian, and when the former vacated
the property it was occupied by the defendant-appellant. The defendant-appellant was
authorized to repair the warehouse on the land, and spent thereon for repairs the sum
of P26,898.27. Defendant-appellant leased one-third of the warehouse to one Dioscoro
Sarile at a monthly rental of P500, which was later raised to P1,000 a month.

Plaintiff-appellee brought an action in court to annul the sale of property to Taiwan

Tekkosho, and recover its possession. The case did not come for trial because the
parties presented a joint petition wherein Plaintiff-appellee claims that the sale in favor
of Taiwan Tekkosho was null and void because it was executed under threats, duress,
and intimidation, and it was agreed that the title be re-issued to Sagrada Orden.

Thereafter, Plaintiff-appellee instituted the present action to recover possession of the

property and rentals for defendant-appellant’s occupation and use. The court rendered
judgement for the plaintiff-appellee to recover from the defendant-appellant the sum of
P3,000 per month, as reasonable rentals, beginning August 1946, to the date the
defendant-appellant vacates the premises. It was declared that plaintiff-appellee has
always been the owner, as the sale of Japanese purchaser was void ab initio.

Thus, this appeal by the defendant-appellant.

ISSUE:

Whether or not the defendant-appellant can be held liable to pay rentals from August
1946 to the date it vacated.

RULING:

No, defendant-appellant is not liable to pay rent.

1
The liability of defendant-appellant to pay rentals must arise from any of the four
sources of obligations, namely, law, contract or quasi-contract, crime, or negligence.
However, defendant-appellant cannot be held liable from any of these sources. First,
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. 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. Moreover, there was no agreement between the
Alien Property Custodian and the defendant-appellant to pay rentals on the property.
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.

Hence, the part of the judgment appealed from, sentencing defendant-appellant-

appellant to pay the rental from August 1946, to February 28, 1949, is reversed by the
Supreme Court.