SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS vs.

NATIONAL COCONUT CORPORATION

G.R. No. L-3756 | Labrador, J. | June 30, 1952
Obligations; Sources of Obligations

DOCTRINE: All obligations must arise from any of the four sources of obligations, namely, law, contract or
quasi-contract, crime, or negligence. (Article 1089, Spanish Civil Code.)

FACTS:
This is an action to recover the possession of a piece of real property (land and warehouses) situated in
Pandacan Manila, and the rentals for its occupation and use. The land belongs to the plaintiff, Sagrada Orden,
in whose name the title was registered before the war. During the Japanese military occupation, the land
was acquired by a Japanese corporation, Taiwan Tekkosho. 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
was 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. Hence, plaintiff brought an action in court
to annul the sale of property of Taiwan Tekkosho, and recover its possession.

The present action is to recover the reasonable rentals from August, 1946, the date when the defendant
began to occupy the premises, to the date it vacated it. The defendant does not contest its liability for the
rentals at the rate of P3,000 per month from February 28, 1949 (the date specified in the judgment in said
civil case), but resists the claim therefor prior to this date. It interposes the defense that it occupied the
property in good faith, under no obligation whatsoever to pay rentals for the use and occupation of the
warehouse.

ISSUE:
Whether or not the defendant company be held liable to pay rentals from August 1946 to the date it vacated.

HELD:
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, 1949, 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.

WHEREFORE, the part of the judgment appealed from, which sentences defendant-appellant to pay rentals
from August, 1946, to February 28, 1949, is hereby REVERSED.