Sagrada Orden Case - Torts

SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS v.
NATIONAL COCONUT CORPORATION

G.R. No. L-3756; June 30, 1952
LABRADOR, J.:
Case: This is an action to recover the possession of a piece of real property (land and warehouses) situated
in Pandacan Manila, and the rentals (from August 1946 when the defendant began to occupy the
premises, to the date it vacated it) for its occupation and use.
FACTS: Sagrada Orden owns the land in whose name the title was registered before the war.
(January 1943) During the Japanese military occupation, the land was acquired by a Japanese
corporation Taiwan Tekkosho for P140,000 and title thereto issued in its name. In April 1946, after
liberation the Alien Property Custodian of the USA took possession, control, and custody
thereof under the Trading with the Enemy Act for the reason that it belonged to an enemy national.
(1946) The property was occupied by the Copra Export Management Company under a
custodianship agreement with US Alien Property Custodian, and when it vacated the property it was
occupied by the defendant National Coconut Corp. The PH Government made
representations with the Office Alien Property Custodian for the use of property by the
Government. (March 1947) The National Coconut Corp was authorized to repair the
warehouse on the land and spent P26,898.27. (1948) The National Coconut Corp leased one-
third of the warehouse to Dioscoro Sarile at a monthly rental of P500 (later raised to
P1,000/month). Action was brought against Sarile for failure to pay rents.
Sagrada made claim to the property before the US Alien Property Custodian but as this was denied, it
brought an action in the CFI to annul the sale of property of Taiwan Tekkosho, and recover its possession.
The PH Republic was allowed to intervene in the action.
The case did not come for trial because the parties presented a joint petition in which it is claimed by
Sagrada that the sale in favor of the Taiwan Tekkosho was null and void because it was executed under
threats, duress, and intimidation, and it was agreed that the title issued in the name of the Taiwan
Tekkosho be cancelled and the original title of plaintiff re-issued.
Pursuant to the agreement the court rendered judgment releasing National Coconut Corp and the
intervenor from liability, but reversing to Sagrada the right to recover from the National Coconut Corp
reasonable rentals for the use and occupation of the premises.
The National Coconut Corp does not contest its liability for the rentals at the rate of P3,000/month from
February 1949, but resists the claim therefor prior to this date claiming that it occupied the property in
good faith, under no obligation whatsoever to pay rentals for the use and occupation of the warehouse.
Judgment was rendered for plaintiff Sagrada to recover from the defendant National
Coconut Corp the sum of P3,000/month, as reasonable rentals, from August 1946, to the date the
defendant vacates the premises. Against this judgment this appeal has been interposed.
ISSUE: Whether or not Sagrada can recover from the National Coconut Corporation payment of rentals
from August 1946 to February 1949.
HELD: No. The SC ruled that the defendant National Coconut Corp 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 Allien Property Administration. Neither
was there any negligence on its part. There was also no privity (of contract or obligation) between the
Alien Property Custodian and the Taiwan Tekkosho, which had secured the possession of the property
from Sagrada by the use of duress, such that the Alien Property Custodian or its permittee (National
Coconut Corp) 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 (Taiwan Tekkosho) but by express provision of law (Trading
with the Enemy Act of the United States). Neither is it a trustee of the former owner (Sagrada) but a
trustee of then US Government, in its own right, to the exclusion of, and against the claim or title of, the
enemy owner.
From August 1946, when the National Coconut Corp took possession, to the date of judgment on February
1948, Alien Property Administration had the absolute control of the property as trustee of the US
Government, with power to dispose of it by sale or otherwise, as though it were the absolute owner.
Therefore, even if the National Coconut Corp were liable to the Alien Property Administration for rentals,
these would not accrue to the benefit of Sagrada (the owner), but to the US Government.
But there is another ground why the claim or rentals cannot be made against the National Coconut Corp.
There was no agreement between the Alien Property Custodian and the National Coconut Cop for the
latter to pay rentals on the property. The existence of an implied agreement to that effect is contrary to the
circumstances. The Copra Export Management Company, which preceded the defendant-appellant, in the
possession and use of the property, does not appear to have paid rentals therefor, as it occupied it by what
the parties denominated a "custodianship agreement," and there is no provision therein for the payment
of rentals or of any compensation for its custody and or occupation and the use.
The Trading with the Enemy Act, as originally enacted, was purely a measure of conversation, hence, it is
very unlikely that rentals were demanded for the use of the property. When the National Coconut Corp
succeeded the Copra Export Management Company in the possession and use of the property, it must
have been also free from payment of rentals, especially as it was Government corporation, and steps were
then being taken by the PH Government to secure the property for the National Coconut Corp. So that the
circumstances do not justify the finding that there was an implied agreement that the National Coconut
Corp was to pay for the use and occupation of the premises at all.
The above considerations show that Sagrada’s claim for rentals before it obtained the judgment annulling
the sale of the Taiwan Tekkosho may not be predicated on any negligence or offense of the National
Coconut Corp, or any contract, express or implied, because the Alien Property Administration was neither
a trustee of Sagrada, nor a privy to the obligations of the Taiwan Tekkosho, its title being based by legal
provision of the seizure of enemy property.
The SC also tried in vain to find a law or provision thereof, or any principle in quasi contracts or equity,
upon which the claim can be supported. On the contrary, as the National Coconut Corp entered into
possession without any expectation of liability for such use and occupation, it is only fair and just that it
may not be held liable therefor. And as to the rents it collected from its lessee, the same should accrue to it
as a possessor in good faith, as this Court has already expressly held.

Sagrada Orden Case - Torts

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SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS v.

NATIONAL COCONUT CORPORATION

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