2/15/2017 G.R.No.

L3756

TodayisWednesday,February15,2017

RepublicofthePhilippines
SUPREMECOURT ClipHighli
Manila

ENBANC

G.R.No.L3756June30,1952

SAGRADAORDENDEPREDICADORESDELSANTISMOROSARIODEFILIPINAS,plaintiffappellee,
vs.
NATIONALCOCONUTCORPORATION,defendantappellant.

FirstAssistantCorporateCounselFedericoC.AlikpalaandAssistantAttorneyAugustoKalawforappellant.
RamirezandOrtigasforappellee.

LABRADOR,J.:

This is an action to recover the possession of a piece of real property (land and warehouses) situated in
PandacanManila,andtherentalsforitsoccupationanduse.Thelandbelongstotheplaintiff,inwhosenamethe
title was registered before the war. On January 4, 1943, during the Japanese military occupation, the land was
acquiredbyaJapanesecorporationbythenameofTaiwanTekkoshoforthesumofP140,00,andthereupontitle
theretoissuedinitsname(transfercertificateoftitleNo.64330,RegisterofDeeds,Manila).Afterliberation,more
specifically on April 4, 1946, the Alien Property Custodian of the United States of America took possession,
control,andcustodythereofundersection12oftheTradingwiththeEnemyAct,40Stat.,411,forthereasonthat
it belonged to an enemy national. During the year 1946 the property was occupied by the Copra Export
ManagementCompanyunderacustodianshipagreementwithUnitedStatesAlienPropertyCustodian(ExhibitG),
and when it vacated the property it was occupied by the defendant herein. The Philippine Government made
representationswiththeOfficeAlienPropertyCustodianfortheuseofpropertybytheGovernment(seeExhibits
2,2A,2B,and1).OnMarch31,1947,thedefendantwasauthorizedtorepairthewarehouseontheland,and
actuallyspentthereontherepairsthesumofP26,898.27.In1948,defendantleasedonethirdofthewarehouse
tooneDioscoroSarileatamonthlyrentalofP500,whichwaslaterraisedtoP1,000amonth.Sariledidnotpay
therents,soactionwasbroughtagainsthim.Itisnotshown,however,ifthejudgmentwaseverexecuted.

Plaintiff made claim to the property before the Alien Property Custodian of the United States, but as this was
denied,itbroughtanactionincourt(CourtofFirstInstanceofManila,civilcaseNo.5007,entitled"LaSagrada
Orden Predicadores de la Provinicia del Santisimo Rosario de Filipinas," vs. Philippine Alien Property
Administrator, defendant, Republic of the Philippines, intervenor) to annul the sale of property of Taiwan
Tekkosho,andrecoveritspossession.TheRepublicofthePhilippineswasallowedtointerveneintheaction.The
casedidnotcomefortrialbecausethepartiespresentedajointpetitioninwhichitisclaimedbyplaintiffthatthe
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 reissued that the claims, rights, title, and interest of the Alien Property Custodian be
cancelled and held for naught that the occupant National Coconut Corporation has until February 28, 1949, to
recoveritsequipmentfromthepropertyandvacatethepremisesthatplaintiff,uponentryofjudgment,paytothe
PhilippineAlienPropertyAdministrationthesumofP140,000andthatthePhilippineAlienPropertyAdministration
be free from responsibility or liability for any act of the National Coconut Corporation, etc. Pursuant to the
agreementthecourtrenderedjudgmentreleasingthedefendantandtheintervenorfromliability,butreversingto
the plaintiff the right to recover from the National Coconut Corporation reasonable rentals for the use and
occupationofthepremises.(ExhibitA1.)

ThepresentactionistorecoverthereasonablerentalsfromAugust,1946,thedatewhenthedefendantbeganto
occupythepremises,tothedateitvacatedit.Thedefendantdoesnotcontestitsliabilityfortherentalsattherate
of P3,000 per month from February 28, 1949 (the date specified in the judgment in civil case No. 5007), 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. Judgment was
renderedfortheplaintifftorecoverfromthedefendantthesumofP3,000amonth,asreasonablerentals,from
August, 1946, to the date the defendant vacates the premises. The judgment declares that plaintiff has always
been the owner, as the sale of Japanese purchaser was void ab initio that the Alien Property Administration
neveracquiredanyrighttotheproperty,butthatitheldthesameintrustuntilthedeterminationastowhetheror
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nottheownerisanenemycitizen.Thetrialcourtfurtherdeclaresthatdefendantcannotclaimanybetterrights
than its predecessor, the Alien Property Administration, and that as defendant has used the property and had
subleasedportionthereof,itmustpayreasonablerentalsforitsoccupation.

Againstthisjudgmentthisappealhasbeeninterposed,thefollowingassignmentoferrorhavingbeenmadeon
defendantappellant'sbehalf:

Thetrialcourterredinholdingthedefendantliableforrentalsorcompensationfortheuseandoccupation
ofthepropertyfromthemiddleofAugust,1946,toDecember14,1948.

1. Want to "ownership rights" of the Philippine Alien Property Administration did not render illegal or ClipHighli
invalidateitsgranttothedefendantofthefreeuseofproperty.

2. the decision of the Court of First Instance of Manila declaring the sale by the plaintiff to the Japanese
purchaser null and void ab initio and that the plaintiff was and has remained as the legal owner of the
property,withoutlegalinterruption,isnotconclusive.

3.Reservationtotheplaintiffoftherighttorecoverfromthedefendantcorporationnotbindingonthelater

4.Useofthepropertyforcommercialpurposesinitselfalonedoesnotjustifypaymentofrentals.

5.Defendant'spossessionwasingoodfaith.

6.Defendant'spossessioninthenatureofusufruct.

Inreply,plaintiffappellee'scounselcontendsthatthePhilippineAllienPropertyAdministration(PAPA)wasamere
administrator of the owner (who ultimately was decided to be plaintiff), and that as defendant has used it for
commercialpurposesandhasleasedportionofit,itshouldberesponsiblethereforetotheowner,whohadbeen
deprivedofthepossessionforsomanyyears.(Appellee'sbrief,pp.20,23.)

Wecannotunderstandhowthetrialcourt,fromthemerefactthatplaintiffappelleewastheowneroftheproperty
and the defendantappellant the occupant, which used for its own benefit but by the express permission of the
AlienPropertyCustodianoftheUnitedStates,soeasilyjumpedtotheconclusionthattheoccupantisliablefor
thevalueofsuchuseandoccupation.Ifdefendantappellantisliableatall,itsobligations,mustarisefromanyof
the four sources of obligations, namley, law, contract or quasicontract, crime, or negligence. (Article 1089,
SpanishCivilCode.)Defendantappellantisnotguiltyofanyoffenseatall,becauseitenteredthepremisesand
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)betweentheAlienPropertyCustodianandtheTaiwanTekkosho,whichhadsecuredthepossessionof
the property from the plaintiffappellee by the use of duress, such that the Alien Property Custodian or its
permittee (defendantappellant) may be held responsible for the supposed illegality of the occupation of the
property by the said Taiwan Tekkosho. The Allien 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, but by
express provision of law (Trading with the Enemy Act of the United States, 40 Stat., 411 50 U.S.C.A., 189).
Neitherisitatrusteeoftheformerowner,theplaintiffappelleeherein,butatrusteeofthenGovernmentofthe
UnitedStates(32Op.Atty.Gen.24950U.S.C.A.283),initsownright,totheexclusionof,andagainsttheclaim
ortitleof,theenemyowner.(Youghioheny&OhioCoalCo.vs.Lasevich[1920],179N.W.,355171Wis.,347
U.S.C.A., 282283.) From August, 1946, when defendantappellant took possession, to the late of judgment on
February 28, 1948, Allien Property Administration had the absolute control of the property as trustee of the
GovernmentoftheUnitedStates,withpowertodisposeofitbysaleorotherwise,asthoughitweretheabsolute
owner. (U.S vs. Chemical Foundation [C.C.A. Del. 1925], 5 F. [2d], 191 50 U.S.C.A., 283.) Therefore, even if
defendantappellant were liable to the Allien Property Administration for rentals, these would not accrue to the
benefitoftheplaintiffappellee,theowner,buttotheUnitedStatesGovernment.

Butthereisanothergroundwhytheclaimorrentalscannotbemadeagainstdefendantappellant.Therewasno
agreementbetweentheAlienPropertyCustodianandthedefendantappellantforthelattertopayrentalsonthe
property.Theexistenceofanimpliedagreementtothateffectiscontrarytothecircumstances.ThecopraExport
ManagementCompany,whichprecededthedefendantappellant,inthepossessionanduseoftheproperty,does
not appear to have paid rentals therefor, as it occupied it by what the parties denominated a "custodianship
agreement,"andthereisnoprovisionthereinforthepaymentofrentalsorofanycompensationforitscustody
andoroccupationandtheuse.TheTradingwiththeEnemyAct,asoriginallyenacted,waspurelyameasureof
conversation,hence,itisveryunlikelythatrentalsweredemandedfortheuseoftheproperty.WhentheNational
coconut Corporation succeeded the Copra Export Management Company in the possession and use of the
property,itmusthavebeenalsofreefrompaymentofrentals,especiallyasitwasGovernmentcorporation,and
steps where then being taken by the Philippine Government to secure the property for the National Coconut
Corporation. So that the circumstances do not justify the finding that there was an implied agreement that the
defendantappellantwastopayfortheuseandoccupationofthepremisesatall.

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Theaboveconsiderationsshowthatplaintiffappellee'sclaimforrentalsbeforeitobtainedthejudgmentannulling
thesaleoftheTaiwanTekkoshomaynotbepredicatedonanynegligenceoroffenseofthedefendantappellant,
oranycontract,expressorimplied,becausetheAllienPropertyAdministrationwasneitheratrusteeofplaintiff
appellee, nor a privy to the obligations of the Taiwan Tekkosho, its title being based by legal provision of the
seizureofenemyproperty.Wehavealsotriedinvaintofindalaworprovisionthereof,oranyprincipleinquasi
contractsorequity,uponwhichtheclaimcanbesupported.Onthecontrary,asdefendantappellantenteredinto
possessionwithoutanyexpectationofliabilityforsuchuseandoccupation,itisonlyfairandjustthatitmaynotbe
heldliabletherefor.Andastotherentsitcollectedfromitslessee,thesameshouldaccruetoitasapossessorin
goodfaith,asthisCourthasalreadyexpresslyheld.(Resolution,NationalCoconutCorporationvs.Geronimo,83
Phil.467.)
ClipHighli
Lastly,thereservationofthisactionmaynotbeconsideredasvestinganewrightifnorighttoclaimforrentals
existedatthetimeofthereservation,norightscanariseoraccruefromsuchreservationalone.

Wherefore, the part of the judgment appealed from, which sentences defendantappellant to pay rentals from
August,1946,toFebruary28,1949,isherebyreversed.Inallotherrespectsthejudgmentisaffirmed.Costsof
thisappealshallbeagainsttheplaintiffappellee.

Paras,C.J.,Pablo,Bengzon,Padilla,Tuason,Montemayor,andBautistaAngelo,JJ,concur.

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