Case Summary (G.R. No. L-3756)
Procedural History and Agreement
Plaintiff’s claim for annulment of the 1943 sale was first litigated before the CFI of Manila (Civil Case No. 5007), joined by the Philippine Alien Property Administrator and the Republic of the Philippines. The parties filed a joint petition: plaintiff alleged duress in the sale to Taiwan Tekkosho; they agreed to cancel the enemy‐title, reissue plaintiff’s original title, discharge APC’s claims upon payment of P140,000, and permit NCC to vacate by February 28, 1949. The court entered judgment in conformity and reserved plaintiff’s right to recover reasonable rentals from NCC.
Trial Court Ruling on Rentals
In the present suit, plaintiff sought rentals from August 1946 through NCC’s vacation. The trial court held (1) plaintiff’s title was never legally interrupted; (2) APC held in trust for plaintiff; (3) NCC stood in no better position than APC; and (4) NCC’s commercial use and sublease obligated it to pay P3,000 monthly from August 1946 until vacatur.
Issues on Appeal
- Whether APC’s lack of ownership rights invalidated its grant of possession to NCC.
- Whether the prior annulment judgment conclusively established plaintiff’s uninterrupted ownership.
- Whether plaintiff’s reservation of rental claims bound NCC.
- Whether mere commercial use of the property imposes rental liability.
- Whether NCC possessed in good faith and thus enjoyed usufructuary rights.
Analysis on Liability for Rentals
The Supreme Court observed that obligations must arise from law, contract or quasi-contract, crime, or negligence (Civil Code, Art. 1089). NCC entered under APC authority, which held absolute control as trustee of the U.S. Government, not of plaintiff. APC’s custody arose by statute (Trading with the Enemy Act) and did not create privity with Taiwan Tekkosho or a trust relationship with plaintiff.
• No Contractual Obligation: There was no express agreement between APC and NCC to pay rentals. The preceding custodian (Copra Export) paid none under its custodianship agreement, and it is improbable that the conservation‐minded Act would imply rent.
• No Quasi-Contract or Negligence: NCC acted in good faith with APC perm
Case Syllabus (G.R. No. L-3756)
Facts of the Case
- The plaintiff-appellee, a religious corporation, held registered title to a parcel of land with warehouses in Pandacan, Manila, prior to World War II.
- On January 4, 1943, during the Japanese occupation, Taiwan Tekkosho, a Japanese corporation, purchased the property for ₱140,000; title was reissued to it (TCT No. 64330).
- After liberation, on April 4, 1946, the United States Alien Property Custodian (APC) seized and assumed custody of the land under the Trading with the Enemy Act.
- The Copra Export Management Company occupied the premises under a custodianship agreement in 1946, then vacated and yielded possession to the National Coconut Corporation (defendant-appellant).
- The Philippine Government sought use of the property and obtained APC’s permission; on March 31, 1947, NCC was authorized to repair the warehouses, spending ₱26,898.27.
- In 1948, NCC subleased one third of the warehouse to Dioscoro Sarile at a rate initially of ₱500 per month, raised to ₱1,000; Sarile defaulted on rental payments.
Procedural History
- Plaintiff’s administrative claim before the U.S. APC was denied.
- Plaintiff filed Civil Case No. 5007 in the CFI Manila to annul the 1943 sale and recover possession; the Republic of the Philippines intervened.
- Parties submitted a joint petition: the Taiwan Tekkosho sale was declared void for duress; plaintiff’s original title was reinstated; NCC was granted until February 28, 1949 to vacate; plaintiff to pay ₱140,000 to PAPA; PAPA released from liability; plaintiff reserved right to recover reasonable rentals from NCC.
- The trial court entered judgment in accordance with this agreement (Exhibit A-1).
- Plaintiff filed the present action to recover rentals from August 1946 (start of NCC occupation) until vacatur.
- At trial, the court awarded ₱3,000 per month as reasonable rental from Au