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Sagrada Orden vs.

Nacoco

Facts:

1. On Jan 4, 1942, during the Japanese occupation, Taiwan Tekkosho (Japanese corporation)
acquired the plaintiffs property (land with warehouse in Pandacan, Manila) for Php140K
2. On April 4, 1946, after the liberation, the US took control and custody of the aforementioned
enemys land under Sect 12 of the Trading with the Enemy Act
3. In the same year, the Copra Export Management Company occupied the property under
custodianship agreement with the United States Alien Property Custodian
4. In August 1946, when the Copra Export Management Co. vacated the property, the National
Coconut Corporation (NACOCO), the defendant, occupied it next
5. Sagrada Orden (plaintiff) files claims on the property with the Court of First Instance of Manila
and against the Philippine Alien Property Administrator
6. Plaintiff petitions that the sale of the property to Taiwan Tekkosho should be declared null and
void as it was executed under duress, that the interest of the Alien Property Custodian be
cancelled, and that NACOCO be given until February 28, 1949 to recover its equipment form the
property and vacate the premise
7. The Republic of the Philippines is allowed to intervene
8. CFI: the defendant (Philippine Alien Property Administrator) and the intervenor (RP) are released
from any liability but the plaintiff may reserve the right to recover from NACOCO reasonable
rentals for the use and occupation of the premises
9. The sale of the property to the Taiwan Takkesho was declared void and the plaintiff was given
the right to recover Php3,000/month as reasonable rental from August 1946 (date when
NACOCO occupied property) to the date NACOCO vacates the premises
10. the judgment is appealed to the SC

Issue:

Whether or not the defendant is liable to pay rent for occupying the property in question?

Held: No.

Ratio:

Obligations can only arise from four sources: law, contracts or quasi-contracts, crime, or negligence (Art
1089, Spanish Civil Code).

There were no laws or an express agreement between the defendant or the Alien Property Custodian with
the plaintiff regarding payment of rent. The property was acquired by the Alien Property Administrator
through law (Trading with the Enemy Act) on the seizure of alien property and not as a successor to the
interests of the latter. There was no contract of rental b/w them and Taiwan Takkesho. NACOCO entered
possession of the property from the Alien Property Custodian without any expectation of liability for its
use. NACOCO did not commit any negligence or offense, and there was no contract, implied or
otherwise, entered into, that can be used as basis for claiming rent on the property before the plaintiff
obtained the judgment annulling the sale to Taiwan Takkesho. The plaintiff has no right to claim rent
from NACOCO.