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RECEIVERSHIP CASES 2014

Compana General de Tabacos vs GauzonKlenzene Cacho


Belgian Catholic missionaries vs Magallanes Press Kristian Lastimosa Caumeran
Po Pauco vs Siguenza Cristina Quiron

CASE DIGESTED BY ARIEF MAMAO (big thanks rief!!!!!)

Berg vs Teus Don Noval


Vivares vs Reyes Cedric Tiu Gutierrez II
Chavez vs CA Ailee Tejano
Descallar vs CA Rebecca L. Jordan
Making Enterprises inc vs Marfori Rhea Yray
Bonaplata vs Amber John Andrew Camello
Commodities Storage and Ice plant vs CA Owen Lerin
Harden vs Director of Prisons Mel Jason Augusto
Calo vs Roldan Mario Calvo
Ylarde vs Enriquez Dave Parilla
Rocha and co vs Crossfield Jobey Bernaldez
Paranete vs Tan Romeo Cisco Amparado Tenedora
Tantano vs Caboverde Isha Berezo Corbeta
Citibank NA vs CA Kimberly Marie Esmea
Martinez vs Grano Karen Abegail Monteron
Platon vs Sandoval Airene Edao
Orendain vs BF homes Anne Vernadice Area
Traders Royal bank vs IAC Jecar G. Sual
G.R. No. 6305
September 26, 1911
COMPAIA GENERAL DE TABACOS DE FILIPINAS, plaintiff-appellee,
vs.
ROMANA GAUZON and JUAN D. POMAR, defendants.
JUAN D. POMAR, receiver-appellant.
DOCTRINE:
The receiver is generally defined to be "an indifferent person between the parties litigant, appointed by the
court and on behalf of all the parties, and not of the plaintiff or defendant only, to receive and hold the thing
or property in litigation, pending the suit, to receive the rents, issues or profits of the land or thing in
question, to receive the rents or other income, to hold possession and control of the property which is the
subject matter of the litigation, and to dispose of the same or deliver it to such person or persons as may be
directed by the court. He is said to be the arm and hand of the court, a part of the machinery of the court, by
which the rights of parties are protected. He is required not only to preserve the property, but to protect the
rights of all of the parties interested.
FACTS:
Defendant, Romana Gauzon executed and delivered to the plaintiff (Compaia General de Tabacos de Filipinas) a
mortgage upon an hacienda known as "San Jose".

The said defendant (Romana Gauzon) having failed to pay the said mortgage, the plaintiff (Compaia General de
Tabacos de Filipinas) commenced an action for the foreclosure of said mortgage, and asked that a receiver be
appointed to take change of the property in question, pending the said action.
Hon. Vicente Jocson, after hearing the petition filed in said cause, appointed the said defendant, Juan D. Pomar, an
employee of the plaintiff, receiver of the property involved in said foreclosure proceedings. Said foreclosure
proceedings continued to a termination.
After the termination of the receivership, the court required of the receiver (Juan D. Pomar) a report and an
accounting of his operations as receiver. It appears from the record that the lower court had a good deal of trouble in
securing a final report. The receiver apparently acted as though his only responsibility was to the plaintiff (Compaia
General de Tabacos de Filipinas).
After a careful consideration of the various items of the account of the receiver, Judge McCabe ordered the receiver,
Juan Pomar, to pay into court the sum of P7,883.76, a balance which he ought to have had in his possession.
Defendant appealed to this court.
ISSUES:
1. WON the court erred in reducing to P8,565.97 the P22,944.73 spent by the receiver for cutting, hauling, and
manufacture of 8,005.58 piculs of sugar, for packing, transportation and storage thereof, and insurance and
selling commission thereon.
2. WON the court erred in not allowing the item of P147.86 paid out by the receiver as interest on money
borrowed to cover the first expenses of his receivership.
3. WON the court erred in not approving the disbursement made by the receiver of the P3,001.94 delivered to
the aparceros as their share of the crop.
4. WON the court erred in reducing to P1,000 the P4,860.87 which the receiver claimed as compensation for
his services
5. WON the court erred in holding that the order appointing the receiver does not extend his powers beyond
those prescribed in section 175 of Act No. 190.
HELD:
First issue:
It was the duty of the receiver to harvest the sugar cane at least possible cost to the owners of the
crop. There is much proof in the record to indicate that the receiver did not harvest the crop of sugar cane
as expeditiously as he should have done. There is no proof in the record which shows that the amount
estimated by the said commissioner for the cutting, grinding, etc., of the sugar cane in question, was not a
reasonable amount for that expense.
Second issue:
A receiver has no authority to borrow money unless the same is expressly given by the court. We
would be inclined, however, to allow this amount (P147.86) had the necessity been fully demonstrated for
borrowing the money. There was absence of express authority and absence of proof of the absolute
necessity for incurring this item of expense
Third issue:
It appears that the receiver delivered one-half of the sugar to the aparceros without deducting the amount of
money and effects advanced to them. If he, in fact, advanced to the aparceros the said sum (P3,001.94) he
should have deducted it from the amount due said aparceros, and not have attempted to collect the same
from the amount due the owner of the hacienda, prejudicing the owner of the hacienda thereby. Here, the
receiver exceeded his authority. Nevertheless we would be inclined to allow this amount (P3,001.94)
if it were a just charge against the administration of the hacienda. But, as was said above, it is not a
just charge against the owner of the hacienda. This amount should have been collected from
the aparceros.
Fourth issue:
The lower court, in the appointment of the receiver, did not fix any sum for his compensation; neither is it
customary for courts in appointing receivers to fix their compensation in advance. Their compensation is a
matter which is always left to the sound discretion of the court, to be allowed from time to time.
Considering the negligent manner in which the receiver administered the hacienda, as well as his
negligence in complying with the various orders of the court with reference to rendering accounts,
we are of the opinion that the sum of P1,000 is, in fact, more than a just compensation for his

services. In view, however, of the fact that the owner of the hacienda did not appeal from the order of
the court allowing said sum (P1,000) we approve the finding of the lower court.
Fifth issue:
The appellant seems to believe that section 175 of the Code of Procedure in Civil Actions gave him full power to
administer the property placed under his control as receiver as he might deem wise and necessary, without any
intervention on the part of the court or of the interested parties.
The appellant evidently overlooked the phrase of said article which says: "The receiver shall have, under
the control of the court in which the action is pending, power, etc."
The receiver is generally defined to be "an indifferent person between the parties litigant, appointed
by the court and on behalf of all the parties, and not of the plaintiff or defendant only, to receive and
hold the thing or property in litigation, pending the suit (Booth vs. Clark, 17 How. (U. S.),322, 331), to
receive the rents, issues or profits of the land or thing in question (Both vs. Clark, supra), to receive
the rents or other income, to hold possession and control of the property which is the subject matter
of the litigation, and to dispose of the same or deliver it to such person or persons as may be
directed by the court. (Wiswall vs. Kunz, 173 Ill., 110.)"
The receiver is said to be the arm and hand of the courta part of the machinery of the court, by
which the rights of parties are protected. He is required not only to preserve the property, but to
protect the rights of all of the parties interested.
We find no reason for changing or modifying the decision of the lower court, and the same is hereby affirmed, with
costs.
G.R. No. L-25729

November 24, 1926

THE BELGIAN CATHOLIC MISSIONARIES, INC.


AL., defendants. JOSE MARIA MEMIJE, appellant.

vs

MAGALLANES

PRESS,

INC.,

ET

DOCTRINE: In a mortgage loan, the proceeds of the property is deemed under conservatorship and
not replevin upon payment of bond. Replvin is the delivery of ownership to its owner. Pending the
dispute of ownership (who should get the insurance proceed), the proper remedy is conservatorship
and not replevin.
FACTS:
Magallanes Press obtained a loan from JP Heilberg with interest rate per annum SECURED by a
CHATTEL MORTGAGE on the printing machineries. Later the successor company Magallanes Press
Corporation (take note that the original company and the successor company is different) contracted
another LOAN from Belgian Catholic Missionaries and SECURED THE SAME CHATTEL MORTGAGE. (This
means that the printing machine was a security to 2 different loans at the same time).
JP Heilberg transferred the credit to Jose Marie Memije. Now there is a subrogation of rights. Memije
will collect on behalf of JP Heilberg. Also Memije is entitled to additional credit because the HEADS of
Magallanes Press Co formerly contracted loans to Memije to pay JP Heilberg.
The printing machines, subject to the chattel mortgage was destroyed by a fire. Gladly, the machines
was covered by an insurance and such insurance proceeds was supposed to be paid to Mimeji. When J.
P. Heilbronn & Co., Inc., transferred its mortgage credit to Jose Ma. Memije it, in turn, endorsed said
insurance policies to him. The insurance companies were disposed to pay the respective insurance
policies, which amounted to P7,686.45, but due to the issuance of the above-mentioned writ of
preliminary injunction, payment could not be made.
Due to the filing of the complaint in the present case on May 9, 1923, and the issuance of the writ of
preliminary injunction on May 10th of the same year, Jose Ma. Memije was unable to collect the
amount of the insurance policies, and when he was summoned under the complaint on May 14, 1923,
he made demand on the Magallanes Press Co., Inc., for the payment of his mortgage credit on the
same date the manager of said corporation, E. F. Clemente, permitted the secretary of the said
corporation to place the property covered by the mortgage into the hands of the said Jose Ma. Memije
in order that the same might be sold, but the sale could not be consummated due to the issuance of
the said writ of preliminary injunction.

ISSUE: What is the proper remedy of the insurance proceeds? Replevin or Conservatorship?
HELD: It appears that the defendant Jose Ma. Memije having attempted to foreclose the mortgage, by
which the mortgage credit acquired by him from J. P. Heilbronn & Co., Inc., was secured, in order to
recover not only the original credit but also the increase, the Belgian Catholic Missionaries Co., Inc.,
filed a complaint, with a petition for a writ of preliminary injunction against the sheriff, in whose hands
the foreclosure of the mortgage was placed. The writ of preliminary injunction having been issued,
upon the filing of a bond in the sum of P15,000, and there being no person more interested in the
conservation and custody of the property covered by the mortgage than said plaintiff company, being
the largest creditor, it applied and obtained from the court the possession of the same.
Contrary to the contention of the appellant, this case is not one of replevin but simply a proceeding
instituted by the plaintiff for the deposit of the property in litigation, upon the filing of a bond, said
plaintiff, acting as a receiver by authority of the court, being the person most interested in the
conservation and care of the same
The lower court, therefore, did not err in authorizing the plaintiff company to take possession of the
personal property in litigation upon the filing of a bond sufficient to secure the conservation or value
thereof.

Topic: Distinguised a Receiver from a Sheriff


G.R. No. L-29295
October 22, 1928
J.M. PO PAUCO vs. DOLORES SIGUENZA, et al. WISE & CO.
FACTS
J.M. Po Pauco obtained final judgment in his favor against the spouses Dolores Siguenza and Mariano Aguilar for the
sum of P72,278.01, both parties agreeing to deduct therefrom the sum of P13,007.46 which is the net value of the
sugar cane belonging to said defendants and attached by the plaintiff and manufactured by the Philippine National
Bank, the receiver of the said product. In another civil case, Wise & Co., Ltd., had on October 18, 1926 obtained
judgment against the herein plaintiff J. M. Po Pauco for the sum of P10,572.80 with legal interest thereon, execution
of said judgment having been ordered in those proceedings, which has not yet, even partially, been paid.
On October 23, 1927, Wise & Co., Ltd., intervened in this case praying that the Philippine National Bank, the receiver
of the said sum of P13,007.46, be ordered to satisfy the judgment in favor of the said petitioner Wise & Co., Ltd.,
against J.M. Po Pauco.
Opposition was filed to said petition by the Philippine National Bank alleging that said bank has a preferential right
over the surplus of the sale of the sugar delivered to it as receiver, and also that the Hibila Trading Corporation
obtained judgment against the said J. M. Po Pauco, in civil case No. 3197 of the Court of First Instance of Occidental
Negros, holding that the rights of the Hibila Trading Corporation over the sugar harvest of 1923-1924 and 1924-1925
of the spouses Dolores Siguenza and Mariano Aguilar in the San Agustin Estate, are preferential over those of J. M.
Po Pauco and, therefor, the latter is not at all entitled to any of the surplus remaining from the sale of said sugar
ISSUE
To determine which has the better right to the net proceeds of the sale of said sugar
RULING
The proceeds of the sale or sum mentioned is in the custody of the receiver & not of a sheriff. Thus, not within the the
reach of judicial processes.
The sheriff is a court officer of a general character who is not appointed for a certain judicial case; the sheriff is an
officer who exercises or can exercise his functions within the limits of his jurisdicition.
A receiver, on the other hand, is a special officer, appointed in relation to and within a certain case or action, and
whose duties are limited to his sphere of action, and do not extend further than the case in which he was appointed.

For this reason, while the funds in the custody of a sheriff may be within the reach of processes coming from other
judicial proceedings, such is not the case with respect to those under the custody of a depositary. From which it
follows that those who, as in the present case, have any claim to property or sum in the possession of a receiver,
must appear in the same proceeding in which said receiver discharges his duties, and there, by motion or petition,
allege and prove their claims.
Topic: Receivership (Rule 59)
EFFECT OF DISMISSAL OF THE CASE
ERNEST BERG, (plaintiff-appellant)
vs.
VALENTIN TEUS, (defendant-appellee)
G.R. No. L-2987 February 20, 1951
FACTS:
Ernest Berg brought the action against Valentin Teus to foreclose a real estate and chattelmortgage
executed in November, 1944, to secure six promissory notes of the aggregate value of P80,000 and
payable on demandtwo years after declaration of armistice between the UnitedStates and Japan.
Mortgagor had undertaken, among other things, to insure and pay the taxes on the
mortgagedproperties; not to alienate, sell, lease, encumber or in any manner dispose thereof; and to
keepand maintain the said properties in good order and repair.Teus had failed to keep taxes fully paid;
had made material alterations on the premises, and hadsold and conveyed them to Central Azucarera
del Norte. The mortgage shall be deemed to beautomatically foreclosed and the mortgagee may
forthwith proceed to foreclose this mortgageeither extrajudicially, even after the death of the
mortgagor,in pursuance of the provisions of Act No. 3135, as amended
On basis of this agreement it was prayed that the mortgage be declared automaticallyforeclosed and
the plaintiff entitled to immediate possession of the properties in question.Berg's attorney also asked
for the appointment of a receiver.
Defendant having moved for the dismissal of the complaint on the grounds thatplaintiff's causeof
action had not accrued by reason of the executive ordersand having opposed the motionfor
receivership,Judge ZoiloHilario entered an order holding that as to the collection of the sixnotes the
suit had been prematurely brought, setting the cause for trial on the merits because, thereasons
alleged in the motion to dismiss were not "indubitable" with reference to theappointment of a receiver
sought by the plaintiff.The moratorium ought not to interfere withthe plaintiff's motion for appointment
of receiver.
Defendant filed a new motion to dismiss; Judge Luis Ortega, replaced Judge Hilario, ignoring thelatter's
order entered the order now on appeal by which the entire action was quashed on thetheory advanced
in the motion to dismiss.
The new order was silent on both the application for receivership and the prayer that theplaintiff be
adjudged authorized by the terms of the mortgage to foreclose it extrajudiciallyand seize the
properties.Judge Ortega opined that Executive Orders Nos. 25 and 32 were still in force unaffected
byRepublic Act No. 342 as to debts contracted during the Japanese occupation.
Plaintiff contended that those executive orders had passed out of existence by thedisappearance of
the emergency contemplated thereby.The constitutionality of Executive Orders Nos. 25 and 32 and
Republic Act No. 342 and alliedissues can wait. These issues are delicate and would require prolonged
study and deliberation.Besides, there is a pending bill in Congress repealing those executive orders
and law.
ISSUE:
Whether on basis of this agreement the mo9rtgage be declared automatically foreclosed and the
plaintiff entitled to immediate possession of the properties in question; and,whether there is a need for
appointment of a receiver.

HELD:
The alleged violation of the conditions of the mortgaged contract, if true, make it necessary, if not
imperative, for the protection of the interest of the plaintiff, that the mortgaged properties be placed in
the custody of the court, the fact that the appointment of a receiver, as the defendant emphasizes, is
an ancillary remedy is precisely one powerful reason why the case should not be dismissed,
Receivership is an auxiliary remedy and the dismissal of the main action would eliminate the only basis
for the appointment of receiver and thus completely bar the door to any relief from mischiefs.
Judge Hilario evidently saw the grave injustice to the plaintiff and the irreparable injury to which his
rights would be exposed if an indefinite suspension of the entire proceeding were decreed.
In suspending the right of the creditor to enforce his right, the president and congress had no idea of
depriving him of all means of preventing the destruction or alienation of the security for the debt. A
destruction which would virtually write-off, in some cases, the whole credit. If that were the intention,
it is doubtful if the orders and the law invoked could stand the test of constitutionality.
GR No. 155408
Julio A. Vivares and Mila G. Ignaling v Engr Jose J. Reyes
The kernel dispute in this petition under Rule 45 is the legality of the May 22, 2001 Resolution of the
Camiguin Regional Trial Court (RTC), Branch 28 in Civil Case No. 517, which placed the estate of
Severino Reyes under receivership. The Court of Appeals (CA) saw it differently in CA-G.R. SP No.
67492its June 18, 2002 Decision recalled the RTC directive on the appointment of the receiver,
prompting Julio Vivares and Mila Ignaling to file the petition at bar to convince the Court to reinstate
the receivership.
The Facts
Severino Reyes was the father of respondent Jose Reyes and Torcuato Reyes. Upon the death of
Severino, respondent and Torcuato came upon their inheritance consisting of several properties. They
had an oral partition of the properties and separately appropriated to themselves said properties.
Petitioner Vivares was the designated executor of Torcuatos last will and testament, while petitioner
Ignaling was declared a lawful heir of Torcuato.
Petitioners instituted an action for Partition and Recovery of Real Estate before the Camiguin RTC. What
was being contested were the properties that were still in the name of Severino.
On March 15, 2000, petitioners filed a Motion to Place Properties in Litigation under
Receivership before the trial court alleging that to their prejudice respondent had, without prior court
approval and without petitioners knowledge, sold to third parties and transferred in his own name
several common properties. The petitioners prayed to place the entire disputed estate of Severino
under receivership. They nominated Lope Salantin to be appointed as receiver.
Respondent opposed the appointment of receivership and asserted that the transfer in his name of the
said properties was a result of oral partition.
On September 19, 2000, respondent filed for cancellation of the receivership and offered to pay a bond
in an amount fixed by court.
Respondent also filed a motion to cancel the notice of lis pendens on certain properties owned by
Elena Unchuan.
RTC ruled in favor of the petitioner and dismissed the motion to cancel the receivership and lift the
notice of lis pendens on the properties allegedly owned by Elena.

CA reversed the ruling, cancelled the receivership and lifted the notice of lis pendens on the properties
owned by Elena. The case was then remanded to the RTC for further proceedings.
Issue:
WHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS PENDENS PRECLUDES THE APPOINTMENT OF
A RECEIVER WHEN THERE IS A NEED TO SAFEGUARD THE PROPERTIES IN LITIGATION.
WHETHER OR NOT THE RECEIVERSHIP SHOULD BE CANCELLED WITH THE WILLINGNESS TO PAY BOND
BY THE RESPONDENT.
Ruling:
The Court sustained the ruling of the CA with some modifications.
On the first issue: Petitioners failed to adduce clear, convincing, and hard evidence to show the alleged
fraud in the transfers and the antedating of said transfers. The fact that the transfers were dated prior
to the demise of Torcuato on May 12, 1992 does not necessarily mean the transfers were attended by
fraud. He who alleges fraud has the burden to prove it. There was no sufficient cause or reason to
justify placing the disputed properties under receivership.
On the second issue: petitioner is willing to post a counterbond in the amount to be fixed by the court
based on Sec. 3, Rule 59. Anchored on this rule, the trial court should have dispensed with the services
of the receiver, more so considering that the alleged fraud put forward to justify the receivership was
not at all established.
It is undisputed that respondent has actual possession over some of the disputed properties which are
entitled to protection. Between the possessor of a subject property and the party asserting contrary
rights to the properties, the former is accorded better rights.

6. Chavez vs. CA, GR. No. 174356, January 20, 2010


ABAD, J.:
But receivership is not an action. It is but an auxiliary remedy, a mere incident of the suit to help
achieve its purpose. Consequently, it cannot be said that the grant of receivership in one case will
amount to res judicata on the merits of the other cases. The grant or denial of this provisional remedy
will still depend on the need for it in the particular action.
Facts
Respondent Fidela Y. Vargas owned a five-hectare mixed coconut land and rice fields in
Sorsogon. Petitioner Evelina G. Chavez had been staying in a remote portion of the land with her
family, planting coconut seedlings on the land and supervising the harvest of coconut and palay.
Fidela and Evelina agreed to divide the gross sales of all products from the land between themselves.
Since Fidela was busy with her law practice, Evelina undertook to hold in trust for Fidela her half of the
profits.
But Fidela claimed that Evelina had failed to remit her share of the profits and, despite demand
to turn over the administration of the property to Fidela, had refused to do so. Consequently, Fidela
filed a complaint against Evelina and her daughter, Aida C. Deles, who was assisting her mother, for
recovery of possession, rent, and damages with prayer for the immediate appointment of a receiver
before the Regional Trial Court (RTC) of Bulan, Sorsogon.[1] In their answer, Evelina and Aida claimed

that the RTC did not have jurisdiction over the subject matter of the case since it actually involved an
agrarian dispute.
After hearing, the RTC dismissed the complaint for lack of jurisdiction based on Fidelas
admission that Evelina and Aida were tenants who helped plant coconut seedlings on the land and
supervised the harvest of coconut and palay. As tenants, the defendants also shared in the gross sales
of the harvest. The court threw out Fidelas claim that, since Evelina and her family received the land
already planted with fruit-bearing trees, they could not be regarded as tenants. Cultivation, said the
court, included the tending and caring of the trees. The court also regarded as relevant Fidelas
pending application for a five-hectare retention and Evelinas pending protest relative to her threehectare beneficiary share.
Dissatisfied, Fidela appealed to the CA. She also filed with that court a motion for the
appointment of a receiver. On April 12, 2006 the CA granted the motion and ordained receivership of
the land, noting that there appeared to be a need to preserve the property and its fruits in light of
Fidelas allegation that Evelina and Aida failed to account for her share of such fruits.
Parenthetically, Fidela also filed three estafa cases with the RTC of Olongapo City and a
complaint for dispossession with the Department of Agrarian Reform Adjudication Board (DARAB)
against Evelina and Aida. In all these cases, Fidela asked for the immediate appointment of a receiver
for the property.
ISSUES:
1.
Whether or not respondent Fidela is guilty of forum shopping considering that she had earlier
filed identical applications for receivership over the subject properties in the criminal cases
she filed with the RTC of Olongapo City against petitioners Evelina and Aida and in the
administrative case that she filed against them before the DARAB; and
2.

Whether or not the CA erred in granting respondent Fidelas application for receivership.

RULING:
One. By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the
same cause, trusting that one or the other tribunal would favorably dispose of the matter. The
elements of forum shopping are the same as in litispendentia where the final judgment in one case will
amount to res judicatain the other. The elements of forum shopping are: (1) identity of parties, or at
least such parties as would represent the same interest in both actions; (2) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding
particulars such that any judgment rendered in the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration.
Here, however, the various suits Fidela initiated against Evelina and Aida involved different causes of
action and sought different reliefs. The present civil actionthat she filed with the RTC sought to recover
possession of the property based on Evelina and Aidas failure to account for its fruits. The estafa cases
she filed with the RTC accused the two of misappropriating and converting her share in the harvests for
their own benefit. Her complaint for dispossession under Republic Act 8048 with the DARAB sought to
dispossess the two for allegedly cutting coconut trees without the prior authority of Fidela or of the
Philippine Coconut Authority.
The above cases are similar only in that they involved the same parties and Fidela sought the placing
of the properties under receivership in all of them. But receivership is not an action. It is but an
auxiliary remedy, a mere incident of the suit to help achieve its purpose. Consequently, it cannot be
said that the grant of receivership in one case will amount to res judicata on the merits of the other

cases. The grant or denial of this provisional remedy will still depend on the need for it in the
particular action.
Two. In any event, we hold that the CA erred in granting receivership over the property in dispute in
this case. For one thing, a petition for receivership under Section 1(b), Rule 59 of the Rules of Civil
Procedure requires that the property or fund subject of the action is in danger of being lost, removed,
or materially injured, necessitating its protection or preservation. Its object is the prevention of
imminent danger to the property. If the action does not require such protection or preservation, the
remedy is not receivership.
Here Fidelas main gripe is that Evelina and Aida deprived her of her share of the lands produce. She
does not claim that the land or its productive capacity would disappear or be wasted if not entrusted to
a receiver. Nor does Fidela claim that the land has been materially injured, necessitating its protection
and preservation. Because receivership is a harsh remedy that can be granted only in extreme
situations, Fidela must prove a clear right to its issuance. But she has not. Indeed, in none of the other
cases she filed against Evelina and Aida has that remedy been granted her.
Besides, the RTC dismissed Fidelas action for lack of jurisdiction over the case, holding that the issues
it raised properly belong to the DARAB. The case before the CA is but an offshoot of that RTC case.
Given that the RTC has found that it had no jurisdiction over the case, it would seem more prudent for
the CA to first provisionally determine that the RTC had jurisdiction before granting receivership which
is but an incident of the main action.
WHEREFORE, the Court GRANTS the petition. The Resolutions dated April 12, 2006 and July 7, 2006 of
the Court of Appeals in CA-G.R. CV 85552, areREVERSED and SET ASIDE.
The receivership is LIFTED and the Court of Appeals is directed to resolve CA-G.R. CV 85552 with
utmost dispatch.
ANTONIETTA O. DESCALLAR, petitioner,
v.
THE HON. COURT OF APPEALS and CAMILO F. BORROMEO, respondents.
G.R. No. 106473 July 12, 1993
TOPIC: Where rights of a party are still to be determined; Propriety
DOCTRINE OF THE CASE:
The appointment of a receiver is not proper where the rights of the parties (one of whom is in possession of the
property), are still to be determined by the trial court.
"Relief by way of receivership is equitable in nature, and a court of equity will not ordinarily appoint a receiver where
the rights of the parties depend on the determination of adverse claims of legal title to real property and one party is
in possession."
Only when the property is in danger of being materially injured or lost... or if portions thereof are being occupied by
third persons claiming adverse title thereto, may the appointment of a receiver be justified

FACTS:
Camilo Borromeo, a realtor, filed against petitioner Antonietta Descallar a civil complaint for the recovery of three (3)
parcels of land and the house built thereon in the possession of the petitioner and registered in her name under
Transfer Certificates of Title Nos. 24790, 24791 and 24792 of the Registry of Deeds for the City of Mandaue
Borromeo alleged that he purchased the property on July 11, 1991 from Wilhelm Jambrich, an Austrian national and
former lover of the petitioner for many years until he deserted her in 1991 for the favors of another woman

Descallar alleged that the property belongs to her as the registered owner. Wilhelm Jambrich, is an Austrian, hence,
not qualified to acquire or own real property in the Philippines. He has no title, right or interest whatsoever in the
property which he may transfer to Borromeo.
On March 5, 1992, Borromeo asked the trial court to appoint a receiver for the property during the pendency of the
case which Judge Mercedes Golo-Dadole granted the application for receivership and appointed her clerk of court as
receiver with a bond of P250,000.00.
Descallar appealed the decision before the CA but appellate court dismissed the petition.
ISSUE
whether the trial court gravely abused its discretion in appointing a receiver for real property registered in the name of
the petitioner in order to transfer its possession from the petitioner to the court-appointed receiver
RULING: Yes
The Court is amazed that the trial court and the Court of Appeals appear to have given no importance to the fact that
the petitioner herein, besides being the actual possessor of the disputed property, is also the registered owner
thereof. Her title and possession cannot be defeated by mere verbal allegations that although she appears in the
deed of sale as vendee of the property, it was her Austrian lover, Jambrich, who paid the price of the sale of the
property. Her Torrens certificates of title are indefeasible or incontrovertible
we find the order of receivership tainted with grave abuse of discretion. The appointment of a receiver is not
proper where the rights of the parties (one of whom is in possession of the property), are still to be
determined by the trial court.
"Relief by way of receivership is equitable in nature, and a court of equity will not ordinarily appoint a receiver where
the rights of the parties depend on the determination of adverse claims of legal title to real property and one party is
in possession." (Calo, et al. vs. Roldan, 76 Phil. 445).
Only when the property is in danger of being materially injured or lost... or if portions thereof are being occupied by
third persons claiming adverse title thereto, may the appointment of a receiver be justified (Motoomul vs. Arrieta, 8
SCRA 172).
In this case, there is no showing that grave or irremediable damage may result to respondent Borromeo unless a
receiver is appointed. The property in question is real property, hence, it is neither perishable or consummable. Even
though it is mortgaged to a third person, there is no evidence that payment of the mortgage obligation is being
neglected. In any event, the private respondent's rights and interests, may be adequately protected during the
pendency of the case by causing his adverse claim to be annotated on the petitioner's certificates of title.
Another flaw in the order of receivership is that the person whom the trial judge appointed as receiver is her own clerk
of court. This practice has been frowned upon by this Court
That order, in effect, made the clerk of court a sort of a receiver charged with the duty of receiving the
proceeds of sale and the harvest of every year during the pendency of the case with the disadvantage that
the clerk of court has not filed any bond to guarantee the faithful discharge of his duties as depositary; and
considering
that in actionsinvolving title to real property, the appointment of a receiver cannot beentertained beca
use its effect would be to take the property out of thepossession of the defendant, except in extreme
cases when there is clearproof of its necessity to save the plaintiff from grave and irremediable loss
ordamage, it is evident that the action of the respondent judge is unwarranted and unfair to the defendants.
(Mendoza vs. Arellano, 36 Phil. 59;

During the pendency of this appeal, Judge Dadole rendered a decision upholding Borromeo's claim to Descallar's
property, This circumstance does not retroactively validate the receivership until the decision (presumably now
pending appeal) shall have attained finality.
WHEREFORE, finding grave abuse of discretion in the order of receivership which the respondent Court of Appeals
affirmed in its decision of July 29, 1992 in CA-G.R. SP No. 27977, the petition for certiorari is hereby GRANTED and
the decision of the appellate court, as well as the order dated March 17, 1992 of the Regional Trial Court of Mandaue
City, Branch 28, in Civil Case No. MAN-1148, are hereby ANNULLED and SET ASIDE. Costs against the private
respondent.

MAKING ENTERPRISES, INC. AND SPOUSES JOAQUIN TAMANO AND ANGELITA TAMANO, PETITIONERS,
VS. JOSE MARFORI AND EMERENCIANA MARFORI, RESPONDENTS.
[ G.R. No. 152239, August 17, 2011 ]
Where rights of a party are still to be determined; Propriety
FACTS:
On June 4, 1984, Jose F. Marfori acquired a five-storey commercial building, known as the Marsman Building, from
the Development Bank of the Philippines. As the land on which the building stood was owned by the Philippine Ports Authority
(PPA), Marfori entered into a contract of lease of the said lot with the PPA. The contract was for a period of twenty-five (25)
years, renewable for a similar period, and was subject to the condition that upon the expiration of lease, the building and all other
improvements found on the leased premises shall become the PPA's sole property. Marfori then incurred huge expenses for the
rehabilitation of the building and leased some portions of the building to the PPA.
On April 10, 1987, Marfori executed a dacion en pago and assignment of rights transferring the ownership of the
Marsman Building to Making Enterprises, Inc. (Making), on the condition that Making would assume all of Marfori's obligations.
Marfori's wife, Emerenciana, alleged that she did not consent to the transfer of the Marsman Building to Making. She
claimed that the building is part of their conjugal property. she filed with the RTC of Manila a complaint against Making, the
spouses Joaquin and Angelita Tamano, the spouses Lester and Cristina Lee, and the PPA for Recovery of Ownership, Annulment
of Contract with Damages, Receivership, Accounting and Preliminary Injunction with Prayer for Restraining Order. She sought,
among others, to annul the dacion en pago and assignment of rights and prayed for the appointment of a receiver to preserve the
rentals of the building. She also prayed for the issuance of a writ of preliminary injunction to enjoin the PPA from paying its
rentals to Making and from approving the transfer of the Marsman Building.
RTC denied the prayer for the issuance of a writ of preliminary injunction and the application for receivership.
Emerenciana filed before the CA a petition for certiorari and receivership with prayer for preliminary injunction.
However, the CA dismissed the petition for being insufficient in form and substance.
Marfori, on the other hand, was the accused in an action for estafa and violation of Batas Pambansa Blg. 22 with the
Prosecutor's Office of Caloocan City.
On November 27, 1996, Marfori and his wife had filed with this Court a Consolidated Petition docketed as G.R. No.
126841 asking among others, for the appointment of a receiver to preserve the rentals collected from the Marsman Building and
the issuance of an injunction to enjoin the implementation of the warrants of arrest issued against him. Respondents argued that
the filing of the criminal cases against Marfori had no factual and legal justification and hence, should be enjoined. SC referred
the petition to CA.
CA granted the petition and appointed a receiver. The CA found that unless a receiver is appointed, there is a
danger of loss or material injury considering that petitioners possess absolute control of the building.

ISSUES:
(1) Whether the CA erred in granting the application for the appointment of a receiver for the Marsman Building; and
(2) Whether the CA erred in permanently enjoining the criminal prosecution of Jose Marfori.

RULING:
Yes
1st issue: the application for an appointment of a receiver must be denied.
An application for the appointment of a receiver under Section 1(a), Rule 59 of the 1997 Rules of Civil Procedure, as
amended, requires that the property or fund subject of the action is in danger of being lost, removed, or materially injured,
necessitating its protection or preservation. Section 1 provides:

SECTION 1. Appointment of receiver.--Upon a verified application, one or more receivers of the property subject of the
action or proceeding may be appointed by the court where the action is pending, or by the Court of Appeals or by the
Supreme Court, or a member thereof, in the following cases:

(a) When it appears from the verified application, and such other proof as the court may require, that the party
applying for the appointment of a receiver has an interest in the property or fund which is the subject of the action or
proceeding, and that such property or fund is in danger of being lost, removed, or materially injured unless a receiver
be appointed to administer and preserve it;
Respondents failed to show how the building as well as the income thereof would disappear or be wasted if not
entrusted to a receiver. They were not able to prove that the property has been materially injured, necessitating its protection and
preservation. Because receivership is a harsh remedy that can be granted only in extreme situations, respondents must
prove a clear right to its issuance. This they failed to do.
It must be stressed that the issue of the validity of the dacion en pago and assignment of rights executed by Marfori in
favor of Making still has to be resolved in Civil Case No. 94-70092. Until the contract is rescinded or nullified, the same
remains to be valid and binding. Thus, we agree with the RTC when it held that courts of equity will not ordinarily
appoint a receiver where the rights of the parties depend on the determination of adverse claims of legal title to real
property and one party is in possession.
Case: Commodities Storage & Ice Plant Corporation vs. CA
Doctrine: Appointment, Section 1
Facts:
In 1990, petitioner spouses Victor and Johannah Trinidad obtained a loan of P31,000,000.00
from respondent Far East Bank & Trust Company to finance the purchase of the Sta. Maria Ice Plant &
Cold Storage. The loan was secured by a mortgage over the ice plant and the land on which it stands.
Petitioners failed to pay their loan. The bank extrajudicially foreclosed the mortgage and the ice plant
was sold by public bidding on March 22, 1993. Respondent bank was the highest bidder and it
registered the certificate of sale on September 22, 1993. Petitioner spouses filed a case against
respondent bank for reformation of the loan agreement, annulment of the foreclosure sale, and
damages. The RTC dismissed the complaint for failure to pay the docket fees.

On October 28, 1994, another civil case was filed by petitioners for damages, accounting and
fixing of redemption period. An Urgent Petition for Receivership was also filed on November 16,
1994. They prayed for the appointment to save the ice plant, conduct its affairs and safeguard its
records during the pendency of the case. The RTC assigned petitioners nominee as receiver. On
appeal, the order was annulled and set aside.

*Important part of the case* Petitioners claim that the appointment of a receiver is justified under Section 1 (b) of Rule 59. They
argue that the ice plant which is the subject of the action was in danger of being lost, removed and materially injured because of
the following "imminent perils":
6.1 Danger to the lives, health and peace of mind of the inhabitants living near the Sta. Maria Ice Plant;
6.2 Drastic action or sanctions that could be brought against the plaintiff by affected third persons, including
workers who have claims against the plaintiff but could not be paid due to the numbing manner by which the
defendant took the Sta. Maria Ice Plant;
6.3 The rapid reduction of the Ice Plant into a scrap heap because of evident incompetence, neglect and
vandalism.

Issue: WON the assignment of a receiver is justified.


Held: NO.
[Requisite of petition for receivership under section 1 (b)]
A petition for receivership under Section 1 (b) of Rule 59 requires that the property or fund which is the subject of the
action must be in danger of loss, removal or material injury which necessitates protection or preservation. The guiding
principle is the prevention of imminent danger to the property. If an action by its nature, does not require such
protection or reservation, said remedy cannot be applied for and granted.
In the instant case, we do not find the necessity for the appointment of a receiver. Petitioners have not sufficiently
shown that the Sta. Maria Ice Plant is in danger of disappearing or being wasted and reduced to a "scrap heap."
Neither have they proven that the property has been materially injured which necessitates its protection and
preservation. In fact, at the hearing on respondent bank's motion to dismiss, respondent bank, through counsel,
manifested in open court that the leak in the ice plant had already been remedied and that no other leakages had
been reported since. This statement has not been disputed by petitioners.
Augusto, Mel Jason T.
RULE 59-RECEIVERSHIP
Harden vs Director of Prisons, G.R. No. L-2349, October 22, 1948
TOPIC: JURISDICTION
DOCTRINE: While a court cannot give its receiver authority to act in another state without the
assistance of the courts thereof, it may act directly upon the parties before it with respect to the
property beyond the territorial limits of its jurisdiction and hold them in contempt if they resist the
courts orders with reference to its custody or disposition. Whether the property was removed before or
after the appointment of the receiver is likewise immaterial.
ANTECEDENT FACTS: A receiver was appointed and a preliminary injunction was issued
restraining Fred M. Harden and his codefendant, Jose Salumbides from transferring and alienating,
except for a valuable consideration and with the consent of the court, moneys, share of
stock and other properties and assets, real and personal, belonging to the conjugal
partnership.

When Mrs. Harden found out that Fred M. Harden transferred to the Hongkong and Shanghai
Banking Corporation and the Chartered Bank of Asia, Australia and China, both in
Hongkong, over 1,000 pesos in drafts or cash and to Virginia Recreation Center, Long
Beach, California, P20,196.80, and to an unknown person, P50,000; she(Mrs. Harden)
moved the court to order Fred Harden to return all these amounts and to and to redeposit
them with the Manila branch of the Chartered Bank of India, Australia & China. The court
order, through Judge Pena stated that Fred Harden should do so within the period of 15 days from
the receipt of a copy of said order. But when she filed a petition of certiorari to the Supreme
Court and all other various motions, said order was modified, stating that Fred Harden should do
so within the period of 5 days from the receipt of a copy of said order with the inclusion of a
decree which states, among others:
..Fred M. Harden be ordered to deliver the certificate covering the 368,553 Balatoc Mining
Company shares either to the Clerk of this Court or to the receiver in this case for
safekeeping after his compliance with the order of January 17, 1948 and said defendant is further
ordered, after the registration of the said certificate, to deposit the same with the Manila
Branch of the Chartered Bank of India, Australia and China.
NOTE: the last part of the order was the culmination of another series of motions with their
corresponding hearings. So, it is important to know the facts of such motions. The facts culled
from the pleadings are the following:
the receiver appointed in the main case prayed that the certificates of stock of the conjugal
partnership, 368,553 shares of Balontoc Mining Co., alleged to be in the possession of the
defendant, be ordered turned over to him (receiver) so that he may registered them. The
court authorized Harden to register not later that June 30. Mrs. Harden complained when
her husband failed to comply with said order and prayed he be ordered to show cause why
he should not be declared in contempt. Harden filed a perfunctory compliance. In his
"compliance", Harden stated that he had been granted an extension until December 31,
1947, within which to register the Balatoc Mining Co. shares under Republic Act No.
62.
After some time, the receiver informed the court that despite the expiration of
December
31, 1947, Fred Harden had not been registered said certificate. Upon his request, he is
given an extension until March 31, 1948 to comply with said order. Mrs. Harden prayed
that defendant Harden "be ordered to deliver the certificate covering the 368,553 Balatoc
Mining Co. shares either to the clerk of the court or to the receiver herein for
safekeeping, immediately after registering them pursuant to Republic Act No. 62. It was
in stage of the case that the present petitioner was committed to jail for failing to
comply
with the said orders of the court. Fred Hardens imprisonment in New Bilibid, Muntinlupa
Rizal is to be continued until he complies with the said orders of the court.
ISSUE: Whether or not the court has no jurisdiction of the property in a foreign country, and that it has
no power to effect an action for receivership to the persons of such property.
RULING: The High Tribunal ruled in the negative.
The Supreme Court said that while a court cannot give its receiver authority to act in another state
without the assistance of the courts thereof, it may act directly upon the parties before it with respect
to the property beyond the territorial limits of its jurisdiction and hold them in contempt if they resist
the courts orders with reference to its custody or disposition. Whether the property was removed
before or after the appointment of the receiver is likewise immaterial.
Further, the Court citing the case of Sercomb vs. Catlin, where that Supreme Court of Illinois ruled: It is
true that the property attached is beyond the jurisdiction of the courts of this state, but the appellant,

who caused it to be attached, is in this state, and within the jurisdiction of its courts. If the superior
court had no power to reach the goods in Newton's hands, it had the power to reach appellant, who
sought to prevent its receiver from getting possession of the goods. It makes no difference that the
property was in a foreign jurisdiction.
Anent to the issue of whether or not the penalty complained of is cruel, unjust or excessive, the
Supreme Court ruled otherwise.
The Court said that the penalty is suitable and adapted to its objective; and it accords with section 7,
Rule 64, of the Rules of Court which provides that "when the contempt consists in the omission to do
an act which is yet in the power of the accused to perform, he may be imprisoned by order of a
superior court until he performs it. If the term of imprisonment in this case is indefinite and might last
through the natural life of the petitioner, yet by the terms of the sentence the way is left open for him
to avoid serving any part of it by complying with the orders of the court, and in this manner put an end
to his incarceration. To order that one be imprisoned for an indefinite period in civil contempt is purely
a remedial measure. Its purpose is to coerce the contender to do an act within his or her power to
perform.
But take note of the dissenting opinion of Justice Perfecto (although this is not binding):
Section 7, Rule 64 Rules of Court which states:
SEC. 7. Imprisonment until ordered obeyed. When the contempt consists in the omission to do an
act which is yet in the power of the accused to perform, he may be imprisoned by order of a superior
court until he performs it.
(Note that this provision pertains to the old Rule, as this case was decided on year 1948.)
Justice Perfecto if of the opinion that the reglementary provision is null and void per se and, therefore,
should be denied compliance. Perhaps, there is no other provision in our statute books more revolting
to conscience, more shocking to the most elemental sense of justice, and most unreasonably
Draconian. The provision is characterized by such an extreme of arbitrariness that is comprehensible
only under a dictatorial system of government. (Something interesting to ponder, isnt it?)
CALO VS. ROLDAN
G.R. No.L-252. March 30, 1946

DOCTRINE OF THE CASE:Appointment of a receiver is not proper or does not lie in action of
Injunction.

FACTS:
Plaintiffs Calo and San Jose, as owners and possessors of certain parcels of rice land in Laguna filed a
complaint against the defendantsRegingRelova and certain TeodulaBartolome alleging that the latter,
through the use of force, stealth, strategy and intimidation, intend or are intending to enter and work
or harvest whatever existing fruits found on the land. Included in the complaint is a prayer for an
issuance of a writ of preliminary injunction to be issued ex parte to restrain, enjoin and prohibit
defendants from entering, interfering with or harvesting the lands belonging to plaintiffs spouses
with an accompanying bond of 200.

Defendants opposed the issuance of the writ of preliminary injunction on the ground that they are
the owners of the lands and have been in actual possession since 1925 and the plaintiffs have never
been in possession thereof.
The CFI of Laguna denied the petition for preliminary injunction on the ground that the defendants
were in actual possession of said lands. Motion for Reconsideration was filed, pending resolution
plaintiff filed an urgent petition ex parte praying that their MR of the order denying petition for
preliminary injunction be granted and/or for the appointment of a RECEIVER of the properties
involved, on the ground that the plaintiffs have an interest in the properties and fruits and that the
appointment of a receiver was the most convenient and feasible means of preserving, administering
and disposing of the properties in litigation. Judge Roldan, who was the judge appointed, replacing
Judge Rilloroza granted the petition for appointment of and appointed a receiver in the case.

ISSUE: Whether or not the granting of the petition for the appointment of a receiver was proper.

RULING:
No, the plaintiffs action is one of ordinary injunction for which they alleged that they are the owners
of the lands involved and were in actual possession thereof and that the defendants without any
legal right, though the use of force, intimidation, stealth, threat and strategy and prayed that the
defendants be restrained, enjoined and prohibited from entering in, interfering with or harvesting the
lands.
The provisional remedies (attachment, preliminary injunction, receivership, delivery of personal
property are remedies to which party litigant may resort for the preservation or protection of their
rights or interest, and for no other purpose during the pendency of the principal action. If an action,
by its nature, does not require such protection or preservation, said remedies cannot applied for and
granted. To each kind of action/sa proper remedy is provided for law,
-Preliminary prohibitory injunction, lies when the relief demanded in the complaint consists in
restraining the commission/continuance of the act complained of, either perpetually or for a limited
period, and the other conditions required by Sec. of Rule 60. The purpose is to preserve the status
quo of the things subject of the action or the relation between parties, in order to protect the rights
of plaintiff respecting the subject of the action during the pendency of the suit.
-Receiver, may be appointed to take charge of personal/real property which is the subject of an
ordinary civil action, when it appears that the party applying for the appointment of a receiver has
an interest in the property or fund which is the subject of the action or litigation, and that such
property or fund is in danger of being lost, removed or materially injured unless a receiver is
appointed to guard and preserve it. The property or fund must be in litigation according to the
allegations of the complaint, and the object of appointing a receiver is to secure and preserve the
property or thing in controversy pending the litigation.
According to the complaint of the plaintiff, the action is one of ordinary injunction based on the
allegation in the complaint.Therefore it is evident that the respondent judge acted in excess of his
jurisdiction in appointing a receiver. Appointment of a receiver is not proper or does not lie in an
action of injunction such as the one filed by the plaintiff. The petition for appointment of a receiver
filed by the plaintiffs is based on the ground that it is the most convenient and feasible means of

preserving, administering and disposing of the properties in litigation; and according to plaintiffs'
theory or allegations in their complaint, neither the lands nor the palay harvested therein, are in
litigation. The litigation or issue raised by plaintiffs in their complaint is not the ownership or
possession of the lands and their fruits. It is whether or not defendants intend or were intending to
enter or work or harvest whatever existing fruits could then be found in the lands described in the
complaint, alleged to be the exclusive property and in the actual possession of the plaintiffs.
It is a matter not only of law but of plain common sense that a plaintiff will not and legally cannot ask
for the appointment of a receiver of a property which he alleges to belong to him and to be actually
in his possession. For the owner and possessor of a property is more interested than other persons in
preserving and administering it.

Ylarde vs. Enriquez


FACTS: This is a petition for certiorari to vacate an appointment of a receiver by order of the Court of First Instance of
Nueva Ecija.
Eugenia Ylarde was the legal or common law wife of one Simplicio Rosario, now deceased. Rosario was granted a
free patent to a homestead measuring fifteen hectares. This is the land or it is a part of this land that is involved in this
litigation. After Eugenia Ylarde's legal or common-law husband died, she executed an extrajudicial partition wherein
she falsely declared under oath that she was the sole heiress of the estate in question. Following that so-called
extrajudicial partition a transfer certificate of title was issued in Eugenia's name cancelling the original document.
In September, 1945, Bienvenido, Magdalena and Apolinario all surnamed Sabado, Simplicio Rosario's collateral
relatives, brought the action against Eugenia. During the pendency of the case, Eugenia died and was substituted by
Rodolfo, Flor (through a guardian ad litem) and Julia all surnamed Ylarde.
On December 17, 1946, Eugenia Ylarde died, and she has been substituted as party defendant by Rodolfo Ylarde,
Flor de Vida Ylarde through a guardian ad litem, and Julia Ylarde. The record does not reveal the degree of
relationship between these new defendants and the deceased Eugenia Ylarde.
The Ylardes allege that they are and have been in the possession of the part of the land which corresponded to them
or to Eugenia Ylarde in the partition, while the Sabados entered upon the possession of their share upon the signing
of the settlements. The respondents (the Sabados) denied that the petitioners are in "physical" possession of the
property in dispute.
ISSUE: Whether or not the lower court abused its discretion in appointing a receiver.
HELD: YES. Appointment of receiver is hereby revoked.
The land which is the subject matter of the suit here is not in any danger of disappearing or being wasted. There is no
pretense that it has any permanent improvements or fixtures which produce income, rents or profits to be collected or
preserved. At the most a bond with sufficient sureties would be adequate to protect the plaintiffs from any possible
injury consequent upon being deprived of the possession of the property.
A receiver, it has been repeatedly held, should not be granted where the injury resulting therefrom would probably be
greater than the injury ensuing from leaving the possession of the property undisturbed. This doctrine fits into the
case at bar. The court would place in the hands of a receiver to administer, crops to plant and raise which, as we have
seen, the defendants have spent considerable money and attention with the plaintiffs contributing nothing beyond
their allegation that they own the ground.
An appointment of a receiver is an interlocutory matter; and an appeal from an order making such appointment can
be interposed only after final judgment is rendered. In this case on appeal would be of no avail to prevent the
enforcement of the order before damage which the petitioners seek to avoid had been done.

G.R. No. L-3430

August 7, 1906

ROCHA & CO., Sociedad en Comandita, plaintiff,


vs.
A. S. CROSSFIELD, Judge of the Court of First Instance of Manila, and FRANCISCO T. FIGUERAS,defendants.
DOCTRINE OF THE CASE: APPOINTMENT OF A RECEIVER
FACTS:
On the 25th of January, 1906 Francisco T. Figueras, one of the defendants, commenced in the Court of First Instance
of Manila an action against Rocha & Co. in which he alleged, among other things, that in 1898 a limited partnership
had been formed under the name of "Carman & Co.;" that he and two others were general partners and that there
were various special partners; that in accordance with the terms of the articles of partnership any one of the partners
had the right to withdrawn from the partnership upon six months' notice; that upon giving the said notice his
participation in the profits of the partnership should cease but that his capital should draw interest at the market rate
until it was returned, and that it should be returned in four installments, one part upon giving notice, the second part
six months after the notice, the third part twelve months after the notice, and the fourth part eighteen months after the
notice. He further alleged that on the withdraw from the partnership and waived his right to receive at the time the
fourth part of his capital and consented that the fourth part should be paid at the end of six months. It was further
alleged that on the 15th day of February, 1904, the partnership of Carman & Co., was reorganized under the name of
Rocha & Co., which latter company assumed all the debts and liabilities of Carman & Co., and took possession of all
its assets.
The complaint alleged that the plaintiff's participation in the business consisted (1) of the capital which he had paid in,
P12,000 (2) his proportionate part of a reserve fund, and (3) his proportionate part of a sinking fund, and that he was
entitled to receive from the partnership the sum of P51,484.17; that the partnership alleged that his interest did not
exceed P34,218.22, and on the 2d day of August, 1904, the partnership paid, and the plaintiff received, one-fourth of
the amount which the partnership admitted that the plaintiff was entitled to.
There was no allegation in the complaint that the partnership of Carman & Co., was dissolved by the withdrawal of
Figueras, nor was there any allegation that after that withdrawal he was the owner of an undivided or of any interest
in the physical property which belonged to the partnership and which consisted of lorchas, launches, and cascos, nor
was there any allegation that he had any lien upon any of this property.
It is apparent that the real controversy between the parties is over the right of Figueras to receive his proportionate
part of the reserve fund and of the sinking fund.
Notwithstanding the want of these allegations, Figueras, after the presentation complaint and after the defendants
had demurred thereto, made an application to the court below for the appointment of a receiver of the property of
Rocha & Co. A receiver was appointed who afterwards took possession of the entire property of Rocha & Co., and
thereupon Rocha & Co., commenced this original action of certiorari in this court, asking that the proceedings in
reference to the appointment of a receiver be certified of this court and that after such certification they be examined
and that the order appointing the receiver be declared void because the court making it had no jurisdiction to appoint
such receiver. A preliminary injunction was granted by one of the justices of this court restraining the receiver and the
defendants in this action from taking further proceedings in the matter during the pendency thereof.
The defendants, having been cited, appeared and answered the complaint, admitting practically all of the facts
alleged therein, a hearing was had upon said complaint and answer, and order was made by this court requiring the
court below to send to it all of the proceedings in the case relating to the appointment of the receiver. Those
proceedings have been remitted, a hearing has been had thereon, and the case is now before us for final disposition.

ISSUE: WHETHER OR NOT THERE IS A VALID GROUND FOR APPOINTMENT OF A RECEIVER?


RULING:
Section 174 of the Code of Civil Procedure is as follows:
SEC. 174. When a receiver may be appointed. A receiver may be appointed in the following cases:
(1) When a corporation has been dissolved, or is insolvent, or is in imminent danger of insolvency, or has
forfeited its corporate rights.
(2) Where it is made to appear by the complaint or answer, and by such other proof as the judge may
require, that the party making the application for the appointment of receiver has an interest in the property
or fund which is the subject of the action and it shown that the property or fund is in danger of being lost,
removed, or materially injured unless a receiver shall be appointed to guard and preserve it.
(3) In an action by the mortgagee for the foreclosure of a mortgaged where it appears that the property is in
danger of being wasted or materially injured and that its value is probably insufficient to discharge the
mortgage debt.
(4) Whenever in other cases it shall be made to appear to the court that the appointment of a receiver is the
most convenient and feasible means of preserving and administering the property which is the subject of
litigation during the pendency of the action.
The case at bar does not fall within any of the provisions of this section. There is no allegation in the complaint, as
has been before stated, that the plaintiff is the owner of any of the property of Rocha & Co., nor is there any
allegation that he has any lien thereon, nor are there any facts alleged in the complaint from which it could be inferred
that he was owner of such property or had any lien thereon. On the contrary, from the facts that are alleged in the
complaint it would seem that his separation from the partnership of Carman & Co., left that partnership as a going
concern and did not dissolve it. The effect of the provisions of the articles of partnership which are referred to in the
complaint is that after the withdrawal of any partner the remaining partners became the owners of all the assets of the
partnership and he became a general creditor of the partnership.
After this action had been commenced in this court, and after a preliminary injunction had been issued as aforesaid,
Figueras applied to the court below for leave to amend his complaint in the action therein opening and such leave
was granted. This amendment, having been made after the action was commenced in this court and after a receiver
was appointed, can not be considered.
In one of the orders made by the court below relating to the receiver, its authority for making it was based on
paragraphs 2 and 4 of section 174 of the Code of Civil Procedure above quoted. In a subsequent order this ground
was abandoned and the appointment was based on paragraph 1 of said section, the court holding that a special
partnership was corporation within the meaning of said section 174. This claim can not be sustained and, in fact, it
was not urged in the argument of this case in this court.
The case not being one in which a receiver could be appointed, the order making such appointment was void and
was beyond the jurisdiction of the court, although that court had jurisdiction of the main action has been settled
adversely to the defendants in this suit by the case of Bonaplata vs. Ambler
The order of the court below appointing a receiver in this case was illegal and void, and it all proceedings taken
therein are hereby annulled. Let judgment be entered to that effect in favor of the plaintiff in this action and against
the defendants, and with costs against the defendant, Figueras. At the expiration of ten days let judgment be entered
in accordance herewith. So ordered.

MILA CABOVERDE TANTANO and ROSELLER CABOVERDE, petitioners VsDOMINALDA ESPINA-CABOVERDE,


EVE CABOVERDE-YU, FE CABOVERDE-LABRADOR, and JOSEPHINE E. CABOVERDE, respondents
VELASCO, JR.
The Case
Assailed in this petition for review under Rule 45 are the Decision and Resolution of the Court of Appeals (CA) rendered on
June 25, 2012 and September 21, 2012, respectively, in CA-G.R. SP. No. 03834, which effectively affirmed the Resolutions dated
February 8, 2010 and July 19, 2010 of the Regional Trial Court (RTC) of Sindangan, Zamboanga del Norte, Branch 11, in Civil
Case No. S-760, approving respondent DominaldaEspina-Caboverde's application for receivership and appointing the receivers
over the disputed properties.
The Facts
Petitioners Mila CaboverdeTantano (Mila) and RosellerCaboverde (Roseller) are children of respondent DominaldaEspinaCaboverde (Dominalda) and siblings of other respondents in this case, namely: Eve Caboverde-Yu (Eve), Fe Caboverde-Labrador
(Fe), and Josephine E. Caboverde (Josephine). Petitioners and their siblings, Ferdinand, Jeanny and Laluna, are the registered
owners and in possession of certain parcels of land, identified as Lots 2, 3 and 4 located at Bantayan, Sindangan and Poblacion,
Sindangan in Zamboangadel Norte, having purchased them from their parents, Maximo and DominaldaCaboverde.
The present controversy started when on March 7, 2005, respondents Eve and Fe filed a complaint before the RTC of Sindangan,
Zamboanga del Norte where they prayed for the annulment of the Deed of Sale purportedly transferring Lots 2, 3 and 4 from
their parents Maximo and Dominalda in favor of petitioners Mila and Roseller and their other siblings, Jeanny, Laluna and
Ferdinand. Docketed as Civil Case No. S-760, the case was raffled to Branch 11 of the court. In their verified Answer, the
defendants therein, including Maximo and Dominalda, posited the validity and due execution of the contested Deed of Sale.
During the pendency of Civil Case No. S-760, Maximo died. On May 30, 2007, Eve and Fe filed an Amended Complaint with
Maximo substituted by his eight (8) children and his wife Dominalda. The Amended Complaint reproduced the allegations in the
original complaint but added eight (8) more real properties of the Caboverde estate in the original list. As encouraged by the
RTC, the parties executed a Partial Settlement Agreement (PSA) where they fixed the sharing of the uncontroverted properties
among themselves, in particular, the adverted additional eight (8) parcels of land including their respective products and
improvements. Under the PSA, Dominalda's daughter, Josephine, shall be appointed as Administrator. The PSA provided that
Dominalda shall be entitled to receive a share of one-half (1/2) of the net income derived from the uncontroverted properties. The
PSA also provided that Josephine shall have special authority, among others, to provide for the medicine of her mother. The
parties submitted the PSA to the court on or about March 10, 2008 for approval.
Before the RTC could act on the PSA, Dominalda, who, despite being impleaded in the case as defendant, filed a Motion to
Intervene separately in the case. Mainly, she claimed that the verified Answer which she filed with her co-defendants contained
several material averments which were not representative of the true events and facts of the case. This document, she added, was
never explained to her or even read to her when it was presented to her for her signature. On May 12, 2008, Dominalda filed a
Motion for Leave to Admit Amended Answer, attaching her Amended Answer where she contradicted the contents of the
aforesaid verified Answer by declaring that there never was a sale of the three (3) contested parcels of land in favor of Ferdinand,
Mila, Laluna, Jeanny and Roseller and that she and her husband never received any consideration from them. She made it clear
that they intended to divide all their properties equally among all their children without favor. In sum, Dominalda prayed that the
reliefs asked for in the Amended Complaint be granted with the modification that her conjugal share and share as intestate heir of
Maximo over the contested properties be recognized.
The RTC would later issue a Resolution granting the Motion to Admit Amended Answer.
On May 13, 2008, the court approved the PSA, leaving three (3) contested properties, Lots 2, 3, and 4, for further proceedings in
the main case. Fearing that the contested properties would be squandered, Dominalda filed with the RTC on July 15, 2008 a
Verified Urgent Petition/Application to place the controverted Lots 2, 3 and 4 under receivership. Mainly, she claimed that while
she had a legal interest in the controverted properties and their produce, she could not enjoy them, since the income derived was
solely appropriated by petitioner Mila in connivance with her selected kin. She alleged that she immediately needs her legal share
in the income.
The Issues
Petitioners raise the following issues in their petition:
(1)Whether or not the CA committed grave abuse of discretion in sustaining the appointment of a receiver despite clear showing
that the reasons advanced by the applicant are not any of those enumerated by the rules; and
(2) Whether or not the CA committed grave abuse of discretion in upholding the Resolution of the RTC and ruling that the
receivership bond is not required prior to appointment despite clear dictates of the rules.

The Ruling
The petition is impressed with merit.
This Court has held that a receiver should not be appointed to deprive a party who is in possession of the property in litigation,
just as a writ of preliminary injunction should not be issued to transfer property in litigation from the possession of one party to
another where the legal title is in dispute and the party having possession asserts ownership in himself, except in a very clear case
of evident usurpation. Furthermore, this Court has declared that the appointment of a receiver is not proper when the rights of the
parties, one of whom is in possession of the property, depend on the determination of their respective claims to the title of such
property unless such property is in danger of being materially injured or lost, as by the prospective foreclosure of a mortgage on
it or its portions are being occupied by third persons claiming adverse title.
It must be underscored that in this case, Dominalda's claim to the disputed properties and her share in the properties' income and
produce is at best speculative precisely because the ownership of the disputed properties is yet to be determined in Civil Case No.
S-760. Also, except for Dominalda's claim that she has an interest in the disputed properties,Dominalda has no relation to their
produce or income. By placing the disputed properties and their income under receivership, it is as if the applicant has obtained
indirectly what she could not obtain directly, which is to deprive the other parties of the possession of the property until the
controversy between them in the main case is finally settled.
This Court cannot countenance this arrangement. To reiterate, the RTC's approval of the application for receivership and the
deprivation of petitioners of possession over the disputed properties would be justified only if compelling reasons exist.
Unfortunately, no such reasons were alleged, much less proved in this case. In any event, Dominalda's rights may be amply
protected during the pendency of Civil Case No. S-760 by causing her adverse claim to be annotated on the certificates of title
covering the disputed properties.
As regards the issue of whether or not the CA was correct in ruling that a bond was not required prior to the appointment of the
receivers in this case, We rule in the negative. aAcHCT Respondents Eve and Fe claim that there are sufficient grounds for the
appointment of receivers in this case and that in fact, petitioners agreed with them on the existence of these grounds when they
acquiesced to Dominalda's Application for Receivership. Thus, respondents insist that where there is sufficient cause to appoint a
receiver, there is no need for an applicant's bond because under Sec. 2 of Rule 59, the very purpose of the bond is to answer for
all damages that may be sustained by a party by reason of the appointment of a receiver in case the applicant shall have procured
such appointment without sufficient cause. Thus, they further argue that what is needed is the receiver's bond which was already
fixed and approved by the RTC.
Also, the CA found that there was no need for Dominalda to file a bond considering that petitioners filed a Manifestation where
they formally consented to the receivership. Hence, it was as if petitioners agreed that there was sufficient cause to place the
disputed properties under receivership; thus, the CA declared that petitioners were estopped from challenging the sufficiency of
such cause.
The foregoing arguments are misplaced. Sec. 2 of Rule 59 is very clear in that before issuing the order appointing a receiver the
court shall require the applicant to file a bond executed to the party against whom the application is presented. The use of the
word "shall" denotes its mandatory nature; thus, the consent of the other party, or as in this case, the consent of petitioners, is of
no moment. Hence, the filing of an applicant's bond is required at all times. On the other hand, the requirement of a receiver's
bond rests upon the discretion of the court. Sec. 2 of Rule 59 clearly states that the court may, in its discretion, at any time after
the appointment, require an additional bond as further security for such damages.
WHEREFORE, upon the foregoing considerations, this petition is GRANTED. The assailed CA June 25, 2012 Decision and
September 21, 2012 Resolution in CA-G.R. SP No. 03834 are hereby REVERSED and SET ASIDE. The Resolutions dated
February 8, 2010 and July 19, 2010 of the RTC, Branch 11 in Sindangan, Zamboangadel Norte, in Civil Case No. S-760,
approving respondent DominaldaEspina-Caboverde's application for receivership and appointing the receivers over the disputed
properties are likewise
SET ASIDE.
Case: Citibank, N.A. (Formerly First National City Bank), petitioner, vs. The Honorable Court
of Appeals and Douglas F. Anama, respondents. G.R. No. 61508 March 17, 1999
Case doctrine:The Court of Appeals found that the requirements of Section 5, Rule 59 on receivership
were not complied with by the petitioner, particularly the filing or posting of a bond and the taking of
an oath. It should be noted that under the old Rules of Court which was in effect at the time this case
was still at trial stage, a bond for the appointment of a receiver was not generally required of the
applicant, except when the application was made ex parte.
FACTS:

In considering for a loan obtained from Citibank, N.A., the defendant Douglas Anama executed a
promissory note, dated November 10, 1972, to pay the plaintiff bank the sum of P418,000.00 in sixty
(60) equal successive monthly installments of P8,722.25, starting on the 10th day of December 1972
and on the 10th of every month thereafter.
To secure payment of the loan, private respondent Anama also constituted a Chattel Mortgage of even
date in favor of petitioner, on various machineries and equipment located at No. 1302 Epifaniodelos
Santos Avenue, Quezon City.
For failure and refusal of the private respondent to pay the monthly installment due under the said
promissory note since January despite repeated demands, petitioner filed a verified complaint against
private respondent Anama for the collection of his unpaid balance on the said promissory note, for the
delivery and possession of the chattels covered by the Chattel Mortgage preparatory to the foreclosure
thereof
Anama submitted his Answer with Counterclaim, denying the material averments of the complaint, and
averring, inter alia that the remedy of replevin was improper and the writ of seizure should be vacated.
The trial court, upon proof of default of the private respondent in the payment of the said loan, issued
an Order of Replevin. Despite the issuance of the said order however, actual delivery of possession did
not take place because of negotiations for an amicable settlement. A pre-trial conference was held and
the petitioner then took over private respondents business as receiver. But when settlement failed,
the lower court tried the case on the merits.
Petitioner then presented a Motion for the Issuance of an Alias Writ of Seizure, ordering the sheriff to
seize and dispose of the properties involved. Private respondent opposed the motion claiming, among
others, (1) that Citibanks P400,000 replevin bond to answer for damages was grossly inadequate; (2)
that he was never in default to justify the seizure; xxx (4) that his supposed obligations with Citibank
were fully secured and his mortgaged properties are more than sufficient to secure payment thereof;
xxx
The trial court issued an Order granting the Motion for Alias Writ of Seizure. Private respondent moved
for reconsideration of the aforesaid order but the same was denied. As a consequence, the sheriff
seized subject properties, dismantled and removed them from the premises where they were installed,
delivered them to petitioners possession and advertised them for sale at public auction.
Private respondent filed with the CA a Petition for Certiorari and Prohibition with Injunction. Finding that
the trial court acted with grave abuse of discretion amounting to excess or lack of jurisdiction in issuing
the assailed resolutions, the CA granted the petition, holding that the provisions of the Rules of Court
on Replevin and Receivership have not been complied with, in that (1) there was no Affidavit of Merit
accompanying the Complaint for Replevin; (2) the bond posted by Citibank was insufficient; and (3)
there was non-compliance with the requirement of a receivers bond and oath of office. Hence the
present petition for certiorari with TRO by Citibank.
ISSUE:
1. WON respondent court erred in practically and in effect rendering judgment on the merits against
the petitioner by ordering the return of the machineries and equipment and its accessories to their
original and respective places and positions.
2. WON respondent erred in finding that the issuance of replivin was improper
3. WON respondent erred in finding that the bond posted by the petitioner is questionable and/or
insufficient.
4. WON the respondent erred in finding that the petitioner did not comply with the
provisions of sec. 5, rule 59 by failing to post a receiver's bond.
5. WON respondent erred in finding that the hon. jorge r. coquia acted with grave abuse of discretion
amounting to excess or lack of jurisdiction in dealing with the situation.
RULING:

No. CA found that the requirements of Section 5, Rule 59 on receivership were not complied with by
the petitioner, particularly the filing or posting of a bond and the taking of an oath. However, the old
Rules of Court which was in effect at the time this case was still at trial stage, a bond for the
appointment of a receiver was not generally required of the applicant, except when the application was
made ex parte. CA was right in finding a defect in such assumption of receivership in that
the requirement of taking an oath has not been complied with.
For erroneously issuing the alias writ of seizure without inquiring into the sufficiency of the replevin
bond and for allowing petitioner to assume receivership without the requisite oath, the Court of
Appeals aptly held that the trial court acted with grave abuse of discretion in dealing with
the situation. Under the Revised Rules of Court, the property seized under a writ of replevin is not to
be delivered immediately to the plaintiff. This is because a possessor has every right to be respected in
its possession and may not be deprived of it without due process. Petition DISMISSED.
RULE 59. RECEIVERSHIP
Instruction: Discharge
Case: Martinez vs. Grano (49 Phil. 214)
Doctrine of the Case:
A receiver who asserts ownership over the property in his hands as receiver and refuses to submit any account of the
financial status of said property should be removed by the court having charge of the receivership.
Facts:
Estanislao Reyes was appointed as receiver and entered into possession the property in controversy in January 1921.
During this period, the property did not produce enough income to meet the expenses and pay the sum due to the first mortgage,
El Hogar Filipino. Thus, he recommended to the court that the property be sold.
The court made an order authorizing the receiver to sell the land with the condition that the proceeds of the sale must be
deposited to the clerks office. Meanwhile, receiver reported that there is no purchaser of the property and he himself came
forward making an offer to take the property with an understanding that he would assume all obligations encumbering it.
Defendant, ClemenciaGrano, opposed the sale because it included the three parcels of property belonged to her. Thus, the court
rendered decision excluding the three parcels of land which belongs to Grano.
When the decision was returned to the lower court, Reyes submitted a motion asking the court to declare him as owner
of the property. In response, Judge Paredes instead declared that the approved sale was a nullity on the ground that Reyes violated
the condition imposed upon by the court. Thus, Reyes was treated not as a purchaser but as a receiver of the property.
In view of this, Reyes still pretended to be the owner of the property by virtue of the purchase and still refused to
submit any account of his receivership in the subsequent years. Thus, the judge revoked his appointment as receiver and ordered
him to rendered an account and deliver the property immediately to the parties in interest all the properties on its present
condition.
Issues:
Whether or not appellant should be removed as receiver over the property in controversy.
Held:
Yes.
There cannot be the slightest doubt of the power of the lower court to remove a receiver and terminate a receivership
under Section 180 of the Code of Civil Procedure; and in view of the attitude of the appellant, the impropriety of his longer
remaining in office is apparent.
The court, however, is of opinion that if upon the prompt submission and examination of the receivers accounts, it
should be found that he has actually paid out for the conservation and protection of the property which is the subject of the
receivership more than he has received by way of income, or should have received in the exercise of reasonable diligence, such
balance in his favor should be recognized as lawful claim constituting a lien on the property.
Actions against Receivers; Leave of Court
Rule 59, Section 6 without leave of court which appointed him; as Section 6 provides that no
action may be filed by or against a receiver without leave of the court which appointed him. The rule
talks of the current receiver of the company and not the previous receiver. The reason behind Rule 59,
Section 6, which requires leave of court for all suits by or against the present receiver, is to forestall
any undue interference with the receivers performance of duties through improvident suits. One of

the general powers of a receiver under Rule 59, Section 6 of the Rules of Court is the
power to bring and defend suits in such capacity.
Topic: Discharge
CASE: G.R. No. 49031 JOSE PLATON and ROMAN CASTILLO, petitioners, vs. HON. CLAUDIO SANDOVAL, in his
capacity as Judge, Court of First Instance of Laguna, and INES MAILOM, respondents. August 28, 1944

DOCTRINE OF THE CASE:


The receiver, being an officer of the court and not the agent or representative of either party to the action, has no legal interest or
standing to question the court's determination that the necessity for the continuation of the receivership has ceased to exist.

FACTS:
Jose Platon was appointed receiver of the property of the late Servanda Mailom while the civil case regarding the annulment of
the sale of certain parcels of land made by the spouses Roman Castillo and Servanda Mailom (previous to her death) to Antonio
Castillo, brother of Roman, was on going . The said civil case was instituted by Ines Mailom, one of the heirs of Servanda
Mailom. Later on, Ines Mailom and the other heirs moved to discharge the receiver on the ground that there was no more
necessity for the continuation of the receivership inasmuch as the defendant Antonio Castillo had renounce his claim to said
property in a stipulation of facts submitted to the court and the heirs of the deceased Servanda Mailom, including the
administrator Roman Castillo, had submitted a project of partition in the intestate proceedings. An order to discharge the receiver
was issued by the court. Jose Platon filed a motion to annul the order.

ISSUE:
Whether or not a receiver has a legal interest or standing to question the court's determination that the necessity for the
continuation of the receivership has ceased to exist.

HELD:
No, the receiver, being an officer of the court and not the agent or representative of either party to the action, has no legal interest
or standing to question the court's determination that the necessity for the continuation of the receivership has ceased to exist.
The property in litigation and under receivership belongs to the intestate estate of the deceased Servanda Mailom, deceased wife
of the petitioner Roman Castillo. The defendant Antonino Castillo, who is not a heir of said deceased, does not claim ownership
of said property and has signed his conformity to the discharge of the receiver. And the heirs of said deceased have agreed upon
the partition of said property with the approval of the probate court. It seems clear, therefore, that the declaration of the
respondent judge that there was no longer any necessity for the continuation of the receivership was well founded. In any event, it
cannot be said that the respondent judge exceeded his jurisdiction or abused his discretion in making such a finding.

ORENDAIN vs BF HOMES
FACTS

BF Homes, Inc. is a domestic corporation operating under Philippine laws and organized
primarily to develop and sell residential lots and houses and other related realty business. Records
show that respondent BF Homes had to avail itself of financial assistance from various sources to
enable it to buy properties and convert them into residential subdivisions. This resulted in its
incurring liabilities, On the other hand, during its business operations, it was able to acquire
properties and assets which, if liquidated, were more than enough to pay all its creditors.
Despite its solvent status, respondent filed a Petition for Rehabilitation and for Declaration in a
State of Suspension of Payments before the Securities and Exchange Commission (SEC). Respondent
highlighted the importance of and prayed for a Rehabilitation Receiver in the petition. Such
receiver, according to respondent, was imperative to oversee the managementand operations of
[BF Homes] so that its business may not be paralyzed and the interest of the creditors may not be
prejudiced. It further argued that rehabilitation [was] feasible and imperative because otherwise, in
view of the extent of its involvement in the shelter program of the government and in the nations
home mortgage insurance system, which has a secured coverage , not only [the] creditors, [buyers,
and stockholders] of the petitioner corporation may suffer but the public as well.
A Deed of Absolute Sale[8] was executed by and between BF Homesrepresented by
petitioner Orendain and the Local Superior of the Franciscan Sisters of the Immaculate Phils., Inc.
(LSFSIPI) over a parcel of land situated at Barangay Pasong Papaya, BF International, Municipality of
Las Pias, Metro Manila. Consequently, receiver Orendain was relieved of his duties and
responsibilities.
On January 23, 1996, BF Homes filed a Complaint before the Las Pias RTC against LSFSIPI and
petitioner Orendain, alleging, inter alia, that the LSFSIPI transacted with Orendain in his
individual capacity and therefore, neither FBO Management, Inc.norOrendain had title to
the property transferred. BF Homes averred that the selling price was grossly inadequate or
insufficient amounting to fraud and conspiracy with the LSFSIP.
On June 14, 1996, Florencio B. Orendain filed a Motion to Dismiss stating that BF
Homes, acting through its Committee of Receivers, had neither the interest nor the
personality to prosecute the said action, in the absence of SECs clear and actual
authorization for the institution of the said suit.
On July 15, 1996, BF Homes filed its Opposition [15] to petitioners Motion to Dismiss, alleging
that the case was within the exclusive jurisdiction of the RTC, not the SEC,considering that the case
was an ordinary reconveyance suit. Likewise, BF Homes alleged that the cause of action was not
barred by the perceived finality of the SEC November 7, 1994 Omnibus Order, and that the general
powers of a receiver authorized BF Homes to institute actions to recover the property.
RTC denied Motion to Dismiss for lack of merit.Orendain filed Motion for Reconsideration which
was also denied due to lack of merit. Petitioner Orendain was directed to file his answer to the
Complaint within ten (10) days from receipt of the Order.
The CA ruled, the SEC could not acquire jurisdiction over the Franciscan Sisters; while
petitioner Orendain was sued in his individual capacity and not in his official capacity as receiver. [23]
Moreover, the CA stated that at the time the assailed orders were issued, the subject SEC
Order had not yet attained finality; that there was no identity between the first and the second action
with respect to the parties; and that the SEC November 7, 1994 Omnibus Order relied on by Orendain
was not a decision on the merits of BF Homes Petition for Rehabilitation and for a Declaration in a
State of Suspension of Payments under Sec. 4 of P.D. No. 1758.
Hence, this petition.
ISSUE:
WON the Committee of receivers may institute an action against a former
receiver without prior SEC approval.
RULING:
Petitioner argues that the Committee of Receivers should have sought prior clearance
from the SEC before instituting the action for reconveyance before the RTC, because it does not have
the legal capacity to sue. This is incorrect. One of the general powers of a receiver under Rule
59, Section 6 of the Rules of Court is the power to bring and defend suits in such capacity.

Petitioner also contends that an action filed by a successor-receiver against him as


predecessor-receiver is not allowed under Rule 59, Section 6 without leave of court which appointed
him; as Section 6 provides that no action may be filed by or against a receiver without leave
of the court which appointed him. This is bereft of merit.
The rule talks of the current receiver of the company and not the previous receiver
like petitioner Orendain. The reason behind Rule 59, Section 6, which requires leave of court for all
suits by or against the present receiver, is to forestall any undue interference with the receivers
performance of duties through improvident suits. Apparently, such situation cannot apply to
Orendain who is no longer BF Homes receiver.
Moreover, the instant petition has been rendered moot and academic by the passage of RA
8799 or The Securities Regulation Code which took effect on August 8, 2000.[37]
Section 5.2 of RA 8799 transferred exclusive and original jurisdiction of the SEC
over actions involving intra-corporate controversies to the courts of general jurisdiction or
the appropriate RTC. In the transition, all intra-corporate cases pending in the SEC, which were not
ripe for adjudication as of August 8, 2000, were turned over to the RTC. Congress thereby recognized
the expertise and competence of the RTC to take cognizance of and resolve cases involving intracorporate controversies. Thus, whether or not the issue is intra-corporate, it is now the [RTC] and no
longer the SEC that takes cognizance of [and resolves cases involving intra-corporate controversies].
TRADERS ROYAL BANK, petitioner, vs. INTERMEDIATE
APPELLATE COURT, and HEIRS OF THE LATE JOSE C.
TAYENGCO, respondents.
[G.R. No. 111357. June 17, 1997.]
FACTS:
lawful

In G.R. No. 63855, it was ruled that the deceased spouses Jose and Salvacion Tayengco, the
owners
of
the
properties
under
receivership.

In G.R. No. 60076, the validity of the appointment of petitioner Traders Royal Bank (TRB)as
receiver pendente lite was affirmed.
In this case the receivership proceeding was duly terminated.
TRB rendered its final accounting of the funds under receivership wherein itretained the
amount of P219, 016.24 as its receiver's fee, instead of turning over theentire fund to the Tayengcos.
The RTC approved the final accounting submitted by TRB, including thededuction of its fee from the
fund under receivership.
The Tayengcos assailed said order before the Court of Appeals, contending thatTRB's
compensation should have been charged against the losing party and notfrom the funds under
receivership.
The Court of Appeals ruled that TRB cannot deduct its fee from the funds under its
receivershipsince this must be shouldered by the losing party or equally apportioned among
theparties-litigants. Consequently, TRB was ordered to return the P219,016.24 to theTayengcos, and
the losing parties, Cu Bie, et al., were held solely liable for TRB'scompensation.
TRB filed a motion for reconsideration, but this was denied.
ISSUE/S:
a. WON the Court of Appeals decision barred by res judicata by virtue of the ruling in G.R. No.
60076 recognizing the propriety of TRB's appointment asreceiver
b. Who is responsible for TRB's receiver's fee?
HELD:
a. No. The elements of res judicata are:
1. The previous judgment has become final;
2. the prior judgment was rendered by a court having jurisdiction over the matter
andparties;
3. the first judgment was made on the merits; and

4.

There wassubstantial identity of parties, subject matter, and cause of action, as


between theprior and subsequent actions.

In G.R. No. 60076,the petition was for the annulment of the trial court's order requiring
Tayengco torender and submit an accounting of the rental of the buildings and apartments,while C.A.
G.R. CV No. 21423 was an appeal questioning the order of the trial court authorizing the
deduction by TRB of its compensation from the receivership funds.There is clearly no identity
of causes of action here. Clearly, the last element of resjudicata is absent in the case at bar.
b.

The compensation of a receiver who has been properly appointed terminates,is to be charged
against the defeated party, or the prevailing litigant may be made to share the
expense, as justice requires.
The trial court's order approving TRB's compensation to be chargedsolely against the funds
under its receivership is without legal justification; hence, itwas correctly reversed by the Court
of Appeals.

Section 8, Rule 59 ofthe Rules of Court, explicitly provides for the manner in which it shall bepaid for its
services, to wit:
"SEC. 8. Termination of receivership; compensation of receiver.
Whenever the court, of its own motion or on that of either party, shalldetermine that the
necessity for a receiver no longer exists, it shall, afterdue notice to all interested parties and
hearing, settle the accounts of thereceiver, direct the delivery of the funds and other property
in his hands tothe persons adjudged entitled to receive them, and order the discharge ofthe
receiver from further duty as such. The court shall allow the receiversuch reasonable
compensation as the circumstances of the case warrant,to be taxed as costs against the
defeated party, or apportioned, as justicerequires ."
Decision appealed from is AFFIRMED.