Receivership

MILA CABOVERDE TANTANO and ROSELLER CABOVERDE, The present controversy started when on March 7, 2005,
Petitioners, respondents Eve and Fe filed a complaint before the RTC of

vs. Sindangan, Zamboanga del Norte where they prayed for the
DOMINALDA ESPINA-CABOVERDE, EVE CABOVERDE-YU, FE annulment of the Deed of Sale purportedly transferring Lots 2, 3 and
CABOVERDE-LABRADOR, and JOSEPHINE E. CABOVERDE, 4 from their parents Maximo and Dominalda in favor of petitioners
Respondents. Mila and Roseller and their other siblings, Jeanny, Laluna and
Ferdinand. Docketed as Civil Case No. S-760, the case was raffled to
The Case Branch 11 of the court.
Assailed in this petition for review under Rule 45 are the Decision and In their verified Answer, the defendants therein, including Maximo
Resolution of the Court of Appeals (CA) rendered on June 25, 2012 and Dominalda, posited the validity and due execution of the
and September 21, 2012, respectively, in CA-G.R. SP. No. 03834, contested Deed of Sale.
which effectively affirmed the Resolutions dated February 8, 20 I 0
and July 19, 2010 of the Regional Trial Court (RTC) of Sindangan, During the pendency of Civil Case No. S-760, Maximo died. On May
Zamboanga del Norte, Branch 11, in Civil Case No. S-760, approving 30, 2007, Eve and Fe filed an Amended Complaint with Maximo
respondent Dominalda Espina-Caboverde's application for substituted by his eight (8) children and his wife Dominalda. The
receivership and appointing the receivers over the disputed Amended Complaint reproduced the allegations in the original
properties. complaint but added eight (8) more real properties of the Caboverde
estate in the original list.
The Facts
As encouraged by the RTC, the parties executed a Partial Settlement
Petitioners Mila Caboverde Tantano (Mila) and Roseller Caboverde Agreement (PSA) where they fixed the sharing of the uncontroverted
(Roseller) are children of respondent Dominalda Espina-Caboverde properties among themselves, in particular, the adverted additional
(Dominalda) and siblings of other respondents in this case, namely: eight (8) parcels of land including their respective products and
Eve Caboverde-Yu (Eve), Fe Caboverde-Labrador (Fe), and Josephine improvements. Under the PSA, Dominalda’s daughter, Josephine,
E. Caboverde (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
Petitioners and their siblings, Ferdinand, Jeanny and Laluna, are the net income derived from the uncontroverted properties. The PSA
registered owners and in possession of certain parcels of land, also provided that Josephine shall have special authority, among
identified as Lots 2, 3 and 4 located at Bantayan, Sindangan and others, to provide for the medicine of her mother.
Poblacion, Sindangan in Zamboanga del Norte, having purchased
them from their parents, Maximo and Dominalda Caboverde.1 The parties submitted the PSA to the court on or about March 10,
2008 for approval.2
SAP RECEIVERSHIP FULLTXT PROVREM

Before the RTC could act on the PSA, Dominalda, who, despite being them, since the income derived was solely appropriated by petitioner
impleaded in the case as defendant, filed a Motion to Intervene Mila in connivance with her selected kin. She alleged that she
separately in the case. Mainly, she claimed that the verified Answer immediately needs her legal share in the income of these properties
which she filed with her co-defendants contained several material for her daily sustenance and medical expenses. Also, she insisted that
averments which were not representative of the true events and unless a receiver is appointed by the court, the income or produce
facts of the case. This document, she added, was never explained to from these properties is in grave danger of being totally dissipated,
her or even read to her when it was presented to her for her lost and entirely spent solely by Mila and some of her selected kin.
signature. Paragraphs 5, 6, 7, and 8 of the Verified Urgent Petition/Application
for Receivership5 (Application for Receivership) capture Dominalda’s
On May 12, 2008, Dominalda filed a Motion for Leave to Admit angst and apprehensions:
Amended Answer, attaching her Amended Answer where she
contradicted the contents of the aforesaid verified Answer by 5. That all the income of Lot Nos. 2, 3 and 4 are collected by Mila
declaring that there never was a sale of the three (3) contested Tantano, thru her collector Melinda Bajalla, and solely appropriated
parcels of land in favor of Ferdinand, Mila, Laluna, Jeanny and by Mila Tantano and her selected kins, presumably with Roseller E.
Roseller and that she and her husband never received any Caboverde, Ferdinand E. Caboverde, Jeanny Caboverde and Laluna
consideration from them. She made it clear that they intended to Caboverde, for their personal use and benefit;
divide all their properties equally among all their children without
favor. In sum, Dominalda prayed that the reliefs asked for in the 6. That defendant Dominalda Espina Caboverde, who is now sickly, in
Amended Complaint be granted with the modification that her dire need of constant medication or medical attention, not to
conjugal share and share as intestate heir of Maximo over the mention the check-ups, vitamins and other basic needs for daily
contested properties be recognized.3 sustenance, yet despite the fact that she is the conjugal owner of the
said land, could not even enjoy the proceeds or income as these are
The RTC would later issue a Resolution granting the Motion to Admit all appropriated solely by Mila Tantano in connivance with some of
Amended Answer.4 her selected kins;
On May 13, 2008, the court approved the PSA, leaving three (3) 7. That unless a receiver is appointed by the court, the income or
contested properties, Lots 2, 3, and 4, for further proceedings in the produce from these lands, are in grave danger of being totally
main case. dissipated, lost and entirely spent solely by Mila Tantano in
connivance with some of her selected kins, to the great damage and
Fearing that the contested properties would be squandered, prejudice of defendant Dominalda Espina Caboverde, hence, there is
Dominalda filed with the RTC on July 15, 2008 a Verified Urgent no other most feasible, convenient, practicable and easy way to get,
Petition/Application to place the controverted Lots 2, 3 and 4 under collect, preserve, administer and dispose of the legal share or interest
receivership. Mainly, she claimed that while she had a legal interest of defendant Dominalda Espina Caboverde except the appointment
in the controverted properties and their produce, she could not enjoy of a receiver x x x;

del Norte under receivership as defendant Dominalda Espina
xxxx Caboverde (the old and sickly mother of the rest of the parties) who
claims to be the owner of the one-half portion of the properties
9. That insofar as the defendant Dominalda Espina Caboverde is under litigation as her conjugal share and a portion of the estate of
concerned, time is of the utmost essence. She immediately needs her her deceased husband Maximo, is in dire need for her medication and
legal share and legal interest over the income and produce of these daily sustenance. As agreed by the parties, Dominalda Espina
lands so that she can provide and pay for her vitamins, medicines, Caboverde shall be given 2/10 shares of the net monthly income and
constant regular medical check-up and daily sustenance in life. To products of the said properties.8
grant her share and interest after she may have passed away would
render everything that she had worked for to naught and waste, akin In the same Resolution, the trial court again noted that Mila, the
to the saying "aanhin pa ang damo kung patay na ang kabayo." nominee of petitioners, could not discharge the duties of a receiver,
she being a party in the case.9 Thus, Dominalda nominated her
On August 27, 2009, the court heard the Application for Receivership husband’s relative, Annabelle Saldia, while Eve nominated a former
and persuaded the parties to discuss among themselves and agree barangay kagawad, Jesus Tan.10
on how to address the immediate needs of their mother.6
Petitioners thereafter moved for reconsideration raising the
On October 9, 2009, petitioners and their siblings filed a arguments that the concerns raised by Dominalda in her Application
Manifestation formally expressing their concurrence to the proposal for Receivership are not grounds for placing the properties in the
for receivership on the condition, inter alia, that Mila be appointed hands of a receiver and that she failed to prove her claim that the
the receiver, and that, after getting the 2/10 share of Dominalda from income she has been receiving is insufficient to support her
the income of the three (3) parcels of land, the remainder shall be medication and medical needs. By Resolution11 of July 19, 2010, the
divided only by and among Mila, Roseller, Ferdinand, Laluna and trial court denied the motion for reconsideration and at the same
Jeanny. The court, however, expressed its aversion to a party to the time appointed Annabelle Saldia as the receiver for Dominalda and
action acting as receiver and accordingly asked the parties to Jesus Tan as the receiver for Eve. The trial court stated:
nominate neutral persons.7
As to the issue of receivership, the Court stands by its ruling in
On February 8, 2010, the trial court issued a Resolution granting granting the same, there being no cogent reason to overturn it. As
Dominalda’s application for receivership over Lot Nos. 2, 3 and 4. The intimated by the movant-defendant Dominalda Caboverde, Lots 2, 3
Resolution reads: and 4 sought to be under receivership are not among those lots
covered by the adverted Partial Amicable Settlement. To the mind of
As regards the second motion, the Court notes the urgency of placing the Court, the fulfilment or non-fulfilment of the terms and
Lot 2 situated at Bantayan, covered by TCT No. 46307; Lot 3 situated conditions laid therein nonetheless have no bearing on these three
at Poblacion, covered by TCT No. T-8140 and Lot 4 also situated at lots. Further, as correctly pointed out by her, there is possibility that
Poblacion covered by TCT No. T-8140, all of Sindangan, Zamboanga these Lots 2, 3, and 4, of which the applicant has interest, but are in

possession of other defendants who are the ones enjoying the against the 8 February 2010 Resolution of this Court placing the
natural and civil fruits thereof which might be in the danger of being properties (Lots 2, 3 and 4) under receivership by the said JESUS A.
lost, removed or materially injured. Under this precarious condition, TAN and ANNABELLE DIAMANTE-SALDIA, and Resolution dated 29
they must be under receivership, pursuant to Sec. 1 (a) of Rule 59. July 2011 denying the herein defendants’ (petitioners therein)
Also, the purpose of the receivership is to procure money from the motion for reconsideration of the 24 May 2011 Resolution, both, for
proceeds of these properties to spend for medicines and other needs lack of merit. In its latter Resolution, the Court of Appeals states:
of the movant defendant Dominalda Caboverde who is old and sickly.
This circumstance falls within the purview of Sec. 1(d), that is, A writ of preliminary injunction, as an ancillary or preventive remedy,
"Whenever in other cases it appears that the appointment of a may only be resorted to by a litigant to protect or preserve his rights
receiver is the most convenient and feasible means of preserving, or interests and for no other purpose during the pendency of the
administering, or disposing of the property in litigation." principal action. But before a writ of preliminary injunction may be
issued, there must be a clear showing that there exists a right to be
Both Annabelle Saldia and Jesus Tan then took their respective oaths protected and that the acts against which the writ is to be directed
of office and filed a motion to fix and approve bond which was are violative of the said right and will cause irreparable injury.
approved by the trial court over petitioners’ opposition.
Unfortunately, petitioners failed to show that the acts of the
Undaunted, petitioners filed an Urgent Precautionary Motion to Stay receivers in this case are inimical to their rights as owners of the
Assumption of Receivers dated August 9, 2010 reiterating what they property. They also failed to show that the non-issuance of the writ
stated in their motion for reconsideration and expressing the view of injunction will cause them irreparable injury. The court-appointed
that the grant of receivership is not warranted under the receivers merely performed their duties as administrators of the
circumstances and is not consistent with applicable rules and disputed lots. It must be stressed that the trial court specifically
jurisprudence. The RTC, on the postulate that the motion partakes of appointed these receivers to preserve the properties and its
the nature of a second motion for reconsideration, thus, a prohibited proceeds to avoid any prejudice to the parties until the main case is
pleading, denied it via a Resolution dated October 7, 2011 where it resolved, Hence, there is no urgent need to issue the injunction.
likewise fixed the receiver’s bond at PhP 100,000 each. The RTC
stated: ACCORDINGLY, the motion for reconsideration is DENIED for lack of
merit.
[1] The appointed receivers, JESUS A. TAN and ANNABELLE
DIAMANTE-SALDIA, are considered duly appointed by this Court, not SO ORDERED.
only because their appointments were made upon their proper
nomination from the parties in this case, but because their xxxx
appointments have been duly upheld by the Court of Appeals in its
Resolution dated 24 May 2011 denying the herein defendants’ WHEREFORE, premises considered, this Court RESOLVES, as it is
(petitioners therein) application for a writ of preliminary injunction hereby RESOLVED, that:

appointing a receiver, in violation of Section 2, Rule 59 of the Rules
1. The defendants’ "Urgent Precautionary Motion to Stay Assumption of court which provides that:
of Receivers" be DENIED for lack of merit. Accordingly, it being
patently a second motion for reconsideration, a prohibited pleading, SEC. 2. Bond on appointment of receiver.-- Before issuing the order
the same is hereby ordered EXPUNGED from the records; appointing a receiver the court shall require the applicant to file a
bond executed to the party against whom the application is
2. The "Motion to Fix the Bond, Acceptance and Approval of the Oath presented, in an amount to be fixed by the court, to the effect that
of Office, and Bond of the Receiver" of defendant Dominalda Espina the applicant will pay such party all damages he may sustain by
Caboverde, be GRANTED with the receivers’ bond set and fixed at reason of the appointment of such receiver in case the applicant shall
ONE HUNDRED THOUSAND PESOS (Ph₱100,000.00) each.12 have procured such appointment without sufficient cause; and the
court may, in its discretion, at any time after the appointment,
It should be stated at this juncture that after filing their Urgent require an additional bond as further security for such damages.
Precautionary Motion to Stay Assumption of Receivers but before the
RTC could rule on it, petitioners filed a petition for certiorari with the The Manifestation dated September 30, 2009 filed by petitioners
CA dated September 29, 2010 seeking to declare null and void the wherein "they formally manifested their concurrence" to the
February 8, 2010 Resolution of the RTC granting the Application for settlement on the application for receivership estops them from
Receivership and its July 19, 2010 Resolution denying the motion for questioning the sufficiency of the cause for the appointment of the
reconsideration filed by petitioners and appointing the receivers receiver since they themselves agreed to have the properties placed
nominated by respondents. The petition was anchored on two under receivership albeit on the condition that the same be placed
grounds, namely: (1) non-compliance with the substantial under the administration of Mila. Thus, the filing of the bond by
requirements under Section 2, Rule 59 of the 1997 Rules of Civil Dominalda for this purpose becomes unnecessary.
Procedure because the trial court appointed a receiver without It must be emphasized that the bond filed by the applicant for
requiring the applicant to file a bond; and (2) lack of factual or legal receivership answers only for all damages that the adverse party may
basis to place the properties under receivership because the sustain by reason of the appointment of such receiver in case the
applicant presented support and medication as grounds in her applicant shall have procured such appointment without sufficient
application which are not valid grounds for receivership under the cause; it does not answer for damages suffered by reason of the
rules. failure of the receiver to discharge his duties faithfully or to obey the
orders of the court, inasmuch as such damages are covered by the
On June 25, 2012, the CA rendered the assailed Decision denying the bond of the receiver.
petition on the strength of the following premises and ratiocination:
As to the second ground, petitioners insist that there is no
Petitioners harp on the fact that the court a quo failed to require justification for placing the properties under receivership since there
Dominalda to post a bond prior to the issuance of the order was neither allegation nor proof that the said properties, not the

fruits thereof, were in danger of being lost or materially injured. They Petitioners raise the following issues in their petition:
believe that the public respondent went out of line when he granted
the application for receivership for the purpose of procuring money (1) Whether or not the CA committed grave abuse of discretion in
for the medications and basic needs of Dominalda despite the income sustaining the appointment of a receiver despite clear showing that
she’s supposed to receive under the Partial Settlement Agreement. the reasons advanced by the applicant are not any of those
enumerated by the rules; and
The court a quo has the discretion to decide whether or not the
appointment of a receiver is necessary. In this case, the public (2) Whether or not the CA committed grave abuse of discretion in
respondent took into consideration that the applicant is already an upholding the Resolution of the RTC and ruling that the receivership
octogenarian who may not live up to the day when this conflict will bond is not required prior to appointment despite clear dictates of
be finally settled. Thus, We find that he did not act with grave abuse the rules.
of discretion amounting to lack or excess of jurisdiction when he
granted the application for receivership based on Section 1(d) of Rule The Court’s Ruling
59 of the Rules of Court.
The petition is impressed with merit.
A final note, a petition for certiorari may be availed of only when
there is no appeal, nor any plain, speedy and adequate remedy in the We have repeatedly held that receivership is a harsh remedy to be
ordinary course of law. In this case, petitioners may still avail of the granted with utmost circumspection and only in extreme situations.
remedy provided in Section 3, Rule 59 of the said Rule where they The doctrinal pronouncement in Velasco & Co. v. Gochico & Co is
can seek for the discharge of the receiver. instructive:
FOR REASONS STATED, the petition for certiorari is DENIED. The power to appoint a receiver is a delicate one and should be
exercised with extreme caution and only under circumstances
SO ORDERED.13 requiring summary relief or where the court is satisfied that there is
imminent danger of loss, lest the injury thereby caused be far greater
Petitioners’ Motion for Reconsideration was also denied by the CA on than the injury sought to be averted. The court should consider the
September 21, 2012.14 consequences to all of the parties and the power should not be
exercised when it is likely to produce irreparable injustice or injury to
Hence, the instant petition, petitioners effectively praying that the private rights or the facts demonstrate that the appointment will
approval of respondent Dominalda’s application for receivership and injure the interests of others whose rights are entitled to as much
necessarily the concomitant appointment of receivers be revoked. consideration from the court as those of the complainant.15
The Issues To recall, the RTC approved the application for receivership on the
stated rationale that receivership was the most convenient and

feasible means to preserve and administer the disputed properties. only when there is a clear showing of necessity for it in order to save
As a corollary, the RTC, agreeing with the applicant Dominalda, held the plaintiff from grave and immediate loss or damage.18
that placing the disputed properties under receivership would ensure
that she would receive her share in the income which she supposedly Before appointing a receiver, courts should consider: (1) whether or
needed in order to pay for her vitamins, medicines, her regular check- not the injury resulting from such appointment would probably be
ups and daily sustenance. Considering that, as the CA put it, the greater than the injury ensuing if the status quo is left undisturbed;
applicant was already an octogenarian who may not live up to the and (2) whether or not the appointment will imperil the interest of
day when the conflict will be finally settled, the RTC did not act with others whose rights deserve as much a consideration from the court
grave abuse of discretion amounting to lack or excess of jurisdiction as those of the person requesting for receivership.19
when it granted the application for receivership since it was justified
under Sec. 1(d), Rule 59 of the Rules of Court, which states: Moreover, this Court has consistently ruled that where the effect of
the appointment of a receiver is to take real estate out of the
Section 1. Appointment of a receiver. – Upon a verified application, possession of the defendant before the final adjudication of the
one or more receivers of the property subject of the action or rights of the parties, the appointment should be made only in
proceeding may be appointed by the court where the action is extreme cases.20
pending, or by the Court of Appeals or by the Supreme Court, or a
member thereof, in the following cases: After carefully considering the foregoing principles and the facts and
circumstances of this case, We find that the grant of Dominalda’s
xxxx Application for Receivership has no leg to stand on for reasons
discussed below.
(d) Whenever in other cases it appears that the appointment of a
receiver is the most convenient and feasible means of preserving, First, Dominalda’s alleged need for income to defray her medical
administering, or disposing of the property in litigation. (Emphasis expenses and support is not a valid justification for the appointment
supplied.) of a receiver. The approval of an application for receivership merely
on this ground is not only unwarranted but also an arbitrary exercise
Indeed, Sec. 1(d) above is couched in general terms and broad in of discretion because financial need and like reasons are not found in
scope, encompassing instances not covered by the other grounds Sec. 1 of Rule 59 which prescribes specific grounds or reasons for
enumerated under the said section.16 However, in granting granting receivership. The RTC’s insistence that the approval of the
applications for receivership on the basis of this section, courts must receivership is justified under Sec. 1(d) of Rule 59, which seems to be
remain mindful of the basic principle that receivership may be a catch-all provision, is far from convincing. To be clear, even in cases
granted only when the circumstances so demand, either because the falling under such provision, it is essential that there is a clear
property sought to be placed in the hands of a receiver is in danger showing that there is imminent danger that the properties sought to
of being lost or because they run the risk of being impaired,17 and be placed under receivership will be lost, wasted or injured.
that being a drastic and harsh remedy, receivership must be granted

Second, there is no clear showing that the disputed properties are in
danger of being lost or materially impaired and that placing them Verily, the RTC’s purported determination that the appointment of a
under receivership is most convenient and feasible means to receiver is the most convenient and feasible means of preserving,
preserve, administer or dispose of them. administering or disposing of the properties is nothing but a hollow
conclusion drawn from inexistent factual considerations.
Based on the allegations in her application, it appears that Dominalda
sought receivership mainly because she considers this the best Third, placing the disputed properties under receivership is not
remedy to ensure that she would receive her share in the income of necessary to save Dominalda from grave and immediate loss or
the disputed properties. Much emphasis has been placed on the fact irremediable damage. Contrary to her assertions, Dominalda is
that she needed this income for her medical expenses and daily assured of receiving income under the PSA approved by the RTC
sustenance. But it can be gleaned from her application that, aside providing that she was entitled to receive a share of one-half (1/2) of
from her bare assertion that petitioner Mila solely appropriated the the net income derived from the uncontroverted properties.
fruits and rentals earned from the disputed properties in connivance Pursuant to the PSA, Josephine, the daughter of Dominalda, was
with some of her siblings, Dominalda has not presented or alleged appointed by the court as administrator of the eight (8) uncontested
anything else to prove that the disputed properties were in danger of lots with special authority to provide for the medicine of her mother.
being wasted or materially injured and that the appointment of a Thus, it was patently erroneous for the RTC to grant the Application
receiver was the most convenient and feasible means to preserve for Receivership in order to ensure Dominalda of income to support
their integrity. herself because precisely, the PSA already provided for that. It cannot
be over-emphasized that the parties in Civil Case No. S-760 were
Further, there is nothing in the RTC’s February 8 and July 19, 2010 willing to make arrangements to ensure that Dominalda was
Resolutions that says why the disputed properties might be in danger provided with sufficient income. In fact, the RTC, in its February 8,
of being lost, removed or materially injured while in the hands of the 2010 Resolution granting the Application for Receivership, noted the
defendants a quo. Neither did the RTC explain the reasons which agreement of the parties that "Dominalda Espina Caboverde shall be
compelled it to have them placed under receivership. The RTC simply given 2/10 shares of the net monthly income and products of said
declared that placing the disputed properties under receivership was properties."21
urgent and merely anchored its approval on the fact that Dominalda
was an elderly in need of funds for her medication and sustenance. Finally, it must be noted that the defendants in Civil Case No. S-760
The RTC plainly concluded that since the purpose of the receivership are the registered owners of the disputed properties that were in
is to procure money from the proceeds of these properties to spend their possession. In cases such as this, it is settled jurisprudence that
for medicines and other needs of the Dominalda, who is old and the appointment should be made only in extreme cases and on a
sickly, this circumstance falls within the purview of Sec. 1(d), that is, clear showing of necessity in order to save the plaintiff from grave
"Whenever in other cases it appears that the appointment of a and irremediable loss or damage.22
receiver is the most convenient and feasible means of preserving,
administering, or disposing of the property in litigation."

This Court has held that a receiver should not be appointed to deprive Unfortunately, no such reasons were alleged, much less proved in
a party who is in possession of the property in litigation, just as a writ this case.
of preliminary injunction should not be issued to transfer property in
litigation from the possession of one party to another where the legal In any event, Dominalda’s rights may be amply protected during the
title is in dispute and the party having possession asserts ownership pendency of Civil Case No. S-760 by causing her adverse claim to be
in himself, except in a very clear case of evident usurpation.23 annotated on the certificates of title covering the disputed
properties.27
Furthermore, this Court has declared that the appointment of a
receiver is not proper when the rights of the parties, one of whom is As regards the issue of whether or not the CA was correct in ruling
in possession of the property, depend on the determination of their that a bond was not required prior to the appointment of the
respective claims to the title of such property24 unless such property receivers in this case, We rule in the negative.
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 Respondents Eve and Fe claim that there are sufficient grounds for
third persons claiming adverse title.25 the appointment of receivers in this case and that in fact, petitioners
agreed with them on the existence of these grounds when they
It must be underscored that in this case, Dominalda’s claim to the acquiesced to Dominalda’s Application for Receivership. Thus,
disputed properties and her share in the properties’ income and respondents insist that where there is sufficient cause to appoint a
produce is at best speculative precisely because the ownership of the receiver, there is no need for an applicant’s bond because under Sec.
disputed properties is yet to be determined in Civil Case No. S-760. 2 of Rule 59, the very purpose of the bond is to answer for all
Also, except for Dominalda’s claim that she has an interest in the damages that may be sustained by a party by reason of the
disputed properties, Dominalda has no relation to their produce or appointment of a receiver in case the applicant shall have procured
income.1âwphi1 such appointment without sufficient cause. Thus, they further argue
that what is needed is the receiver’s bond which was already fixed
By placing the disputed properties and their income under and approved by the RTC.28 Also, the CA found that there was no
receivership, it is as if the applicant has obtained indirectly what she need for Dominalda to file a bond considering that petitioners filed a
could not obtain directly, which is to deprive the other parties of the Manifestation where they formally consented to the receivership.
possession of the property until the controversy between them in the Hence, it was as if petitioners agreed that there was sufficient cause
main case is finally settled.26 This Court cannot countenance this to place the disputed properties under receivership; thus, the CA
arrangement. declared that petitioners were estopped from challenging the
sufficiency of such cause.
To reiterate, the RTC’s approval of the application for receivership
and the deprivation of petitioners of possession over the disputed The foregoing arguments are misplaced. Sec. 2 of Rule 59 is very clear
properties would be justified only if compelling reasons exist. 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" possession of the property and gave a bond in the sum of P50,000
denotes its mandatory nature; thus, the consent of the other party, conditioned for the faithful performance of the duties of his office,
or as in this case, the consent of petitioners, is of no moment. Hence, the other defendants, Juan Garcia and Fernando Martinez, becoming
the filing of an applicant’s bond is required at all times. On the other sureties thereon. The receiver was appointed in August ,1905, and in
hand, the requirement of a receiver’s bond rests upon the discretion January, 1907, the Supreme Court set aside the order appointing a
of the court. Sec. 2 of Rule 59 clearly states that the court may, in its receiver on the ground that, under the provisions of law relative to
discretion, at any time after the appointment, require an additional receiverships, there was no authority for the appointment of a
bond as further security for such damages. receiver in the action named. (Molina vs. De la Riva, 7 Phil. Rep.,
302).chanroblesvirtualawlibrary chanrobles virtual law library
WHEREFORE, upon the foregoing considerations, this petition is
GRANTED. The assailed CA June 25, 2012 Decision and September 21, The property was inventoried at the time possession was taken by
2012 Resolution in CA-G.R. SP No. 03834 are hereby REVERSED and the receiver and the value, as set out in the inventory, was something
SET ASIDE. The Resolutions dated February 8, 2010 and July 19, 2010 more than P231,000. After the reversal by the Supreme Court of the
of the RTC, Branch 11 in Sindangan, Zamboanga del Norte, in Civil order appointing the receiver the latter began a proceeding to
Case No. S-760, approving respondent Dominalda Espina- account. Objections were presented to certain phases of the account,
Caboverde’s application for receivership and appointing the receivers but none touching the condition of the property. The record does not
over the disputed properties are likewise SET ASIDE. disclose what became of this proceedings or of the objections
presented therein and we find nothing further in connection
SO ORDERED. therewith. It appears, however, that the property, both real and
personal, which the receiver had in his possession at the termination
G.R. No. L-10106 November 23, 1915 of the receivership was seized by the sheriff of Albay under
ANTONIO DE LA RIVA, Plaintiff-Appellee, vs. RAFAEL MOLINA executions issued on judgments against De la Riva, in favor of Gibbs,
SALVADOR, ET AL., Defendants-Appellants. Gale & Carr and Enrique F. Somes, and was duly sold at public sale
under said executions. It further appears that the proceeds of the
Lawrence, Ross and Block for appellants. sale of such property were not sufficient to pay the judgment under
Alfredo Chicote and Agustin Alvarez for appellee. which the levies were made.chanroblesvirtualawlibrary chanrobles
virtual law library
MORELAND, J.:
The present action was begun in 1908. In the first cause of action the
In the year 1905 the defendant Rafael Molina Salvador began an plaintiff seeks to recover P8,000 for the deterioration of the property,
action against the plaintiff for the recovery of about P42,000, and, in during the receivership, due to the negligence of the receiver; the
that action, secured the appointment of Joaquin Navarro, another of sum of P30,000 for the negligent failure of the receiver to continue
the defendants in this action, receiver of real and personal property the business which, it is alleged, was in operation ta the time the
owned by De la Riva in the Island of Catanduanes. The receiver took receiver was appointed; and P50,000 damages resulting from an

alleged conspiracy between the receiver and the defendant Rafael that the plaintiff cannot recover.chanroblesvirtualawlibrary
Molina Salvador, whereby he latter was permitted to appropriate to chanrobles virtual law library
himself, in part at least, the business of De la Riva, and by which the
use of a considerable portion of the property in the hands of the Concerning the cause of action based on the ground that the
receiver was permitted to said Molina without compensation, or with defendant Molina had procured the appointment of the receiver
a compensation very inadequate.chanroblesvirtualawlibrary without sufficient cause, we have already said that it was, in effect,
chanrobles virtual law library dismissed and that no appeal was taken from the order of dismissal.
We might add, however, that the facts which must be found to exist
The second cause of action is based on the wrongful appointment of before an action will lie under section 177 of the Code of Civil
the receiver, it being alleged that the appointment was procured by Procedure were not present in the case before us. The application for
Molina without just cause. The complaint, so far as this cause of the receiver was not ex parte and no bond was given to protect the
action is concerned, was dismissed by the trial court and no appeal defendant from the effects of an appointment without cause; and no
was taken from that dismissal.chanroblesvirtualawlibrary chanrobles bond having been given no liability existed. (Molina vs. Somes, 24
virtual law library Phil. Rep., 49.) Moreover, if damages were to be sought for such
appointment, they should have been demanded in the action in
The defendants demurred to the complaint on the ground that there which the receiver was appointed and not in action begun separately
was a misjoinder of parties defendant and the demurrer was for that purpose. (Yap Unki vs. Chua Jamco, 14 Phil. Rep., 602.) In
overruled and exception taken. If the demurrer had been well spite of all this, however, in sustaining plaintiff's alleged right to
framed, we would have no hesitation in saying that it was improperly recover as set out in certain other allegations of the complaint, the
overruled. There is clearly a misjoinder of parties defendant and, on court says in part: "The defendants, Rafael Molina and Joaquin
proper objection, the court should have remedied that condition. The Navarro, are liable for all the damages arising to plaintiff from the
demurrer having been dismissed, however, we are bound to sustain appointment of a receiver, caused by the improper performance of
the court's action if there is any legal grounds on which it may be his duties by the receiver; even though Molina had given no bond
done, whether it be specifically stated by the lower court as a ground himself directly, there was an implied contract in obtaining the
or not. Under the decision of this court in the case of Lizarraga appointment of a receiver, under which he was obligated to pay the
Hermanos vs. Yap Tico (24 Phil. Rep., 504, a demurrer, to be a proper defendant in that action the damages which he might suffer from
pleading, must not only set out the " objections to the complaint," such appointment, no matter how they came about, that
but it "must distinctly specify the grounds upon which any of the appointment being improper." It is apparent that the trial court
objections to the complaint ... are taken." The demurrer in this case confused the damages resulting from the appointment of the
simply states the objections to the complaint without specifying the receiver, where the appointment was procured without just cause,
grounds of the objection; and, in that condition, or could be and the damages which arise after the receiver has been appointed,
dismissed by the court on its own initiative. However, that question due to his negligence or mismanagement. The liability in these two
is academic in view of the fact that we have come to the conclusion cases rests in different principles. The right to damages for procuring
the appointment of a receiver without just cause (there being no

malicious prosecution) is statutory (177, Code Civ. Proc.) while the nevertheless, that the receiver did not properly perform his duties
right to damages based on the negligence or misconduct of the for the reason that he favored Molina at the expense of the
receiver arises under the general principles of the law. (Molina vs. receivership, thus combining the different elements of the first cause
Somes, 24 Phil. Rep., 49). In the former case the damages, or part of of action and founding them on the negligence of the receiver in
them, may be caused before the receiver qualifies or takes handling the property and managing the business, instead of basing
possession of the property, while in the latter, the injury occurs only that cause of action, as did the plaintiff, on an active conspiracy
after the receiver has qualified and taken possession of the property. between him and Molina.chanroblesvirtualawlibrary chanrobles
In the former case the liability rests on statute while in the other it virtual law library
rests on the negligence or misconduct of the receiver. In the former
the person obtaining the appointment of the receiver is responsible Dealing, then, with the action as based solely on the negligence of
for the damages, if he has signed the bond described in section 177 the receiver in the performance of his duties, we are met at the
of the Code of Civil Procedure. (Molina vs. Somes, 24 Phil. Rep., 49.) outset with a failure of proof on the part of the plaintiff, both with
In the latter he is not responsible in any event. The bond is given by respect to the negligence of the receiver and the amount of damages
the receiver, and not by the person procuring his appointment, and which the plaintiff alleges he sustained by reason
the liability of the receiver, if any, arises from his own negligence, and thereof.chanroblesvirtualawlibrary chanrobles virtual law library
involves in no way the person who obtained his appointment. For the
acts of the receiver after his appointment no one is responsible but It has been shown, there is no doubt, that some of the property
himself and his sureties. Molina cannot, in this action, therefore, be deteriorated, both in form and value, during the time that the
made to respond for the acts of the receiver, it not having been receiver held it in his possession, and that some of it was considerably
demonstrated that he exercised control over or that he connived damaged; but it also appears, by the weight of the evidence, that
with the receiver.chanroblesvirtualawlibrary chanrobles virtual law such deterioration and damage were due to force over which the
library receiver had no control and concerning which he was in no way
responsible. Some of the warehouses and buildings were injured by
Taking up the cause of action based on an alleged conspiracy typhoons useless by ordinary wear and tear. It was proved that the
between the defendant Molina and the receiver, the trial court was launch, which is referred to frequently in the evidence, foundered
"unable to find that an actual conspiracy existed to exploit and get all before it was delivered to the receiver and was never raised; while
of plaintiff's business away;" but, while it found that the evidence was the smaller boats were in bad condition at the time the receiver was
insufficient to establish the conspiracy, it nevertheless held that "the appointed, many of them being under
action of defendants taken altogether caused great injury to water.chanroblesvirtualawlibrary chanrobles virtual law library
plaintiff's property rights, and was in violation of the obligation of
each one of the defendants in connection with their relation to the As to the value of the property, speaking generally, there is no
appointment of the receiver." It is somewhat difficult to harmonize reliable evidence. The inventory made at the time the receiver took
these two positions unless we assume that the court, by the two possession shows the value of the property and bills receivable, as
statements, abandoned the theory of a conspiracy, but held, inventoried, to have been about P231,000. Of this sum about

P110,000 was bills receivable. It does not appear in the record how As to the allegation that the plaintiff suffered damages on account of
the value of the property was fixed in the inventory or whether that the fact that the receiver did not continue the business as he found
was the market value thereof at the time the inventory was made. it, the record shows that, at the time of the appointment of the
On that subject there is no evidence except the inventory itself. In the receiver, there was very little business; and what there was was not
same way, there is no evidence before us of the value of the property profitable. It appears, however, that the receiver did continue the
at the time the receivership terminated, or at the time the receiver business as best he could for such time as he deemed advisable and
presented his account in 1907, or when the property was seized for the best interests of the receivership. That the business was not
under the executions issued on the judgments in favor of Gibbs, Gale in a flourishing condition may, in a measure, be inferred from the fact
& Carr and Enrique F. Somes. What its value was at that time we have that the action in which the receiver was appointed was commenced
no means of knowing. Whether the property in general had by Molina against De la Riva to recover P42,000 or thereabouts which
deteriorated or had been damaged we are not informed from any was a part of the purchase price of the property and business which
source, particularly as the record is silent with respect to damages was the object of the receivership. De la Riva had bought the property
caused to said property by reason of acts or omissions of the receiver. and business of Molina some time before the beginning of the action
Substantially all the testimony there is in the record as to the value referred to and had failed to make the payments required by the
of the property in question at any time is that given by the plaintiff contract of purchase.chanroblesvirtualawlibrary chanrobles virtual
himself. With respect to his evidence it must be noted that he did not law library
see the property from 1905 until about the year 1910. What its
condition was in 1907, when it was seized under the executions Finally, we are of the opinion that an action against the receiver and
referred to, plaintiff does not know. It had been taken out of the his sureties cannot be maintained under the circumstances shown to
hands of the receiver and had been in the hands of the purchasers have existed in this case. When this action was brought there was
under the execution sale for nearly, if not quite, three years before pending before the court in the action in which the receiver was
the plaintiff saw it. Evidence of its value at that time would be worth appointed a proceeding wherein the receiver was accounting for the
very little in an action against the receiver based on its values in 1905 property which he had in his possession. There had been certain
and 1907. Moreover, plaintiff testified in 1910 that the value of the objections presented to such account by the plaintiff herein but
property in question at that time was about P150,000. Of that based on grounds entirely apart from the negligence or misconduct
amount P50,000 was the value of the property and P100,000 bills of the receiver. That proceeding is still pending, so far as we know.
receivable. This statement should be taken in connection with We do not believe it to be the policy of the law to permit actions to
plaintiff's complaint in the present action, which was begun in 1908, be brought against a receiver based on his management of the
in which, as we have seen, it is alleged that, at the time of the receivership property without leave of the court which appointed
dissolution of the receivership, the property and business were of him. As we have already intimated, a receiver is to be regarded as the
very little value.chanroblesvirtualawlibrary chanrobles virtual law arm, officer, or representative of the court appointing him. The
library custody of the receiver is the custody of the court. His acts and
possession are the acts and possession of the court, and his contracts
and liabilities are, in contemplation of law, the contracts and

liabilities of the court. As a necessary consequence, a receiver is G.R. No. L-17176 October 30, 1962
subject to the control and supervision of the court at every step in his ROSENDO RALLA and PABLO RALLA, petitioners,
management of the property or funds placed in his hands. On the vs.
other hand, it is the duty of the court to protect the possession of its HON. MATEO L. ALCASID as Judge of the Court of First Instance of
receiver and to prevent all interference with him in the performance Albay and PEDRO RALLA, respondents.
of his official functions and duties. So thoroughly is this recognized, BENGZON, C.J.:
that it is well settled that any unauthorized interference with a
receiver's possession of the property committed to his charge, or Statement. — The instant petition for certiorari seeks to annul the
with the receiver in the discharge of his official duties, is a contempt orders of respondent judge appointing a receiver and refusing a bond
of the court by which he was appointed. It is the relationship which to dissolve the receivership.
exists between the court and the receiver which has led to the
general rule, followed in jurisdiction where statutes have not been Seeking to recover physical possession of the parcels of land involved
passed to the contrary, that no action can be brought against a in the receivership, petitioner submit alternative prayers: (a)
receiver without leave of the court appointing him. And this rule modification of the order appointing the receiver so that the
applies as well where suit is brought to recover a money judgment receivership would only embrace certain parcels of land, and exclude
merely as where it is to take from the receiver specific property others; or (b) discharge of receiver upon submission of a counter-
whereof he is in possession by order of the court. (See generally Cys., bond of P20,000.00; or (c) increase of the receiver's bond from
Receivers and authorities.) If actions against him are permitted P10,000.00 to P20,000.00.
indiscriminately, the interest of those concerned in the property held
by the receiver will suffer and court will be hampered and limited in Facts. — On January 5, 1960, in the Court of First Instance of Albay,
its control over him. One who feels himself sufficiently aggrieved by Pedro Ralla filed against his father Rosendo Ralla and his brother
acts of a receiver to warrant active intervention should take the Pablo Ralla, an action for partition involving 212 parcels of land
matter into the court which appointed the receiver and ask either for allegedly valued P270,000.00. The complaint after making proper
an accounting or take some other proceeding, and ask for the allegations, also prayed for the appointment of a receiver.
consequent judgment of the court on the acts complained of, or for
leave to bring action directly. If, under the facts presented, it is the Pablo Ralla, in his answer, asserted exclusive ownership over a
judgment of the court that the interests of all concerned will be best number of those parcels; Rosendo Ralla's ownership of other parcels
observed by such a suit or by any other proceeding, permission will and ownership of the rest by the conjugal estate of Rosendo and his
be given to bring it.chanroblesvirtualawlibrary chanrobles virtual law deceased wife, Paz Escarilla. Rosendo Ralla equally asserted exclusive
library ownership over a number of the said parcels Pablo Ralla's exclusive
ownership of those claimed by the latter; and conjugal ownership of
For these reasons the judgment appealed from is reversed and the the rest of the parcels by Rosendo with his deceased wife, Paz
action dismissed on the merits, without costs to either party in this Escarilla.
instance. So ordered.

After hearing the prayer for appointment of a receive the respondent thereof; (5) in this case, however, there is no such necessity, in as
court issued an order appointing a receiver of all the parcels of land much as the rights of above respondent may be protected by notice
enumerated in the inventory submitted by Pedro Ralla, except of lis pendens or by the filing of a bond by petitioners to compensate
certain parcels of land. The Municipal Treasurer of Ligao, Albay, for the damage sought to be prevented. Above petitioners had
Vicente Real, qualified as receiver with a bond of P10,000.00. offered a counterbond of P20,000.00 — twice the bond submitted by
the receiver; (6) as the pleadings submitted in the lower court show
A motion for reconsideration was denied. While such motion was the presence of adverse claim of title to a greater portion of the lands
pending, above petitioners presented an omnibus "Motion to be in question, the constitution of the receivership although protective
allowed to file a bond for the discharge of the receiver and/or Motion of the rights of herein respondent Pedro Ralla would, on the other
to resolve the motion for reconsideration of the order dated July 21, hand, cause disproportionate injury to the rights of herein
1959 and motion to require accounting and increase of bond, if petitioners.
discharge of the receiver is not allowed."
Respondents have met the above propositions with arguments
However, respondent court entered an order denying the motion to equally impressive, and these are, in brief, our conclusions:
reconsider the appointment of a receiver, and the motion to
discharge the receivership upon the filing of a bond. A receiver of real or personal property, which is the subject of the
action, may be appointed by the court where it appears from the
Issue. — On the principal contention that the respondent judge pleadings, and/or such other proof as the judge may require, that the
exceeded his jurisdiction or abused his discretion when he decreed party applying for such appointment has an actual interest in it and
the receivership and appointed a receiver in a partition proceeding, that such property is in danger of being lost, removed or materially
petitioners submit the instant petition for certiorari. injured.1 The appointment is also proper whenever it appears to be
the most convenient and feasible means of preserving, or
Discussion. — They rest their case on the following propositions: (1) administering the property in litigation.2
in a partition proceeding, generally, no administration is necessary
and the appointment of a receiver is irregular; (2) the court appoints The appointment of a receiver depends principally upon the sound
a receiver only after full consideration of the facts and circumstances discretion of the court; it is not a matter absolute right. The facts and
of each particular case; (3) the consequences and effects thereof circumstances, of each particular case determine the soundness of
should be well taken into account, with a view to avoiding the exercise such discretion.3 Among the consequences and effects
irreparable, injustice or injury to the other parties who are entitled considered by the courts before appointing a receiver are: (a)
to as much consideration as those seeking it; (4) in an action involving whether or not the injury resulting from such a appointment would
title to real property, as in the above case, where the appointment of probably be greater than the injury suing if the status quo is left
a receiver to take charge of the property has the effect of taking the undisturbed;4 and (b) whether or not the appointment will imperil
property out of the possession of the above petitioners, application the interests of other whose rights deserve as much a consideration
therefor should only be granted after a clear showing of the necessity from the court as those of the person requesting for receivership.5

spite of the efforts exerted by this Court to prevail upon the
In the case at bar, the respondent court ordered the a appointment defendants toward this and on equitable basis;
of a receiver after hearing and presentation of evidence by both
parties. Eleven sessions were had follows that purpose, numerous (5) The actuation of the defendants, the majority co-owners,
documentary proofs were submitted. The facts and circumstances results in serious prejudice to the minority, the plaintiff, and that the
upon which the order was based — which this Court is not prepared plaintiff has not been given the benefit or accounting of the products
to revise at this time — are as follows: and income therefrom, and has not been given whatsoever his
corresponding and due share thereof;
(1) It was not established to the satisfaction of the Court with
few exceptions, that the properties subject matter of the complaint (6) The plaintiff is being prevented by the defendants from
for partition are exclusive properties of the surviving spouse, the entering the lands in question and from even interfering and aiding
defendant Rosendo Ralla most of the properties were either acquired in the administration thereof.
or titled during the marriage and in fact in the various certificates of
title Exhibits "11" to "114" the one half (1/2) undivided portion is In this atmosphere of strained relationship between the parties, of
registered in the name of Rosendo Ralla married to Paz Escarilla, the unsatisfactory arrangement for the administration of the properties
deceased mother of the plaintiff (Pedro Ralla). involved, not to mention the conveyance by petitioners of some of
the conjugal properties left by the deceased spouse of Rosendo Ralla,
(2) The defendants have been disposing, conveying an Paz Escarilla it was not entirely improper to direct the appointment
transferring properties and converting them from the character of of a receiver. All the circumstances found by the lower court
conjugal properties left by the deceased Paz Escarilla to the exclusive apparently justify the constitution of the receivership of the lands in
properties of the defendants with the avowed purpose and intention question. The requirements of law have been more than satisfied.6
of depriving plaintiff of his right, interest, title and participation Even under petitioners' theory that the granting therefor should only
thereto and to the great damage and prejudice of the plaintiff, as be "after a clear showing of the necessity thereof", the instant
evidenced by the documents of conveyance executed by the appointment of a receiver appears to be proper.
defendant Rosendo Ralla, marked Exhibits "C", "D", and "E";
The case of Leonides Chunaco, et al. vs. Hon. Perfecto Quicho, et al.,7
(3) The products, rentals, income, assets and funds collected and similar in nature to the present case, was resolved by this Court along
received by the defendants, since the death of said late Paz Escarilla the same lines with our conclusion in this litigation. There we held:
on December 27, 1957, up to the present, from the properties, are in
danger of being lost or removed; While in a partition proceeding it is generally unnecessary for the
court to appoint a receiver, however, (as held in the case of Tuason
(4) The relations of the plaintiff and defendants who are co- vs. Concepcion, 54 Phil. 408) where the relationship among the co-
owners are strained, and no satisfactory arrangement for owners are strained, and no satisfactory arrangement for
administration of the property can be made and accomplished in

administration can be accomplished, the appointment of a receiver MARIA S. TUASON, ET AL., Petitioners, v. PEDRO CONCEPCION,
is not an abuse of discretion. Judge of First Instance of Manila, ET AL., Respondents.
Jose Ma. Tuason, for respondents D. Tuason and Augusto Tuason.
This ruling has been confirmed by Art. 492, par. 3 of the New Civil
Code authorizing the appointment of an a administrator (which term SYLLABUS
would include a receiver) in cases where the action of the majority
co-owners results in serious prejudice to the minority. 1. CERTIORARI; JURISDICTION. — In this jurisdiction the statutory
provisions on the subject of certiorari are taken from the California
Should there be no majority, or should the resolution the majority be Code of Civil Procedure and strictly confine the use of the writ to
seriously prejudicial to those interested in the property owned in cases where an inferior tribunal has exceeded its jurisdiction.
common, the court, at the instance of a interested party, shall order
such measures as it may deem proper, including the appointment of 2. ID.; ID. — The provision of section 220 of the Code of Civil
an administrator. Procedure that the court shall "determine whether the inferior
tribunal . . . has not regularly pursued its authority" has reference
We likewise sustain the lower court's order fixing the receiver's bond only to irregularities affecting the jurisdiction of the court. The
at only P10,000.00 because the records show, the gross income of California statute uses practically the same language, and in that
the estate under receivership — land, can not be lost — amounted state it has been uniformly held that jurisdiction must have been
quarterly to more or less P7,000.00 only.8 Considering that the exceeded before the court can interfere by writs of certiorari and that
parties have been withdrawing their corresponding share from the mere errors in the exercise of the court’s jurisdiction are not
net income, it is easy to understand that the bond already filed sufficient.
sufficiently answers for any cash remaining in the receiver's hands.
3. APPOINTMENT OF RECEIVER; DISCRETION. — In the appointment
Judgment. — Without further discussing the other points raised by of receivers, the Philippine Code of Civil Procedure gives the judges
petitioners, we find no inclination to hold that the respondent court of the Courts of First Instance an unusually wide discretion, and
abused its discretion in the issuance of its questioned orders. subsection 4 of section 174 of the Code has no direct counterpart in
any American or English statute. But the discretion thus conferred
Petition denied with costs against petitioners. must not be exercised arbitrarily, and sound reasons for the
appointment of a receiver should appear in the record of the case.
4. ID.; ID.; JURISDICTION; CERTIORARI. — The present case involves a

large tract of land held in common by the parties. The relations
between them were strained, and no satisfactory arrangement as to
the administration of the property had been accomplished.
Inconvenient and expensive litigation was threatening, and

eventually the majority of the owners in common expressed their "On August 22, 1923, Antonio Ma. Barretto y Rocha and twenty-one
conformity with the appointment of a receiver for the administration other individuals filed suit against Augusto Humberto Tuason y de la
of the property. In these circumstances, the respondent judge cannot Paz and fourteen other defendants, civil case No. 24803, of the Court
be said to have exceeded his jurisdiction in appointing such receiver, of First Instance of Manila, alleging that plaintiffs are the descendants
and certiorari will not lie. of the second born children of the founder of said mayorazgo, and
further alleging, among other things, that the said mayorazgo
constitutes a family trust, and that the defendants had fraudulently
DECISION obtained a Torrens title in their favor upon the entailed real estate.
The plaintiffs prayed for an accounting of receipts, expenses, and
profits of the mayorazgo properties from and after February 4, 1874.
OSTRAND, J.:
"The defendants in that case interposed several defenses — among
others, that they possessed a Torrens title to the properties in
This is a petition for a writ of certiorari to set aside the appointment question, free from charges or encumbrances, and prescription of the
of a receiver. In a memorandum in support of the petition, counsel action, and alleged a counterclaim for the pensions received by the
for the petitioners makes the following clear and accurate plaintiffs after the year 1917.
preliminary statement:jgc:chanrobles.com.ph
"The Court of First Instance (Judge Pedro Concepcion), after trial,
"On February 25, 1794, Don Antonio Tuason founded mayorazgo in rendered judgment dismissing the complaint and the counterclaim,
Manila and vicinity by an instrument duly executed by him and without costs.
approved by the King of Spain. He provided, among other things, that
the revenues of the mayorazgo properties should be distributed in "Both plaintiffs and defendants appealed to the Supreme Court. On
the proportion of four-fifths to his first-born child and his successors March 23, 1926, this Honorable Court reversed the said decision and
and one-fifth to the other eight children of the founder and their declared that the plaintiffs are entitled to participate in a fifth of the
successors. The said mayorazgo properties consist what is known as properties of said mayorazgo and its revenues in certain proportions,
’Haciendas de Santa Mesa y Diliman’ and ’Hacienda de Mariquina’ and that the registration of the properties under Act No. 496 is not
and two ’fincas’ on Calle Rosario, Manila. The tax assessment values an impediment to its division and the transfer of said portions to the
of the said properties are as follows: plaintiffs, as beneficiaries, in accordance with said decision.
Haciendas de Santa Mesa y Diliman P 3,550,640.00
"This Honorable Court, in its decision, further discussed the
Hacienda de Mariquina 1,507,140.00 Disentailing Law of October 11, 1820, which became effective in the
Philippines on March 1, 1864, and held that among the effects
Two ’fincas’ in Calle Rosario 542,382.00 produced upon this mayorazgo by said Disentailing Law, on the one
hand, and the conduct of the interested parties, on the other, there

is, in the first place, the abolishment of the trust of the naked allegations of the petition were not true. The court (vacation judge)
ownership in favor of the descendants of the founder in an indefinite held that the verified allegations of the petition were sufficient to
succession, and, in the second, the conversion of the family trust on justify the appointment of a receiver and on June 26, 1928, made an
one-fifth of the revenues into a trust of the ownership of one-fifth of order appointing a receiver. On the same date the attorneys for the
all the properties in favor of the younger children and other relatives defendants indicated to the court their intention to file a motion for
of the founder. (Barretto v. Tuason, 50 Phil., 888, 890, 928-938.) reconsideration of said order, and the court thereupon ordered the
receiver to postpone taking possession of said properties until July 2,
"A motion for reconsideration was filed by defendants in the 1928, or until further orders of the court. On June 28, 1928, the
Supreme Court, and certain parties filed complaints in intervention in defendants filed a verified motion for reconsideration, making
the Supreme Court, claiming an interest as beneficiaries in the one- certain denials of the allegations of the petition and making certain
fifth of said mayorazgo. allegations tending to show why the appointment of a receiver
should be set aside, and prayed that upon the presentation of
"On October 5, 1926, this Honorable Court denied the motion for evidence upon the allegations of the parties the court set aside its
reconsideration, but set aside the dispositive part of its decision of order of June 26, 1928, appointing a receiver. Upon the hearing of
March 23, 1926, and ordered the case returned to the Court of First said motion for reconsideration the court made an order which,
Instance, with the complaints in intervention, to the end that the new among other things, recited as follows:jgc:chanrobles.com.ph
parties may intervene, and in order that the original plaintiffs may, if
they so desire, amend their complaint; and this Honorable Court "‘In view of the fact that in the motion for reconsideration the
further ordered that the plaintiffs take the necessary steps toward defendants have made allegations under oath in contradiction to the
the inclusion as parties of all who may claim the right to participate verified allegations of the plaintiffs’ petition and supplementary
in the fifth part of said properties, requiring them to appear and petition, it is incumbent upon the court to grant a hearing for the
establish their rights, and ordered that the Court of First Instance purpose of taking evidence to enable the court to determine under
proceed to the trial of the case as to the amount of the participation the evidence whether a receiver should be appointed under the
which the original parties and the intervenors may have in the fifth prayer of the plaintiffs’ petition.’
part of the properties of said mayorazgo.
"The record shows that, with the consent of the parties, a referee
"In this state of the case in the Court of First Instance, the plaintiffs, was appointed by Judge Concepcion on July 26, 1928, to take
on May 18, 1928, filed therein a petition for the appointment of a evidence; that depositions were taken; that on December 14, 1928,
receiver. The petition was verified by the oath of Antonio Ma. the court (Judge Concepcion) made an order denying the petition for
Barretto, one of the plaintiffs, and it alleged certain grounds for the the appointment of a receiver upon the ground that the new petition,
appointment of a receiver. The petition was set for hearing. The like the preceding ones, was based upon mere conclusions without
attorneys for defendants appeared and argued orally and in writing specification of any concrete facts to sustain them, and because the
as to the insufficiency of the petition, but did not file any answer lack of means for controlling and intervening in the management of
thereto or offer any evidence or affidavits to prove that the the properties of the mayorazgo to protect their rights and interests

is not a sufficient ground for the appointment of a receiver; but the that Augusto Tuason and Jose Ma. Tuason, who are defendants and
court ordered the defendants to set aside every months one-fifth of his clients in said case, had instructed him to support the petition for
the income of the mayorazgo after deducting expenses, and to a receivership and that Jose Ma. Tuason alone, as administrator of
deposit it in a bank subject to the orders of the court; and thereafter, the estate of the deceased Demetrio Tuason, represented fifty per
on January 5, 1929, in passing upon a petition of the attorneys for the cent of the properties in Manila, forty per cent of the Haciendas Santa
plaintiffs, the court ordered the defendants to submit to the court an Mesa y Diliman, and 13/30 of the Hacienda of Mariquina, and that in
account of the administration of the mayorazgo properties, such view of their instructions and by reason of his connections with the
account to cover each and every month, and that the said accounting other defendants, he desired to withdraw from the case. His motion
be submitted on or before the 10th day of each month for the seems to have been granted and on August 16, Attorney Eusebio
preceding month, commencing with February, 1929, for the month Orense filed his appearance as attorney for the rest of the defendants
of January, 1929. in the case, and eight days later, he presented an extensive
memorandum in support of his answer to the petition for the
"On or about December 7, 1928, the majority in interest of the appointment of a receiver.
coöwners who had executed powers of attorney to Augusto H.
Tuason to manage the mayorazgo properties, being dissatisfied with On September 21, 1929, Judge Pedro Concepcion issued an order in
his management, revoked such powers and thus removed the said which he expressed as his opinion that an orderly and pacific
Augusto Tuason as manager, and by a resolution adopted by the administration of the properties in question could not be had by
majority in interest of the coöwners decided to constitute all the reason of the strained relations among the coparticipants in the four-
coöwners into a board of management for the administration of said fifths part of the mayorazgo. For that and for other reasons stated in
properties, each coöwner to have voting power according to his the order, his Honor granted the petition for a receivership and
interest in the properties. Doña Maria S. Tuason was elected appointed the Bank of the Philippine Islands as receiver. Two days
president of the board of management."cralaw virtua1aw library later, an exception to said order was duly noted, and a motion for
reconsideration filed.
On August 5, 1929, Gregorio Maga, Concepcion Rosel, Saturnina
Rosel, Tiburcia Rosel, Engracia Rosel, Rufina Rosel, Andrea Tuason, Upon receiving the motion for reconsideration, Judge Concepcion set
Antonio Tuason, and Marciano Tuason, alleging that they had proven it down for hearing on September 28, and suspended the effects of
their rights in the aforesaid one-fifth of the mayorazgo property, filed the execution of the appointment of the receiver. When the motion
a new petition in the aforesaid civil case No. 24803 for the was called for hearing, Attorney Orense announced to the court that
appointment of a receiver. Five days later, some of the plaintiffs in after filing his motion for reconsideration, certain of his clients, who
said civil case filed a statement expressing their conformity to the were defendants in the case, had notified him in writing that they
proposed receivership, but upon the condition that Maria S. Tuason desisted from the opposition to the appointment of a receiver, and
be appointed receiver. On the same date, Attorney Gregorio Araneta that he therefore desired to be allowed to withdraw as attorney for
of the law firm of Araneta & Zaragoza, Attorneys for all of the the defendants who were opposed to the appointment of a receiver.
defendants in said civil case No. 24803, appeared in court and stated Apparently, there was no objection to Orense’s withdrawal, and on

the same date, the law firm Harvey & O’Brien filed their appearance statute used practically the same language (sec. 1074, California
as attorneys for the parties still opposing the receivership, namely, Code of Civil Procedure), and it has there been uniformly held that
Maria S. Tuason, Teresa E. Tuason, Antonio M. Tuason, Angel M. there must have been an excess of jurisdiction before the court can
Tuason, and Albina Tuason, who are now the petitioners in the interfere by writs of certiorari and that mere errors in the exercise of
present case. The hearing of the motion for reconsideration was the court’s jurisdiction are not sufficient. (Clary v. Hoagland, 5 Cal.,
thereupon continued until October 5, 1929, and on that date, Harvey 476; Coulter v. Stark, 7 Cal., 244; Henshaw v. Supervisors of Butte
& O’Brien presented an exhaustive memorandum in opposition to County, 19 Cal., 150; Wratten v. Wilson, 22 Cal., 466; People v.
the appointment of a receiver. In a lengthy order dated October 16, Johnson, 30 Cal., 98; Winter v. Fitzpatrick, 35 Cal., 269; Muir v.
1929, and setting forth the reasons for the appointment of the Superior Court, 58 Cal., 361; Hutchinson v. Superior Court of Inyo
receiver, Judge Concepcion denied the motion for reconsideration. In County, 61 Cal., 119; State v. Fifth Judicial District Court, 18 Nev., 286;
the meantime, the receiver does not appear to have entered upon its Sherer v. Superior Court, 94 Cal., 354; Reagan v. Justice’s Court, 75
functions as such. Cal., 253; Alexander v. Municipal Court, 66 Cal., 387.)
On October 23, Maria S. Tuason and her sons Antonio M. Tuason and From what has been said, it follows that the only question here to be
Angel Tuason together with Teresa E. Tuason and Albina Tuason determined is whether the respondent judge, in appointing the
instituted the present proceeding. receiver, exceeded his jurisdiction, and in answering that question,
we must necessarily follow the laws of this country.
In most of the United States the issuance of writs of certiorari is
governed by statutes which vary considerably in different In the appointment of receivers, the Philippine Code of Civil
jurisdictions, and some states have gone so far as to use certiorari as Procedure gives the judges of the Courts of First Instance a wide
a substitute for appeal where the appeal is lost without the fault of discretion, perhaps more so than in any other jurisdiction under the
the petitioner (See Hill v. Faison, 277 Ex., 428; Scroggs v. Alexander, American flag. The appointment before us falls under subsection 4 of
88 U. C., 64). In this jurisdiction the statutory provisions on the section 174 of the Code which provides that a receiver may be
subject are taken from the California Code of Civil Procedure and appointed "whenever in other cases it shall be made to appear to the
strictly confined the use of the writ of certiorari to cases where an court that the appointment of a receiver is the most convenient and
inferior tribunal has exceeded its jurisdiction. It is true that section feasible means of preserving and administering the property which is
220 of our Code of Civil Procedure provides that the courts shall the subject of litigation during the pendency of the action."cralaw
"determine whether the inferior tribunal . . . has not regularly virtua1aw library
pursued its authority," and it may, perhaps, be argued that
expression increases the scope of the writ. But to so hold would be The subsection quoted has no direct counterpart in any American or
repugnant to the provisions of section 217, which confer the English statute, and, as may be seen, it is very broad. Of course, the
authority to issue such writs, and it seems perfectly clear that the wide discretion thus conferred upon the courts must not be exercised
expression mentioned has reference only to irregularities affecting arbitrarily, and sound reasons for the appointment of the receiver
the jurisdiction of the court. It may be noted that the California

should appear in the record of the case in which the receivership is partition of the properties and that they intended to warn the
initiated. numerous tenants of the mayorazgo against paying rents to the
persons who then pretended to administer the properties; ands that
Counsel for the petitioner vigorously asserts that the appointment of they now were in favor of the appointment of a receiver.
the receiver in the present case was improvidently made inasmuch
as the allegations of the petition for the receivership were denied in It is also a matter of record which cannot be disputed that before the
the defendant’s answer and that no evidence was presented in its issuance of the order of October 16, 1929, the other members of the
support. That is true in part; the answer contained a qualified general aforesaid board, except the herein petitioners, declared their
denial, and no oral evidence was taken. We agree with counsel that conformity with the appointment of the receiver, and subsequently
in such circumstances, the petition, standing alone, would not they filed an affidavit stating among other things that "if in the
constitute grounds for the appointment of a receiver and would, no beginning they opposed the appointment of a receiver this was due
doubt, have been denied by the court. to the fact that they were uncertain who the person of the receiver
would be, but since the announcement made by the court that the
But the record before us shows undisputed facts which, in our Bank of the Philippine Islands would be appointed, as in fact it was,
opinion, justify the action of the respondent judge. Thus it is receiver of the Mayorazgo Tuason properties, they have withdrawn
conceded that on May 18, 1928, claimants of the one-fifth, above- their opposition to said receivership proceedings because they have
mentioned, filed a petition for the appointment of a receiver and that special trust and confidence in the impartiality, efficiency, integrity,
after the reception of oral evidence and after extensive arguments of and solvency of the Bank of the Philippine Islands, and they hereby
the attorneys, the petition was finally denied on December 14, 1928; adhere and conform to the appointment of said receiver;
that in the same month of December, the majority of the coowners
of the four-fifths of the property being dissatisfied with the "That all these deponents representing as they do the majority
management of Augusto H. Tuason, who until that time had managed interest in said properties agree to, as they hereby authorize, the said
the principal properties, revoked the powers under which he was Bank of the Philippine Islands to administer the aforesaid properties
acting and removed him as manager; that by a resolution adopted at either as a receiver under the provisions of section 174 of the Code
the same time by the majority of the coöwners, a board of of the Civil Procedure, or as an impartial administrator under the
management, consisting of the eleven principal coöwners, for the provisions of article 398 of the Civil Code."cralaw virtua1aw library
administration of said properties was created, each coowner to have
voting power according to his interest in the properties, and Maria S. From the facts stated, it is plain that the relations between Augusto
Tuason was elected president of the board. It is also shown by the H. Tuason and Jose Ma. Tuason on one side and Maria S. Tuason on
statements of Augusto H. Tuason and Jose Ma. Tauson, who the other, were strained, and it seems likely that if a receiver had not
represented a very large part of the property, that they were been appointed, Augusto and Jose Ma. Tuason would have brought
dissatisfied with the new management and had lost all confidence in their contemplated action for a partition of the four-fifths of the
it; that they, at the time of the filing of the petition for a receiver in mayorazgo. From a legal point of view, they had the right to bring
the present case, were on the point of bringing an action for the such an action. In the present state of the original mayorazgo case

such litigation would have been both inconvenient and expensive to certiorari. There, too, the statutes differ from ours; the writ of review
all of the parties and would probably have led to further litigation in has a somewhat wider scope than our certiorari, and instead of the
the collection of rents and to additional friction among the coowners. language of subsection 4 of section 174 of our Code of Civil
Considering the surrounding circumstances, we should hesitate to Procedure, the language employed in the Idaho statute is that
hold that the respondent judge abused his discretion to such an receivers may be appointed "in all other cases where receivers have
extent as to exceed his jurisdiction in appointing the receiver upon heretofore been appointed by the usages of courts of equity." The
the ground alone. difference is obvious.
But there are other grounds for withholding the writ of certiorari in We are not unmindful of the general rule that extreme caution must
this case. Article 398 of the Civil Code provides that "the decision of be observed in appointing receivers of real property against a
the majority of the part owners as to the management and defendant in possession and that whenever a contest over real
enjoyment of the common property shall be binding on all. To property is merely a question of dispute of title, as in actions of
constitute a majority the decision must have been made with the ejectment, the plaintiff asserting a legal title in himself as against a
concurrence of owners representing the greater part of the interests defendant in possession, who is receiving the rents and profits under
which constitute the thing held in common." In the present case a a claim of legal title, a receiver will not ordinarily be appointed to take
large majority in interest is in favor of surrendering the management possession of the property or to receive the rents and profits thereof.
of the property to the receiver appointed, and it follows that their
decision in that respect must be considered binding on the other But that rule cannot apply with great force to the present case. There
coowners. is here no question as to the rights of the defendants in regard to the
title to the four-fifths of the mayorazgo property; that has already
It is argued that the majority of the coowners joined in the petition been definitely determined by our decision in the original case. None
for the receivership too late and that, consequently, their adherence of the coowners claimed right to the exclusive possession of any of
to it should not be taken into consideration. We do not think so. They the properties nor can any of them individually claim exclusive rights
manifested their conformity before the final order to the court dated to the management thereof and to collect the rents. There is
October 16, 1929, was issued. In that order the court referred to the consequently no forestalling of the decision on the merits, which is
fact that the majority was in favor of the appointment, and it was one one of the principal reasons for the reluctance of the courts to
of the grounds for denying the motion for reconsideration. appoint receivers of real property.
The petitioners cite a number of cases which, in our opinion, have In our opinion, the respondent judge did not exceed his jurisdiction
little or no bearing on the present case; the facts differ and so do the in appointing the receiver; on the contrary, his judgment and
laws and the circumstances. With the exception of the case of discretion in doing so seems quite sound. It is, indeed, difficult to see
Sweeney v. Meyhew (6 Ida., 445) all of the cases cited were decided how he could have found a better solution of the problem with which
on appeals and not on certiorari. The Idaho case was brought before he was confronted. In the midst of the remaining litigation in the
the Supreme Court of the state on a writ of review, a substitute for original case, he was also burdened with litigation as to the

management of the property in question, and such litigation would litigations resulting from the latter are taken into consideration: paid
probably have the effect of delaying the final determination of the clerks and collectors of rents would, of course, be necessary in either
disputed points in the original or principal case. The last petition for event.
the appointment of a receiver culminated in the withdrawal of the
majority of the coowners from the so-called board of management As we have already pointed out, in this jurisdiction the powers of the
thus creating a situation in which no one had clear authority to collect courts in appointing receivers are somewhat broader than usual, and
the rents, the principal part of the management. no special procedure in regard to such appointments is provided for
in our statutes. In fact, the practice is so divergent in the different
Judge Concepcion has had charge of civil case No. 24803 from the States that it is practically impossible to reduce the various rules to
beginning. From past experience, as well as from the record, he must an harmonious system, but assuming for the sake of the argument,
have known that managers selected from among the coowners had that in the appointment of the receiver in the present case, the
been objects of suspicion on the part of the other coowners, and that respondent judge did not observe the technical niceties, his failure to
such suspicions led to bickerings and eventually to useless and do so would hardly affect the question of his jurisdiction to appoint.
expensive litigation, detrimental to the interests of all of the parties. (Presidio Mining Co. v. Overton, 286 Fed., 848; citing Sage v.
In these circumstances, we cannot hold that he erred in appointing Memphis, etc. Ry., 125 U. S., 361; and Sullivan Timber Co. v. Black,
as manager a disinterested person or entity who enjoyed the 159 Ala., 570.) The appointment was not arbitrary, and the
confidence of the owners. We can take cognizance of the fact that possession of the property involved was not "wrested" from the
the receiver selected is a solvent and reliable institution and that it controlling majority of the coowners. There is nothing drastic about
has a trust department adequately equipped for the task with which the proceedings. Certainly, it is not a case for review on certiorari
it has been entrusted; it undoubtedly has better facilities for keeping under our statutes. To hold otherwise would amount to a violation of
proper accounts than has any of the coowners, a matter of great our laws and, considering the fact that the respondent judge acted
importance when it is taken into consideration that the properties in within his jurisdiction, it would be contrary to the former decisions of
question are extensive and valuable and that the management this court in regard to certiorari.
consists principally in collecting rents. The petition for a writ of certiorari is denied with the costs against
the petitioners. So ordered.
It has been suggested that the property in question is so large and
valuable, and the expenses of administration so heavy, that the G.R. No. 10173 September 18, 1914
interests of the coowners will be seriously prejudiced by the MARIANO VELASCO AND CO., Plaintiff-Appellee, vs. GOCHUICO
receivership. We cannot place much weight on this contention. The AND CO., ET AL., Defendants-Appellants.
fact that the estate is large is no obstacle; on the contrary, the larger
the estate, the more important it becomes to provide for competent This is a motion made in this court to appoint a receiver in a
and satisfactory management. And the expenses of the receivership foreclosure action or, in case the court refuse to appoint a receiver,
need not be much greater than the cost of the coowners’ to issue an execution upon the judgment contained in the action or
management, especially so where the trouble and expense of the require the defendant to file a bond in the sum of P75,000 to

guarantee the payment of the judgment in case for the affirmed by Instance that no action was pending in that court to which the
this court. petition for the appointment of a receiver could become ancillary and
that an appeal from the original judgment to this court had been
A proceeding for the appointment of a receiver should be by petition perfected, the allowance of the bill of exceptions having the effect to
and not by motion. the petition should by verified and should have stay all further proceedings in the case. In reply to such contention
attached to it such affidavits as the petitioner may deem necessary we might say that, although the cause has been appealed to the
for the substitution of the allegation set forth in the petition. The Supreme court, it may be regarded as yet pending for the purpose of
present proceeding is by motion and moving a receiver papers are an application for a receiver and we are of the opinion that the court
not verified. that rendered the decree appealed from is the proper court to hear
and determine such an application. The office of a receiver is
The power to appoint a receiver is a delicate one and should be manifestly to aid, by the preservation of property, in making effective
exercised with extreme caution and only under circumstances the court's decree. It has always been regarded as an auxiliary or
requiring summary relief or where the court in satisfied that there is ancillary proceeding and rarely, if ever, as an independent one. If
imminent danger of loss, lest the injury thereby caused be far greater occurrences arise after decree which threaten the effectiveness of
than the injury sought to be averted. The court should consider the the decree, the court has the power then to make the appointment.
consequences to all of the parties and the power should not be The questions raised on the appointment of a receiver do not involve
exercised when it is likely to produce irreparable injustice or injury to any matter litigated by the appeal. (Brinkman vs. Ritzinger, 82 Ind.,
private rights or the facts demonstrate that the appointment will 358; Chicago & Southeastern Railway Co. vs. St. Clair, 144 Ind., 371;
injure the interests of others whose rights are entitled to as much Moran vs. Johnson, 26 Grat., Va., 108; Adkins vs. Edwards, 83 Va.,
consideration from the court as those of the complainant. This being 316.)
the case, the papers upon which the petition for the appointment of
a receiver are based should be verified and should contain all the Even though we held that this court has authority to appoint a
facts required to show a clear right to the relief. receiver in an action pending on appeal, we should not excercise that
authority under the facts and circumstances of this case. This court is
The question has not been raised or discussed whether this court has not provided with adequate resources and machinery for dealing
authority to appoint a receiver in an action pending here on appeal. with the situation presented by the appointment of a receiver and all
We do not, therefore, that whether the court has that right or not, of the details connected therewith. It would impose upon us
the result would be the same, as the motion could not prevail in obligations and duties which we are not fully prepared to discharge
either event. and which we are not called upon to meet under the circumstances.
With respect to that portion of the motion asking for the issuance of
We are of the opinion that, although the case has been appealed and an execution, should the court refuse to appoint a receiver, we have
the appeal perfected, the Court of First Instance still has the power to say Section 144 of the Code of Civil Procedure provides: "Excepts
to hear and decide an application for the appointment of a receiver. by special order of the court, no execution shall issue upon final
It may be contended against the jurisdiction of the Court of First

judgment rendered in a Court of First Instance until after the period
for perfecting a bill of exceptions has expired. But the filing of a bill Separate Opinions
.of exceptions shall of itself stay execution until the final
determination of the action, unless for special reasons stated in the CARSON, J., concurring:
bill of exceptions the court shall order that execution be not stayed, Understanding as I do that nothing said in this opinion is intended to
in which event execution may at once issue. But the court may be taken as a ruling that this court has not the power in an
require as a condition of a stay of execution that a bond shall be given appropriate case to take such measures as may be necessary to
reasonably sufficient to secure the performance of the judgment conserve the subject matter in litigation pending the final disposition
appealed from in case it be affirmed in part or wholly." of such case, either by the appointment of a receiver, or the
requirement of bond for the continued stay of execution or by
In the case of Macke vs. Camps (5 Phil. Rep., 185), the court said: granting such other remedy as the facts of the particular case may
"Thus the legislator has placed the issuance of the order complained require, I concur.
of in the discretion of the trial court, and this court will not interfere
to modify, control, or inquire into the exercise of this discretion, G.R. No. 183018 August 3, 2011
which is thus conferred by statute, unless it be alleged and proven ADVENT CAPITAL AND FINANCE CORPORATION, Petitioner,
that there has been an abuse or excess of authority on the part of vs.
trial judge, or unless it appears that since the issuance of the order ROLAND YOUNG, Respondent.
conditions have so far changed as to necessitate the intervention of
the appellate court to protect the interests of the parties against DECISION
contingencies which were not contemplated by the trial judge at the
time of the issuance of the order. ( Jerome vs. McCarter, 21 Wallace, CARPIO, J.:
88 U.S., 17; Calvo vs. Gutierrez, 4 Phil. Rep., 203.)"
The Case
Therefore, even though this court has authority to issue an execution
in an action pending on appeal, a question which we do not decide, This petition for review1 assails the 28 December 2007 Decision2 and
we would not issue it in this case upon the showing made for the 15 May 2008 Resolution3 of the Court of Appeals in CA-G.R. SP No.
reasons expressed in the decision above cited. No change in 96266. The Court of Appeals set aside the 24 March 2006 and 5 July
condition or circumstance has been shown since the execution was 2006 Orders4 of the Regional Trial Court of Makati City, Branch 147,
stayed in the court below which would warrant our interference. and directed petitioner Advent Capital and Finance Corporation to
The reasons which lead to the denial of the motion to issue an return the seized vehicle to respondent Roland Young. The Court of
execution also require the denial of the motion to require the Appeals denied the motion for reconsideration.
defendant to give the bond mentioned in the moving papers
The Antecedents
The motion must be denied in all its parts.

The present controversy stemmed from a replevin suit instituted by a Writ of Seizure8 directing the Sheriff to seize the subject car from
petitioner Advent Capital and Finance Corporation (Advent) against Young. Upon receipt of the Writ of Seizure, Young turned over the car
respondent Roland Young (Young) to recover the possession of a to Advent,9 which delivered the same to the rehabilitation
1996 Mercedes Benz E230 with plate number UMN-168, which is receiver.10
registered in Advent’s name.5
Thereafter, Young filed an Answer alleging that as a former employee
Prior to the replevin case, or on 16 July 2001, Advent filed for of Advent, he had the option to purchase the subject car at book
corporate rehabilitation with the Regional Trial Court of Makati City, value pursuant to the company car plan and to offset the value of the
Branch 142 (rehabilitation court).6 car with the proceeds of his retirement pay and stock option plan.
Young sought the (1) execution of a deed of sale over the subject car;
On 27 August 2001, the rehabilitation court issued an Order (stay and (2) determination and payment of the net amount due him as
order) which states that "the enforcement of all claims whether for retirement benefits under the stock option plan.
money or otherwise, and whether such enforcement is by court
action or otherwise, against the petitioner (Advent), its guarantors Advent filed a Reply with a motion to dismiss Young’s counterclaim,
and sureties not solidarily liable with it, is stayed."7 alleging that the counterclaim did not arise from or has no logical
relationship with the issue of ownership of the subject car.
On 5 November 2001, Young filed his Comment to the Petition for
Rehabilitation, claiming, among others, several employee benefits After issues have been joined, the parties entered into pre-trial on 2
allegedly due him as Advent’s former president and chief executive April 2004, which resulted in the issuance of a pre-trial order of even
officer. date reciting the facts and the issues to be resolved during the trial.
On 6 November 2002, the rehabilitation court approved the On 28 April 2005, the trial court issued an Order dismissing the
rehabilitation plan submitted by Advent. Included in the inventory of replevin case without prejudice for Advent’s failure to prosecute. In
Advent’s assets was the subject car which remained in Young’s the same order, the trial court dismissed Young’s counterclaim
possession at the time. against Advent for lack of jurisdiction. The order pertinently reads:
Young’s obstinate refusal to return the subject car, after repeated It appears that as of July 28, 2003, subject motor vehicle has been
demands, prompted Advent to file the replevin case on 8 July 2003. turned over to the plaintiff, thru its authorized representative, and
The complaint, docketed as Civil Case No. 03-776, was raffled to the adknowledged by the parties’ respective counsels in separate
Regional Trial Court of Makati City, Branch 147 (trial court). Manifestations filed. To date, no action had been taken by the
plaintiff in the further prosecution of this case. Accordingly, this case
After Advent’s posting of ₱3,000,000 replevin bond, which was is ordered dismissed without prejudice on the ground of failure to
double the value of the subject car at the time, through Stronghold prosecute.
Insurance Company, Incorporated (Stronghold), the trial court issued

Anent plaintiff’s Motion to Dismiss defendant Young’s counterclaim rehabilitation proceedings before the corporate court concerned, the
for benefits under the retirement and stock purchase plan, the Court assertions in the Motion for Reconsiderations (sic) will no longer
rules as follows: The only issue in this case is who is entitled to the stand.
possession of the subject motor vehicle. This issue may have a
connection, but not a necessary connection with defendant’s rights On the other hand, the plaintiff did not file a Motion for
under the retirement plan and stock purchase plan as to be Reconsideration of the same Order, dismissing the complaint for
considered a compulsory counterclaim. failure to prosecute, within the reglementary period. Hence, the
same has attained finality.
xxx
Defendant alleged that the dismissal of the case resulted in the
Notably, defendant’s claim is basically one for benefits under and by dissolution of the writ. Nonetheless, the Court deems it proper to
virtue of his employment with the plaintiff, and the subject vehicle is suspend the resolution of the return of the subject vehicle. In this
merely an incident in that claim. Said claim is properly ventilated, as case, the subject vehicle was turned over to plaintiff by virtue of a
it is resolvable by, the Rehabilitation Court which has jurisdiction and writ of replevin validly issued, the latter having sufficiently shown
has acquired jurisdiction, to the exclusion of this Court. Accordingly, that it is the absolute/registered owner thereof. This was not denied
plaintiff’s Motion To Dismiss defendant Young’s counterclaim is by the defendant. Plaintiff’s ownership includes its right of
granted.11 possession. The case has been dismissed without a decision on the
merits having been rendered. Thus, to order the return of the vehicle
On 10 June 2005, Young filed a motion for partial reconsideration of to one who is yet to prove his right of possession would not be
the dismissal order with respect to his counterclaim. proper.
On 8 July 2005, Young filed an omnibus motion, praying that Advent Accordingly, the Motion for Partial Reconsideration is denied.12
return the subject car and pay him ₱1.2 million in damages "(f)or the
improper and irregular seizure" of the subject car, to be charged On 8 June 2006, Young filed a motion to resolve his omnibus motion.
against the replevin bond posted by Advent through Stronghold.
In an Order dated 5 July 2006, the trial court denied the motion to
On 24 March 2006, the trial court issued an Order denying Young’s resolve, to wit:
motion for partial reconsideration, viz:
In the instant case, the Court suspended the resolution of the return
In the instant case, defendant, in his counterclaim anchored her [sic] of the vehicle to defendant Roland Young. It should be noted that the
right of possession to the subject vehicle on his alleged right to writ of replevin was validly issued in favor of the plaintiff and that it
purchase the same under the company car plan. However, has sufficiently established ownership over the subject vehicle which
considering that the Court has already declared that it no longer has includes its right to possess. On the other hand, the case (Olympia
jurisdiction to try defendant’s counterclaim as it is now part of the International vs. Court of Appeals) cited by defendant finds no

application to this case, inasmuch as in the former the Court has not issue of who between Advent and petitioner has the better right to
rendered judgment affirming plaintiff’s (Olympia) right of possession possess the subject car was not determined. As such, the parties
on the property seized. Moreover, the Court, in the Order dated April should be restored to their status immediately before the institution
28, 2005, has already denied defendant’s counterclaim upon which of the case.
he based his right of possession on the ground of lack of jurisdiction.
Accordingly, the Court reiterates its previous ruling that to order the The Supreme Court’s ruling in Olympia International, Inc. vs. Court of
return of the subject vehicle to defendant Young, who is yet to prove Appeals (supra) squarely applies to the present controversy, to wit:
his right of possession before the Rehabilitation Court would not be
proper. "Indeed, logic and equity demand that the writ of replevin be
cancelled. Being provisional and ancillary in character, its existence
WHEREFORE, there being no new and substantial arguments raised, and efficacy depended on the outcome of the case. The case having
the Motion to Resolve is denied.13 been dismissed, so must the writ’s existence and efficacy be
dissolved. To let the writ stand even after the dismissal of the case
Young filed a petition for certiorari and mandamus with the Court of would be adjudging Olympia as the prevailing party, when precisely,
Appeals seeking to annul the trial court’s Orders of 24 March 2006 no decision on the merits had been rendered. The case having been
and 5 July 2006. dismissed, it is as if no case was filed at all and the parties must revert
to their status before the litigation."
The Court of Appeals’ Ruling
Indeed, as an eminent commentator on Remedial Law expounds:
In his petition before the Court of Appeals, Young argued mainly that
the trial court committed grave abuse of discretion amounting to lack "The plaintiff who obtains possession of the personal property by a
or excess of jurisdiction in (1) not directing the return of the subject writ of replevin does not acquire absolute title thereto, nor does the
vehicle to him; (2) refusing to hold a hearing to determine the defendant acquire such title by rebonding the property, as they only
damages to be recovered against the replevin bond; and (3) hold the property subject to the final judgment in the action." (I
dismissing his counterclaim. Regalado, Remedial Law Compendium, Eighth Revised Edition, p.
686)
The Court of Appeals ruled in favor of Young and annulled the
assailed rulings of the trial court. The Court of Appeals held: Reversion of the parties to the status quo ante is the consequence ex
proprio vigore of the dismissal of the case. Thus, in Laureano vs. Court
It is noteworthy that the case was dismissed by the court a quo for of Appeals (324 SCRA 414), it was held:
failure of Advent to prosecute the same. Upon dismissal of the case,
the writ of seizure issued as an incident of the main action (for "(A)lthough the commencement of a civil action stops the running of
replevin) became functus officio and should have been recalled or the statute of prescription or limitations, its dismissal or voluntary
lifted. Since there was no adjudication on the merits of the case, the

abandonment by plaintiff leaves the parties in exactly the same
position as though no action had been commenced at all." The Issue
By the same token, return of the subject car to petitioner pending The main issue in this case is whether the Court of Appeals
rehabilitation of Advent does not constitute enforcement of claims committed reversible error in (1) directing the return of the seized
against it, much more adjudication on the merits of petitioner’s car to Young; and (2) ordering the trial court to set a hearing for the
counterclaim. In other words, an order for such return is not a determination of damages against the replevin bond.
violation of the stay order, which was issued by the rehabilitation
court on August 27, 2001. x x x The Court’s Ruling
Corollarily, petitioner’s claim against the replevin bond has no The petition is partially meritorious.
connection at all with the rehabilitation proceedings. The claim is not
against the insolvent debtor (Advent) but against bondsman, On returning the seized vehicle to Young
Stronghold. Such claim is expressly authorized by Sec. 10, Rule 60, in
relation to Sec. 20, Rule 57, id., x x x14 We agree with the Court of Appeals in directing the trial court to
return the seized car to Young since this is the necessary
The dispositive portion of the Court of Appeals’ decision reads: consequence of the dismissal of the replevin case for failure to
prosecute without prejudice. Upon the dismissal of the replevin case
WHEREFORE, premises considered, the instant petition is PARTLY for failure to prosecute, the writ of seizure, which is merely ancillary
GRANTED. The orders of the Regional Trial Court dated March 24, in nature, became functus officio and should have been lifted. There
2006 and July 5, 2006 are ANNULLED and SET ASIDE in so far as they was no adjudication on the merits, which means that there was no
suspended resolution of petitioner’s motion for, and/or disallowed, determination of the issue who has the better right to possess the
the return of the subject car to petitioner. Accordingly, respondent subject car. Advent cannot therefore retain possession of the subject
Advent Capital and Finance Corporation is directed to return the car considering that it was not adjudged as the prevailing party
subject car to petitioner. entitled to the remedy of replevin.
The Regional Trial Court of Makati City (Branch 147) is directed to Contrary to Advent’s view, Olympia International Inc. v. Court of
conduct a hearing on, and determine, petitioner’s claim for damages Appeals16 applies to this case. The dismissal of the replevin case for
against the replevin bond posted by Stronghold Insurance Co. failure to prosecute results in the restoration of the parties’ status
prior to litigation, as if no complaint was filed at all. To let the writ of
SO ORDERED.15 seizure stand after the dismissal of the complaint would be adjudging
Advent as the prevailing party, when precisely no decision on the
Advent filed a motion for reconsideration, which was denied by the merits had been rendered. Accordingly, the parties must be reverted
Court of Appeals in a Resolution dated 15 May 2008. to their status quo ante. Since Young possessed the subject car

before the filing of the replevin case, the same must be returned to cases. It provides that in replevin cases, as in receivership and
him, as if no complaint was filed at all. injunction cases, the damages to be awarded upon the bond "shall
be claimed, ascertained, and granted" in accordance with Section 20
Advent’s contention that returning the subject car to Young would of Rule 57 which reads:
constitute a violation of the stay order issued by the rehabilitation
court is untenable. As the Court of Appeals correctly concluded, Sec. 20. Claim for damages on account of improper, irregular or
returning the seized vehicle to Young is not an enforcement of a claim excessive attachment. - An application for damages on account of
against Advent which must be suspended by virtue of the stay order improper, irregular or excessive attachment must be filed before the
issued by the rehabilitation court pursuant to Section 6 of the Interim trial or before appeal is perfected or before the judgment becomes
Rules on Corporate Rehabilitation (Interim Rules).17 The issue in the executory, with due notice to the attaching obligee or his surety or
replevin case is who has better right to possession of the car, and it sureties, setting forth the facts showing his right to damages and the
was Advent that claimed a better right in filing the replevin case amount thereof. Such damages may be awarded only after proper
against Young. In defense, Young claimed a better right to possession hearing and shall be included in the judgment on the main case. e
of the car arising from Advent’s car plan to its executives, which he
asserts entitles him to offset the value of the car against the proceeds If the judgment of the appellate court be favorable to the party
of his retirement pay and stock option plan. against whom the attachment was issued, he must claim damages
sustained during the pendency of the appeal by filing an application
Young cannot collect a money "claim" against Advent within the in the appellate court with notice to the party in whose favor the
contemplation of the Interim Rules. The term "claim" has been attachment was issued or his surety or sureties, before the judgment
construed to refer to debts or demands of a pecuniary nature, or the of the appellate court becomes executory. The appellate court may
assertion to have money paid by the company under rehabilitation allow the application to be heard and decided by the trial court.
to its creditors.18 In the replevin case, Young cannot demand that
Advent pay him money because such payment, even if valid, has been Nothing herein contained shall prevent the party against whom the
"stayed" by order of the rehabilitation court. However, in the attachment was issued from recovering in the same action the
replevin case, Young can raise Advent’s car plan, coupled with his damages awarded to him from any property of the attaching obligee
retirement pay and stock option plan, as giving him a better right to not exempt from execution should the bond or deposit given by the
possession of the car. To repeat, Young is entitled to recover the latter be insufficient or fail to fully satisfy the award.
subject car as a necessary consequence of the dismissal of the
replevin case for failure to prosecute without prejudice. The above provision essentially allows the application to be filed at
any time before the judgment becomes executory.20 It should be
On the damages against the replevin bond filed in the same case that is the main action,21 and with the court
having jurisdiction over the case at the time of the application.22
Section 10, Rule 60 of the Rules of Court19 governs claims for
damages on account of improper or irregular seizure in replevin

In this case, there was no application for damages against Stronghold Since Young is time-barred from claiming damages against the
resulting from the issuance of the writ of seizure before the finality replevin bond, the dismissal order having attained finality after the
of the dismissal of the complaint for failure to prosecute. It appears application for damages, the Court of Appeals erred in ordering the
that Young filed his omnibus motion claiming damages against trial court to set a hearing for the determination of damages against
Stronghold after the dismissal order issued by the trial court on 28 the replevin bond.
April 2005 had attained finality. While Young filed a motion for partial
reconsideration on 10 June 2005, it only concerned the dismissal of WHEREFORE, the Court GRANTS the petition IN PART. The Court SETS
his counterclaim, without any claim for damages against the replevin ASIDE the portion in the assailed decision of the Court of Appeals in
bond. It was only on 8 July 2005 that Young filed an omnibus motion CA-G.R. SP No. 96266 ordering the trial court to set a hearing for the
seeking damages against the replevin bond, after the dismissal order determination of damages against the replevin bond.
had already become final for Advent’s non-appeal of such order. In
fact, in his omnibus motion, Young stressed the finality of the SO ORDERED.
dismissal order.23 Thus, Young is barred from claiming damages
against the replevin bond.
In Jao v. Royal Financing Corporation,24 the Court held that

defendant therein was precluded from claiming damages against the
surety bond since defendant failed to file the application for damages
before the termination of the case, thus:
The dismissal of the case filed by the plaintiffs-appellees on July 11,

1959, had become final and executory before the defendant-
appellee corporation filed its motion for judgment on the bond on
September 7, 1959. In the order of the trial court, dismissing the
complaint, there appears no pronouncement whatsoever against the
surety bond. The appellee-corporation failed to file its proper
application for damages prior to the termination of the case against
it. It is barred to do so now. The prevailing party, if such would be the
proper term for the appellee-corporation, having failed to file its
application for damages against the bond prior to the entry of final
judgment, the bondsman-appellant is relieved of further liability
thereunder.

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MILA CABOVERDE TANTANO and ROSELLER CABOVERDE, The present controversy started when on March 7, 2005,

Petitioners, respondents Eve and Fe filed a complaint before the RTC of

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4. ID.; ID.; JURISDICTION; CERTIORARI. — The present case involves a

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In Jao v. Royal Financing Corporation,24 the Court held that

The dismissal of the case filed by the plaintiffs-appellees on July 11,

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