RECEIVERSHIP

RECEIVERSHIP

G.R. No. 6305 September 26, 1911COMPAIA GENERAL DE TABACOS DE FILIPINAS,plaintiff-appellee,vs.ROMANA GAUZON and JUAN D. POMAR,defendants.JUAN D. POMAR,receiver-appellant.M. Fernandez Yamson, for appellant.A. P. Seva, for appellee.JOHNSON,J.:The present appeal is made by the defendant Juan D. Pomar, as receiver, against the order of the Hon. Albert e. McCabe, judge of the Province of Occidental Negros, disallowing certain items in the final account of the said receiver.It appears from the record that the defendant, Romana Gauzon, on the 10th day of September, 1904, executed and delivered to the plaintiff (Compaia General de Tabacos de Filipinas) a mortgage upon an hacienda known as "San Jose," in the municipality of San Carlos, in the Province of Occidental Negros. The said defendant (Romana Gauzon) having failed to pay the said mortgage, the plaintiff (Compaia General de Tabacos de Filipinas), on the 22d day September, 1905, commenced an action for the foreclosure of said mortgage, and asked, in addition to the foreclosure of the mortgage, that a receiver be appointed to take change of the property in question, pending the said action. On the same day (22nd of September, 1905) the Hon. Vicente Jocson, after hearing the petition filed in said cause, appointed the said defendant, Juan D. Pomar, an employee of the plaintiff, receiver of the property involved in said foreclosure proceedings. Said foreclosure proceedings continued to a termination. The result of said proceedings may be found in two decisions of this court, the cases of La Compaia General de Tabacos de Filipinas vs. Ganzon (13 Phil. Rep., 472) and La Compaia General de Tabacos de Filipinas vs. Ganzon (13 Phil. Rep., 481). The facts relating to the foreclosure proceedings and the judgment therein are not important in the present cause, further than to show the history of the transactions of the receiver, the defendant, Juan D. Pomar.After the termination of the receivership, the court required of the receiver (Juan D. Pomar) a report and an accounting of his operations as receiver. It appears from the record that the lower court had a good deal of trouble in securing a final report. The receiver apparently acted as though his only responsibility was to the plaintiff (Compaia General de Tabacos de Filipinas); however, finally the lower court secured what appears to be a final accounting by the receiver, upon the 9th or 10th day of August, 1909. The report of the receiver contained many items.After a careful consideration of the various items of the account of the receiver, Judge McCabe allowed the following items of said account 1. Care of cane before cuttingP1,522.30

2. Cutting and grinding, according to report of commissioners8,565.97

3. Fuel150.00

4. Expenses in Iloilo, according to receiver's Exhibit B2,591.28

5. Storage428.28

6. Insurance428. 28

7. Selling commission648. 28

8. Judgment for plaintiff in cause No. 2499,187.80

9. Receiver's pay1,000.00

Total24,522.04

or about the first Tuesday of November, 1909, the sum of P7,883.76, a balance which he ought to have had in his possession. From the order allowing said items only the defendant appealed to this court and made the following assignments of error: .I. The court erred in reducing to P8,565.97 the P22,944.73 spent by the receiver for cutting, hauling, and manufacture of 8,005.58 piculs of sugar, for packing, transportation and storage thereof, and insurance and selling commission thereon.II. The court erred in not allowing the item of P147.86 paid out by the receiver as interest on money borrowed to cover the first expenses of his receivership.III. The court erred in not approving the disbursement made by the receiver of the P3,001.94 delivered to theaparcerosas their share of the crop.IV. The court erred in reducing to P1,000 the P4,860.87 which the receiver claimed as compensation for his services.V. The court erred in holding that the order appointing the receiver does not extend his powers beyond those prescribed in section 175 of Act No. 190.With reference to the first assignment of error, it will be noted that the receiver presented an account for cutting, grinding, etc., of the sugar cane upon the hacienda, over which he had control as receiver, amounting to P22,944.73. Judge McCabe refused to allow that amount for cutting and grinding, etc., of said sugar cane, upon the ground that it was an unreasonable charge. The parties in the lower court agreed to the appointment of three commissioners for the purpose of ascertaining the reasonable cost of cutting, grinding, etc., of the sugar cane upon the said hacienda. The commissioners were duly appointed, the plaintiff selecting one, the defendant another and the court selecting the third. In due time and after due deliberation, the commissioners etc., of the said sugar cane per pico was P1.07. There were 8,005.58 picos of sugar cane, which calculated at the rate of per pico for cutting, grinding, etc., would amount to P8,565.97, which amount the lower court allowed the receiver. The commissioners appointed by the lower court were men who had experience in the cutting and grinding of sugar cane. It was the duty of the receiver to harvest the sugar cane at least possible cost to the owners of the crop. There is much proof in the record to indicate that the receiver did not harvest the crop of sugar cane as expeditiously as he should have done. There is no proof in the record which shows that the amount estimated by the said commissioner for the cutting, grinding, etc., of the sugar cane in question, was not a reasonable amount for that expense. We find nothing in the record which justifies us in modifying the decision of the lower court with reference to this first assignment of error.With reference to the second assignment of error, it appears that the receiver attempted to charge P147.86, as interest on money borrowed by him during his administration as receiver. There is no proof in the record which shows that it was necessary for him to borrow money to properly conserve the interests of the owners and creditors interested in the administration of the hacienda. The lower court correctly said, "a receiver has no authority to borrow money unless the same is expressly given by the court." We would be inclined, however, to allow this amount (P147.86) had the necessity been fully demonstrated for borrowing the money. In the absence of authority expressly given and especially in the absence of proof of the absolute necessity for incurring this item of expense, we refuse to modify the conclusions of the lower court with respect to this item.With reference to the third assignment of error above noted, the receiver included in his account the item of P3,001.94, being the amount, according to this statement, of money and effects delivered to"los aparceros de la hacienda"during his administration. It is a well known custom among sugar growers in the Philippine Islands, that theaparcerosplant and cultivate sugar cane at their own expense, receiving one-half of the sugar produced and delivering the other half to the owner land. It is also a well known custom that the owners of the land from time to time advance money and effects to theaparceros, deducting the value of the same from the value of the sugar after the same is harvested. In the present case it appears that the receiver delivered one-half of the sugar to theaparceroswithout deducting the amount of money and effects advanced to them. If he, in fact, advanced to theaparcerosthe said sum (P3,001.94) he should have deducted it from the amount due saidaparceros, and not have attempted to collect the same from the amount due the owner of the hacienda, prejudicing the owner of the hacienda thereby. Here again the receiver exceeded his authority. Nevertheless we would be inclined to allow this amount (P3,001.94) if it were a just charge against the administration of the hacienda. But, as was said above, it is not a just charge against the owner of the hacienda. This amount should have been collected from theaparceros. Judge McCabe committed no error in disallowing this item in the account of the receiver.With reference to the fourth assignment of error above noted, it will be seen that the receiver included in his account the sum of P4,860.87 as compensation for his administration as receiver. The lower court disallowed that amount but did allow him the sum of P1,000 as his just compensation as receiver. The lower court, in the appointment of the receiver, did not fix any sum for his compensation; neither is it customary for courts in appointing receivers to fix their compensation in advance. Their compensation is a matter which is always left to the sound discretion of the court, to be allowed from time to time. The receiver attempted to recover as his compensation 15 per cent of the value of the sugar. The lower court found that the amount of P4,860. 87 was an unreasonable amount to be allowed as compensation for the services of the receiver in the present case. The court found that the receiver might have done all the work which he did do in the course of his administration as receiver in one hundred days. The Code of Procedure in Civil Actions allows administrators of estates of deceased persons the sum of P4 a day for the time actually employed in the administration of the estate. The lower court, following this provision of the law, believing the present case to be somewhat analogous, allowed the receiver P4 a day for his services. The lower court also allowed an additional amount, the basis of which does not clearly appear in the record, making the total compensation of the receiver the sum of P1,000. Against that order the owner of the hacienda did not appeal. Considering the negligent manner in which the receiver administered the hacienda, as appears from the record, as well as his negligence in complying with the various orders of the court with reference to rendering accounts, we are of the opinion that the sum of P1,000 is, in fact, more than a just compensation for his services. In view, however, of the fact that the owner of the hacienda did not appeal from the order of the court allowing said sum (P1,000) we approve the finding of the lower court.With reference to the fifth assignment of error above noted, the appellant seems to believe that section 175 of the Code of Procedure in Civil Actions gave him full power to administer the property placed under his control as receiver as he might deem wise and necessary, without any intervention on the part of the court or of the interested parties. The appellant evidently overlooked the phrase of said article which says: "The receiver shall have,under the control of the court in which the action is pending, power, etc." The judge of the lower court in his decision goes into detail at length and cites authorities extensively, for the purpose of showing the general duties, powers and responsibilities of receivers, evidently for the purpose of instructing receivers in his district. The receiver is generally defined to be "an indifferent person between the parties litigant, appointed by the court and on behalf of all the parties, and not of the plaintiff or defendant only, to receive and hold the thing or property in litigation, pending the suit (Boothvs. Clark, 17 How. (U. S.),322, 331), to receive the rents, issues or profits of the land or thing in question (Bothvs. Clark,supra), to receive the rents or other income, to hold possession and control of the property which is the subject matter of the litigation, and to dispose of the same or deliver it to such person or persons as may be directed by the court. (Wiswallvs. Kunz, 173 Ill., 110.)" The reports of the decisions of the courts are filled with decisions supporting the above doctrine. The receiver is said to be the arm and hand of the courta part of the machinery of the court, by which the rights of parties are protected. He is required not only to preserve the property, but to protect the rights of all of the parties interested. If he is not versed in the law, he should secure legal advice, with the permission of the court and in case of doubt should advise with the court and receive direction.After a full consideration of the above assignments of error, in connection with the facts contained in the record, we find no reason for changing or modifying the decision of the lower court, and the same is hereby affirmed, with costs.Torres, Mapa and Moreland, JJ.,concur.G.R. No. L-25729 November 24, 1926THE BELGIAN CATHOLIC MISSIONARIES, INC.,plaintiff-appellee,vs.MAGALLANES PRESS, INC., ET AL.,defendants.JOSE MARIA MEMIJE,appellant.Antonio M. Opisso, Romualdez Hermanos and Luciano de la Rosa for appellant.Cavanna, Aboitiz & Agan for appellee.VILLA-REAL,J.:This is an appeal by Jose Marie Memije from a judgment of the Court of First Instance of Manila the dispositive part of which is as follows:For all the foregoing, the court is of the opinion that the plaintiff has a right to the relief prayed for in its complaint. Wherefore, judgment is rendered declaring that Exhibits C and D, that is, the mortgage deeds in question in this proceeding, in so far as they prejudice the rights of the plaintiff, are null and void; that the preliminary injunction issued in this case against the defendant Jose Ma. Memije is final and absolute; and that the plaintiff recover the amount of the fire insurance policies of the defendant "Magallanes Press, Inc.," which, or the representatives of which, is hereby ordered to endorse said insurance policies to the plaintiff, with the costs of the proceedings against the defendants, with the exception of J.P. Heilbronn Co., Inc. It is so ordered.In support of his appeal, the appellant assigns the following supposed errors as committed by the lower court in its judgment, to wit: (1) The court erred in overruling the demurrer filed by this defendant to the complaint in this action; (2) the trial court erred in giving the plaintiff corporation possession of the property mortgaged to this appellant without following the necessary proceedings or complying with the provisions of the law; (3) the trial court erred in issuing the writ of preliminary injunction against the appellant and E. E. Elser, restraining the former from receiving from the latter, or the latter from delivering to the former, the amount of the insurance policies covering the property mortgaged to the appellant, which was damaged by the fire that occurred in the establishment of the Magallanes Press, Inc; (4) the trial court erred in giving to the unnecessary intervention of the Magallanes Press, Inc., in the execution of the deed Exhibit C an interpretation which is neither based upon law nor upon the contract; (5) the trial court erred in ordering the suspension of the foreclosure of the appellant's mortgage on the property of the Magallanes Press, Inc.; (6) the trial court erred, under the facts proven in this case, in applying article 1297 of the Civil Code; (7) the trial court erred in finding in its decision that the defendant Jose Ma. Memije should not have executed the documents Exhibits C and D without taking into account the rights of the plaintiff corporation, The Belgian Catholic Missionaries, Inc; (8) the trial court erred in declaring Exhibits C and D null and void in so far as they prejudice the rights of the plaintiff, over whose credit that of the herein appellant is preferential; in declaring the writ of preliminary injunction issued against the defendant Jose Ma. Memije final and absolute; in giving judgment for the plaintiff to recover the amount of the fire insurance policies of the defendant the Magallanes Press, Inc; and (9) the trial court erred in not making any pronouncement as to the counterclaim and cross-complaint of the defendant Jose Ma. Memije in this action, nor taking the same into consideration and rendering judgment thereon in favor of said defendant.The oral evidence has not been forwarded to this court so that we are compelled to base our opinion exclusively upon the documentary evidence and the facts found and stated by the trial court in its judgment.It appears that on December 1, 1921, the Magallanes Press, through its manager H. Camena, executed a promissory note in favor of J. P. Heilbronn & Co., Inc., for the sum of P3,472.92, with interest at 10 per cent per annum, payable at the rate of P250 a month, plus the interest earned on the unpaid balance, until the whole amount of the indebtedness shall have been paid, the first payment to be made on January 1, 1922, with the condition that upon the failure to pay any monthly installment or the interest earned on the unpaid balance, the whole amount of the indebtedness shall become due, and the maker shall pay the payee an additional sum equivalent to 15 per cent of the total balance, for attorney's fee and expenses of collection, forfeiting all right of exemption.On the same date, December 1, 1921, the said Magallanes Press, through its managers H. Camena, also executed a promissory note in favor of J. P. Heilbronn & Co., Inc., for the sum of P10,715.77, with interest at 12 per cent per annum, payable at the rate of P500 a month, together with the interest earned on the unpaid balance, until the whole amount of the indebtedness shall have been paid, the first payment to be made on January 1, 1922, with the condition that upon the failure to pay any monthly installment or the interest earned on the unpaid balance, the whole amount of the indebtedness shall become due, and the maker shall pay the payee an additional sum equal to 15 per cent of the total balance for attorney's fee and expenses of collection, forfeiting all right of exemption.To secure the payment of said promissory notes which amounted to a total of P14,188.69, H. Camena, as general manager of the Magallanes Press, executed a chattel mortgage on all of the printing machinery and its accessories, belonging to the said Magallanes Press, in favor of J. P. Heilbronn & Co., Inc.One June 19, 1922, the Magallanes Press Co., Inc., successor to the Magallanes Press, with all the latter's rights and obligations, through its duly authorized president, E. F. Clemente, executed a chattel mortgage on the same printing machinery ad its accessories in favor of the Belgian Catholic Missionaries Co., Inc., which the Magallanes Press had mortgaged to J. P. Heilbronn & Co., Inc., to secure the payment of a loan of P30,500, with interest at 12 per cent per annum, which the said Magallanes Press & Co., Inc., had obtained from the Belgian Catholic Missionaries Co., Inc., the duration of the mortgage loan being one year from the execution of the mortgage deed.In December, 1922 the appellant Jose Ma. Memije made a loan in the sum of P2,000 to E. F. Clemente which was paid on account of the indebtedness of the Magallanes Press to J. P. Heilbronn & co., Inc., together with the sum of P1,641 which A. F. Mendoza owed said E. F. Clemente.On the occasion of the issuance of the writ of attachment in civil cause No. 23818 of the Court of First Instance of Manila, entitled Jose Ma. Cavanna vs. the Magallanes Press Co., Inc., the defendant Jose Ma. Memije, on February 21, 1923, filed an intervention in said case.All the promissory note executed by the Magallanes Press in favor of J. P. Heilbronn & Co., Inc., having been overdue for non-payment of the installments as well as the respective chattel mortgage, the said J. P. Heilbronn & Co., Inc., transferred all its mortgage credit against the Magallanes Press to Jose Ma. Memije in consideration of the sum of P8,280.90, the balance of said mortgage credit.On March 14, 1923, Enrique Clemente, as manager of the Megallane Press Co., Inc., executed a deed in favor of Jose Ma. Memije by virtue of which the chattel mortgage which was given by the Magallanes Press in favor of J. P. Heilbronn & Co., Inc., and transferred by the latter to Jose Ma. Memije, was made to cover an additional loan of P5,895.79, which included the sum of P2,000 which said Jose Ma. Memije had advanced said Enrique Clemente in December, 1922.On April 21, 1923, a fire occurred in the building where the pointing machinery, its accessories and other personal property of the Magallanes Press Co., Inc., were located and which were covered by said chattel mortgages. Said property was insured, and the insurance policies covering it were endorsed to J. P. Heilbronn & Co., Inc., upon the execution of the chattel mortgage thereon in favor of the latter. When J. P. Heilbronn & Co., Inc., transferred its mortgage credit to Jose Ma. Memije it, in turn, endorsed said insurance policies to him. The insurance companies were disposed to pay the respective insurance policies, which amounted to P7,686.45, but due to the issuance of the above-mentioned writ of preliminary injunction, payment could not be made.Due to the filing of the complaint in the present case on May 9, 1923, and the issuance of the writ of preliminary injunction on May 10th of the same year, Jose Ma. Memije was unable to collect the amount of the insurance policies, and when he was summoned under the complaint on May 14, 1923, he made demand on the Magallanes Press Co., Inc., for the payment of his mortgage credit on the same date the manager of said corporation, E. F. Clemente, permitted the secretary of the said corporation to place the property covered by the mortgage into the hands of the said Jose Ma. Memije in order that the same might be sold, but the sale could not be consummated due to the issuance of the said writ of preliminary injunction.The first question raised by the defendant and appellant has reference to the overruling of the demurrer filed by him to complaint.One of the grounds of said demurrer was that the complaint in this case did not allege facts sufficient to constitute a cause of action against the said defendant, in that, notwithstanding the fact that the said complaint was instituted to annul the document of transfer of the mortgage credit Exhibit C, it was not alleged in the said complaint that the defendant Jose Ma. Memije had any intention to defraud the interests of the plaintiff corporation, which was absolutely impossible due to the nature of the transaction and the preferential character of the mortgage credit of J. P. Heilbronn & Co., Inc.As to this paragraph of the complaint, the plaintiff company having known of the existence of a chattel mortgage in favor of J. P. Heilbronn & Co., Inc., the latter, either as the first or as the second mortgage, had a perfect right to transfer its mortgage credit, without the knowledge or consent of any other mortgagee, inasmuch as whoever acquired it, would have exactly the same status as the transferor with the same rights and obligations. The fact, therefore, that the Magallanes Press Co., Inc., had consented to the transfer of the mortgage credit of J. P. Heilbronn & Co., Inc., to Jose Ma. Memije, does not constitute a fraud that an vitiate the said transfer, inasmuch as the order of preference of the mortgages has not been altered, and its allegations does not constitute a cause of action to annul the said transfer.In regard to the allegation contained in the ninth paragraph of the complaint, it is very clear that the increase made by Jose Ma. Memije in the mortgage credit acquired by him from J.P. Heilbronn & Co., Inc., and the extension made by the Magallanes Press, Inc., of the mortgage to said additional credit without the knowledge or consent of the plaintiff company, as second mortgagee, prejudices the credit of the latter, inasmuch as the security for the payment of said credit was reduced as to it, and, therefore, constitute a fraud that vitiates the contract of extension of the mortgage evidence by the deed Exhibit D, rendering it void.lawphil.netThe facts allege in paragraph 9 of the complaint are sufficient to constitute a cause of action of nullity, and the lower court did nor err in overruling the demurrer filed by the defendant Jose Ma. Memije.In regard to the second assignment of error, it appears that the defendant Jose Ma. Memije having attempted to foreclose the mortgage, by which the mortgage credit acquired by him from J. P. Heilbronn & Co., Inc., was secured, in order to recover not only the original credit but also the increase, the Belgian Catholic Missionaries Co., Inc., filed a complaint, with a petition for a writ of preliminary injunction against the sheriff, in whose hands the foreclosure of the mortgage was placed. The writ of preliminary injunction having been issued, upon the filing of a bond in the sum of P15,000, and there being no person more interested in the conservation and custody of the property covered by the mortgage than said plaintiff company, being the largest creditor, it applied and obtained from the court the possession of the same.Contrary to the contention of the appellant, this case is not one of replevin but simply a proceeding instituted by the plaintiff for the deposit of the property in litigation, upon the filing of a bond, said plaintiff, acting as a receiver by authority of the court, being the person most interested in the conservation and care of the same (sec. 174, Act No. 190; 11 C. J., 726).The lower court, therefore, did not err in authorizing the plaintiff company to take possession of the personal property in litigation upon the filing of a bond sufficient to secure the conservation or value thereof.The third assignment of error raises the question as to the preference of right between the plaintiff company and the defendant over the mortgaged property and the amount of the insurance policies covering a part thereof which was destroyed by fire.As we have seen in the statement of the pertinent facts necessary for the clear and accurate solution of the questions of law involved in the present appeal, the firm of J. P. Heilbronn & Co., Inc., had a mortgage credit against the Magallanes Press for the sum of P14,186.69, secured by a first chattel mortgage. The plaintiff company, the Belgian Catholic Missionaries Co., Inc., also had a mortgage credit for the amount of P30,500, secured by a second mortgage on the same personal property. After this second mortgage had been executed, the payment of the mortgage credit of J.P. Heilbronn & Co., Inc., became due, which credit had been reduced to the sum of P8,280,90 through partial payments, and the herein defendant-appellant Jose Ma. Memije acquired said mortgage credit and increased it by P5,895.59 of which increase P2,000 was a previous loan.There is no question but that J. P. Heilbronn & Co., Inc., at the time of the transfer of this mortgage rights to Jose Ma. Memije, had a preferential right over that of the Belgian Catholic Missionaries Co., Inc., for the remainder of the amount of the mortgage credit, that is, P8,280.90. The plaintiff company had a preferential right to the rest of the value of the mortgaged property after deducting the remaining mortgage credit of J. P. Heilbronn & Co., Inc.The increase of P5,895.59 made by the defendant Jose Ma. Memije in favor of the Magallanes Press Co., Inc., and the extension of the mortgage thereto, are not only subordinate to the mortgage credit of the plaintiff company, being subsequent in time and in registration, but said increase in the security is also void. The increase of the mortgage security becomes a new mortgage in itself, inasmuch as the original mortgage did not contain any stipulation in regard to the increase of the mortgage credit, and even if it did, said increase would take effect only from the date of the increase. A mortgage that contains a stipulation in regard to future advances in the credit will take effect only from the date the same are made and not from the date of the mortgage (11 C. J., 448; 5 R. C. L., 420-421). In accordance with the provisions of section 5 of Act No. 1508, known as the Chattle Mortgage Law, the parties to the original deeds swore that the same was mortgaged "to secure the obligations specified therein and for no other purpose." Neither the increase in question, nor the extension of the mortgage to secure the payment of the same is specified in the deed, consequently said extension is void. "Where the statute provides that the parties to a chattel mortgage must make oath that the debt is a just debt, honestly due and owing from the mortgagor to the mortgagee, it is obvious that a valid mortgage cannot be made to secure a debt to be thereafter contacted." (11 C. J., 448.)Briefly, therefore, we have the following:(a) That Jose Ma. Memije has a preferential right to the value of the chattels mortgage and the amount of the insurance policies up to the sum of P8,280.90;(b) That the plaintiff corporation, the Belgian Catholic Missionaries Co., Inc., has a right to the remainder of the value of said chattels and the insurance policies up to the amount of P30,500, after deducting the preferential credit of Jose Ma. Memije;(c) That as to the increase of P5,895.59, the right of the defendant Jose Ma. Memije is that of an ordinary creditor.In regard to the damages claimed by the defendant in his counterclaim and which is the subject-matter of his remaining assignments of error, said defendant has a right to interest at 12 per cent on the P8,280.90 the amount of the mortgage credit acquired by him from J. P. Heilbronn & Co., Inc., from February 26, 1923, the date of the acquisition until fully paid.For the foregoing reasons, the judgment appealed from is revoked and it is ordered the another be entered declaring all the mortgages overdue, and the mortgage credit of Jose Ma. Memije preferential over that of the Belgian Catholic Missionaries Co., Inc., up to the amount of P8,280.90, with interest at the rate of 12 per cent per annum from February 26, 1923, until fully paid; the mortgage credit of the Belgian Catholic Missionaries Co., Inc., for the sum of P30,500 with interest at the rate of 12 per cent per annum, from June 19, 1922, until fully paid, plus the sum of P3,000 for attorney's fees, over the additional credit of Jose Ma. Memije for P5,895.59; and ordering the foreclosure of the said mortgages by selling the mortgaged property at public auction, to the proceeds of which shall be added the amount of the insurance policies and the above-mentioned credits in the order of preference above established, without special pronouncement as to costs. So ordered.Avancea, C. J., Johnson, Street, Ostrand and Johns, JJ., concur.G.R. No. L-29295 October 22, 1928J. M. PO PAUCO,plaintiff,vs.DOLORES SIGUENZA, ET AL.,defendants.WISE & CO.,intervenor-appellant.Block, Johnston and Greenbaum for the intervenor.Roman J. Lacson for receiver-appellee National Bank.ROMUALDEZ,J.:In this case, J.M. Po Pauco obtained final judgment in his favor against Dolores Siguenza and Mariano Aguilar for the sum of P72,278.01, both parties agreeing to deduct therefrom the sum of P13,007.46 which is the net value of the sugar cane belonging to said defendants and attached by the plaintiff and manufactured by the Philippine National Bank, the receiver of the said product. By virtue of said judgment and agreement the court issued a writ of execution for the remaining sum of P59,270.55 on November 19, 1926.In another civil case before the same court, No. 6416, Wise & Co., Ltd., had on October 18, 1926 obtained judgment against the herein plaintiff J. M. Po Pauco for the sum of P10,572.80 with legal interest thereon, execution of said judgment having been ordered in those proceedings, which has not yet, even partially, been paid.On October 23, 1927, Wise & Co., Ltd., intervened in this case praying that the Philippine National Bank, the receiver of the said sum of P13,007.46, be ordered to satisfy the judgment in favor of the said petitioner Wise & Co., Ltd., against J.M. Po Pauco, out of the sum deposited with it, Po Pauco's right and interest in the judgment of this case now before us having been preliminary attached in civil case No. 6416, on August 6, 1926.Opposition was filed to said petition by the Philippine National Bank alleging that said bank has a preferential right over the surplus of the sale of the sugar delivered to it as receiver, and also that the Hibila Trading Corporation obtained judgment against the said J. M. Po Pauco, in civil case No. 3197 of the Court of First Instance of Occidental Negros, holding that the rights of the Hibila Trading Corporation over the sugar harvest of 1923-1924 and 1924-1925 of the spouses Dolores Siguenza and Mariano Aguilar in theSan Agustin Estate, are preferential over those of J. M. Po Pauco and, therefor, the latter is not at all entitled to any of the surplus remaining from the sale of said sugar; and that said Hibila Trading Corporation is an interested party which must be summoned before the motion of Wise & Co., Ltd., can be heard, which corporation must institute an ordinary action to establish whatever right it may have to the surplus of the sugar in question.1awph!l.netThe court of First Instance of Iloilo denied the motion of Wise & Co., Ltd., granting it permission to institute an action against the Philippine National Bank and the Hibila Trading Corporation in order to determine which has the better right to the net proceeds of the sale of said sugar.Wise & Co., Ltd., appeals from said ruling making several assignments of error.It should not be forgotten that the sum mentioned is in the custody of a receiver and not of a sheriff. The sheriff is a court officer of a general character who is not appointed for a certain judicial case; the sheriff is an officer who exercises or can exercise his functions within the limits of his jurisdicition. A receiver, on the other hand, is a special officer, appointed in relation to and within a certain case or action, and whose duties are limited to his sphere of action, and do not extend further than the case in which he was appointed.For this reason, while the funds in the custody of a sheriff may be within the reach of processes coming from other judicial proceedings, such is not the case with respect to those under the custody of a depositary. From which it follows that those who, as in the present case, have any claim to property or sum in the possession of a receiver, must appear in the same proceeding in which said receiver discharges his duties, and there, by motion or petition, allege and prove their claims.The order appealed from is reversed and it is ordered that this proceeding be remanded to the court of origin in order that, without the necessity of commencing a new action, the interested parties be given an opportunity to set forth and prove their alleged preferential rights over the sum in controversy.Without any special pronouncement as to costs. So ordered.Johnson, Street, Malcolm, Ostrand and Villa-Real, JJ., concur.G.R. No. L-2987 February 20, 1951ERNEST BERG,plaintiff-appellant,vs.VALENTIN TEUS,defendant-appellee.Alva J. Hill for appellant.J. Perez Cardeas for appellee.TUAZON,J.:This appeal is from an order of the Court of First Instance of Ilocos Sur dismissing the above-entitled action by reason of Executive Order No. 25, as amended by Executive Order No. 32, on moratorium.Ernest Berg brought the action against Valentin Teus to foreclose a real estate and chattel mortgage executed in November, 1944, to secure six promissory notes of the aggregate value of P80,000 and payable on demand two years after declaration of armistice between the United States and Japan. An amended or supplementary complaint was later admitted against the defendant's objection. The complaints recited that by stipulations of the parties, the mortgagor had undertaken, among other things, to insure and pay the taxes on the mortgaged properties; not to alienate, sell, lease, encumber or in any manner dispose thereof; and to keep and maintain the said properties in good order and repair; but that, it was alleged, he (defendant) had failed to keep taxes fully paid; had made material alterations on the premises, and had sold and conveyed them to Central Azucarera del Norte. It was further alleged that the mortgagor had agreed that should he fail to perform any of his obligations as stipulated, "the mortgage shall be deemed to be automatically foreclosed and the mortgagee may forthwith proceed to foreclose this mortgage either extrajudicially, even after the death of the mortgagor, in pursuance of the provisions of Act No. 3135, as amended;" and on the basis of this agreement it was prayed that the mortgage be declared automatically foreclosed and the plaintiff entitled to immediate possession of the properties in question. In a separate motion Berg's attorney also asked for the appointment of a receiver.Counsel for the defendant having moved for the dismissal of the complaint on the grounds that plaintiff's cause of action had not accrued by reason of the executive orders herein before cited, and having opposed the motion for receivership, Judge Zoilo Hilario entered an order holding that as to the collection of the six notes the suit had been prematurely brought, but setting the cause for trial on the merits because, according to His Honor, the reasons alleged in the motion to dismiss were not "indubitable" with reference to the appointment of a receiver sought by the plaintiff. As we understand this order, its result was that the moratorium ought not to interfere with the plaintiff's motion for appointment of receiver.However that may be, the plaintiff subsequently filed a "complete complaint" in which the original complaint and the amended or supplementary complaint were consolidated. This "complete complaint", which was admitted without objection, apparently was supposed to have restored the case to its original status. Consequently the attorney for the defendant filed a new motion to dismiss; the Judge Luis Ortega, who had replaced Judge Hilario, ignoring the latter's order entered the order now on appeal by which the entire action was quashed on the theory advanced in the motion to dismiss. The new order was silent on both the application for receivership and the prayer that the plaintiff be adjudged authorized by the terms of the mortgage to foreclose it extrajudicially and seize the properties.Judge Ortega opined that Executive Orders Nos. 25 and 32 were still in force unaffected by Republic Act No. 342 as to debts contracted during the Japanese occupation. Plaintiff contended that those executive orders had passed out of existence by the disappearance of the emergency contemplated thereby, and the contention is reiterated in his instance. But from the view we take of the case, decision on this question can be deferred. For the purpose of the present decision, we will assume that Executive Orders Nos. 25 and 32 are still in full force and effect. This we do to pave the way for and hasten action on the petition to put the premises and chattels involved in the hands of a receiver, petition which appears of urgent character. The constitutionality of Executive Orders Nos. 25 and 32 and Republic Act No. 342 and allied issues can wait. These issues are delicate and would require prolonged study and deliberation. Besides, there is a pending bill in Congress repealing those executive orders and law.InMedina vs. Santos(78 Phil., 464; 44 Off. Gaz., [No. 10] 3811), it was held that an action for the recovery of a truck with prayer for payment of its value in case the truck was not returned, could proceed notwithstanding the moratorium law. The court observed that the indemnity sought was a subsidiary liability and would not come into being unless and until decision was rendered against the defendant for such payment.InMoya vs. Barton(79 Phil., 14; 45 Off Gaz., [No. 1] 237), the court said that when the cause of action was in part covered by the moratorium and in part not, it was not unjust to render judgment for the payment of the entire obligation with the understanding that execution with respect to the amounts that had fallen due before March 10, 1945, would be stayed.In the case ofAlejo vs. Gomez(83 Phil., 969), the court ruled that suit for unlawful detainer and rents in arrears was not affected by the moratorium, the recovery of the unpaid rentals, it was said, being accessory to the main action.And, lastly, inRealty Investments Inc. et al. vs. Villanueva et al., (84 Phil., 842; 47. Off. Gaz., 1844), the court, citing the above-mentioned cases decided that the court should go ahead with the trial of the action on the merits without prejudice to the right of the defendant to arrest the execution should one for payment of money be issued. In that case plaintiff, which had sold to the defendant a piece of land on installment basis, was demanding payment of the installments still unpaid, (installments which the defendant claimed to have fully settled with the Japanese alien property custodian) or, in default, restoration of the ownership and possession of the property. In revoking the lower court's order of dismissal, we pointed out that theDe Vencia vs. General, (78 Phil., 780; 44 Off. Gaz., 4912), andMa-ao Sugar Central Co., Inc. vs. Barrios, (79 Phil., 666; 45 Off. Gaz., 2444), were distinguishable fromMoya vs. Barton,Medina vs. Santos, andAlejo vs. Gomez, in that the suits in the first two named cases had for theirsole objectthe enforcement of a monetary obligation.The case at bar falls within the relaxed rule of this court's later decisions. The alleged violations of the conditions of the mortgage contract, if true, make it necessary if not imperative, for the protection of the interest of the plaintiff, that the mortgaged properties be placed in the custody of the court. The fact that the appointment of a receiver, as the defendant emphasizes, is an ancillary remedy is precisely one powerful reason why the case should not be dismissed. Because receivership is an auxiliary remedy dismissal of the main action would eliminate the only basis for the appointment or receiver and thus completely bar the door to any relief from mischiefs.Under the circumstances of the case, the least that should have been done, if that were feasible as a matter of procedure, was to adopt the steps which Judge Hilario had proposed to do. Judge Hilario evidently saw the grave injustice to the plaintiff and the irreparable injury to which his rights would be exposed if an indefinite suspension of the entire proceeding were decreed.In suspending the right of creditor to enforce his right the President and Congress had no idea of depriving him of all means of preventing the destruction or alienation of the security for the debt, destruction which would virtually write off, in some cases, the whole credit. If that were the intention, it is doubtful if the orders and the law invoked could stand the test of constitutionality.The order appealed from will therefore be reversed and the case remanded to the court below for further proceeding according to the tenor of this decision. We leave the way open to the defendant to ask for the arrest or stay of execution in the event of an adverse monetary judgment, and for the plaintiff to impugn anew, if necessary, the constitutionality of Executive Orders Nos. 25 and 32 and Republic Act No. 342 and/or their being still in force. Costs of this appeal will be charged against the appellee.Moran, C. J., Paras, Feria, Pablo, Bengzon, Padilla, Montemayor, Reyes, Jugo and Bautista Angelo, JJ.,concur.JULIO A. VIVARES andG.R. No. 155408MILA G. IGNALING,Petitioners,Present:QUISUMBING,J., Chairperson,- versus -CARPIO,CARPIO MORALES,TINGA, andVELASCO, JR.,JJ.ENGR. JOSE J. REYES,Promulgated:Respondent.February 13, 2008x-----------------------------------------------------------------------------------------xD E C I S I O NVELASCO, JR.,J.:The CaseThe kernel dispute in this petition under Rule 45 is the legality of the May 22, 2001 Resolution[1]of the Camiguin Regional Trial Court (RTC), Branch 28 in Civil Case No. 517, which placed the estate of Severino Reyes under receivership.The Court of Appeals (CA) saw it differently in CA-G.R. SP No. 67492its June 18, 2002 Decision[2]recalled the RTC directive on the appointment of the receiver, prompting Julio Vivares and Mila Ignaling to file the petition at bar to convince the Court to reinstate the receivership.The FactsSeverino Reyes was the father of respondent Jose Reyes and Torcuato Reyes.Upon the death of Severino, respondent and Torcuato came upon their inheritance consisting of several properties.They had an oral partition of the properties and separately appropriated to themselves said properties.On May 12, 1992, Torcuato died with a last will and testament executed on January 3, 1992.InReyes v. Court of Appeals,[3]we affirmed the November 29, 1995 CA Decision, admitting the will for probate.Petitioner Vivares was the designated executor of Torcuatos last will and testament, while petitioner Ignaling was declared a lawful heir of Torcuato.Believing that Torcuato did not receive his full share in the estate of Severino, petitioners instituted an action forPartition and Recovery of Real Estatebefore the Camiguin RTC, Branch 28 entitledJulio A. Vivares, as executor of the estate of Torcuato J. Reyes and Mila R. Ignaling, as heir v. Engr. Jose J. Reyesand docketed as Civil Case No. 517.With the approval of the trial court, the parties agreed that properties from the estate of Severino, which were already transferred in the names of respondent and Torcuato prior to the latters death on May 12, 1992, shall be excluded from litigation.In short, what was being contested were the properties that were still in the name of Severino.On November 24, 1997, for the purpose of collating the common properties that were disputed, the trial court directed the formation of a three-man commission with due representation from both parties, and the third member, appointed by the trial court, shall act as chairperson.The disputed properties were then annotated with notices oflis pendensupon the instance of petitioners.On March 15, 2000, petitioners filed a Motion to Place Properties in Litigation under Receivership[4]before the trial court alleging that to their prejudice respondent had, without prior court approval and without petitioners knowledge, sold to third parties and transferred in his own name several common properties. Petitioners also averred that respondent fraudulently antedated, prior to May 12, 1992, some conveyances and transfers to make it appear that these were no longer part of the estate of Severino under litigation.They further claimed that respondent was and is in possession of the common properties in the estate of Severino, and exclusively enjoying the fruits and income of said properties and without rendering an accounting on them and turning over the share pertaining to Torcuato.Thus, petitioners prayed to place the entire disputed estate of Severino under receivership.They nominated a certain Lope Salantin to be appointed as receiver.On March 23, 2000, respondent filed his Opposition to Place the Estate of Severino Reyes under Receivership,[5]denying that he had fraudulently transferred any property of the estate of Severino and asserting that any transfer in his name of said properties was a result of the oral partition between him and Torcuato that enabled the latter as well to transfer several common properties in his own name.On May 24, 2000, petitioners filed their Offer of Exhibits in support of their motion for receivership.On the same date, the trial court issued an Order[6]granting petitioners motion and appointed Salantin as receiver conditioned on the filing of a PhP 50,000 bond.Respondent filed a motion for reconsideration, contending that the appointment of a receiver was unduly precipitate considering that he was not represented by counsel and thus was deprived of due process.On August 4, 2000, the trial court allowed respondent to present his evidence to contest petitioners grounds for the appointment of a receiver, and the trial court set the reception of respondents evidence for September 4, 2000.However, on August 24, 2000, respondent filed a motion for postponement of the September 4, 2000 scheduled hearing on the ground that he was in theUnited Statesas early as July 23, 2000 for medical examination.On September 5, 2000, the trial court denied respondents motion for postponement and reinstated its May 24, 2000 Order.On September 19, 2000, respondent filed a Manifestation with Motion to Discharge Receiver, reiterating the circumstances which prevented him from attending the September 4, 2000 hearing and praying for the discharge of the receiver upon the filing of a counterbond in an amount to be fixed by the court in accordance with Section 3, Rule 59 of the 1997 Revised Rules on Civil Procedure.On October 10, 2000, petitioners filed their undated Opposition to Motion to Discharge Receiver.Subsequently, respondent filed a Motion to Cancel Notice ofLis Pendenswhich was annotated on Tax Declaration (TD) No. 112 covering Lot No. 33 allegedly belonging exclusively to him.Respondent asserted in the motion that an adjacent property to Lot No. 33, particularly a portion of Lot No. 35, which is owned by a certain Elena Unchuan, was erroneously included in Lot No. 33 and, consequently, was subjected to the notice oflis pendens.Petitioners filed their Opposition to the Motion to CancelLis Pendens.Consequently, on May 22, 2001, the trial court issued a Resolution, denying respondents motions to discharge receiver and cancel the notice oflis pendensin TD No. 112.Respondent seasonably filed a partial motion for reconsideration of the May 22, 2001 Resolution, attaching copies of deeds of sale executed by Torcuato covering several common properties of the estate of Severino to prove that he and Torcuato had indeed made an oral partition of the estate of their father, Severino, and thus allowing him and Torcuato to convey their respective shares in the estate of Severino to third persons.On October 19, 2001, the trial court heard respondents motion for partial reconsideration, and on the same date issued an Order denying the motion for partial reconsideration on the ground that respondent failed to raise new matters in the motion but merely reiterated the arguments raised in previous pleadings.Aggrieved, respondent filed a Petition for Certiorari before the CA, assailing the May 22, 2001 Resolution and October 19, 2001 Order of the RTC.The Ruling of the Court of AppealsOn June 18, 2002, the CA rendered the assailed Decision, sustaining respondents position and granted relief, thus:WHEREFORE, premises considered, the Petition is herebyGRANTED.The Resolution dated 22 May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is hereby reversed and set aside.The court-appointed receiver, Lope Salantin, is discharged upon the posting by petitioner of a counterbond in the amount of P100,000.00.The notice oflis pendensin Tax Declaration 112, in so far as it covers the property of Elena Unchuan, is cancelled.Let this case be remanded to the courta quofor further proceedings.[7]In reversing the trial court, the CA reasoned that the courta quofailed to observe the well-settled rule that allows the grant of the harsh judicial remedy of receivership only in extreme cases when there is an imperative necessity for it.The CA thus held that it is proper that the appointed receiver be discharged on the filing of a counterbond pursuant to Sec. 3, Rule 59 of the 1997 Revised Rules on Civil Procedure.Moreover, the CA ratiocinated that respondent has adequately demonstrated that the appointment of the receiver has no sufficient basis, and further held that the rights of petitioners over the properties in litigation are doubly protected through the notices oflis pendensannotated on the titles of the subject properties.In fine, the appellate court pointed out that the appointment of a receiver is a delicate one, requiring the exercise of discretion, and not an absolute right of a party but subject to the attendant facts of each case.The CA found that the trial court abused its discretion in appointing the receiver and in denying the cancellation of the notice oflis pendenson TD No. 112, insofar as it pertains to the portion owned byUnchuan.Aggrieved, petitioners in turn interposed a Motion for Reconsideration that was denied through the assailed September 24, 2002 CA Resolution.Thus, this petition for review on certiorari is before us, presenting the following issues for consideration:IWHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS PENDENS PRECLUDES THE APPOINTMENT OF A RECEIVER WHEN THERE IS A NEED TO SAFEGUARD THE PROPERTIES IN LITIGATION.IIWHETHER OR NOT A DULY APPOINTED RECEIVER OF PROPERTIES IN LITIGATION SHOULD BE DISCHARGED SIMPLY BECAUSE THE ADVERSE PARTY OFFERS TO POST A COUNTERBOND.IIIWHETHER OR NOT THE CANCELLATION OF A NOTICE OF LIS PENDENS ANNOTATED ON TAX DECLARATION NO. 112 IS CONTRARY TO LAW.[8]The Courts RulingThe petition must be denied.Being closely related, we discuss the first and second issues together.Receivership not justifiedWe sustain the CA ruling that the trial court acted arbitrarily in granting the petition for appointment of a receiver as there was no sufficient cause or reason to justify placing the disputed properties under receivership.First, petitioners asseverate that respondent alienated several common properties of Severino without court approval and without their knowledge and consent.The fraudulent transfers, they claim, were antedated prior to May 12, 1992, the date of Torcuatos death, to make it appear that these properties no longer form part of the assets of the estate under litigation in Civil Case No. 517.Petitioners position is bereft of any factual mooring.Petitioners miserably failed to adduce clear, convincing, and hard evidence to show the alleged fraud in the transfers and the antedating of said transfers.The fact that the transfers were dated prior to the demise of Torcuato on May 12, 1992 does not necessarily mean the transfers were attended by fraud.He who alleges fraud has the burden to prove it.Moreover, respondent has adduced documentary proof that Torcuato himself similarly conveyed several lots in the estate of Severino based on the oral partition between the siblings.To lend credence to the transfers executed by Torcuato but distrust to those made by respondent would be highly inequitable as correctly opined by the courta quo.Indeed, receivership is a harsh remedy to be granted only in extreme situations.As early as 1914, the Court already enunciated the doctrinal pronouncement inVelasco & Co. v. Gochuico & Co.that courts must use utmost circumspection in allowing receivership, thus:The power to appoint a receiver is a delicate one and should be exercised with extreme caution and only under circumstances requiring summary relief or where the court is satisfied that there is imminent danger of loss, lest the injury thereby caused be far greater than the injury sought to be averted.The court should consider the consequences to all of the parties and the power should not be exercised when it is likely to produce irreparable injustice or injury to private rights or the facts demonstrate that the appointment will injure the interests of others whose rights are entitled to as much consideration from the court as those of the complainant.[9]Petitioners cannot now impugn the oral partition entered into by Torcuato and respondent and hence cannot also assail the transfers made by respondent of the lots which were subject of said agreement, considering that Torcuato also sold properties based on said verbal arrangement.Indeed, the parties agreed that the civil action does not encompass the properties covered by the oral partition.In this factual setting, petitioners cannot convince the Court that the alleged fraudulent transfers of the lots made by respondent, which purportedly form part of his share in Severinos estate based on the partition, can provide a strong basis to grant the receivership.Second, petitioner is willing to post a counterbond in the amount to be fixed by the court based on Sec. 3, Rule 59 of the 1997 Rules of Civil Procedure, which reads:Sec. 3.Denial of application or discharge of receiver.The application may be denied, or the receiver discharged, when the adverse party files a bond executed to the applicant, in an amount to be fixed by the court, to the effect that such party will pay the applicant all damages he may suffer by reason of the acts, omissions, or other matter specified in the application as ground for such appointment.The receiver may also be discharged if it is shown that his appointment was obtained without sufficient cause.Anchored on this rule, the trial court should have dispensed with the services of the receiver, more so considering that the alleged fraud put forward to justify the receivership was not at all established.Petitioners advance the issue that the receivership should not be recalled simply because the adverse party offers to post a counterbond.At the outset, we find that this issue was not raised before the CA and therefore proscribed by the doctrine that an issue raised for the first time on appeal and not timely raised in the proceedings in the lower court is barred by estoppel.[10]Even if we entertain the issue, the contention is nevertheless devoid of merit.The assailed CA decision supported the discharge of the receiver with several reasons including the posting of the counterbond.While the CA made a statement that the trial court should have discharged the appointed receiver on the basis of the proposed counterbond, such opinion does not jibe with the import of Sec. 3, Rule 59.The rule states that the applicationmaybe denied or the receiver discharged.In statutory construction, the word may has always been construed as permissive.If the intent is to make it mandatory or ministerial for the trial court to order the recall of the receiver upon the offer to post a counterbond, then the court should have used the word shall.Thus, the trial court has to consider the posting of the counterbond in addition to other reasons presented by the offeror why the receivership has to be set aside.Third, since a notice oflis pendenshas been annotated on the titles of the disputed properties, the rights of petitioners are amply safeguarded and preserved since there can be no risk of losing the property or any part of it as a result of any conveyance of the land or any encumbrance that may be made thereon posterior to the filing of the notice oflis pendens.[11]Once the annotation is made, any subsequent conveyance of the lot by the respondent would be subject to the outcome of the litigation since the fact that the properties are undercustodia legisis made known to all and sundry by operation of law.Hence, there is no need for a receiver to look after the disputed properties.On the issue oflis pendens, petitioners argue that the mere fact that a notice oflis pendenswas annotated on the titles of the disputed properties does not preclude the appointment of a receiver.It is true that the notice alone will not preclude the transfer of the propertypendente lite, for the title to be issued to the transferee will merely carry the annotation that the lot is under litigation.Hence, the notice oflis pendens, by itself, may not be the most convenient and feasible means of preserving or administering the property in litigation.However, the situation is different in the case at bar.A counterbond will also be posted by the respondent to answer for all damages petitioners may suffer by reason of any transfer of the disputed properties in the future.As a matter of fact, petitioners can also ask for the issuance of an injunctive writ to foreclose any transfer, mortgage, or encumbrance on the disputed properties.These considerations, plus the finding that the appointment of the receiver was without sufficient cause, have demonstrated the vulnerability of petitioners postulation.Fourth, it is undisputed that respondent has actual possession over some of the disputed properties which are entitled to protection.Between the possessor of a subject property and the party asserting contrary rights to the properties, the former is accorded better rights.In litigation, except for exceptional and extreme cases, the possessor ought not to be deprived of possession over subject property.Article 539 of the New Civil Code provides that every possessor has a right to be respected in his possession; and should he be disturbed therein he shall be protected in or restored to said possession by the means established by the laws and the Rules of Court.InDescallar v. Court of Appeals, we ruled that the appointment of a receiver is not proper where the rights of the parties, one of whom is in possession of the property, are still to be determined by the trial court.[12]In view of the foregoing reasons, we uphold the CA ruling that the grant of the receivership was without sufficient justification nor strong basis.Anent the third issue that the cancellation of the notice oflis pendenson TD No. 112 is irregular as Lot No. 33 is one of the disputed properties in the partition case, petitioners position is correct.The CA made a factual finding that the property of Unchuan was erroneously included in Lot No. 33, one of the disputed properties in Civil Case No. 517.It then ruled that the annotation oflis pendensshould be lifted.This ruling is bereft of factual basis.The determination whether the property of Unchuan is a part of Lot No. 33 and whether that portion really belongs to Unchuan are matters to be determined by the trial court.Consequently, the notice oflis pendenson TD No. 112 stays until the final ruling on said issues is made.WHEREFORE, the petition isPARTLY GRANTED.The June 18, 2002 CA Decision in CA-G.R. SP No. 67492 isAFFIRMEDwithMODIFICATIONinsofar as it ordered the cancellation of the notice oflis pendensin TD No. 112.As thus modified, the appealed CA Decision should read as follows:WHEREFORE, premises considered, the Petition is herebyPARTLY GRANTED.The Resolution dated 22 May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is hereby reversed and set aside.The court-appointed receiver, Lope Salantin, is discharged upon the posting by petitioner of a counterbond in the amount of PhP 100,000.The notice oflis pendensin TD No. 112, including the portion allegedly belonging to Elena Unchuan, remains valid and effective.Let this case be remanded to the courta quofor further proceedings in Civil Case No. 517.No costs.SO ORDERED.EVELINA G. CHAVEZ andG.R. No. 174356AIDA CHAVEZ-DELES,Petitioners,Present:Carpio,J., Chairperson,- versus -Brion,Del Castillo,Abad, andPerez,JJ.COURT OF APPEALS andATTY. FIDELA Y. VARGAS,Promulgated:Respondents.January 20, 2010x --------------------------------------------------------------------------------------- xDECISIONABAD,J.:This case is about the propriety of the Court of Appeals (CA), which hears the case on appeal, placing the property in dispute under receivership upon a claim that the defendant has been remiss in making an accounting to the plaintiff of the fruits of such property.The Facts and the CaseRespondent Fidela Y. Vargas owned a five-hectare mixed coconut land and rice fields in Sorsogon.Petitioner Evelina G. Chavez had been staying in a remote portion of the land with her family, planting coconut seedlings on the land and supervising the harvest of coconut andpalay.Fidela and Evelina agreed to divide the gross sales of all products from the land between themselves.Since Fidela was busy with her law practice, Evelina undertook to hold in trust for Fidela her half of the profits.But Fidela claimed that Evelina had failed to remit her share of the profits and, despite demand to turn over the administration of the property to Fidela, had refused to do so.Consequently, Fidela filed a complaint against Evelina and her daughter, Aida C. Deles, who was assisting her mother, for recovery of possession, rent, and damages with prayer for the immediate appointment of a receiver before the Regional Trial Court (RTC) of Bulan, Sorsogon.[1]In their answer, Evelina and Aida claimed that the RTC did not have jurisdiction over the subject matter of the case since it actually involved an agrarian dispute.After hearing, the RTC dismissed the complaint for lack of jurisdiction based on Fidelas admission that Evelina and Aida were tenants who helped plant coconut seedlings on the land and supervised the harvest of coconut andpalay.As tenants, the defendants also shared in the gross sales of the harvest.The court threw out Fidelas claim that, since Evelina and her family received the land already planted with fruit-bearing trees, they could not be regarded as tenants.Cultivation, said the court, included the tending and caring of the trees.The court also regarded as relevant Fidelas pending application for a five-hectare retention and Evelinas pending protest relative to her three-hectare beneficiary share.[2]Dissatisfied, Fidela appealed to the CA.She also filed with that court a motion for the appointment of a receiver.On April 12, 2006 the CA granted the motion and ordained receivership of the land, noting that there appeared to be a need to preserve the property and its fruits in light of Fidelas allegation that Evelina and Aida failed to account for her share of such fruits.[3]Parenthetically, Fidela also filed three estafa cases with the RTC of Olongapo City and a complaint for dispossession with the Department of Agrarian Reform Adjudication Board (DARAB) against Evelina and Aida.In all these cases, Fidela asked for the immediate appointment of a receiver for the property.The Issues PresentedPetitioners present the following issues:1.Whether or not respondent Fidela is guilty of forum shopping considering that she had earlier filed identical applications for receivership over the subject properties in the criminal cases she filed with the RTC of Olongapo City against petitioners Evelina and Aida and in the administrative case that she filed against them before the DARAB; and2.Whether or not the CA erred in granting respondent Fidelas application for receivership.The Courts RulingOne.By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the same cause, trusting that one or the other tribunal would favorably dispose of the matter.[4]The elements of forum shopping are the same as inlitispendentiawhere the final judgment in one case will amount toresjudicatain the other.The elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount toresjudicatain the action under consideration.[5]Here, however, the various suits Fidela initiated against Evelina and Aida involved different causes of action and sought different reliefs.The present civil actionthat she filed with the RTC sought to recover possession of the property based on Evelina and Aidas failure to account for its fruits. The estafa cases she filed with the RTC accused the two of misappropriating and converting her share in the harvests for their own benefit.Her complaint for dispossession under Republic Act 8048 with the DARAB sought to dispossess the two for allegedly cutting coconut trees without the prior authority of Fidela or of the Philippine Coconut Authority.The above cases are similar only in that they involved the same parties and Fidela sought the placing of the properties under receivership in all of them.But receivership is not an action.It is but an auxiliary remedy, a mere incident of the suit to help achieve its purpose.Consequently, it cannot be said that the grant of receivership in one case will amount toresjudicataon the merits of the other cases.The grant or denial of this provisional remedy will still depend on the need for it in the particular action.Two.In any event, we hold that the CA erred in granting receivership over the property in dispute in this case.For one thing, a petition for receivership under Section 1(b), Rule 59 of the Rules of Civil Procedure requires that the property or fund subject of the action is in danger of being lost, removed, or materially injured, necessitating its protection or preservation.Its object is the prevention of imminent danger to the property.If the action does not require such protection or preservation, the remedy is not receivership.[6]Here Fidelas main gripe is that Evelina and Aida deprived her of her share of the lands produce.She does not claim that the land or its productive capacity would disappear or be wasted if not entrusted to a receiver.Nor does Fidela claim that the land has been materially injured, necessitating its protection and preservation.Because receivership is a harsh remedy that can be granted only in extreme situations,[7]Fidela must prove a clear right to its issuance.But she has not.Indeed, in none of the other cases she filed against Evelina and Aida has that remedy been granted her.[8]Besides, the RTC dismissed Fidelas action for lack of jurisdiction over the case, holding that the issues it raised properly belong to the DARAB.The case before the CA is but an offshoot of that RTC case.Given that the RTC has found that it had no jurisdiction over the case, it would seem more prudent for the CA to first provisionally determine that the RTC had jurisdiction before granting receivership which is but an incident of the main action.WHEREFORE,the CourtGRANTSthe petition.The Resolutions dated April 12, 2006 and July 7, 2006 of the Court of Appeals in CA-G.R. CV 85552, areREVERSEDandSET ASIDE.The receivership isLIFTEDand the Court of Appeals is directed to resolve CA-G.R. CV 85552 with utmost dispatch.SO ORDERED.G.R. No. 106473 July 12, 1993ANTONIETTA O. DESCALLAR,petitioner,vs.THE HON. COURT OF APPEALS and CAMILO F. BORROMEO,respondents.Gilberto C. Alfafara for petitioner.Bernadito A. Florido for private respondent.GRIO-AQUINO,J.:Assailed in this petition for review oncertiorariis the decision dated July 29, 1992 of the Court of Appeals in CA-G.R. SP No. 27977, affirming the orders dated March 17, 1992 and April 27, 1992 of the trial court in Civil Case No. MAN-1148, granting respondent's petition for receivership and denying petitioner's motion for reconsideration thereof.On August 9, 1991, respondent Camilo Borromeo, a realtor, filed against petitioner a civil complaint for the recovery of three (3) parcels of land and the house built thereon in the possession of the petitioner and registered in her name under Transfer Certificates of Title Nos. 24790, 24791 and 24792 of the Registry of Deeds for the City of Mandaue. The case was docketed as Civil Case No. MAN-1148 of the Regional Trial Court, Branch 28, Mandaue City.In his complaint, Borromeo alleged that he purchased the property on July 11, 1991 from Wilhelm Jambrich, an Austrian national and former lover of the petitioner for many years until he deserted her in 1991 for the favors of another woman. Based on the deed of sale which the Austrian made in his favor, Borromeo filed an action to recover the ownership and possession of the house and lots from Descallar and asked for the issuance of new transfer certificates of title in his name.In her answer to the complaint, Descallar alleged that the property belongs to her as the registered owner thereof; that Borromeo's vendor, Wilhelm Jambrich, is an Austrian, hence, not qualified to acquire or own real property in the Philippines. He has no title, right or interest whatsoever in the property which he may transfer to Borromeo.On March 5, 1992, Borromeo asked the trial court to appoint a receiver for the property during the pendency of the case. Despite the petitioner's opposition, Judge Mercedes Golo-Dadole granted the application for receivership and appointed her clerk of court as receiver with a bond of P250,000.00.Petitioner filed a motion for reconsideration of the court's order, but it was denied.Petitioner sought relief in the Court of Appeals by a petition forcertiorari(CA-G.R. SP No. 27977 "Antonietta O. Descallar vs. Hon. Mercedes G. Dadole, as Judge, RTC of Mandaue City, Branch 28, and Camilo F. Borromeo").On July 29, 1992, the Court of Appeals dismissed the petition forcertiorari.In due time, she appealed the Appellate Court's decision to this Court by a petition forcertiorariunder Rule 45 of the Rules of Court.In a nutshell, the issue in this appeal is whether the trial court gravely abused its discretion in appointing a receiver for real property registered in the name of the petitioner in order to transfer its possession from the petitioner to the court-appointed receiver. The answer to that question is yes.The Court is amazed that the trial court and the Court of Appeals appear to have given no importance to the fact that the petitioner herein, besides being the actual possessor of the disputed property, is also the registered owner thereof, as evidenced by TCTs Nos. 24790, 24791, and 24792 issued in her name by the Register of Deeds of Mandaue City on December 3, 1987. Her title and possession cannot be defeated by mere verbal allegations that although she appears in the deed of sale as vendee of the property, it was her Austrian lover, Jambrich, who paid the price of the sale of the property (Sinoan vs. Sorogan, 136 SCRA 407). Her Torrens certificates of title are indefeasible or incontrovertible (Sec. 32, P.D. 1529).Even if it were true that an impecunious former waitress, like Descallar, did not have the means to purchase the property, and that it was her Austrian lover who provided her with the money to pay for it, that circumstance did not make her any less the owner, since the sale was made to her, not to the open-handed alien who was, and still is, disqualified under our laws to own real property in this country (Sec. 7, Art. XII, 1987 Constitution). The deed of sale was duly registered in the Registry of Deeds and new titles were issued in her name. The source of the purchase money is immaterial for there is no allegation, nor proof, that she bought the property as trustee or dummy for the monied Austrian, and not for her own benefit and enjoyment.There is no law which declares null and void a sale where the vendee to whom the title of the thing sold is transferred or conveyed, paid the price with money obtained from a third person. If that were so, a bank would be the owner of whatever is purchased with funds borrowed from it by the vendee. The holding of the trial court and the Court of Appeals that Jambrich, notwithstanding his legal incapacity to acquire real property in the Philippines, is the owner of the house and lot which his erstwhile mistress, Antonietta, purchased with money she obtained from him, is a legal heresy.In view of the above circumstances, we find the order of receivership tainted with grave abuse of discretion. The appointment of a receiver is not proper where the rights of the parties (one of whom is in possession of the property), are still to be determined by the trial court.Relief by way of receivership is equitable in nature, and a court of equity will not ordinarily appoint a receiver where the rights of the parties depend on the determination of adverse claims of legal title to real property and one party is in possession. (Calo, et al. vs. Roldan, 76 Phil., 445).Only when the property is in danger of being materially injured or lost, as by the prospective foreclosure of a mortgage thereon for non-payment of the mortgage loans despite the considerable income derived from the property, or if portions thereof are being occupied by third persons claiming adverse title thereto, may the appointment of a receiver be justified (Motoomul vs. Arrieta, 8 SCRA 172).In this case, there is no showing that grave or irremediable damage may result to respondent Borromeo unless a receiver is appointed. The property in question is real property, hence, it is neither perishable or consummable. Even though it is mortgaged to a third person, there is no evidence that payment of the mortgage obligation is being neglected. In any event, the private respondent's rights and interests, may be adequately protected during the pendency of the case by causing his adverse claim to be annotated on the petitioner's certificates of title.Another flaw in the order of receivership is that the person whom the trial judge appointed as receiver is her own clerk of court. This practice has been frowned upon by this Court:The respondent judge committed grave abuse of discretion in connection with the appointment of a receiver. . . . The instant case is similar toParanete vs. Tan, 87 Phil. 678 (1950) so that what was there said can well apply to the actuations of the respondent judge. . . . "We hold that the respondent judge has acted in excess of his jurisdiction when he issued the order above adverted to. That order, in effect, made the clerk of court a sort of a receiver charged with the duty of receiving the proceeds of sale and the harvest of every year during the pendency of the case with the disadvantage that the clerk of court has not filed any bond to guarantee the faithful discharge of his duties as depositary; and considering thatin actions involving title real property, the appointment of a receiver cannot be entertained because its effect would be to take the property out of the possession of the defendant, except in extreme cases when there is clear proof of its necessity to save the plaintiff from grave and irremediable loss of damage, it is evident that the action of the respondent judge is unwarranted and unfair to the defendants. (Mendoza vs. Arellano, 36 Phil. 59; Agonoy vs. Ruiz, 11 Phil. 204; Aquino vs. Angeles David, 77 Phil. 1087; Ylarde vs. Enriquez, 78 Phil. 527; Arcega vs. Pecson, 44 Off. Gaz., [No. 12], 4884, 78 Phil. 743; De la Cruz vs. Guinto, 45 Off. Gaz. pp. 1309, 1311; 79 Phil. 304). (Abrigo vs. Kayanan, 121 SCRA 20).During the pendency of this appeal, Judge Dadole rendered a decision in Civil Case No. MAN-1148 upholding Borromeo's claim to Descallar's property, annulling the latter's TCTs Nos. 24790, 24791 and 24792 and ordering the Register of Deeds of Mandaue City to issue new ones in the name of Borromeo. This circumstance does not retroactively validate the receivership until the decision (presumably now pending appeal) shall have attained finality.WHEREFORE, finding grave abuse of discretion in the order of receiver which the respondent Court of Appeals affirmed in its decision of July 29, 1992 in CA-G.R. SP No. 27977, the petition forcertiorariis hereby GRANTED and the decision of the appellate court, as well as the order dated March 17, 1992 of the Regional Trial Court of Mandaue City, Branch 28, in Civil Case No. MAN-1148, are hereby ANNULLED and SET ASIDE. Costs against the private respondent.SO ORDERED.Cruz, Bellosillo and Quiason, JJ., concur.Making Enterprises, Inc. v. Marfori, G.R. No. 152239, 17 August 2011Before us is a petition for review on certiorari assailingthe July 24, 2000 Decision[1]of the Court of Appeals (CA) in CA-G.R. SP No. 43076.The CA had ordered the issuance of writs of certiorari and prohibition permanently enjoining the prosecution of Jose Marfori in Criminal Case Nos. 170660 to 170676 before the Metropolitan Trial Court (MeTC) of Caloocan City, and ordered the appointment of a receiver in Civil Case No. 94-70092, pending before the Regional Trial Court (RTC) of Manila. Likewise assailed is the appellate courts Resolution[2]dated February 12, 2002, denying petitioners motion for reconsideration.The antecedent facts follow:On June 4, 1984, Jose F. Marfori acquired a five-storey commercial building, known as the Marsman Building, from the Development Bank of the Philippines.As the land on which the building stood was owned by the Philippine Ports Authority (PPA), Marfori entered into a contract of lease of the said lot with the PPA.The contract was for a period of twenty-five (25) years, renewable for a similar period, and was subject to the condition that upon the expiration of lease, the building and all other improvements found on the leased premises shall become the PPAs sole property.Marfori then incurred huge expenses for the rehabilitation of the building and leased some portions of the building to the PPA.Thereafter, on April 10, 1987, Marfori executed adacion en pagoand assignment of rights transferring the ownership of the Marsman Building to Making Enterprises, Inc. (Making), on the condition that Making would assume all of Marforis obligations.[3]Making was represented by its General Manager, Cristina Lee, and Executive Vice-President, Angelita Ma. Tamano, in the said transaction.Marforis wife, Emerenciana, alleged that she did not consent to the transfer of the Marsman Building to Making.She claimed that the building is part of their conjugal property as it was acquired during their marriage.[4]On April 12, 1994, shefiled with the RTC of Manila a complaint against Making, the spouses Joaquin and Angelita Tamano, the spouses Lester and Cristina Lee, and the PPA for Recovery of Ownership, Annulment of Contract with Damages, Receivership, Accounting and Preliminary Injunction with Prayer for Restraining Order.[5]She sought, among others, to annul thedacion en pagoand assignment of rights and prayed for the appointment of a receiver to preserve the rentals of the building.She also prayed for the issuance of a writ of preliminary injunction to enjoin the PPA from paying its rentals to Making and from approving the transfer of the Marsman Building.In an Order[6]dated October 18, 1995, Judge Catalino Castaeda, Jr. of the RTC, Branch 17, of Manila denied the prayer for the issuance of a writ of preliminary injunction and the application for receivership.The RTC noted that in 1987, Emerencianas complaint for the same cause of action was dismissed by the RTC, Branch 51, of Manila for improper venue.[7]The RTC was not convinced that she would indeed suffer grave injustice and irreparable damages if a writ of injunction enjoining the PPA from paying rentals to Making and approving the transfer of the Marsman Building is not issued considering that she re-filed her complaint only on April 12, 1994, or more than six years after her first complaint was dismissed.As regards her prayer for the appointment of a receiver, the RTC held that the appointment of a receiver is an equitable relief and a court of equity will not ordinarily appoint a receiver where the rights of the parties depend on the determination of adverse claims of legal title to real property and one party is in possession.Emerenciana moved for reconsideration of the order.However, the RTC denied the motion.[8]Not satisfied, Emerenciana filed before the CA a petition for certiorari and receivership with prayer for preliminary injunction, which was docketed as CA-G.R. SP No. 39161.On March 29, 1996, however, the CA dismissed the petition for being insufficient in form and substance.[9]Reconsideration of the dismissal was likewise denied in a Resolution dated November 29, 1996.[10]Meanwhile, with regard to the criminal cases mentioned at the outset, records show that in 1987, Marfori issued twenty-two (22) checks in favor of Cristina Lee.Lee deposited the checks to her account with the Philippine Bank of Communications, but the same were dishonored for the reason of Account Closed.Thus, she filed complaintsagainst Marforifor estafa and violation ofBatas Pambansa Blg.22with the Prosecutor's Office of Caloocan City.[11]Before he could be arraigned,Marfori sought reinvestigation of the criminal cases against him, arguing that he was not given the opportunity to present controverting evidence to prove that the checks were already paid or liquidated.[12]The RTC granted Marforis motion and ordered the Office of the City Prosecutor to conduct a reinvestigation. Upon reinvestigation, Assistant City Prosecutor Afable E. Cajigal rendered a joint resolution,[13]which was later approved by City Prosecutor Gabriel N. Dela Cruz, finding cause to dismiss the criminal complaints against Marfori.On August 11, 1995, Asst. City Prosecutor Cajigal filed a motion to dismiss before the RTC of Caloocan City, which motion was granted by Judge Emilio L. Leachon, Jr. on the same date.[14]Claiming that she was not notified of the order for reinvestigation, Angelita Ma. Tamano moved to set aside the joint resolution.[15]Prosecutor Cajigal then reversed his previous findings and recommended the setting aside of the joint resolution and dismissal order.[16]Said resolution was approved by 1stAssistant City Prosecutor Rosauro Silverio.Thus, Asst. City Prosecutor Cajigal filed seventeen (17) informations for violation of B.P. 22 against Marfori before the MeTC of Caloocan City.[17]Warrants for Marforis arrest were also issued by Judge Marcelino L. Sayo.Aggrieved, Marfori filed with the Caloocan City RTC a petition[18]for certiorari and injunction with prayer for temporary restraining order against Judge Sayo; Asst. City Prosecutors Cajigal, Silverio and Dela Cruz;and Making, who was represented by Tamano.Marfori maintained that all the checks were drawn in favor of Cristina Lee, but the prosecutors deliberately made it appear in the new informations that the checks were drawn in favor of Making.He prayed that Judge Sayo be enjoined from proceeding with the trial of the criminal cases and that the informations for violation of B.P. 22, as well as the warrants of arrest, be declared void.Making, represented by Tamano, filed a motion to dismiss arguing that the general rule is that a criminal prosecution may not be restrained by injunction.[19]In an Order dated April 18, 1997, the RTC granted Makings motion and dismissed Marfori's petition.[20]Meanwhile, on November 27, 1996, Marfori and his wife had filed with this Court a Consolidated Petition[21]docketed as G.R. No. 126841 asking among others, for the appointment of a receiver to preserve the rentals collected from the Marsman Building and the issuance of an injunction to enjoin the implementation of the warrants of arrest issued against him.Respondents argued that the filing of the criminal cases against Marfori had no factual and legal justification and hence, should be enjoined.The Court, after finding no special and important reasons for it to take cognizance of the case in the first instance, referred the petition to the CA for consideration and adjudication on the merits.[22]On February 16, 1998, respondents filed an Amended Consolidated Petition[23]with the CA.They added that Judge Castaeda, Jr. likewise erred in denying in Civil Case No. 94-70092 their motion to present crucial documents wherein Tamano allegedly made a declaration against her interest.They likewise reiterated in their amended petition their prayer for the appointment of a receiver to take over, manage, and administer the Marsman Building.In their Comment, petitioners countered that respondents had lost all their rights to the building after they ceded it to Making in 1987.Petitioners also charged respondents with forum shopping.[24]They argued that when Emerencianas application for a writ of preliminary injunction and receivership was denied by the RTC, she appealed the denial to the CA.When she failed to obtain a favorable action, she and her husband filed a petition with the Supreme Court involving the same subject matter and the same issues as in Emerencianas earlier petition in CA-G.R. SP No. 39161. Petitioners alleged that respondents hid the real purpose of their action by cleverly lumping together the civil and the criminal cases in their Consolidated Petition.On July 24, 2000, the CA rendered the assailed Decision, to wit:WHEREFORE, premises considered, the petition filed by petitioners Jose and Emerenciana Marfori is hereby GRANTED, and judgment rendered as follows:1)That writs of certiorari and prohibition be issued permanently enjoining the further prosecution of Criminal Case Nos. 170660 to 170676, inclusive, against petitioner Jose Marfori; and2)That, after posting of a bond in an amount to be determined by the Trial Court, let a receiver be appointed in Civil Case No. 94-70092, to take custody, manage, and administer the Marsman Building and all rents collected therefrom, during the pendency of the proceedings.SO ORDERED.[25]The CA brushed aside petitioners' argument that respondents were guilty of forum shopping, holding that technical rules of procedure must be relaxed in the interest of substantial justice.As to the order granting the prayer for the appointment of a receiver, the CA ruled that respondents have sufficiently proven their interest in the Marsman Building.The CA found that unless a receiver is appointed, there is a danger of loss or material injury considering that petitioners possess absolute control of the building.Meanwhile, as to the criminal cases, the CA ruled that the public prosecutors gravely abused their discretion when they set aside the earlier resolution recommending the dismissal of the criminal cases against Marfori based solely on the ground that Tamano was not given the chance to comment on Marforis motion for reinvestigation. The CA noted that in the joint