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Commodities vs. CA, June 19, 1997....................................................2
Vivares vs. Reyes, February 13, 2008................................................8
Citibank vs. CA, March 17, 1999.......................................................15
Traders Royal Bank vs. IAC, et. Al., June 17, 1997.......................... ..28
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Commodities vs. CA, June 19, 1997
SECOND DIVISION
G.R. No. 125008 June 19, 1997
COMMODITIES STORAGE & ICE PLANT CORPORATION,
SPOUSES VICTOR & JOHANNAH TRINIDAD, petitioners,
vs.
COURT OF APPEALS, JUSTICE PEDRO A.. RAMIREZ, CHAIRMAN
and FAR EAST BANK & TRUST COMPANY, respondents.
PUNO,J.:
In this petition for certiorari, petitioner seeks to annul and set aside
the decision and resolution of the Court of Appeals 1 in CA-G.R. SP
No. 36032 dismissing the complaint in Civil Case No. 94-72076
before the Regional Trial Court, Branch 9, Manila.
The facts show that in 1990, petitioner spouses Victor and Johannah
Trinidad obtained a loan of P31,000,000.00 from respondent Far East
Bank & Trust Company to finance the purchase of the Sta. Maria Ice
Plant & Cold Storage in Sta. Maria, Bulacan. The loan was secured by
a mortgage over the ice plant and the land on which the ice plant
stands. Petitioner spouses failed to pay their loan. The bank
extrajudicially foreclosed the mortgage and the ice plant was sold by
public bidding on March 22, 1993. Respondent bank was the highest
bidder. It registered the certificate of sale on September 22, 1993
and later took possession of the property.
On November 22, 1993, petitioner spouses filed Civil Case No. 956-
M-93 against respondent bank before the Regional Trial Court,
Malolos, Bulacan for reformation of the loan agreement, annulment
of the foreclosure sale and damages. 2 The trial court dismissed the
complaint for petitioners' failure to pay the docket fees. The
dismissal was without prejudice to refiling of the complaint. 3
On October 28, 1994, petitioners filed Civil Case No. 94-72076
against respondent bank before the Regional Trial Court, Branch 9,
Manila for damages, accounting and fixing of redemption period. 4 As
a provisional remedy, petitioners filed on November 16, 1994 an
"Urgent Petition for Receivership." They alleged that respondent
bank took possession of the ice plant forcibly and without notice to
them; that their occupation resulted in the destruction of petitioners'
financial and accounting records making it impossible for them to
pay their employees and creditors; the bank has failed to take care
of the ice plant with due diligence such that the plant has started
emitting ammonia and other toxic refrigerant chemicals into the
atmosphere and was posing a hazard to the health of the people in
the community; the spouses' attention had been called by several
people in the barangay who threatened to inform the Department of
Environment and Natural Resources should they fail to take action.
Petitioners thus prayed for the appointment of a receiver to save the
ice plant, conduct its affairs and safeguard its records during the
pendency of the case. 5
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Instead of an answer, respondent bank filed on November 25, 1994 a
"Motion to Dismiss and Opposition to Plaintiff's Petition for
Receivership." It alleged that the complaint states no cause of action
and that venue had been improperly laid. It also alleged that
petitioners failed to pay the proper docket fees and violated the rule
on forum-shopping. 6
In an order dated December 13, 1994, the trial court granted the
petition for receivership and appointed petitioners' nominee, Ricardo
Pesquera, as receiver. The order disposed as follows:
WHEREFORE, premises considered the Urgent Petition
for Receivership is GRANTED and Mr. Ricardo Pesquera
to whose appointment no opposition was raised by the
defendant and who is an ice plant contractor,
maintainer and installer is appointed receiver.
Accordingly, upon the filing and approval of the bond
of TWO MILLION (P2,000,000.00) pesos which shall
answer for all damages defendant may sustain by
reason of the receivership, said Ricardo Pesquera is
authorized to assume the powers of a receiver as well
as the obligation as provided for in Rule 59 of the
Rules of Court after taking his oath as such receiver.
SO ORDERED. 7
Respondent bank assailed this order before the Court of Appeals on
a petition for certiorari. On January 11, 1996, the Court of Appeals
annulled the order for receivership and dismissed petitioners'
complaint for improper venue and lack of cause of action. The
dispositive portion of the decision reads:
WHEREFORE, the petition for certiorari is GRANTED.
Accordingly, the assailed order dated December 13,
1994 (Annex A, petition) is ANNULLED and SET ASIDE
and respondent's complaint in Civil Case No. 94-72076
in the respondent court (Annexes F, petition; 4,
comment), is DISMISSED. Costs against respondents
except the court.
SO ORDERED.
Reconsideration was denied on May 23, 1996. 8 Hence, this petition.
Section 1 of Rule 59 of the Revised Rules of Court provides that:
Sec. 1. When and by whom receiver appointed. One
or more receivers of the property, real or personal,
which is the subject of the action, may be appointed
by the judge of the Court of First Instance in which the
action is pending, or by a Justice of the Court of
Appeals or of the Supreme Court, in the following
cases:
(a) When the corporation has been dissolved, or is
insolvent, or is in imminent danger of insolvency, or
has forfeited its corporate rights;
(b) When it appears from the complaint or answer, and
such other proof as the judge may require, that the
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party applying for the appointment of receiver has an
interest in the property or fund which is the subject of
the action, and that such property or fund is in danger
of being lost, removed or materially injured unless a
receiver be appointed to guard and preserve it;
(c) When it appears in an action by the mortgagee for
the foreclosure of a mortgage that the property is in
danger of being wasted or materially injured, and that
its value is probably insufficient to discharge the
mortgage debt, or that the parties have so stipulated
in the contract of mortgage;
(d) After judgment, to preserve the property during
the pendency of the appeal, or to dispose of it
according to the judgment, or to aid execution when
the execution has been returned unsatisfied or the
judgment debtor refuses to apply his property in
satisfaction of the judgment, or otherwise carry the
judgment into effect;
(e) Whenever in other cases it appears that the
appointment of a receiver is the most convenient and
feasible means of preserving, administering, or
disposing of the property in litigation.
A receiver of real or personal property, which is the subject of
the action, may be appointed by the court when it appears
from the pleadings or such other proof as the judge may
require, that the party applying for such appointment has (1)
an actual interest in it; and (2) that (a) such property is in
danger of being lost, removed or materially injured; or (b)
whenever it appears to be the most convenient and feasible
means of preserving or administering the property in
litigation.9
A receiver is a person appointed by the court in behalf of all the
parties to the action for the purpose of preserving and conserving
the property in litigation and prevent its possible destruction or
dissipation, if it were left in the possession of any of the
parties. 10 The appointment of a receiver is not a matter of absolute
right. It depends upon the sound discretion of the court 11and is
based on facts and circumstances of each particular case. 12
Petitioners claim that the appointment of a receiver is justified under
Section 1 (b) of Rule 59. They argue that the ice plant which is the
subject of the action was in danger of being lost, removed and
materially injured because of the following "imminent perils":
6.1 Danger to the lives, health and peace of mind of
the inhabitants living near the Sta. Maria Ice Plant;
6.2 Drastic action or sanctions that could be brought
against the plaintiff by affected third persons,
including workers who have claims against the plaintiff
but could not be paid due to the numbing manner by
which the defendant took the Sta. Maria Ice Plant;
6.3 The rapid reduction of the Ice Plant into a scrap
heap because of evident incompetence, neglect and
vandalism. 13
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A petition for receivership under Section 1 (b) of Rule 59 requires
that the property or fund which is the subject of the action must be
in danger of loss, removal or material injury which necessitates
protection or preservation. The guiding principle is the prevention of
imminent danger to the property. If an action by its nature, does not
require such protection or reservation, said remedy cannot be
applied for and granted. 14
In the instant case, we do not find the necessity for the appointment
of a receiver. Petitioners have not sufficiently shown that the Sta.
Maria Ice Plant is in danger of disappearing or being wasted and
reduced to a "scrap heap." Neither have they proven that the
property has been materially injured which necessitates its
protection and preservation. 15 In fact, at the hearing on respondent
bank's motion to dismiss, respondent bank, through counsel,
manifested in open court that the leak in the ice plant had already
been remedied and that no other leakages had been reported
since. 16 This statement has not been disputed by petitioners.
At the time the trial court issued the order for receivership of the
property, the problem had been remedied and there was no
imminent danger of another leakage. Whatever danger there was to
the community and the environment had already been contained.
The "drastic sanctions" that may be brought against petitioners due
to their inability to pay their employees and creditors as a result of
"the numbing manner by which [respondent bank] took the ice
plant" does not concern the ice plant itself. These claims are the
personal liabilities of petitioners themselves. They do not constitute
"material injury" to the ice plant.
Moreover, the receiver appointed by the court appears to be a
representative of petitioners. Respondent bank alleges that it was
not aware that petitioners nominated one Mr. Pesquera as
receiver. 17 The general rule is that neither party to a litigation
should be appointed as receiver without the consent of the other
because a receiver should be a person indifferent to the parties and
should be impartial and disinterested. 18 The receiver is not the
representative of any of the parties but of all of them to the end that
their interests may be equally protected with the least possible
inconvenience and expense. 19
The power to appoint a receiver must be exercised with extreme
caution. There must be a clear showing of necessity therefor in order
to save the plaintiff from grave and irremediable loss or
damage. 20It is only when the circumstances so demand, either
because there is imminent danger that the property sought to be
placed in the hands of a receiver be lost or because they run the risk
of being impaired, endeavouring to avoid that the injury thereby
caused be greater than the one sought to be avoided. 21
The Court of Appeals correctly found that the trial court gravely
abused its discretion in issuing the order for receivership. The
respondent court, however, went further and took cognizance of
respondent bank's motion to dismiss. And finding merit in the
motion, it dismissed the complaint. Petitioners now claim that the
respondent court should have refrained from ruling on the motion to
dismiss because the motion itself was not before it. 22
Again, we reject petitioners' contention. The motion to dismiss is
anchored on improper venue, lack of cause of action and forum-
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shopping. We agree with the respondent court that the question of
venue relates to the principal action and is prejudicial to the ancillary
issue of receivership. Although the grounds for dismissal were not
specifically raised before the appellate court, the said court may
consider the same since the petition for receivership depends upon a
determination thereof. 23
In their complaint, petitioners prayed for the following:
WHEREFORE, in view of the foregoing, it is respectfully
prayed that after trial on the merits judgment be
rendered:
1. Ordering the Defendant to pay COMMODITIES actual
and compensatory damages in the amount of PESOS:
TWO MILLION FIVE HUNDRED THOUSAND and 00/100
(P2,500,000.00);
2 Ordering the Defendant to pay Plaintiffs moral
damages in the amount of PESOS: TWO MILLION and
00/100 (P2,000,000.00) to compensate the Plaintiffs
for the anxiety and besmirched reputation caused bythe unjust actuations of the Defendant;
3. Ordering the Defendant to pay Plaintiffs nominal
and exemplary damages in the amount of PESOS: FIVE
HUNDRED THOUSAND and 00/100 (P500,000.00) to
deter the repetition of such unjust and malicious
actuations of the Defendant;
4. In order to restore the legal right of the Plaintiff
COMMODITIES to redeem its foreclosed property, a
right which COMMODITIES has been unjustly deprived
of by the malicious and bad faith machinations of the
Defendant, compelling the Defendant to produce the
correct, lawful, official and honest statements of
account and application of payment. Concomitantly,
ordering the Defendant to accept the redemption of
the foreclosed properties pursuant to Rule 39 of the
Revised Rules of Court in conjunction with Act 3135,
within the prescribed period for redemption, said
period to commence from the date of receipt by the
Plaintiff COMMODITIES of the correct, lawful, official
and honest statements of account and application of
payments;
5. Ordering the Defendant to pay attorney's fees in the
amount of PESOS: THREE HUNDRED THOUSAND
(P300,000.00); and costs of litigation.
Other reliefs and remedies just and equitable under
the circumstances are likewise prayed for. 24
Petitioners pray for two remedies: damages and redemption.
The prayer for damages is based on respondent bank's
forcible occupation of the ice plant and its malicious failure to
furnish them their statements of account and application of
payments which prevented them from making a timely
redemption. 25 Petitioners also pray that respondent bank be
compelled to furnish them said documents, and upon receipt
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thereof, allow redemption of the property. They ultimately
seek redemption of the mortgaged property. This is explicit in
paragraph 4 of their prayer.
An action to redeem by the mortgage debtor affects his title to the
foreclosed property. If the action is seasonably made, it seeks to
erase from the title of the judgment or mortgage debtor the lien
created by registration of the mortgage and sale. 26 If not made
seasonably, it may seek to recover ownership to the land since the
purchaser's inchoate title to the property becomes consolidated after
expiration of the redemption period. 27 Either way, redemption
involves the title to the foreclosed property. It is a real action.
Section 2 of Rule 4 of the Revised Rules of Court provides:
Sec. 2. Venue in Courts of First Instance. (a) Real
actions. Actions affecting title to, or for recovery of
possession, or for partition or condemnation of, or
foreclosure of mortgage on, real property, shall be
commenced and tried in the province where the
property or any part thereof lies. 28
Where the action affects title to the property, it should be
instituted in the Regional Trial Court where the property is
situated. The Sta. Maria Ice Plant & Cold Storage is located in
Sta. Maria, Bulacan. The venue in Civil Case No. 94-72076
was therefore laid improperly.
Finally, there is no merit in petitioners' claim that the respondent
bank is no longer the real party in interest after selling the ice plant
to a third person during the pendency of the case. Section 20 of Rule
3 of the Revised Rules of Court provides that in a transfer of interest
pending litigation, the action may be continued by or against the
original party, unless the court, upon motion, directs the transferee
to be substituted in the action or joined with the original party. The
court has not ordered the substitution of respondent bank.
IN VIEW WHEREOF, the decision dated January 11, 1996 and
resolution dated May 23, 1996 of the Court of Appeals in CA-G.R. SP
No. 36032 are affirmed. Costs against petitioners.
SO ORDERED.
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Vivares vs. Reyes, February 13, 2008
SECOND DIVISION
G.R. No. 155408 February 13, 2008
JULIO A. VIVARES and MILA G. IGNALING, petitioners,
vs.
ENGR. JOSE J. REYES, respondent.
D E C I S I O N
VELASCO, JR.,J.:
The Case
The kernel dispute in this petition under Rule 45 is the legality of the
May 22, 2001 Resolution1 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
Decision2recalled the RTC directive on the appointment of the
receiver, prompting Julio Vivares and Mila Ignaling to file the petition
at bar to convince the Court to reinstate the receivership.
The Facts
Severino Reyes was the father of respondent Jose Reyes and
Torcuato Reyes. Upon the death of Severino, respondent and
Torcuato came upon their inheritance consisting of several
properties. They had an oral partition of the properties and
separately appropriated to themselves said properties.
On May 12, 1992, Torcuato died with a last will and testament
executed on January 3, 1992. In Reyes 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 Estate before 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. Reyes and 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 pendens upon the instance of petitioners.
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On March 15, 2000, petitioners filed a Motion to Place Properties in
Litigation under Receivership4 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,5denying 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 Order6 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 the United
States as 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
Pendens which 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 Cancel Lis Pendens.
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Consequently, on May 22, 2001, the trial court issued a Resolution,
denying respondents motions to discharge receiver and cancel the
notice oflis pendens in 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 Appeals
On June 18, 2002, the CA rendered the assailed Decision, sustaining
respondents position and granted relief, thus:
WHEREFORE, premises considered, the Petition is
hereby 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 P100,000.00.
The notice oflis pendens in Tax Declaration 112, in so far as
it covers the property of Elena Unchuan, is cancelled. Let this
case be remanded to the court a quo for further proceedings.7
In reversing the trial court, the CA reasoned that the court a
quo failed 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
pendens annotated 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 pendens on TD No. 112, insofar as it pertains to the portion
owned by Unchuan.
Aggrieved, petitioners in turn interposed a Motion for
Reconsideration that was denied through the assailed September 24,
2002 CA Resolution.
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Thus, this petition for review on certiorari is before us, presenting the
following issues for consideration:
I
WHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS
PENDENS PRECLUDES THE APPOINTMENT OF A RECEIVER
WHEN THERE IS A NEED TO SAFEGUARD THE PROPERTIES IN
LITIGATION.
II
WHETHER OR NOT A DULY APPOINTED RECEIVER OF
PROPERTIES IN LITIGATION SHOULD BE DISCHARGED SIMPLYBECAUSE THE ADVERSE PARTY OFFERS TO POST A
COUNTERBOND.
III
WHETHER OR NOT THE CANCELLATION OF A NOTICE OF LIS
PENDENS ANNOTATED ON TAX DECLARATION NO. 112 IS
CONTRARY TO LAW.8
The Courts Ruling
The petition must be denied. Being closely related, we discuss the
first and second issues together.
Receivership not justified
We 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 theantedating 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 tothe transfers executed by Torcuato but distrust to those made by
respondent would be highly inequitable as correctly opined by the
court a 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 in Velasco & Co. v. Gochuico & Co. that
courts must use utmost circumspection in allowing receivership,
thus:
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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 "application may be 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
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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 pendens has 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 under custodia legis is 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 pendens was 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." In Descallar 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
pendens on TD No. 112 is irregular as Lot No. 33 is one of the
disputed properties in the partition case, petitioners position is
correct.
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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
pendens should 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 pendens on TD No. 112 stays until the final ruling on said issues
is made.
WHEREFORE, the petition is PARTLY GRANTED. The June 18, 2002CA Decision in CA-G.R. SP No. 67492
isAFFIRMED with MODIFICATION insofar as it ordered the
cancellation of the notice oflis pendens in TD No. 112. As thus
modified, the appealed CA Decision should read as follows:
WHEREFORE, premises considered, the Petition is
hereby PARTLY GRANTED. The Resolution dated 22 May
2001 of the Regional Trial Court of Camiguin, Branch 28 inCivil 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 pendens in TD No.
112,including the portion allegedly belonging to Elena
Unchuan, remains valid and effective. Let this case be
remanded to the court a quo for further proceedings in Civil
Case No. 517.
No costs.
SO ORDERED.
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Citibank vs. CA, March 17, 1999
THIRD DIVISION
G.R. No. 61508 March 17, 1999
Citibank, N.A. (Formerly First National City Bank), petitioner,
vs.
The Honorable Court of Appeals and Douglas F.
Anama, respondents.
PURISIMA,J.:
At bar is a special civil action for certiorari with prayer fora
temporary restraining order faulting the Court of Appeals 1 with
grave abuse of discretion for nullifying the lower court's order of
seizure of mortgaged properties subject of a case for sum of moneyand replevin.
The facts leading to the institution of the case are as follows:
In considering for a loan obtained from Citibank, N.A. (formerly First
National City Bank), the defendant (private respondent herein)
Douglas Anama executed a promissory note, dated November 10,
1972, 2 to pay the plaintiff bank the sum of P418,000.00 in sixty (60)
equal successive monthly installments of P8,722.25, starting on the
10th day of December 1972 and on the 10th of every month
thereafter. The said Promissory Note stipulated further that:
(a) the loan is subject to interest at the
rate of twelve percent (12%) per
annum;
(b) the promissory note and the entire
amount therein stated shall become
immediately due and payable without
notice or demand upon
(aa) default in the
payment of anyinstallment of principal or
interest at the time when
the same is due;
(bb) the occurrence of
any change in the
condition and affairs of
the defendant, which inthe opinion of the plaintiff
shall increase its credit
risk;
(c) the defendant agrees to pay all
costs, expenses, handling and insurance
charges incurred in the granting of the
loan;
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(d) in case the services of a lawyer is
made necessary for collection,
defendant shall be liable for attorney's
fees of at least ten percent (10%) of the
total amount due. 3
To secure payment of the loan, private respondent Anama also
constituted a Chattel Mortgage of even date in favor of petitioner, on
various machineries and equipment located at No. 1302 Epifanio
delos Santos Avenue, Quezon City, under the following terms and
conditions:
(a) The machineries and equipment
subject of the mortgage, stand as
security for defendant's account.
(b) All replacement, substitutions,
additions, increases and accretions to
the properties mortgaged shall also be
subject to the mortgage.
(c) The defendant appoints the plaintiffas his attorney-in-fact with authority to
enter the premises of the defendant and
take actual possession of the mortgaged
chattels without any court order, to sell
said property to any party.
(d) All expenses in carrying into effect
the stipulations therein shall be for the
account of the defendant and shall form
part of the amount of the obligation
secured by the mortgage.
(e) In case the plaintiff institutes
proceedings for the foreclosure of the
mortgage, the plaintiff shall be entitled
to the appointment of a receiver without
a bond.
(f) In case of default, the defendant shall
be liable for attorney's fees and cost of
collection in the sum equal to twenty-
five (25%) of the total amount of the
indebtedness outstanding and unpaid. 4
On November 25, 1974, for failure and refusal of the private
respondent to pay the monthly installment due under the said
promissory note since January 1974, despite repeated demands,
petitioner filed a verified complaint against private respondent
Anama for the collection of his unpaid balance of P405,820.52 on the
said promissory note, for the delivery and possession of the chattels
covered by the Chattel Mortgage preparatory to the foreclosurethereof as provided under Section 14 of the Chattel Mortgage Law,
docketed as Civil Case No. 95991 before the then Court of First
Instance of Manila.
On February 20, 1975, the defendant Anama submitted his Answer
with Counterclaim, denying the material averments of the complaint,
and averring inter alia (1) that the remedy of replevin was improper
and the writ of seizure should be vacated; (2) that he signed the
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promissory note for P418,000.00 without receiving from plaintiff
Citibank any amount, and was even required to pay the first
installment on the supposed loan in December 1974; (3) that the
understanding between him and the Citibank was for the latter to
release to him the entire loan applied for prior to and during the
execution of his promissory note, but Citibank did not do so and,
instead, delayed the release of any amount on the loan even after
the execution of the promissory note thereby disrupting his
timetable of plans and causing him damages; (4) that the amount
released by Citibank to him up to the present was not the amount
stated in the promissory note, and his alleged default in paying the
installment on the loan was due to the delay in releasing the full
amount of the loan as agreed upon; (5) that the macheniries and
equipment described in the chattel mortgage executed by him are
really worth more than P1,000,000.00 but he merely acceded to the
valuation thereof by Citibank in said document because of the
latter's representation that the same was necessary to speed up the
granting of the loan applied for by him; (6) that the properties
covered by said chattel mortgage are real properties installed in a
more or less permanent nature at his (defendant's) premises in
Quezon City, as admitted by Citibank in said mortgage document; (7)
that the mortgage contract itself stipulated that the manner and
procedure for affecting the sale or redemption of the mortgage
properties, if made extrajudicial, shall be governed by Act No. 1508
and other pertinent laws which all pertain to real properties; and (8)
that because of the filing of this complaint without valid grounds
therefor, he suffered damages and incurred attorney's fees; the
defendant, now private respondent, averred.
On December 2, 1974, the trial court upon proof of default of the
private respondent in the payment of the said loan, issued an Order
of Replevin over the macheneries and equipment covered by the
Chattel Mortgage.
However, despite the issuance of the said order of seizure of subject
chattels, actual delivery of possession thereof to petitioner did not
take place because negotiations for an amicable settlement between
the parties were encouraged by the trial court.
On March 24, 1975, a pre-trial conference was held and the lower
court issued an order for joint management by the petitioner and the
private respondent of the latter's business for ten (10) days, after
which the former would appointed receiver for the said business.
On April 1, 1975, the petitioner took over private respondent's
business as receiver. When further proposals to settle the case
amicably failed, the lower court proceeded to try the case on the
merits.
On January 29, 1977, petitioner presented a Motion for the Issuance
of anAlias Writ of Seizure, ordering the sheriff to seize the propertiesinvolved and dispose of them in accordance with the Revised Rules
of Court. The lower court then gave private respondent five (5) days
to oppose the said motion and on February 22, 1977, he sent in his
opposition thereto on the grounds: (1) that Citibank's P400,000
replevin bond to answer for damages was grossly inadequate
because the market value of the properties involved is P1,710,000
and their replacement cost is P2,342,300.00 per the appraisal report
of the Appraisal and Research Corp.; (2) that he was never in default
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to justify the seizure; (3) that the Civil Case No. 18071 of the Court of
First Instance, entitled Hernandes vs. Anama, et al., which, according
to Citibank, supposedly increased its credit risk in the alleged
obligation, had already been dismissed as against him and the case
terminated with the dismissal of the complaint against the remaining
defendant, First National City Bank, by the Court in its orders of
January 12, 1977 and February 7, 1977; (4) that his (defendant's)
supposed obligations with Citibank were fully secured and his
mortgaged properties are more than sufficient to secure payment
thereof; and (5) that the writ of seizure if issued would stop his
business operations and contracts and expose him to lawsuits from
customers, and also dislocate his employees and their families
entirely dependent thereon for their livelihood.
On February 28, 1977, acting on the said Motion and private
respondent's opposition, the trial court issued an Order granting the
Motion forAlias Writ of Seizure, ruling thus:
WHEREFORE, the motion for alias writ of seizure is
hereby granted. At any rate, this Order gives another
opportunity for defendant and the intervenor who
claims to be a part owner to file a counterbond under
Sec. 60 of Rules of Court. 5
Private respondent moved for reconsideration of the aforesaid order
but the same was denied by the Resolution of March 18, 1977, to
wit:
In view of the foregoing, the motion for
reconsideration is hereby denied.
At any rate, as already stated, the defendant has still a
remedy available which is to file a bond executed to
the plaintiff in double the value of the properties as
stated in the plaintiff's affidavit. The Court at this
instance therefore has no authority to stop or
suspended the writ of seizure already ordered. 6
Accordingly, by virtue of theAlias writ of Seizure, petitioner took
possession of the mortgaged chattels of private respondent. As a
consequence, the sheriff seized subject properties, dismantled and
removed them from the premises where they were installed,
delivered them to petitioner's possession on March 17, 18 and 19,
1977 and advertised them for sale at public auction scheduled on
March 22, 1977.
On March 21, 1977, private respondent filed with the Court of
Appeals a Petition for Certiorari and Prohibition 7with Injunction to
set aside and annul the questioned resolution of the trial court on
the ground that they were issued "in excess of jurisdiction and with
grave abuse of discretion" because of the "lack of evidence and clear
cut right to possession of First National City Bank (herein petitioner)"
top the machineries subject of the Chattel Mortgage.
On July 30, 1982, finding that the trial court acted with grave abuse
of discretion amounting to excess of lack of jurisdiction in issuing the
assailed resolutions, the Court of Appeals granted petition, holding
that the provision of the Rules of Court on Replevin and Receivership
have not been complied with, in that (1) there was no Affidavit of
Merit accompanying the Complaint for Replevin; (2) the bond posted
by Citibank was insufficient; and (3) there was non-compliance with
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the requirement of a receiver's bond and oath of office. The decretal
portion of the assailed decision of the Court of Appeals, reads:
WHEREFORE, the petition is granted. The questioned
resolutions issues by the respondent judge in Civil
Case No. 95991, dated February 28, 1977 and March
18, 1977, together with the writs and processes
emanating or deriving therefrom, are hereby declare
null and void ab initio.
The respondent ex-officio sheriff of Quezon City and
the respondent First National City Bank are hereby
ordered to return all the machineries and equipment
with their accessories seized, dismantled and hauled,
to their original and respective places and position in
the shop flooring of the petitioner's premises where
these articles were, before they were dismounted,
seized and hauled at their own expense. The said
respondents are further ordered to cause the repair of
the concrete foundations destroyed by them including
the repair of the electrical wiring and facilities affected
during the seizure, dismanting and hauling.
The writ of preliminary injunction heretofore in effect
is hereby made permanent. Costs against the private
respondents.
SO ORDERED 8
Therefrom, Citibank came to this Court via its present petition
for certiorari, ascribing grave abuse of discretion to the Court of
Appeals and assigning as errors, that:
I
THE RESPONDENT COURT ERRED IN PRACTICALLY AND
IN EFFECT RENDERING JUDGMENT ON THE MERITS
AGAINST THE HEREIN PETITIONER BY ORDERING THE
RETURN OF THE MACHINERIES AND EQUIPMENT AND
ITS ACCESSORIES TO THEIR ORIGINAL AND
RESPECTIVE PLACES AND POSITIONS.
II
THE RESPONDENT COURT ERRED IN FINDING THAT
THE COMPLAINT OF THE PETITIONER DID NOT COMPLY
WITH THE PROVISIONS OF SEC. 2, RULE 60 OF THE
RULES OF COURT.
III
THAT THE RESPONDENT COURT ERRED IN FINDING
THAT THE BOND POSTED BY THE PETITIONER IS
QUESTIONABLE AND/OR INSUFFICIENT.
IV
THE RESPONDENT COURT ERRED IN FINDING THAT
THE PETITIONER DID NOT COMPLY WITH THE
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PROVISIONS OF SEC. 5, RULE 59 BY FAILING TO POST
A RECEIVER'S BOND.
V
THE RESPONDENT ERRED IN FINDING THAT THE HON.
JORGE R. COQUIA ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO EXCESS OR LACK OF
JURISDICTION IN DEALING WITH THE SITUATION.
I
Anent the first assigned error, petitioner contends that the
Court of Appeals, by nullifying the writ of seizure issued
below, in effect, rendered judgment on the merits and
adjudged private respondent Anama as the person lawfully
entitled to the possession of the properties subject of the
replevin suit. It is theorized that the same cannot be done, as
the case before the court below was yet at trial stage and
lower court still had to determine whether or not private
respondent was in fact in default in the payment of his
obligation to petitioner Citibank, which default would warrant
the seizure of subject machineries and equipment.
The contention is untenable. A judgment is on the merits
when it determines the rights and liabilities of the parties on
the basis of the disclosed facts, irrespective of formal
technical or dilatory objections, and it is not necessary that
there should have been a trial. 9 The assailed decision of the
Court of Appeals did not make any adjudication on the rights
and liabilities between Citibank and Douglas Anama. There
was no finding yet of the fact of default. The decision only
ruled on the propriety of the issuance of the writ of seizure by
the trial court. As worded by the respondent court itself, "the
main issues to be resolved are whether there was lack or
excess of jurisdiction, or grave abuse of discretion, in the
issuance of the orders in question, and there is no appeal nor
any plain, speedy, and adequate remedy in the ordinary
course of law." 10
In resolving the issue posed by the petition, the Court of
Appeals limited its disposition to a determination of whether
or not the assailed order of seizure was issued in accordance
with law, that is, whether the provisions of the Rules of Court
on delivery of personal property or replevin as a provisional
remedy were followed. The Court of Appeals relied on Ruled
60 of the Rules of Court, which prescribed the procedure for
the recovery of possession of personal property, which Rule,
provides:
Sec. 2. Affidavit and Bond. Upon applying or such
order the plaintiff must show by his own affidavit or
that of some other person who personally knows the
facts:
(a) That the plaintiff is the owner of the
property claimed particularly describing
it, or is entitled to the possession
thereof;
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(b) That the property is wrongfully
detained by the defendant, alleging the
cause of detention thereof according to
his best of knowledge, information and
belief;
(c) That it has nor been taken for a tax
assessment or fine pursuant to law, or
seized under an execution, or an
attachment against the property of the
plaintiff, or is so seized, that is exempt
from such seizure; and
(d) The actual value of the property.
The plaintiff must also give a bond, executed to the
defendant in double of the value of the property as
stated in the affidavit aforementioned, for the property
to the defendant of such sum as he may recover from
the plaintiff in the action.
The Court of Appeals did not pass upon the issue of who, as between
Douglas Anama and Citibank, is entitled to the possession of subject
machineries, as asserted by the latter. When it ordered the
restoration of the said machineries to Douglas Anama (now the
private respondent), it merely defendant to the possession of his
properties, since there was a finding that the issuance of the writ
was not in accordance with the specific rules of the Rules of Court.
II
In its second assignment of errors, petitioner theorizes that
the Court of Appeals erred in finding that it did not comply
with Section 2, Rule 60 of the Rules of Court requiring the
replevin plaintiff to attach an affidavit of merit to the
compliant.
Petitioner maintains that although there was no affidavit of merit
accompanying its complaint, there was nonetheless substantial
compliance with the said rule as all that is required to be alleged in
the affidavit of merit was set forth in its verified complaint. Petitioner
argues further that assuming arguendo that there was non-
compliance with the affidavit of merit requirement, such defense can
no longer be availed of by private respondent Anama as it was not
alleged in his Answer and was only belatedly interposed in his Reply
to the Petitioner's Comment on the Petitioner for Certiorari before
the Court of Appeals.
Petitioner is correct insofar as it contends that substantial
compliance with the affidavit requirement may be permissible. There
is substantial compliance with the rule requiring that an affidavit of
merit to support the complaint for replevin if the complaint itself
contains a statements of every fact required to be stated in the
affidavit of merit and the complaint is verified like an affidavit. On
the matter of replevin, Justice Vicente Francisco's Comment on the
Rules of Court, states:
Although the better practice is to keep the affidavit
and pleading separate, if plaintiff's pleading contains a
statement of every fact which the statute requires to
be shown in the affidavits, and the pleading is verified
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by affidavit covering every statement therein, this will
be sufficient without a separate affidavit; but in no
event can the pleading supply the absence of the
affidavit unless all that the affidavit is required to
contain is embodied in the pleading, and the pleading
is verified in the form required in the case of a
separate affidavit. (77 CJS 65 cited in Francisco, Rules
of Court of the Philippines, Vol. IV-A, p. 383)
And similarly, in the case of an attachment which likewise requires
an affidavit of merit, the Court held that the absence of an affidavit
of merit is not fatal where the petition itself, which is under oath,
recites the circumstances or facts constitutive of the grounds for the
petition. 11
The facts that must be set forth in the affidavit of merit are (1) that
plaintiff owns the property particularly describing the same, or that
he is entitled to its possession; (2) wrongful detention by defendants
of said property; (3) that the property is not taken by virtue of a tax
assessment or fine pursuant to law or seized under execution or
attachment or, if it is so seized, that it is exempt from seizure; and
the, (4) the actual value of the property. 12
But, as correctly taken note of by the Court of Appeals, petitioner's
complaint does not allege all the facts that should be set forth in an
affidavit of merit. Although the complaint alleges that petitioner is
entitled to the possession of subject properties by virtue of the
chattel mortgage executed by the private respondent, upon the
latter's default on its obligation, and the defendant's alleged
"wrongful detention" of the same, the said complaint does not state
that subject properties were not taken by virtue of a tax assessment
or fine imposed pursuant to law or seized under execution or
attachment or, if they were so seized, that they are exempt from
such seizure.
Then too, petitioner stated the value of subject properties at a
"probable value of P200,000.00, more or less". Pertinent rules
require that the affidavit of merit should state the actual value of the
property subject of a replevin suit and not just its probable value.
Actual value (or actual market value) means "the price which an
article would command in the ordinary course of business, that is to
say, when offered for sale by one willing to sell, but not under
compulsion to selland purchased by another who is willing to buy,
but under no obligation to purchase it".13 Petitioner alleged that the
machineries and equipment involved are valued at P200,000.00
while respondent denies the same, claiming that per the appraisal
report, the market value of the said properties is P1,710,000.00 and
their replacement cost is P2,342,300.00. Petitioner's assertion is
belied by the fact that upon taking possession of the aforesaid
properties, it insured the same for P610,593.74 and P450,000.00,
separately. It bears stressing that the actual value of the properties
subject of a replevin is required to be in the affidavit because such
actual value will be the basis of the replevin bond required to be
posted by the plaintiff. Therefore, when the petitioner failed to
declare the actual value of the machineries and equipment subject
of the replevin suit, there was non-compliance with Section 2, Rule
60 of the Revised Rules of Court.
It should be noted, however, that the private respondent interposed
the defense of lack of affidavit of merit only in his Reply to the
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Comment of Citibank on the Petition for Certiorari which respondent
filed with the Court of Appeals. Section 2, Rule 9 of the Revised Rules
of Court, provides:
Sec. 2. Defenses and objections not pleaded deemed
waived Defenses and objections not pleaded either
in a motion to dismiss or in the answer are deemed
waived; except the failure to state a cause of action
which may be alleged in later pleading, . . . .
This Rule has been revised and amended, as follows:
Sec. 1. Defenses and objection not pleaded.
Defenses and objections not pleaded in a motion todismiss or in the answer are deemed waived.
However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction
over the subject matter, that there is another action
pending between the same parties for the same
cause, or that the action is barred by a prior judgment
or by statute of limitations, the court shall dismiss the
claim.
Thus, although respondent's defense of lack of affidavit of merit is
meritorious, procedurally, such a defense is no longer available for
failure to plead the same in the Answer as required by the omnibus
motion rule.
III
Petitioner also faults the Court of Appeals for finding that the bond
posted by the petitioner is questionable and/or insufficient. It is
averred that, in compliance with Section 2, Rule 60 requiring the
replevin plaintiff to post a bond in double the value of the properties
involved, it filed a bond in the amount P400,000.00 which is twice
the amount of P200,000.00 declared in its complaint.
The Court reiterates its findings on the second assignment of errors,
particularly on the issue of the actual of subject properties as against
their probable value. Private respondent, at the onset, has put into
issues the value of the said properties. In the Special Defenses
contained in his Answer, private respondent averred:
That while defendant admits that he executed a
Chattel Mortgage in favor of plaintiff, he vigorously
denies that the machineries covered therein are worth
P200,000.00. The fact is that plaintiff knew fully well
that said chattels are worth no less than
P1,000,000.00, said defendant having acceded to said
valuation upon plaintiff's representation that it would
be necessary to speed up the granting of the loan.
As here was a disagreement on the valuation of the properties in the
first place, proper determination of the value of the bond to be
posted by the plaintiff cannot be sufficiently arrived at. Though the
rules specifically require that the needed bond be double the value
of the properties, since plaintiff merely denominated a probable
value of P200,000.00 and failed to aver the properties' actual value,
which is claimed to be much greater than that declared by plaintiff,
the amount of P400,000.00 would indeed be insufficient as found by
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the Court of Appeals. The Rules of Court requires the plaintiff to
"give a bond, executed to the defendant in double the value of the
property as stated in the affidavit
. . . ." Hence, the bond should be double the actual value of the
properties involved. In this case, what was posted was merely an
amount which was double the probable value as declared by the
plaintiff and, therefore, inadequate should there be a finding that the
actual value is actually far greater than P200,000.00. Since the
valuation made by the petitioner has been disputed by the
respondent, the lower court should have determined first the actual
value of the properties. It was thus as error for the said court to
approve the bond, which was based merely on the probable value of
the properties.
It should be noted that a replevin bond is intended to indemnify the
defendant against any loss that he may suffer by reason of its being
compelled to surrender the possession of the disputed property
pending trial of the
action. 14 The same may also be answerable for damages if any
when judgment is rendered in favor of the defendant or the party
against whom a writ of replevin was issued and such judgment
includes the return of the property to him. 15 Thus, the requirement
that the bond be double the actual value of the properties litigated
upon. Such is the case because the bond will answer for the actual
loss to the plaintiff, which corresponds to the value of the properties
sought to be recovered and for damages, if any.
Petitioner also maintains that, assuming for the sake of argument
that its replevin bond was grossly inadequate or insufficient, the
recourse of the respondent should be to post a counterbound or a
redelivery bond as provided under Section 5 of Rule 60.
Sec. 5 and 6, Rule 60 of the Rules of Court, read:
Sec. 5. Return of property. If the defendant objects
to the sufficient of the plaintiff's bond, or of the surety
or sureties thereon, he cannot require the return of
the property as in this section provided; but if he does
not so object, he may, at any time before the delivery
of the property to the plaintiff, if such delivery be
adjudge, and for the payment of such sum to him as
may be recovered against the defendant, and by
serving a copy of such bond on the plaintiff or his
attorney.
Sec. 6. Disposition of property by officer. If within
five (5) days after the taking of the property by the
officer, the defendant does not object to the sufficiecy
of the bond, or of the surety or sureties thereon, or
require the return of the property as provided in the
last preceding section; or if the defendant so objects,and the plaintiff's first or new bond is approved; or if
the defendant so require, and his bond is object to and
found insufficient and he does not forthwith file an
approved bond, the property shall be delivered to the
plaintiff, the officer must return it to the defendant.
The Court held in a prior case 16 that the remedies provided under
Section 5, Rule 60, are alternative remedies. ". . . If a defendant in a
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replevin action wishes to have the property taken by the sheriff
restored to him, he should, within five days from such taking, (1)
post a counter-bond in double the value of said property, and (2)
serve plaintiff with a copy thereof, both requirements as well as
compliance therewith within the five-day period mentioned being
mandatory." 17 This course of action is available to the defendant for
as long as he does not object to the sufficiency of the plaintiff's
bond.
Conformably, a defendant in a replevin suit may demand the return
of possession of the property replevined by filing a redelivery bond
executed to the plaintiff in double the value of the property as stated
in the plaintiff's affidavit within the period specified in Section 5 and
6.
Alternatively, "the defendant may object to the sufficiency of the
plaintiff's bond, or of the surety or sureties thereon;" but if he does
so, "he cannot require the return of the property" by posting a
counter-bond pursuant to Section 5 and 6. 18
In the case under consideration, the private respondent did
not opt to cause redelivery of the properties to him by filing acounter-bond precisely because he objected to the sufficiency
of the bond posted by plaintiff. Therefore, he need not file a
counter-bond or redelivery bond. When such objection was
not given due course in the court below when, instead of
requiring the plaintiff to post a new bond, the court approved
the bond in the amount of P400,000.00, claimed by
respondent to be insufficient, and ordered the seizure of the
properties recourse to a petition for certiorari before the
Court of Appeals assailing such order is proper under the
circumstances.
IV
As its fourth assignment of errors, petitioner contends that the Court
of Appeals made an error of judgment in finding that the petitioner
did not comply with the provisions of Section 5, Rule 59 by failing to
post a receiver's bond. Petitioner contends that although it is in
agreement with the Court of Appeals that a receiver's bond is
separate and distinct from a replevin bond, under the circumstances
it was not required to file a receiver's bond because it did not
assume receivership over the properties. It is further argued that
assuming that it did assume receivership, the Chattel Mortgage
expressly provides, that:
In case the MORTGAGEE institutes proceedings,
judicially or otherwise, for the foreclosure of this
Chattel Mortgage, or to enforce any of its rights
hereunder, the MORTGAGEE shall be entitled as a
matter of right to the appointment of a receiver,
without bond, of the mortgaged properties and of suchproperties, real or personal, claims and rights of the
MORTGAGOR as shall be necessary or proper to
enable the said receiver to property control and
dispose of the mortgaged properties. 19
The order of the trial court dated March 24, 1975 provided, among
others, that the properties shall be under joint management for a
period of ten days, after which period "the bank, by virtue of the
O S O S
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stipulations under the chattel mortgage, becomes the Receiver to
perform all the obligations as such Receiver" and "in the event that
the bank decides not to take over the receivership, the joint
management continues." 20
From the evidence on record, it is palpably clear that petitioner
Citibank did, in fact, assume receivership. A letter 21 dated April 1,
1975 sent by petitioner to the private respondent, reads:
1, 1975
Anama Engineering Service Group
114 R. Lagmay Street
San Juan, Rizal
Attention: Mr. Douglas Anama
Gentlemen:
Pursuant to the Court order, we have decided to take
over your machine shop as Receiver.
We are hereby appointing Mr. Artemio T. Gonzales as
our representative. Verytruly yours, FIRST NATIONAL
CITY BANK By: P.R. REAL, JR. Assistant
ManagerPetitioner cannot therefore deny that nine
days after the trial court issued the order of
receivership, it informed he private respondent that it
would, as it did, assume receivership.
The Court of Appeals found that the requirements of Section 5, Rule
59 on receivership were not complied with by the petitioner,
particularly the filing or posting of a bond and the taking of an oath.
It should be noted that under the old Rules of Court which was in
effect at the time this case was still at trial stage, a bond for the
appointment of a receiver was not generally required of the
applicant, except when the application was ex parte. 22 Therefore,
petitioner was not absolutely required to file a bond. Besides, as
stipulated in the chattel mortgage contract between the parties,
petitioner, as the mortgagee, is entitled to the appointment of a
receiver without a bond.
However, the Court of Appeals was right in finding a defect in such
assumption of receiver in that the requirement of taking an oath has
not been complied with Section 5, Rule 59, states:
Sec. 5. Oath and bond of receiver. Before entering
upon his duties, the receiver must be sworn to perform
them faithfully, and must file a bond, executed to such
person and in such sum as the court or judge may
direct, to the effect that he will faithfully discharge theduties of receiver in the action and obey the orders of
the court therein.
Consequently, the trail court erred in allowing the petitioner to
assume receivership over the machine shop of private respondent
without requiring the appointed receiver to take an oath.
V
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In light of the foregoing, the answer to the fifth assignment of errors
is in the negative. For erroneously issuing the alias writ of seizure
without inquiring into the sufficiency of the replevin bond and for
allowing petitioner to assume receivership without the requisite
oath, the Court of Appeals aptly held that the trial court acted with
grave abuse of discretion in dealing with situation.
Under the Revised Rules of Court, the property seized under a writ of
replevin is not to be delivered immediately to the plaintiff. 23 This is
because a possessor has every right to respected in its possession
and may not be deprived of it without due process. 24
As enunciated by this Court in the case ofFilinvest Credit
Corporation vs. Court of Appeals, 25
The reason why the law does not allow the creditor to
possess himself of the mortgaged property with
violence and against the will of the debtor is to be
found in the fact that the creditor's right of possession
is conditioned upon the fact of default, and the
existence of this fact may naturally be the subject of
controversy. The debtor, for instance, may claim ingood faith, and rightly or wrongly, that the debt is
paid, or that for some other reason the alleged default
is nonexistent. His possession in this situation is as
fully entitled to protection as that of any other person,
and in the language of Article 446 of the Civil Code, he
must be respected therein. To allow the creditor to
seized the property against the will of the debtor
would make the former to a certain extent both judge
and executioner in his own cause a thing which is
inadmissible in the absence of unequivocal agreement
in the contract itself or express provision to the effect
in the statute.
WHEREFORE, for lack of merit, the petition is hereby DISMISSED. No
pronouncement as to costs.
SO ORDERED.
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Traders Royal Bank vs. IAC, et. Al., June 17, 1997
G.R. No. 111357 June 17, 1997
TRADERS ROYAL BANK, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, and HEIRS OF THE LATE
JOSE C. TAYENGCO, respondents.
R E S O L U T I O N
ROMERO,J.:
The factual aspects of this case have already been resolved by this
Court in G.R. No. 63855, 1 wherein we ruled the deceased spouses
Jose and Salvacion Tayengco to be the lawful owners of the
properties under receivership, and G.R. No. 60076, 2 where we
affirmed the validity of the appointment of petitioner Traders Royal
Bank (TRB) as receiver pendente lite.
In view of these rulings, the receivership proceeding was duly
terminated. Thus, TRB rendered its final accounting of the funds
under receivership wherein it retained the amount of P219,016.24 as
its receiver's fee, instead of turning over the entire fund to the
Tayengcos. The Regional Trial Court of Iloilo, Branch 5, in an order
dated July 5, 1988, approved the final accounting submitted by TRB,
including the deduction of its fee from the fund under receivership.
The Tayengcos assailed said order before the Court of
Appeals, 3 contending that TRB's compensation should have been
charged against the losing party and not from the funds under
receivership.
In resolving this issue the Court of Appeals, 4in its decision dated
February 12, 1993, ruled that TRB cannot deduct its fee from the
funds under its receivership since this must be shouldered by the
losing party or equally apportioned among the parties-litigants.
Consequently, TRB was ordered to return the P219,016.24 to the
Tayengcos, and the losing parties, Cu Bie, et al., were held solely
liable for TRB's compensation. 5TRB filed a motion for
reconsideration, but this was denied by the appellate court in its
resolution dated August 17, 1993. 6
In this appeal, TRB raises the following errors allegedly committed by
the Court of Appeals:
1. The Hon. IAC (should be CA) erred when it rendered
the judgment and Resolution ordering the return by
TRB of Receiver's Fee of P219,016.24 to the heirs of
Jose Tayengco, as it reversed the Decision of theSupreme Courtin the case of Jose Tayengco
vs.Hon. Ilarde, TRB, et al., GR No. 60076, which
ordered the Trial Court to "settle the account of the
receiver, TRB" to thereafter discharge the receiver and
charged as cost against the losing party;
2. The Hon. IAC had no jurisdiction in CA-GR. 21423
and erred in knowingly taking cognizance and
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rendering the judgment and resolution on the issue of
the payment of receiver's fee to TRB since the same
subject matter was already within the jurisdiction of
the Supreme Court in GR. No. 60076;
3. The Hon. IAC erred when it rendered the judgment
and Resolution which reversed the final Supreme
Court Decision in GR. No. 60076 on the payment of the
receiver's fee to TRB as it violated the Rule on "Bar by
Final Judgment". 7(Emphasis supplied).
TRB's assignment of errors submits for resolution two vital issues: (1)
Is the Court of Appeals decision dated February 12, 1993 barred
by res judicata by virtue of our ruling in G.R. No. 60076 recognizing
the propriety of TRB's appointment as receiver? (2) Who is
responsible for TRB's receiver's fee?
With respect to the first assigned error, we are not persuaded.
The elements ofres judicata are: (1) The previous judgment has
become final; (2) the prior judgment was rendered by a court having
jurisdiction over the matter and parties; (3) the first judgment was
made on the merits; and (4) there was substantial identity of parties,
subject matter, and cause of action, as between the prior and
subsequent actions. 8
The difference between the two causes of action is unmistakable. In
G.R. No. 60076, the petition was for the annulment of the trial court's
order requiring Tayengco to render and submit an accounting of the
rental of the buildings and apartments, while C.A. G.R. CV No. 21423
was an appeal questioning the order of the trial court authorizing the
deduction by TRB of its compensation from the receivership funds.
There is clearly no identity of causes of action here. Clearly, the last
element ofres judicata is absent in the case at bar.
Procedural obstacles aside, we now answer the principal query posed
in the instant petition.
Nobody questions the right of TRB to receive compensation. Section
8, Rule 59 of the Rules of Court, however, explicitly provides for the
manner in which it shall be paid for its services, to wit:
Sec. 8. Termination of receivership; compensation of
receiver. Whenever the court, of its own motion or
on that of either party, shall determine that thenecessity for a receiver no longer exists, it shall, after
due notice to all interested parties and hearing, settle
the accounts of the receiver, direct the delivery of the
funds and other property in his hands to the persons
adjudged entitled to receive them, and order the
discharge of the receiver from further duty as
such. The court shall allow the receiver such
reasonable compensation as the circumstances of thecase warrant, to be taxed as costs against the
defeated party, or apportioned, as justice requires.
(Emphasis supplied).
It is, therefore, clear that when the services of a receiver who has
been properly appointed terminates, his compensation is to be
charged against the defeated party, or the prevailing litigant may be
made to share the expense, as justice requires. Consequently, the
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trial court's order approving TRB's compensation to be charged
solely against the funds under its receivership is without legal
justification; hence, it was correctly reversed by the Court of
Appeals.
IN VIEW OF THE FOREGOING, the decision appealed from is
AFFIRMED. Costs against petitioner.
SO ORDERED.