provisional remedies rule 59
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Provisional Remedies Rule 59 1
[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.
D E C I S I O N
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 highestbidder. 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 filedon 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]
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 al
damages defendant may sustain by reason of the receivership
said Ricardo Pesquera is authorized to assume the powers of areceiver 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 o
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 o
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 andrespondent'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 o
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 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 injuredunless 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
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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 thepleadings 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 [11] and 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 IcePlant;
6.3 The rapid reduction of the Ice Plant into a scrap heap because
of evident incompetence, neglect and vandalism."[13]
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
preservation, said remedy cannot be applied for and granted.[14]
In the instant case, we do not find the necessity for theappointment 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 iceplant.
Moreover, the receiver appointed by the court appears to
be a representative of petitioners. Respondent bank alleges tha
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 no
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 necessitytherefor in order to save the plaintiff from grave and
irremediable loss or damage.[20] It 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 cour
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 cour
should have refrained from ruling on the motion to dismissbecause 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-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 by the unjust actuations of the Defendant;
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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 ofpayment. 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, saidperiod 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
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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Provisional Remedies Rule 59 4
JULIO A. VIVARES and G.R. No. 155408
MILA G. IGNALING,
Petitioners,
Present:
QUISUMBING, J.,
Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
ENGR. JOSE J. REYES,Respondent Promulgated:
February 13, 2008
x---------------------------------------------------------------------------------x
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 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 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
for Partition and Recovery of Real Estate before the Camiguin
RTC, Branch 28 entitled Julio 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 estateof 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 of lis
pendens upon the instance of petitioners.
On March 15, 2000, petitioners filed a Motion to Place
Properties in Litigation under Receivership[4] before the tria
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 tha
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 severacommon 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 counse
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 o
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 States as early as July 23, 2000 for medica
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, 2000petitioners filed their undated Opposition to Motion to Discharge
Receiver.
Subsequently, respondent filed a Motion to Cance
Notice of Lis 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 of li
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pendens. Petitioners filed their Opposition to the Motion to
Cancel Lis Pendens.
Consequently, on May 22, 2001, the trial court issued a
Resolution, denying respondents motions to discharge receiver
and cancel the notice of lis 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 of lis 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 receiverhas no sufficient basis, and further held that the rights of
petitioners over the properties in litigation are doubly protected
through the notices of lis 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 of lis 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.
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 SIMPLY BECAUSE
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 severa
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 o
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 o
Severino based on the oral partition between the siblings. To lend
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credence to the 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:
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 ministeria
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 of lis 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 of lis 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 noneed for a receiver to look after the disputed properties.
On the issue of lis pendens, petitioners argue that the mere fac
that a notice of lis 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 property pendente lite, for the title to be issued to
the transferee will merely carry the annotation that the lot is
under litigation.Hence, the notice of lis pendens, by itself, may no
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 actua
possession over some of the disputed properties which are
entitled to protection. Between the possessor of a subjec
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 aright 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 o
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.
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Anent the third issue that the cancellation of the notice of lis
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.
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
of lis 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 of lis pendens on TD No. 112 stays until the final ruling on
said issues is made.
WHEREFORE, the petition is PARTLY GRANTED. The
June 18, 2002 CA Decision in CA-G.R. SP No. 67492
is AFFIRMED with MODIFICATION insofar as it ordered the
cancellation of the notice of lis 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 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 of lis pendens in TD
No. 112, including the portion allegedlybelonging 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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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 for a
temporary restraining order faulting the Court of Appeals1 with
grave abuse of discretion for nullifying the lower court's order of
seizure of mortgaged properties subject of a case for sum of
money and 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 Notestipulated 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 any
installment 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 in the 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;
(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 o
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 plaintiff as his
attorney-in-fact with authority to enter thepremises of the defendant and take actua
possession of the mortgaged chattels withou
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 o
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 ofa 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
foreclosure thereof as provided under Section 14 of the Chatte
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 o
the complaint, and averring inter alia (1) that the remedy o
replevin was improper and the writ of seizure should be vacated
(2) that he signed the 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 loanapplied 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
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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 thetrial 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 theIssuance of an Alias Writ of Seizure, ordering the sheriff to seize
the properties involved 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 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 thecase 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 for Alias Writ of Seizure, ruling thus:
WHEREFORE, the motion for alias writ o
seizure is hereby granted. At any rate, this
Order gives another opportunity for defendan
and the intervenor who claims to be a part
owner to file a counterbond under Sec. 60 o
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 alreadyordered. 6
Accordingly, by virtue of the Alias 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 o
Appeals a Petition for Certiorari and Prohibition 7 with 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 Chatte
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 the requirement of a
receiver's bond and oath of office. The decretal portion of theassailed 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.
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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 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 meritsand 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 o
the parties on the basis of the disclosed facts
irrespective of formal technical or dilatory objectionsand 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 o
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 ofAppeals 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 o
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;
(b) That the property is wrongfully
detained by the defendant, alleging
the cause of detention thereo
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Provisional Remedies Rule 59 11
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 afinding 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 substantialcompliance 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 bestated 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 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 isunder 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 exemp
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 allegesthat 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 pricewhich an article would command in the ordinary course o
business, that is to say, when offered for sale by one willing to
sell, but not under compulsion to sell and purchased by another
who is willing to buy, but under no obligation to purchase
it". 13Petitioner 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 tha
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 responden
interposed the defense of lack of affidavit of merit only in his
Reply to the 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:
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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 to dismiss 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 availablefor 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 thatit 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 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 tothe 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 defendan
objects to the sufficient of the plaintiff's bond
or of the surety or sureties thereon, he cannotrequire 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. — I
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 thereturn of the property as provided in the las
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
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defendant in a 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 aredelivery 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 a counter-bond precisely because he objected
to the sufficiency of the bond posted by plaintiff.
Therefore, he need not file a counter-bond or redeliverybond. 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, Rule59 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, withoutbond, of the mortgaged properties and of such
properties, 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 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 21dated April 1
1975 sent by petitioner to the private respondent, reads:
April 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.
Very truly yours,
FIRST NATIONAL CITY BANK
By:
P.R. REAL, JR.
Assistant Manager
Petitioner cannot therefore deny that nine days after the tria
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 ineffect 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 wasex 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:
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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 the
duties 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 privaterespondent without requiring the appointed receiver to take an
oath.
V
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 awrit 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 of Filinvest 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 in good 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 inthe 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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[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,[4] in 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.[5] TRB
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 the Supreme Court in 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 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] (Underscoring
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 of res judicata are: (1) The previous judgment
has become final; (2) the prior judgment was rendered by a court
having jurisdiction over the matter and parties; (3) the first
judgment was made on the merits; and (4) there was substantia
identity of parties, subject matter, and cause of action, asbetween the prior andsubsequent 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 appea
questioning the order of the trial court authorizing the deduction
by TRB of its compensation from the receivership funds. There is
clearly no identity of causes of action here. Clearly, the last
element of res judicata is absent in the case at bar.
Procedural obstacles aside, we now answer the principa
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 the necessity 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 t
he circumstances of the casewarrant, to be taxed as costs against the defeatedparty, or apport
oned, as justice requires." (Underscoring 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 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.