Case Name: Rocha and Co. v. Crossfield, 6 Phil.

355

Topic: IV.K.- Receivership - Ground for Appointment

Principle:
An order appointing a receiver of the property of a defendant is beyond the jurisdiction of the court
and void when the complaint contains no allegation that the plaintiff is the owner of the property for
which a receiver is appointed, or that he has any interest therein or lien thereon and when the only
prayer of the complaint is for a money judgment against the defendant.

SHORT VERSION

Facts:
X is a member of Partnership Y. Stipulations within the partnership granted the partner to withdraw
capital within 6 months plus interests. X withdrew his capital, including interests. However, upon
claiming of said capital, partnership Y refused to give out the complete amount. X made an application
to the court for the appointment of a receiver and was granted by the court pending action.

Question:
Was the court's appointment of the receiver valid?

Answer:
No.

The grounds for appointing are the following:

"(1) When a corporation has been dissolved, or is insolvent, or is in imminent danger of insolvency, or
has forfeited its corporate rights.

"(2) Where it is made to appear by the complaint or answer, and by such other proof as the judge may
require, that the party making the application for the appointment of receiver has an interest in the
property or fund which is the subject of the action and it shown that the property or fund is in danger of
being lost, removed, or materially injured unless a receiver shall be appointed to guard and preserve
it.

"(3) In an action by the mortgagee for the foreclosure of a mortgaged where it appears that the
property is in danger of being wasted or materially injured and that its value is probably insufficient to
discharge the mortgage debt.

"(4) Whenever in other cases it shall be made to appear to the court that the appointment of a receiver
is the most convenient and feasible means of preserving and administering the property which is the
subject of litigation during the pendency of the action."

In this case, the grounds cited does not fall within any of the provisions which a receiver could be
appointed. Hence, the order appointing a receiver was illegal and void.

LONG VERSION

Facts:
Figueras is a general partner of Carman & Co, a limited partnership, with two others; that in
accordance with the terms of the articles of partnership any one of the partners had the right to
withdrawn from the partnership upon six months’ notice; that upon giving the said notice his
participation in the profits of the partnership should cease but that his capital should draw interest at
the market rate until it was returned, and that it should be returned. Figuera allegedly withdrew from
the partnership. Furthermore, the partnership was renamed under Rocha & Co., which the latter
company assumed all the debts and liabilities. The complaint stemmed from Figuera withdrawal of his
interest from the partnership, with his claim of the capital does not conincide with how much the
partnership is willing to handover which was lower.

Figueras, after the presentation complaint, made an application to the court for the appointment of a
receiver of the property of Rocha & Co. A receiver was appointed who afterwards took possession of
the entire property of Rocha & Co., and thereupon Rocha & Co., commenced this original action of
certiorari asking that the receiver be declared void because the court allowing it had no jurisdiction to
appoint such receiver.

Question:
Was the court's appointment of the receiver valid?

Answer:
No.

Requisites of appointing a receiver:

"(1) When a corporation has been dissolved, or is insolvent, or is in imminent danger of insolvency, or
has forfeited its corporate rights.

"(2) Where it is made to appear by the complaint or answer, and by such other proof as the judge may
require, that the party making the application for the appointment of receiver has an interest in the
property or fund which is the subject of the action and it shown that the property or fund is in danger of
being lost, removed, or materially injured unless a receiver shall be appointed to guard and preserve
it.

"(3) In an action by the mortgagee for the foreclosure of a mortgaged where it appears that the
property is in danger of being wasted or materially injured and that its value is probably insufficient to
discharge the mortgage debt.

"(4) Whenever in other cases it shall be made to appear to the court that the appointment of a receiver
is the most convenient and feasible means of preserving and administering the property which is the
subject of litigation during the pendency of the action."

The case at bar does not fall within any of the provisions which a receiver could be appointed, the
order making such appointment was void and was beyond the jurisdiction of the Code of Civil
Procedure.
Case Name: Paranete v. Tan, G.R. No. L-3791, November 29, 1950

Topic: IV.K.- Receivership - Ground for Appointment

Principle:

A trial court issuing an order requiring the party in possession of the property whose ownership is in
litigation, to make an accounting and to deposit the proceeds of the sale of the harvest with the Clerk
of Court acted in excess of its jurisdiction. That order, in effect, made the Clerk of Court a sort of a
receiver charged with the duty of receiving the proceeds of sale and the harvest of every year during
the pendency of the case with the disadvantage that the Clerk of Court has not filed any bond to
guarantee the faithful discharge of is duties as depository; and considering that in actions involving
title to real property, the appointment of a receiver cannot be entertained because its effect would be
to take the property out of the possession of the defendant of its necessity to save the plaintiff from
grave and irremediable loss or damage.

SHORT VERSION ONLY DUE TO VERY SHORT CASE.

Facts:
Respondents filed a case in the Court of First Instance for the recovery of parcels of land against
Petitioners and six other codefendants. Plaintiffs filed a petition for a writ of preliminary injunction to
oust defendants from the lands and have possession of said lands. Defendants moved for
reconsideration of writ, respondent judge reconsidered his order, but required the defendants to render
an accounting of the harvest, as well as all future harvests, and to deposit the proceeds of the sale
with the clerk of court.

Question:
Did the respondent judge exceeded his jurisdiction in issuing his order?

Answer:
Yes.

Jurisprudence dictates that in actions involving title to real property, the appointment of a receiver
cannot be entertained because its effect would be to take the property out of the possession of the
defendant, except in extreme cases when there is clear proof of its necessity to save the plaintiff from
grave and irremediable loss or damage, it is evident that the action of the respondent judge is
unwarranted and unfair to the defendants.

In the current case, one of the defendants, has been in possession of the lands, as owner, and that
during the years had made improvements. The improvements never involved the plaintiffs. Hence, the
situation does not warrant the placing of lands in the hands of a neutral person as is required when a
receiver is appointed, and to do so would be unfair against the defendants.
Case Name: Citibank NA v. CA, G.R. No. 61508. March 17, 1999

Topic: IV.L - Oath, Bond

Principle:
Although parties entered into a stipulation in a chattel mortgage that the mortgagee is entitled to the
appointment of a receiver without a bond. Such assumption will not exempt the receiver if the latter
failed also to comply in taking an oath as required by section 5, rule 59. 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.

SHORT VERSION

Facts:
X took a loan from Y, and executed a promissory for such loan. A chattel mortgage was constituted to
secure the loan. Due to non-prompt payment, Y filed a case against X for payment of loan. Y asked
the court to issue a Writ of Seizure, however, respondent opposed the motion claiming non-
compliance with the requirement of a receiver's bond and oath of office.

Question:
Was the issued writ of seizure invalid?

Answer:
Yes.

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.

In this case, the old rules still applies which means that the bond of a receiver was not required,
however, the receiver is required to take oath. Hence, by not taking oath to assume receivership, the
court erred in the appointment of a receiver.

LONG VERSION

Facts:
Respondent, Anama, took a loan from Citibank in which Anama executed a promissory note to pay the
plaintiff. A chattel mortgage was constituted in favor of petitioner to secure payment of loan. For failure
of respondent to pay, Petitioner, Citibank, filed a verified complaint against Anama for collection of
money. 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.
Petitioner presented a Motion for the Issuance of an Alias Writ of Seizure, ordering the sheriff to seize
and dispose of the properties involved. Private respondent opposed the motion claiming, among
others. there was non-compliance with the requirement of a receiver's bond and oath of office.

RTC: Granted the motion for alias writ of seizure.

CA: Trial court acted with grave abuse, citing rules on replevin and receivership have not been
complied.
Questions:
Was there grave abuse of descretion issuing a writ of receivership?

Answer:
Yes.

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.

To 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. 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. Consequently, the trial 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.
Case Name: Martinez v. Grano 49 Phil 214

Topic: IV.N – Powers

Principle:

DUTY OF RECEIVER TO PRESENT VOUCHERS FOR DISBURSEMENT AND EXPENSES. — It is a

dereliction of duty on the part of a receiver to fail to submit vouchers, when practicable, showing
disbursements and expenses on account of the trust property. A failure to produce such vouchers
gives rise to unfavorable inferences against the receiver.

ADMINISTRATION OF RECEIVERSHIP PROPERTY. — In the administration of receivership property

the receiver is accountable for the income that should be received in the exercise of reasonable
diligence.

SHORT VERSION

Facts:
X was appointed receiver by the court in a land ownership dispute. He was then ordered to administer
the property (land with coconut groves of the petitioner) and preserve it. Later, the court annulled the
receivership and it is dissolved. X, presented a claim that he is a creditor of the receivership for his
spendings without presenting any voucher for money or evidence for his claims. The court ordered
that in the event the plaintiffs should not pay off this balance within three months, the property
pertaining to the receivership should be sold for the satisfaction of said claim.

Issue:
Can X be a creditor to the receivership?

Ruling:
No.

Speaking in terms of the doctrine of the civil law, we may say that the failure of the trustee to
administer the property for the benefit of all persons in interest entitles the plaintiffs to have the
contract of agency and administration rescinded; and if necessary to the accomplishment of justice,
we should not hesitate to displace such unfaithful trustee.

One of the duties of a receiver is to to submit vouchers, when practicable, showing disbursements and
expenses on account of the trust property. A failure to produce such vouchers gives rise to unfavorable
inferences against the receiver. X showed no proof of disbursement and expenses on the account of
the trust property. Furthermore, X did not show any proof of the accountable income that he received
from the administration of the property. A receiver could be a creditor or debtor to the receivership
depending on the book of accounts.

LONG VERSION

Facts:
While the case of Martinez vs. Graño (42 Phil., 35), was pending in the Court of First Instance of
Laguna, the plaintiffs found themselves unable to meet the financial requirements of the litigation for
attorney's fees, costs, and other expenses. They applied to Estanislao Reyes, son-in-law of Sebastian
Martinez, for the purpose of getting him to contract with lawyers for necessary services and to pay the
indicental expenses of the appeal.
A formal contract was executed between Martinez Heirs and Estanislao Reyes. the following are the
principal features:
(1) Reyes agreed to advance and pay the attorney's fees, expenses of documents, and court costs, —
for all which the individuals forming the party of the first part agreed jointly and severally to reimburse
him "in confirmity with an exact statement of accounts to be rendered by him";
(2) Reyes further agreed to take over the administration of the properties involved in the litigation and
to pay the taxes accruing thereon and all the liens incumbering the property, principally the mortgage
lien existing in favor of a building and loan by the parties that in the Hogar Filipino, it being
contemplated by the parties that in the event the litigation ended favorably to the heirs, Clemencia
Graño, who was then in possession of the property, would be substituted by Reyes, with the
permission of the court and consent of Hogar Filipino;
(3) it was agreed that in payment for his services, and as a free gift, the party of the first part would
transfer to him one thousand fruiting coconut trees such as Reyes might select from the trees then in
litigation, but these trees were further specified in the contract as being those then planted and
bearing upon a parcel of land of an area of six hectares pertaining to the heirs of Inocente Martinez,
deceased.

Paragraph six of the same contract provides:

Until all the incumbrances burdening the property which is the subject of litigation are fully paid and
also until the party of the first part has completely reimbursed the part of the second part for all the
expenses advanced by the party of the second part on account of the litigation, the latter, Estanislao
Reyes, or his legal representative, shall have absolute power over the administration and gathering
the nuts, for his own benefit and in order that he may pay all the charges burdening the property
subject to the litigation, it being the sole duty of the party of the second part to present annually, to
anyone of the party of the first part, an exact statement of the income obtained and expenses incurred
upon whatever account, such as the cost of the gathering and cleaning (of the nuts) and caring for the
trees.

Thereafter, Judge Llorente, then presiding in the Laguna court, appointed Reyes receiver of the
property, upon application of the plaintiffs Judge Isidro Paredes, then presiding in the Laguna court,
entered an order annulling and dissolving the receivership, and requiring Reyes to render his accounts
as receiver within fifteen days from notification of the order. This order was upon appeal affirmed by
this court. In the end Judge Paredes approved the accounts as submitted by Reyes, declared him to
be creditor of the receivership in the amount of P25,230.21, to July, 1926, and ordered that, in the
event the plaintiffs should not pay off this balance within three months, all of the property pertaining to
the receivership (with the exception of the lot containing one thousand trees set aside for Reyes in the
eight paragraph of the contract) should be sold by the sheriff for the satisfaction of said claim. It is from
this order that the present appeal is prosecuted by the plaintiffs.

Notes:
Case filed: filed to the RTC, dissolution of receivership.

Antecedents from the source case: Martinez vs Grano GR L-16709.

- Juan Martinez and wife Macaria Ticson, both deceased, had a large estate of properties.
- One of their descendant, Clemencia Grano, was appointed guardian.
- The properties were mortgaged (sold under pacto de retro) to Tiaoqui.
- To redeem or payoff for the properties, the heirs of Martinez contracted with “El Hogar Filipino”
wherein stipulated were “El Hogar Filipino” will payoff the debt to Tiaoqui. Since the sale was pacto de
retro, to make it simple, the properties were bought back under the name of Clemencia Grano and
subsequently mortgaged to “El Hogar Filipino”
- Conflict arose when the heirs would now redeem the properties but Clemencia Grano claims that she
is the sole owner of the properties. Hence, the series of cases, including this...
Question:
Is the dissolving of the receivership of Reyes, and declaring him as creditor correct?

Answer:
No.

Speaking in terms of the doctrine of the civil law, we may say that the failure of the trustee to
administer the property for the benefit of all persons in interest entitles the plaintiffs to have the
contract of agency and administration rescinded; and if necessary to the accomplishment of justice,
we should not hesitate to displace such unfaithful trustee.

Reyes did not present any evidence of the expenses he had made to preserve the property subject of
the litigation. Furthermore, he did not even present proofs of the income he had gained in the
administration of the property (the coconut groves). He therefore cannot claim that he is the creditor of
the receivership. Ironically, the court declares that he is actually a debtor to the receivership when the
court found out the true income of the property. It is unreasonable and impossible that a coconut grove
containing 7,000 trees in bearing, and valued at from P60,000 to P70,000 should have produced so
little as P2,929.42 return in 4yrs, and if it is true that the receiver did not get more, it must have been
due to his lack of diligence.
Case Name: Platon vs Sandoval, 74 Phil 731

Topic: IV.N – Powers

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

SHORT VERSION

Facts:
Spouses X and Y sold a parcel of land to W(brother of X). Upon the death of Y, XX(son of Y) filed a
case to annul the sale. The said property was put into receivership and Z was appointed receiver. Y
move to discharge the receiver on the ground that there was no more necessity for the continuation of
the receivership inasmuch as W had renounce his claim to said property and the heirs of Y including
the administrator X had submitted a project of partition in the intestate proceeding. Z files a motion for
reconsidreation on the grounds that in the event X wins the case on the litigato of the land, the
receiver has to deliver to him the properties, thereby rendering the project of partition useless and of
no value. The judge denies the motion.

Issue:
Was the denial proper?

Ruling:
Yes.

Provisional remedies are temporary, auxiliary, and ancillary remedies available to a litigant for the
protection and preservation of his rights while the main action is pending. They are writs and
processes which are not main actions and they presuppose the existence of a principal action.

The receiver, being an officer of the court and not the agent or representative of either party to the
action, has no legal interest or standing to question the court's determination that the necessity for the
continuation of the receivership has ceased to exist. Z being the appointed receiver, he becomes an
officer of the court. Since the receiver derives its power from the appointment of the court.It is beyond
the powers of the receiver to question the order of the court to terminate the receivership. The spring
cannot go beyond its source.

LONG VERSION

Facts:
This case stems from the case of "Ines Mailom vs. Antonio Castillo and Roman Castillo," to annul an
order issued by the respondent judge whereby the receiver appointed was discharged, and to compel
the respondent judge to approve the appeal of said from said order.

A civil case was instituted by Ines Mailom, one of the heirs of the deceased Servanda Mailom, to annul
the sale of certain parcels of land made by the spouses Roman Castillo and Servanda Mailom
(previous to the death of the latter) in favor of Antonio Castillo, a brother of Roman. After the death of
Servanda Mailom, her husband Roman Castillo was appointed administrator of the estate left by her.

The herein petitioner Jose Platon was appointed receiver of the property in litigation in said civil case
at the instance of Ines Mailom. Ines Mailom moved to discharge the receiver on the ground that there
was no more necessity for the continuation of the receivership inasmuch as the defendant Antonio
Castillo had renounce his claim to said property and the heirs of the deceased Servanda Mailom,
including the administrator Roman Castillo, had submitted a project of partition in the intestate
proceedings of the deceased Servanda Mailom, respondent judge granted the motion, discharging the
receiver and ordering him to deliver the properties under receivership. The receiver Jose Platon filed a
motion to set aside said order on the ground that in the event Antonio Castillo wins the case, the
receiver has to deliver to him the properties, thereby rendering the project of partition useless and of
no value. The respondent judge denies it.

Issue:
Was there proper discharge of receivership?

Ruling:
Yes.

Provisional remedies are temporary, auxiliary, and ancillary remedies available to a litigant for the
protection and preservation of his rights while the main action is pending. They are writs and
processes which are not main actions and they presuppose the existence of a principal action.

With regard to the order discharging the receiver and terminating the receivership, we find no excess
of jurisdiction nor grave abuse of discretion on the part of the respondent judge. The property in
litigation and under receivership belongs to the intestate estate of the deceased Servanda Mailom,
deceased wife of the petitioner Roman Castillo. The defendant Antonio Castillo, who is not a heir of
said deceased, does not claim ownership of said property and has signed his conformity to the
discharge of the receiver. And the heirs of said deceased have agreed upon the partition of said
property with the approval of the probate court. It seems clear, therefore, that the declaration of the
respondent judge that there was no longer any necessity for the continuation of the receivership was
well founded. In any event, it cannot be said that the respondent judge exceeded his jurisdiction or
abused his discretion in making such a finding. Furthermore, the receiver, being an officer of the court
and not the agent or representative of either party to the action, has no legal interest or standing to
question the court's determination that the necessity for the continuation of the receivership
has ceased to exist.