1. ANTONIETTA O.

DESCALLAR, petitioner,
vs.
THE HON. COURT OF APPEALS and CAMILO F. BORROMEO, respondents.
Gilberto C. Alfafara for petitioner.
Bernadito A. Florido for private respondent.

GRIO-AQUINO, J.:
Assailed in this petition for review on certiorari is the decision dated July 29, 1992 of the Court
of Appeals in CA-G.R. SP No. 27977, affirming the orders dated March 17, 1992 and April 27,
1992 of the trial court in Civil Case No. MAN-1148, granting respondent's petition for
receivership and denying petitioner's motion for reconsideration thereof.
On August 9, 1991, respondent Camilo Borromeo, a realtor, filed against petitioner a civil
complaint for the recovery of three (3) parcels of land and the house built thereon in the
possession of the petitioner and registered in her name under Transfer Certificates of Title Nos.
24790, 24791 and 24792 of the Registry of Deeds for the City of Mandaue. The case was
docketed as Civil Case No. MAN-1148 of the Regional Trial Court, Branch 28, Mandaue City.
In his complaint, Borromeo alleged that he purchased the property on July 11, 1991 from
Wilhelm Jambrich, an Austrian national and former lover of the petitioner for many years until
he deserted her in 1991 for the favors of another woman. Based on the deed of sale which the
Austrian made in his favor, Borromeo filed an action to recover the ownership and possession of
the house and lots from Descallar and asked for the issuance of new transfer certificates of title
in his name.
In her answer to the complaint, Descallar alleged that the property belongs to her as the
registered owner thereof; that Borromeo's vendor, Wilhelm Jambrich, is an Austrian, hence, not
qualified to acquire or own real property in the Philippines. He has no title, right or interest
whatsoever in the property which he may transfer to Borromeo.
On March 5, 1992, Borromeo asked the trial court to appoint a receiver for the property during
the pendency of the case. Despite the petitioner's opposition, Judge Mercedes Golo-Dadole
granted the application for receivership and appointed her clerk of court as receiver with a bond
of P250,000.00.
Petitioner filed a motion for reconsideration of the court's order, but it was denied.

Petitioner sought relief in the Court of Appeals by a petition for certiorari (CA-G.R. SP No.
27977 "Antonietta O. Descallar vs. Hon. Mercedes G. Dadole, as Judge, RTC of Mandaue City,
Branch 28, and Camilo F. Borromeo").
On July 29, 1992, the Court of Appeals dismissed the petition for certiorari.
In due time, she appealed the Appellate Court's decision to this Court by a petition
for certiorari under Rule 45 of the Rules of Court.
In a nutshell, the issue in this appeal is whether the trial court gravely abused its discretion in
appointing a receiver for real property registered in the name of the petitioner in order to transfer
its possession from the petitioner to the court-appointed receiver. The answer to that question is
yes.
The Court is amazed that the trial court and the Court of Appeals appear to have given no
importance to the fact that the petitioner herein, besides being the actual possessor of the
disputed property, is also the registered owner thereof, as evidenced by TCTs Nos. 24790, 24791,
and 24792 issued in her name by the Register of Deeds of Mandaue City on December 3, 1987.
Her title and possession cannot be defeated by mere verbal allegations that although she appears
in the deed of sale as vendee of the property, it was her Austrian lover, Jambrich, who paid the
price of the sale of the property (Sinoan vs. Sorogan, 136 SCRA 407). Her Torrens certificates
of title are indefeasible or incontrovertible (Sec. 32, P.D. 1529).
Even if it were true that an impecunious former waitress, like Descallar, did not have the means
to purchase the property, and that it was her Austrian lover who provided her with the money to
pay for it, that circumstance did not make her any less the owner, since the sale was made to her,
not to the open-handed alien who was, and still is, disqualified under our laws to own real
property in this country (Sec. 7, Art. XII, 1987 Constitution). The deed of sale was duly
registered in the Registry of Deeds and new titles were issued in her name. The source of the
purchase money is immaterial for there is no allegation, nor proof, that she bought the property
as trustee or dummy for the monied Austrian, and not for her own benefit and enjoyment.
There is no law which declares null and void a sale where the vendee to whom the title of the
thing sold is transferred or conveyed, paid the price with money obtained from a third person. If
that were so, a bank would be the owner of whatever is purchased with funds borrowed from it
by the vendee. The holding of the trial court and the Court of Appeals that Jambrich,
notwithstanding his legal incapacity to acquire real property in the Philippines, is the owner of
the house and lot which his erstwhile mistress, Antonietta, purchased with money she obtained
from him, is a legal heresy.

In view of the above circumstances, we find the order of receivership tainted with grave abuse of
discretion. The appointment of a receiver is not proper where the rights of the parties (one of
whom is in possession of the property), are still to be determined by the trial court.
Relief by way of receivership is equitable in nature, and a court of equity will not
ordinarily appoint a receiver where the rights of the parties depend on the
determination of adverse claims of legal title to real property and one party is in
possession. (Calo, et al. vs. Roldan, 76 Phil., 445).
Only when the property is in danger of being materially injured or lost, as by the prospective
foreclosure of a mortgage thereon for non-payment of the mortgage loans despite the
considerable income derived from the property, or if portions thereof are being occupied by third
persons claiming adverse title thereto, may the appointment of a receiver be justified (Motoomul
vs. Arrieta, 8 SCRA 172).
In this case, there is no showing that grave or irremediable damage may result to respondent
Borromeo unless a receiver is appointed. The property in question is real property, hence, it is
neither perishable or consummable. Even though it is mortgaged to a third person, there is no
evidence that payment of the mortgage obligation is being neglected. In any event, the private
respondent's rights and interests, may be adequately protected during the pendency of the case by
causing his adverse claim to be annotated on the petitioner's certificates of title.
Another flaw in the order of receivership is that the person whom the trial judge appointed as
receiver is her own clerk of court. This practice has been frowned upon by this Court:
The respondent judge committed grave abuse of discretion in connection with the
appointment of a receiver. . . . The instant case is similar to Paranete vs. Tan, 87
Phil. 678 (1950) so that what was there said can well apply to the actuations of the
respondent judge. . . . "We hold that the respondent judge has acted in excess of
his jurisdiction when he issued the order above adverted to. That order, in effect,
made the clerk of court a sort of a receiver charged with the duty of receiving the
proceeds of sale and the harvest of every year during the pendency of the case
with the disadvantage that the clerk of court has not filed any bond to guarantee
the faithful discharge of his duties as depositary; and considering that in actions
involving title real property, the appointment of a receiver cannot be entertained
because its effect would be to take the property out of the possession of the
defendant, except in extreme cases when there is clear proof of its necessity to
save the plaintiff from grave and irremediable loss of damage, it is evident that
the action of the respondent judge is unwarranted and unfair to the defendants.
(Mendoza vs. Arellano, 36 Phil. 59; Agonoy vs. Ruiz, 11 Phil. 204; Aquino vs.
Angeles David, 77 Phil. 1087; Ylarde vs. Enriquez, 78 Phil. 527; Arcega vs.

Pecson, 44 Off. Gaz., [No. 12], 4884, 78 Phil. 743; De la Cruz vs. Guinto, 45 Off.
Gaz. pp. 1309, 1311; 79 Phil. 304). (Abrigo vs. Kayanan, 121 SCRA 20).
During the pendency of this appeal, Judge Dadole rendered a decision in Civil Case No. MAN1148 upholding Borromeo's claim to Descallar's property, annulling the latter's TCTs Nos. 24790,
24791 and 24792 and ordering the Register of Deeds of Mandaue City to issue new ones in the
name of Borromeo. This circumstance does not retroactively validate the receivership until the
decision (presumably now pending appeal) shall have attained finality.
WHEREFORE, finding grave abuse of discretion in the order of receiver which the respondent
Court of Appeals affirmed in its decision of July 29, 1992 in CA-G.R. SP No. 27977, the petition
for certiorari is hereby GRANTED and the decision of the appellate court, as well as the order
dated March 17, 1992 of the Regional Trial Court of Mandaue City, Branch 28, in Civil Case No.
MAN-1148, are hereby ANNULLED and SET ASIDE. Costs against the private respondent.
2. NATIONAL INVESTMENT AND DEVELOPMENT CORPORATION, EUSEBIO
VILLATUYA MARIO Y. CONSING and ROBERTO S. BENEDICTO, petitioners,
vs.
HON. BENJAMIN AQUINO, in his official capacity as Presiding Judge of Branch VIII of
the Court of First Instance of Rizal, BATJAK INC., GRACIANO A. GARCIA and
MARCELINO CALINAWAN JR., respondents.
G.R. No. L-34213 June 30, 1988
PHILIPPINE NATIONAL BANK, petitioner,
vs.
HON. BENJAMIN H. AQUINO, in his capacity as Presiding Judge of the Court of First
Instance of Rizal, Branch VIII and BATJAK INCORPORATED, respondents.
Cruz, Palafox, Alfonso and Associates for petitioner NIDC in G.R. No. 34192.
The Chief Legal Counsel for petitioner PNB in G.R. No. 34213.
Reyes and Sundiam Law Office for respondent Batjak, Inc.
Duran, Chuanico Oebanda, Benemerito & Associates for private respondents in G.R. Nos.
34192 & 34213.
Tolentino, Garcia, Cruz & Reyes for movant in G.R. No. L-34192.

PADILLA, J.:
These two (2) separate petitions for certiorari and prohibition, with preliminary injunction, seek
to annul and set aside the orders of respondent judge, dated 16 August 1971 and 30 September
1971, in Civil Case No. 14452 of the Court of First Instance of Rizal, entitled Batjak Inc. vs.
NIDC et al." The order of 16 August 1971 1 granted the alternative petition of private respondent
Batjak, Inc. Batjak for short) for the appointment of receiver and denied petitioners' motion to
dismiss the complaint of said private respondent. The order dated 30 September 1971 2 denied
petitioners' motion for reconsideration of the order dated 16 August 1971.
The herein petitions likewise seek to prohibit the respondent judge from hearing and/or
conducting any further proceedings in Civil Case No. 14452 of said court.
Batjak, (Basic Agricultural Traders Jointly Administered Kasamahan) is a Filipino-American
corporation organized under the laws of the Philippines, primarily engaged in the manufacture of
coconut oil and copra cake for export. In 1965, Batjak's financial condition deteriorated to the
point of bankruptcy. As of that year, Batjak's indebtedness to some private banks and to the
Philippine National Bank (PNB) amounted to P11,915,000.00, shown as follows:
Republic Bank P 2,324,000.00
Philippine Commercial and
Industrial Bank 1,346,000.00
Manila Banking Corporation 2,000,000.00
Manufacturers Bank 440,000.00
Hongkong and Shanghai
Banking Corporation 250,000.00
Foreign Export Advances
(against immediate shipment) 555,000.00
PNB export advance line
(against immediate shipment) 5,000,000.00
TOTAL 11,915,000.00

As security for the payment of its obligations and advances against shipments, Batjak mortgaged
its three (3) coco-processing oil mills in Sasa, Davao City, Jimenez, Misamis Occidental and
Tanauan, Leyte to Manila Banking Corporation (Manila Bank), Republic Bank (RB), and
Philippine Commercial and Industrial Bank (PCIB), respectively. In need for additional
operating capital to place the three (3) coco-processing mills at their optimum capacity and
maximum efficiency and to settle, pay or otherwise liquidate pending financial obligations with
the different private banks, Batjak applied to PNB for additional financial assistance. On 5
October 1965, a Financial Agreement was submitted by PNB to Batjak for acceptance. The
Financial Agreement reads:
PHILIPPINE NATIONAL BANK
Manila, Philippines
International Department
Octobe
r 5,
1965
BATJAK, INCORPORATED
3rd Floor, G. Puyat Bldg.
Escolta, Manila
Attn.: Mr. CIRIACO B. MENDOZA
Vice-President & General Manager
Gentlemen:
We are pleased to advise that our Board of Directors approved for
you the following:
1) That NIDC shall invest P6,722,500.00 in the form of preferred shares of stocks
at 9% cumulative, participating and convertible within 5 years at par into common
stocks to liquidate your accounts with the Republic Bank, Manufacturers Bank &
Trust Company and the PCIB which, however, shall be applied to the latter three
(3) banks accounts with the Loans & Discounts Dept. NIDC shall match your P
10 million subscription by an additional investment of P3,277,500 within a period
of one to two years at NIDC's option;

2) That NIDC will guaranty for five (5) years your account with the Manila
Banking Corporation;
3) That the above banks (Republic Bank, PCIB, MBTC and Manila Banking
Corp.) shall release in favor of PNB the first and any mortgage they hold on your
properties;
4) That you shall exercise (execute) a first mortgage on all your properties located
at Sasa, Davao City; Jimenez, Misamis Occidental; and Tanauan, Leyte and
assign leasehold rights on the property on which your plant at Sasa, Davao City is
erected in favor of PNB;
5) That a voting trust agreement for five (5) years over 60% of the oustanding
paid up and subscribed shares shall be executed by your stockholders in favor of
NIDC;
6) That this accomodation shall be secured by the joint and several signatures of
officers and directors;
7) That the number of the Board of Directors shall be increased to seven (7), three
(3) from your firm and the other four (4) from the PNB-NIDC;
8) That a comptroller, at your expense, shall be appointed by PNB-NIDC to
supervise the financial management of your firm;
9) That the past due accounts of P 5 million with the International Department of
the PNB shall be transferred to the Loans & Discount Department and to be
treated as a Demand Loan;
10) That any excess of NIDC investment as required in Condition 1 after payment
of the obligations to three (3) Banks (RB, MBTC, & PCIB) shall be applied to
reduce the above Demand Loan of P 5 million;
11) That we shall grant you an export advance of P3 million to be used for copra
purchases, subject to the following conditions:
a) That the line shall expire on September 30, 1966 but revocable
at the Bank(s) option;
b) That drawings against the line shall be allowed only when an
irrevocable export L/C for coconut products has been established

or assigned in your favor and you shall assign to us all proceeds of

negotiations to be received from your letters of credit;
c) That drawings against the line be limited to 60% of the peso
value of the export letters of credit computed at P3.50 per $1.00
but total drawings shall not in any event exceed P3,000,000.00;
d) That release or releases against the line shall be covered by
promissory note or notes for 90 days but not beyond the expiry
dates of the coveting L/C and proceeds of said L/C shall first be
applied to the correspondent drawings on the line;
e) That drawings against the line shall be charged interest at the
rate of 9% per annum and subject to 1/2% penalty charge on all
drawings not paid or extended on maturity date; and
f) That within 90 days from date of release against the line, you
shall negotiate with us on equivalent amount in export bills,
otherwise, the line shag be temporarily suspended until the
outstanding export advance is fully liquidated.
We are writing the National Investment & Development Corporation, the
Republic Bank, the Philippine Commercial & Industrial Bank and the
Manufacturers Bank & Trust Company and the Manila Banking Corporation
regarding the above.
In connection with the above, kindly submit to us two (2) copies of your board
resolution certified to under oath by your corporate secretary accepting the
conditions enumerated above authorizing the above transactions and the officer or
officers to sign on behalf of the corporation.
Thank you.
Very
truly
yours,
(SGD.)
JOSE
B.
SAMS
ON 3

The terms and conditions of the Financial Agreement were duly accepted by Batjak. Under said
Agreement, NIDC would, as it actually did, invest P6,722,500.00 in Batjak in the form of
preferred shares of stock convertible within five (5) years at par into common stock, to liquidate
Batjak's obligations to Republic Bank (RB), Manufacturers Bank and Trust Company (MBTC)
and Philippine Commercial & Industrial Bank (PCIB), and the balance of the investment was to
be applied to Batjak's past due account of P 5 million with the PNB.
Upon receiving payment, RB, PCIB, and MBTC released in favor of PNB the first and any
mortgages they held on the properties of Batjak.
As agreed, PNB also granted Batjak an export-advance line of P 3 million, later increased to P
5million, and a standby letter of credit facility in the amount of P5,850,000.00. As of 29
September 1966, the financial accomodation that had been extended by PNB to Batjak amounted
to a total of P 14,207,859.51.
As likewise agreed, Batjak executed a first mortgage in favor of PNB on all its properties located
at Jimenez, Misamis Occidental and Tanauan, Leyte. Batjak's plant in Sasa, Davao City was
mortgaged to the Manila Bank which, in 1967, instituted foreclosure proceedings against the
same but which were aborted by the payment by Batjak of the sum of P2,400,000.00 to Manila
Bank, and which amount was advanced to Batjak by NIDC, a wholly-owned subsidiary of PNB.
To secure the advance, Batjak mortgaged the oil mill in Sasa, Davao City to NIDC. 4
Next, a Voting Trust Agreement was executed on 26 October 1965 in favor of NIDC by the
stockholders representing 60% of the outstanding paid-up and subscribed shares of Batjak. This
agreement was for a period of five (5) years and, upon its expiration, was to be subject to
negotiation between the parties. The voting Trust Agreement reads:
VOTING TRUST AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This AGREEMENT made and executed by the undersigned stockholders of
BATJAK, INC., a corporation duly organized and existing under the laws of the
Philippines, whose names are hereinbelow subscribed hereinafter caged the
SUBSCRIBERS, and the NATIONAL INVESTMENT AND DEVELOPMENT
CORPORATION, hereinafter referred to as the trustee.
WITNESSETH:
WHEREAS, the SUBSCRIBERS are owners respectively of the capital stock of
the BATJAK, INC. (hereinafter called the CORPORATION) in the amounts

represented by the number of shares set fort opposite their respective names
hereunder;
AND WHEREAS, with a view or establishing a safe and competent management
to operate the corporation for the best interest of all the stockholders thereof, and
as mutually agreed between the SUBSCRIBERS and the TRUSTEE, this Voting
Trust Agreement has been executed under the following terms and conditions.
NOW THEREFORE, the undersigned stockholders, in consideration of
the premises and of the mutual covenants and agreements herein contained and to
carry out the foregoing purposes in order to vest in the TRUSTEE the voting
rights of the shares of stock held by the undersigned in the CORPORATION as
hereinafter stated it is mutually agreed as follows:
1. PERIOD OF DESIGNATION For a period of five (5) years from and after
date hereof, without power of revocation on the part of the SUBSCRIBERS, the
TRUSTEE designated in the manner herein provided is hereby made, constituted
and appointed as a VOTING TRUSTEE to act for and in the name of the
SUBSCRIBERS, it being understood, however, that this Voting Trust Agreement
shall, upon its expiration be subject to a re-negotiation between the parties, as
may be warranted by the balance and attending circumstance of the loan
investment of the TRUSTEE or otherwise in the CORPORATION.
2. ASSIGNMENT OF STOCK CERTIFICATES UPON ISSUANCE The
undersigned stockholders hereby transfer and assign their common shares to the
capital stock of the CORPORATION to the extent shown hereunder:
JAMES A. KEISTER 21,500 shares
JOHNNY LIEUSON 20,300 shares
CBM FINANCE & INVESTMENT
CORP. (C.B. Mendoza, Pres.) 5,000 shares
ALEJANDRO G. BELTRAN 4,000 shares
ESPERANZA A. ZAMORA 3,000 shares
CIRIACO B. MENDOZA 2,000 shares
FIDELA DE GUZMAN 2,000 shares

LLOYD D. COMBS 2,000 shares

RENATO B. BEJAR 200 shares
TOTAL 60,000 shares
to the TRUSTEE by virtue of the provisions hereof and do hereby authorize the
Secretary of the CORPORATION to issue the corresponding certificate directly in
the name of the TRUSTEE and on which certificates it shall appear that they have
been issued pursuant to this Voting Trust Agreement and the said TRUSTEE shall
hold in escrow all such certificates during the term of the Agreement. In turn, the
TRUSTEE shall deliver to the undersigned stockholders the corresponding Voting
Trust certificates provided for in Sec. 36 of Act No. 1459.
3. VOTING POWER OF TRUSTEE The TRUSTEE and its successors in
trust, if anym shall have the power and it shall be its duty to vote the shares of the
undersigned subject hereof and covered by this Agreement at all annual,
adjourned and special meetings of the CORPORATION on all questions, motions,
resolutions and matters including the election of directors and such matters on
which the stockholders, by virtue of the by-laws of the CORPORATION and of
the existing legislations are entitled to vote, which may be voted upon at any and
all said meetings and shall also have the power to execute and acknowledge any
agreements or documents that may be necessary in its opinion to express the
consent or assent of all or any of the stockholders of the CORPORATION with
respect to any matter or thing to which any consent or assent of the stockholders
may be necessary, proper or convenient.
4. FILING of AGREEMENT An executed copy of this Agreement shall be
filed with the CORPORATION at its office in the City of Manila wherever it may
be transfered therefrom and shall constitute irrevocable authority and absolute
direction of the officers of the CORPORATION whose duty is to sign and deliver
stock certificates to make delivery only to said voting trustee of the shares and
certificates of stock subject to the provisions of this Agreement as aforesaid. Such
copy of this Agreement shall at all times be open to inspection by any stockholder,
as provided by law.
5. DIVIDEND the full and absolute beneficial interest in the shares subject of
this Agreement shall remain with the stockholders executing the same and any all
dividends which may be declared by the CORPORATION shall belong and be
paid to them exclusively in accordance with their stockholdings after deducting
therefrom or applying the same to whatever liabilities the stockholders may have

in favor of the TRUSTEE by virtue of any Agreement or Contract that may have
been or will be executed by and between the TRUSTEE and the CORPORATION
or between the former and the undersigned stockholders.
6 COMPENSATION; IMMUNITY The TRUSTEE or its successor in trust
shall not receive any compensation for its serviceexcept perhaps that which the
CORPORATION may grant to the TRUSTEE's authorized representative, if any.
Expenses costs, champs, and other liabilities incurred in the carrying out of the
but herein established or by reason thereof, shall be paid for with the funds of the
CORPORATION. The TRUSTEE or any of its duly authorized representative
shall incur no liability by reason of any error of law or of any matter or thing done
or omitted under this Agreement, except for his own individual malfeasance.
7. REPRESENTATION The TRUSTEE, being a corporation and a juridical
person shall accomplish the foregoing objectives and perform its functions under
this Agreement as well as enjoy and exercise the powers, privileges, rights and
interests herein established through its duly authorized and accredited re
resentatives . p with full authority under the specific appointment or designation
or Proxy.
8. IRREVOCABILITY This Agreement shall during its 5-year term or any
extension thereof be binding upon and inure to the benefit of the undersigned
stockholders and their respective legal representatives, pledges, transferees,
and/or assigns and shall be irrevocable during the said terms and/or its extension
pursuant to the provisions of paragraph 1 hereof. It is hereby understood and the
undersigned stockholders have bound as they hereby bind themselves to make a
condition of every pledge, transfer of assignment of their interests in the
CORPORATION that the interests and participation so pledged, transferred or
assigned is evidenced by annotations in the certificates of stocks or in the books
of the corporation, shall be subject to this Agreement and the same shall be
binding upon the pledgees, transferees and assigns while the trust herein created
still subsists.
9. TERMINATION Upon termination of this Agreement as heretofore
provided, the certificates delivered to the TRUSTEE by virtue hereof shall be
returned and delivered to the undersigned stockholders as the absolute owners
thereof, upon surrender of their respective voting trust certificates, and the duties
of the TRUSTEE shall cease and terminate.
10. ACCEPTANCE OF TRUST The TRUSTEE hereby accepts the trust
created by this Agreement under the signature of its duly authorized

representative affixed hereinbelow and agrees to perform the same in accordance

with the term/s hereof.
IN WITNTESS HEREOF, the undersigned stockholders and the TRUSTEE by its
representatives, have hereunto affixed their signatures this 26 day of October,
1965 in the City of Manila, Philippines.
(SGD) JAMES A. KEISER (SGD) JOHNNY LIEUSON
Stockholder Stockholder
CBM FINANCE & INVESTMENT CORPORATION
By: (SGD) C.B. MENDOZA
President
ESPERANZA A. ZAMORA (SGD) ALEJANDRO G. BELTRAN
By: (SGD) MARIANO ZAMORA Stockholder
ESPERANZA A. ZAMORA
(SGD) FIDELA DE GUZMAN (SGD) CIRIACO B. MENDOZA
Stockholder Stockholder
(SGD) RENATO B. BEJAR (SGD) LLOYD D. COMBS
Stockholder Stockholder
NATIONAL
INVESTMENT AND
DEVELOPMENT
CORPORATION
By:
(SGD) IGNACIO
DEBUQUE JR.

VicePreside
nt 5
In July 1967, forced by the insolvency of Batjak, PNB instituted extrajudicial foreclosure
proceedings against the oil mills of Batjak located in Tanauan, Leyte and Jimenez, Misamis
Occidental. The properties were sold to PNB as the highest bidder. One year thereafter, or in
September 1968, final Certificates of Sale were issued by the provincial sheriffs of Leyte 6 and
Misamis Occidental 7 for the two (2) oil mills in Tanauan and Jimenez in favor of PNB, after
Batjak failed to exercise its right to redeem the foreclosed properties within the allowable one
year period of redemption. Subsequently, PNB transferred the ownership of the two (2) oil mills
to NIDC which, as aforestated, was a wholly-owned PNB subsidiary.
As regards the oil mill located at Sasa, Davao City, the same was similarly foreclosed
extrajudicial by NIDC. It was sold to NIDC as the highest bidder. After Batjak failed to redeem
the property, NIDC consolidated its ownership of the oil mill. 8
Three (3) years thereafter, or on 31 August 1970, Batjak represented by majority stockholders,
through Atty. Amado Duran, legal counsel of private respondent Batjak, wrote a letter to NIDC
inquiring if the latter was still interested in negotiating the renewal of the Voting Trust
Agreement. 9 On 22 September 1970, legal counsel of Batjak wrote another letter to NIDC
informing the latter that Batjak would now safely assume that NIDC was no longer interested in
the renewal of said Voting Trust Agreement and, in view thereof, requested for the turn-over and
transfer of all Batjak assets, properties, management and operations. 10
On 23 September 1970, legal counsel of Batjak sent stin another letter to NIDC, this time asking
for a complete accounting of the assets, properties, management and operation of Batjak,
preparatory to their turn-over and transfer to the stockholders of Batjak. 11
NIDC replied, confirming the fact that it had no intention whatsoever to comply with the
demands of Batjak. 12
On 24 February 1971, Batjak filed before the Court of First Instance of Rizal a special civil
action for mandamus with preliminary injunction against herein petitioners docketed as Civil
Case No. 14452. 13
On 14 April 1971, in said Civil Case No. 14452, Batjak filed an urgent ex parte motion for the
issuance of a writ of preliminary prohibitory and mandatory injunction. 14 On the same day,
respondent judge issued a restraining order "prohibiting defendants (herein petitioners) from
removing any record, books, commercial papers or cash, and leasing, renting out, disposing of or
otherwise transferring any or all of the properties, machineries, raw materials and finished

products and/or by-products thereof now in the factory sites of the three (3) modem coco milling
plants situated in Jimenez, Misamis Occidental, Sasa, Davao City, and Tanauan, Leyte." 15
The order of 14 April 1971 was subsequently amended by respondent judge upon an ex
parte motion of private respondent Batjak so as to include the premises of NIDC in Makati and
those of PNB in Manila, as among the premises which private respondent Batjak was authorized
to enter in order to conduct an inventory.
On 24 April 1971, NIDC and PNB filed an opposition to the ex parte application for the issuance
of a writ of preliminary prohibitory and mandatory injunction and a motion to set aside
restraining order.
Before the court could act on the said motion, private respondent Batjak filed on 3 May 1971 a
petition for receivership as alternative to writ of preliminary prohibitory and mandatory
injunction. 16 This was opposed by PNB and NIDC . 17
On 8 May 1971., NIDC and PNB filed a motion to dismiss Batjak's complaints. 18
On 16 August 1971, respondent judge issued the now assailed order denying petitioners' motion
to dismiss and appointing a set of three (3) receivers. 19 NIDC moved for reconsideration of the
aforesaid order. 20 On 30 September 1971, respondent judge denied the motion for
reconsideration. 21
Hence, these two (2) petitions, which have been consolidated, as they involve a resolution of the
same issues. In their manifestation with motion for early decision, dated 25 August 1986, private
respondent, Batjak contends that the NIDC has already been abolished or scrapped by its parent
company, the PNB.
After a careful study and examination of the records of the case, the Court finds and holds for the
petitioners.
1. On the denial of petitioners' motion to dismiss.
As a general rule, an order denying a motion to quash or to dismiss is interlocutory and cannot be
the subject of a petition for certiorari. The remedy of the aggrieved party in a denied motion to
dismiss is to file an answer and interpose, as defense or defenses, the objection or objections
raised by him in said motion to dismiss, then proceed to trial and, in case of adverse decision, to
elevate the entire case by appeal in due course. However, under certain situations, recourse to the
extraordinary legal remedies of certiorari, prohibition and mandamus to question the denial of a
motion to dismiss or quash is considered proper, in the interest of more enlightened and
substantial justice. As the court said in Pineda and Ampil Manufacturing Co. vs. Bartolome, 95
Phil. 930,938

For analogous reasons it may be said that the petition for certiorari interposed by
the accused against the order of the court a quo denying the motion to quash may
be entertained, not only because it was rendered in a criminal case, but because it
was rendered, as claimed, with grave abuse of discretion, as found by the Court of
Appeals. ..
and reiterated in Mead v. Argel 22 citing Yap v. Lutero (105 Phil. 1307):
However, were we to require adherence to this pretense, the case at bar would
have to be dismissed and petitioner required to go through the inconvenience, not
to say the mental agony and torture, of submitting himself to trial on the merits in
Case No. 166443, apart from the expenses incidental thereto, despite the fact that
his trial and conviction therein would violate one of this [sic] constitutional rights,
and that, an appeal to this Court, we would, therefore, have to set aside the
judgment of conviction of the lower court. This would, obviously, be most unfair
and unjust. Under the circumstances obtaining the present case, the flaw in the
procedure followed by petitioner herein may be overlooked, in the interest of a
more enlightened and substantial justice.
Thus, where there is patent grave abuse of discretion, in denying the motion to dismiss, as in the
present case, this Court may entertain the petition for certiorari interposed by the party against
whom the said order is issued.
In their motion to dismiss Batjaks complaint, in Civil Case No. 14452, NIDC and PNB raised
common grounds for its allowance, to wit:
1. This Honorable Court (the trial court) has no jurisdiction over the subject of the
action or suit;
2. The venue is improperly laid; and
3. Plaintiff has no legal capacity to sue.
In addition, PNB contended that the complaint states no cause of action (Rule 16, Sec. 1, Par. a,
c, d & g, Rules of Court).
Anent the first ground, it is a well-settled rule that the jurisdiction of a Court of First Instance to
issue a writ of preliminary or permanent injunction is confined within the boundaries of the
province where the land in controversy is situated. 23 The petition for mandamus of Batjak
prayed that NIDC and PNB be ordered to surrender, relinquish and turnover to Batjak the assets,
management and operation of Batjak particularly the three (3) oil mills located in Sasa, Davao
City, Jimenez, Misamis Occidental and Tanauan, Leyte.

Clearly, what Batjak asked of respondent court was the exercise of power or authority outside its
jurisdiction.
On the matter of proper venue, Batjak's complaint should have been filed in the provinces where
said oil mills are located. Under Rule 4, Sec. 2, paragraph A of the Rules of Court, "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."
In support of the third ground of their motion to dismiss, PNB and NIDC contend that Batjak's
complaint for mandamus is based on its claim or right to recovery of possession of the three (3)
oil mills, on the ground of an alleged breach of fiduciary relationship. Noteworthy is the fact
that, in the Voting Trust Agreement, the parties thereto were NIDC and certain stockholders of
Batjak. Batjak itself was not a signatory thereto. Under Sec. 2, Rule 3 of the Rules of Court,
every action must be prosecuted and defended in the name of the real party in interest. Applying
the rule in the present case, the action should have been filed by the stockholders of Batjak, who
executed the Voting Trust Agreement with NIDC, and not by Batjak itself which is not a party to
said agreement, and therefore, not the real party in interest in the suit to enforce the same.
In addition, PNB claims that Batjak has no cause of action and prays that the petition for
mandamus be dismissed. A careful reading of the Voting Trust Agreement shows that PNB was
really not a party thereto. Hence, mandamus will not lie against PNB.
Moreover, the action instituted by Batjak before the respondent court was a special civil action
for mandamus with prayer for preliminary mandatory injunction. Generally, mandamus is not a
writ of right and its allowance or refusal is a matter of discretion to be exercised on equitable
principles and in accordance with well-settled rules of law, and that it should never be used to
effectuate an injustice, but only to prevent a failure of justice. 24 The writ does not issue as a
matter of course. It will issue only where there is a clear legal right sought to be enforced. It will
not issue to enforce a doubtful right. A clear legal right within the meaning of Sec. 3, Rule 65 of
the Rules of Court means a right clearly founded in or granted by law, a right which is
enforceable as a matter of law.
Applying the above-cited principles of law in the present case, the Court finds no clear right in
Batjak to be entitled to the writ prayed for. It should be noted that the petition for mandamus
filed by it prayed that NIDC and PNB be ordered to surrender, relinquish and turn-over to Batjak
the assets, management, and operation of Batjak particularly the three (3) oil mills and to make
the order permanent, after trial, and ordering NIDC and PNB to submit a complete accounting of
the assets, management and operation of Batjak from 1965. In effect, what Batjak seeks to
recover is title to, or possession of, real property (the three (3) oil mills which really made up the
assets of Batjak) but which the records show already belong to NIDC. It is not disputed that the

mortgages on the three (3) oil mills were foreclosed by PNB and NIDC and acquired by them as
the highest bidder in the appropriate foreclosure sales. Ownership thereto was subsequently
consolidated by PNB and NIDC, after Batjak failed to exercise its right of redemption. The three
(3) oil mills are now titled in the name of NIDC. From the foregoing, it is evident that Batjak had
no clear right to be entitled to the writ prayed for. In Lamb vs. Philippines(22 Phil. 456) citing
the case of Gonzales V. Salazar vs. The Board of Pharmacy, 20 Phil. 367, the Court said that the
writ of mandamus will not issue to give to the applicant anything to which he is not entitled by
law.
2. On the appointment of receiver.
A receiver of real or personal property, which is the subject of the action, may be appointed by
the court when it appears from the pleadings that the party applying for the appointment of
receiver has an interest in said property. 25 The right, interest, or claim in property, to entitle one
to a receiver over it, must be present and existing.
As borne out by the records of the case, PNB acquired ownership of two (2) of the three (3) oil
mills by virtue of mortgage foreclosure sales. NIDC acquired ownership of the third oil mill also
under a mortgage foreclosure sale. Certificates of title were issued to PNB and NIDC after the
lapse of the one (1) year redemption period. Subsequently, PNB transferred the ownership of the
two (2) oil mills to NIDC. There can be no doubt, therefore, that NIDC not only has possession
of, but also title to the three (3) oil mills formerly owned by Batjak. The interest of Batjak over
the three (3) oil mills ceased upon the issuance of the certificates of title to PNB and NIDC
confirming their ownership over the said properties. More so, where Batjak does not impugn the
validity of the foreclosure proceedings. Neither Batjak nor its stockholders have instituted any
legal proceedings to annul the mortgage foreclosure aforementioned.
Batjak premises its right to the possession of the three (3) off mills on the Voting Trust
Agreement, claiming that under said agreement, NIDC was constituted as trustee of the assets,
management and operations of Batjak, that due to the expiration of the Voting Trust Agreement,
on 26 October 1970, NIDC should tum over the assets of the three (3) oil mills to Batjak. The
relevant provisions of the Voting Trust Agreement, particularly paragraph 4 & No. 1 thereof, are
hereby reproduced:
NOW THEREFORE, the undersigned stockholders, in consideration of the
premises and of the mutual covenants and agreements herein contained and to
carry out the foregoing purposes in order to vest in the TRUSTEE the voting
right.8 of the shares of stock held by the undersigned in the CORPORATION as
hereinafter stated it is mutually agreed as follows:

1. PERIOD OF DESIGNATION For a period of five (5) years from and after
date hereof, without power of revocation on the part of the SUBSCRIBERS, the
TRUSTEE designated in the manner herein provided is hereby made, constituted
and appointed as a VOTING TRUSTEE to act for and in the name of the
SUBSCRIBERS, it being understood, however, that this Voting Trust Agreement
shall, upon its expiration be subject to a re-negotiation between the parties, as
may be warranted by the balance and attending circumstance of the loan
investment of the TRUSTEE or otherwise in the CORPORATION.
and No. 3 thereof reads:
3. VOTING POWER OF TRUSTEE The TRUSTEE and its successors in
trust, if any, shall have the power and it shall be its duty to vote the shares of the
undersigned subject hereof and covered by this Agreement at all annual,
adjourned and special meetings of the CORPORATION on all questions, motions,
resolutions and matters including the election of directors and all such matters on
which the stockholders, by virtue of the by-laws of the CORPORATION and of
the existing legislations are entitled to vote, which may be voted upon at any and
all said meetings and shall also have the power to execute and acknowledge any
agreements or documents that may be necessary in its opinion to express the
consent or assent of all or any of the stockholders of the CORPORATION with
respect to any matter or thing to which any consent or assent of the stockholders
may be necessary, proper or convenient.
From the foregoing provisions, it is clear that what was assigned to NIDC was the power to vote
the shares of stock of the stockholders of Batjak, representing 60% of Batjak's outstanding
shares, and who are the signatories to the agreement. The power entrusted to NIDC also included
the authority to execute any agreement or document that may be necessary to express the consent
or assent to any matter, by the stockholders. Nowhere in the said provisions or in any other part
of the Voting Trust Agreement is mention made of any transfer or assignment to NIDC of
Batjak's assets, operations, and management. NIDC was constituted as trustee only of the voting
rights of 60% of the paid-up and outstanding shares of stock in Batjak. This is confirmed by
paragraph No. 9 of the Voting Trust Agreement, thus:
9. TERMINATION Upon termination of this Agreement as heretofore
provided, the certificates delivered to the TRUSTEE by virtue hereof shall be
returned and delivered to the undersigned stockholders as the absolute owners
thereof, upon surrender of their respective voting trust certificates, and the duties
of the TRUSTEE shall cease and terminate.-

Under the aforecited provision, what was to be returned by NIDC as trustee to Batjak's
stockholders, upon the termination of the agreement, are the certificates of shares of stock
belonging to Batjak's stockholders, not the properties or assets of Batjak itself which were never
delivered, in the first place to NIDC, under the terms of said Voting Trust Agreement.
In any event, a voting trust transfers only voting or other rights pertaining to the shares subject of
the agreement or control over the stock. The law on the matter is Section 59, Paragraph 1 of the
Corporation Code (BP 68) which provides:
Sec. 59. Voting Trusts One or more stockholders of a stock corporation may
create a voting trust for the purpose of confering upon a trustee or trusties the
right to vote and other rights pertaining to the shares for a period not exceeding
five (5) years at any one time: ... 26
The acquisition by PNB-NIDC of the properties in question was not made or effected under the
capacity of a trustee but as a foreclosing creditor for the purpose of recovering on a just and valid
obligation of Batjak.
Moreover, the prevention of imminent danger to property is the guiding principle that governs
courts in the matter of appointing receivers. Under Sec. 1 (b), Rule 59 of the Rules of Court, it is
necessary in granting the relief of receivership that the property or fired be in danger of loss,
removal or material injury.
In the case at bar, Batjak in its petition for receivership, or in its amended petition therefor, failed
to present any evidence, to establish the requisite condition that the property is in danger of being
lost, removed or materially injured unless a receiver is appointed to guard and preserve it.
WHEREFORE, the petitions are GRANTED. The orders of the respondent judge, dated 16
August 1971 and 30 September 1971, are hereby ANNULLED and SET ASIDE. The respondent
judge and/or his successors are ordered to desist from hearing and/or conducting any further
proceedings in Civil Case No. 14452, except to dismiss the same. With costs against private
respondents.
SO ORDERED.

G.R. No. L-13832

March 29, 1960

GERONIMO DE LOS REYES, petitioner,

vs.
HON. FROILAN BAYONA, ETC., ET AL., respondents.
Bausa, Ampil and Suarez for petitioner.
Tansinsin, Delgado, Flores and Macapagal for respondents.
MONTEMAYOR, J.:
This is a petition for certiorari with preliminary injunction filed by Geronimo de los Reyes
against respondent Hon. Bayona, as Presiding Judge, Branch I, Court of First Instance of Manila,
Maria B. Castro and Arsenio Tenchavez, to annul the order of respondent Judge, dated April 30,
1958, in Civil Case No. 3910, appointing Tenchavez receiver of the property in question on the
filing of a bond in the sum of P50,000.
In our resolution of May 14, 1958, giving due course to the petition, we granted the petition for
preliminary injunction upon the filing of a surety bond in the amount of P2,000.

The following may serve as background for a better understanding of this case. On August 31,
1943, Geronimo de los Reyes, later referred to as Reyes, obtained a loan of P120,000 in Japanese
military war notes from Maria B. Castro, later referred to as Castro, with interest at the rate of
6% per year, said interest for the first two years to be paid in advance. To guarantee the payment
of the loan, Reyes executed in favor of Castro a document purporting to be a deed of sale with
right of repurchase, over two parcels of land in Calisunga, Calauan, Laguna, one parcel
containing 168.9909 hectares, and the other 77.2798 hectares, covered by certificates of title
Nos. 8254 and 8255 of the Register of Deeds of Laguna. On the same day, Castro as vendee,
allegedly leased the two parcels to Reyes for an annual rental equivalent to the interest on the
loan for a year. Claiming that the deed of sale with right to repurchase did not express the true
intention of the parties, but that was merely a mortgage to secure the payment of the loan, Reyes,
in October 1947, filed Civil Case No. 3910 with the Court of First Instance of Manila against
Castro and her husband Espinosa, alleging in his complaint that since December 1944 up to
January 1945, he (Reyes) had repeatedly tendered to Castro the payment of the principal of the
loan, but that she refused to accept it, and so he filed Civil Case No. 3134 in the Court of First
Instance of Manila, at the same time consigning in court in her favor the sum of P120,000,
evidenced by an official receipt issued by the Clerk of Court; that despite the pendency of said
Civil Case No. 3134, Castro executed an affidavit of consolidation of ownership of the two
parcels of land, all without his knowledge and consent, as a result of which, the Register of
Deeds of Laguna cancelled transfer certificates of title Nos. 8254 and 8255 in his name and
issued in lieu thereof, transfer certificates of title Nos. 953 and 954 in Castro's name. Upon
discovery of the consolidation of ownership made by Castro he (Reyes) took steps toward the
reconstitution of the records of Civil Case No. 3134, whose original records presumably were
destroyed during the war, particularly the battle for the liberation of Manila, but his efforts were
frustrated by the denial by the trial court on the ground that the period for reconstitution had
already expired. So, as already said, Reyes filed Civil Case No. 3910 in the Court of First
Instance of Manila.
In the meantime, on the theory that the two parcels in question had really been sold to her by
Reyes and that she had thereafter leased the same to him and that he failed to pay the annual
rentals, Castro on October 24, 1947 filed a complaint for unlawful detainer against Reyes in the
Justice of the Peace Court of Calauan, Laguna. Despite the answer filed by him setting up the
defense that the two parcels had not really been sold by him to Castro, but only mortgages to
secure the payment on the loan of 120,000 in Japanese military notes; that during the Japanese
occupation, he had repeatedly tendered payment of the loan to her, but that she refused to accept
payment, as a result of which he consigned the amount in court and filed Civil Case No. 3134 of
the Court of First Instance of Manila to compel her to accept the payment of the loan, whose sum
had been consigned in court; that because he failed to reconstitute the records of Civil Case No.
3134 on time, he had to file Civil Case No. 3910 in the same Court and that said case was then
pending, the Justice of the Peace Court on October 12,1949, rendered judgment in favor of
Castro. Pending appeal of the unlawful detainer case in the Court of First Instance of Laguna

(Civil Case No. 9858), the said court over his objection issued a writ of execution of the
judgment of the Justice of the Peace Court. Failing to secure a reconsideration of the order of
execution, Reyes filed a petition forcertiorari before this Tribunal to annuls aid order of
execution, G. R. No. L-8960. * On January 31, 1957, we promulgated a decision in the
said certiorari case, holding that the order of execution was improvidently issued, inasmuch as
more than five years had elapsed since the judgment of the Justice of the Peace Court was
rendered; that there was reason to believe that the deed conveying the two parcels of land to
Castro was one of mortgage, rather than of sale, and that furthermore, even assuming that it were
a sale, Castro not being the original owner and possessor of the parcels but only a vendee a retro,
the vendor, Reyes had the right to continue in his possession until the case between them was
finally determined. As a result, the order of execution was set aside and the writ of preliminary
injunction issued was made permanent.
It would appear, however, that as a result of the writ of execution issued by the Court of First
Instance of Laguna in Civil Case No. 9858, which as already stated was brought to this Court
on certiorari in g. R. No. L-8960, Castro was placed in possession of the property in question
from March 16, 1955 to July 30, 1957, she evidently giving up possession in favor of Reyes,
only as a result of our decision in G. R. No. L-8960. This explanation of Castro's possession of
the property for over two years, will help us understand the later decision of the trial court,
ordering her to return possession of the land to Reyes and to account for the income she received
therefrom. The dispositive part of said decision reads:
WHEREFORE, judgment is hereby rendered dismissing the case for lack of appellate
jurisdiction over the subject matter of the action and the plaintiff is ordered to return to
the defendant the possession of the two parcels of land now covered by Transfers
Certificates of Title Nos. T-954 and to account to the latter for the income she received
therefrom during the period she was in possession thereof. The plaintiff is further ordered
to pay the costs in both instances.
Castro filed a petition for certiorari in the Court of Appeals to set aside the above-mentioned
judgmnent. The Court of Appeals citing and reproducing our decision in G. R. No. L-8960,
aforementioned, on November 7, 1957, denied the petition for certiorari, saying:
The circumstances of the case have not changed from the time of the promulgation of the
decision of the Supreme Court referred to and, therefore, the instant petition
for certiorari should be, as it is hereby Denied, for lack of merit. With costs against the
petitioner.
According to the present petition for certiorari before us (G. R. No. L-13832), in Civil Case No.
3910 of The Court of First Instance of Manila, on August 29, 1957, petitioner Reyes was notified
of the hearing of the Urgent Petition for Receivership" filed by Castro; that Reyes opposed the

petition on October 28, 1957; and that respondent Judge Bayona issued an order denying the
petition for appointment of a receiver, thus:
After going over the arguments of the parties, this Court is of the opinion and so holds
that the appointments of a receiver at this time is inappropriate except until after the
termination of the trial of this case. The trial of this case has been set for several days in
accordance with the calendar, and this Court as well as the parties are bent in terminating
this case as soon as possible.
In view of the foregoing, this Court is of the opinion and so holds that the appointment of
a receiver in this case should behold in abeyance until after the decision of this Court
shall have been rendered.
However, on May 7, 1958, Reyes was served a copy of the order of respondent Judge, dated
April 30, 1958, appointing respondent Arsenio Tenchavez receiver of the properties in question.
This order based on an ex-parte petition reiterating the request for appointment of a receiver,
which request had previously been denied.
It should not be difficult to gather from out decision in G. R. No. L-8960 and the decision of the
Court of Appeals in CA-G.R. No. 19833-R that the courts, in justice to the parties, particularly,
Reyes, considered possession in him instead of Castro as more reasonable and just. It is,
therefore, to be expected that we cannot look with favor on any judicial order or arrangement
whereby this possession of Reyes should be transferred to a receiver, because by so doing, Castro
would be obtaining indirectly what she could not obtain directly, namely, deprive Reyes of the
possession of the property until the controversy between them is finally settled.
Petition for certiorari is hereby granted; the order of April 30, 1958 appointing Arsenio
Tenchavez receiver, is set aside and the writ of preliminary injunction is made permanent.
Respondent Maria B. Castro will pay the costs.
Paras, C. J., Bengzon, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and
Gutierrez David, JJ.,concur.

4. G.R. No. L-17176

October 30, 1962

ROSENDO RALLA and PABLO RALLA, petitioners,

vs.
HON. MATEO L. ALCASID as Judge of the Court of First Instance of Albay and PEDRO
RALLA,respondents.
Madrid Law Office for petitioners.
Victorino P. Abrera for respondents.
BENGZON, C.J.:
Statement. The instant petition for certiorari seeks to annul the orders of respondent judge
appointing a receiver and refusing a bond to dissolve the receivership.
Seeking to recover physical possession of the parcels of land involved in the receivership,
petitioner submit alternative prayers: (a) modification of the order appointing the receiver so that
the receivership would only embrace certain parcels of land, and exclude others; or (b) discharge
of receiver upon submission of a counter-bond of P20,000.00; or (c) increase of the receiver's
bond from P10,000.00 to P20,000.00.
Facts. On January 5, 1960, in the Court of First Instance of Albay, Pedro Ralla filed against
his father Rosendo Ralla and his brother Pablo Ralla, an action for partition involving 212
parcels of land allegedly valued P270,000.00. The complaint after making proper allegations,
also prayed for the appointment of a receiver.
Pablo Ralla, in his answer, asserted exclusive ownership over a number of those parcels;
Rosendo Ralla's ownership of other parcels and ownership of the rest by the conjugal estate of
Rosendo and his deceased wife, Paz Escarilla. Rosendo Ralla equally asserted exclusive
ownership over a number of the said parcels Pablo Ralla's exclusive ownership of those claimed

by the latter; and conjugal ownership of the rest of the parcels by Rosendo with his deceased
wife, Paz Escarilla.
After hearing the prayer for appointment of a receive the respondent court issued an order
appointing a receiver of all the parcels of land enumerated in the inventory submitted by Pedro
Ralla, except certain parcels of land. The Municipal Treasurer of Ligao, Albay, Vicente Real,
qualified as receiver with a bond of P10,000.00.
A motion for reconsideration was denied. While such motion was pending, above petitioners
presented an omnibus "Motion to be allowed to file a bond for the discharge of the receiver
and/or Motion to resolve the motion for reconsideration of the order dated July 21, 1959 and
motion to require accounting and increase of bond, if discharge of the receiver is not allowed."
However, respondent court entered an order denying the motion to reconsider the appointment of
a receiver, and the motion to discharge the receivership upon the filing of a bond.
Issue. On the principal contention that the respondent judge exceeded his jurisdiction or
abused his discretion when he decreed the receivership and appointed a receiver in a partition
proceeding, petitioners submit the instant petition for certiorari.
Discussion. They rest their case on the following propositions: (1) in a partition proceeding,
generally, no administration is necessary and the appointment of a receiver is irregular; (2) the
court appoints a receiver only after full consideration of the facts and circumstances of each
particular case; (3) the consequences and effects thereof should be well taken into account, with
a view to avoiding irreparable, injustice or injury to the other parties who are entitled to as much
consideration as those seeking it; (4) in an action involving title to real property, as in the above
case, where the appointment of a receiver to take charge of the property has the effect of taking
the property out of the possession of the above petitioners, application therefor should only be
granted after a clear showing of the necessity thereof; (5) in this case, however, there is no such
necessity, in as much as the rights of above respondent may be protected by notice of lis
pendens or by the filing of a bond by petitioners to compensate for the damage sought to be
prevented. Above petitioners had offered a counterbond of P20,000.00 twice the bond
submitted by the receiver; (6) as the pleadings submitted in the lower court show the presence of
adverse claim of title to a greater portion of the lands in question, the constitution of the
receivership although protective of the rights of herein respondent Pedro Ralla would, on the
other hand, cause disproportionate injury to the rights of herein petitioners.
Respondents have met the above propositions with arguments equally impressive, and these are,
in brief, our conclusions:

A receiver of real or personal property, which is the subject of the action, may be appointed by
the court where it appears from the pleadings, and/or such other proof as the judge may require,
that the party applying for such appointment has an actual interest in it and that such property is
in danger of being lost, removed or materially injured.1 The appointment is also proper whenever
it appears to be the most convenient and feasible means of preserving, or administering the
property in litigation.2
The appointment of a receiver depends principally upon the sound discretion of the court; it is
not a matter absolute right. The facts and circumstances, of each particular case determine the
soundness of the exercise such discretion.3 Among the consequences and effects considered by
the courts before appointing a receiver are: (a) whether or not the injury resulting from such a
appointment would probably be greater than the injury suing if the status quo is left
undisturbed;4 and (b) whether or not the appointment will imperil the interests of other whose
rights deserve as much a consideration from the court as those of the person requesting for
receivership.5
In the case at bar, the respondent court ordered the a appointment of a receiver after hearing and
presentation of evidence by both parties. Eleven sessions were had follows that purpose,
numerous documentary proofs were submitted. The facts and circumstances upon which the
order was based which this Court is not prepared to revise at this time are as follows:
(1) It was not established to the satisfaction of the Court with few exceptions, that the
properties subject matter of the complaint for partition are exclusive properties of the
surviving spouse, the defendant Rosendo Ralla most of the properties were either
acquired or titled during the marriage and in fact in the various certificates of title
Exhibits "11" to "114" the one half (1/2) undivided portion is registered in the name of
Rosendo Ralla married to Paz Escarilla, the deceased mother of the plaintiff (Pedro
Ralla).
(2) The defendants have been disposing, conveying an transferring properties and
converting them from the character of conjugal properties left by the deceased Paz
Escarilla to the exclusive properties of the defendants with the avowed purpose and
intention of depriving plaintiff of his right, interest, title and participation thereto and to
the great damage and prejudice of the plaintiff, as evidenced by the documents of
conveyance executed by the defendant Rosendo Ralla, marked Exhibits "C", "D", and
"E";
(3) The products, rentals, income, assets and funds collected and received by the
defendants, since the death of said late Paz Escarilla on December 27, 1957, up to the
present, from the properties, are in danger of being lost or removed;

(4) The relations of the plaintiff and defendants who are co-owners are strained, and no
satisfactory arrangement for administration of the property can be made and
accomplished in spite of the efforts exerted by this Court to prevail upon the defendants
toward this and on equitable basis;
(5) The actuation of the defendants, the majority co-owners, results in serious prejudice to
the minority, the plaintiff, and that the plaintiff has not been given the benefit or
accounting of the products and income therefrom, and has not been given whatsoever his
corresponding and due share thereof;
(6) The plaintiff is being prevented by the defendants from entering the lands in question
and from even interfering and aiding in the administration thereof.
In this atmosphere of strained relationship between the parties, of unsatisfactory arrangement for
the administration of the properties involved, not to mention the conveyance by petitioners of
some of the conjugal properties left by the deceased spouse of Rosendo Ralla, Paz Escarilla it
was not entirely improper to direct the appointment of a receiver. All the circumstances found by
the lower court apparently justify the constitution of the receivership of the lands in question.
The requirements of law have been more than satisfied.6 Even under petitioners' theory that the
granting therefor should only be "after a clear showing of the necessity thereof", the instant
appointment of a receiver appears to be proper.
The case of Leonides Chunaco, et al. vs. Hon. Perfecto Quicho, et al.,7 similar in nature to the
present case, was resolved by this Court along the same lines with our conclusion in this
litigation. There we held:
While in a partition proceeding it is generally unnecessary for the court to appoint a
receiver, however, (as held in the case of Tuason vs. Concepcion, 54 Phil. 408) where the
relationship among the co-owners are strained, and no satisfactory arrangement for
administration can be accomplished, the appointment of a receiver is not an abuse of
discretion.
This ruling has been confirmed by Art. 492, par. 3 of the New Civil Code authorizing the
appointment of an a administrator (which term would include a receiver) in cases where
the action of the majority co-owners results in serious prejudice to the minority.
Should there be no majority, or should the resolution the majority be seriously prejudicial
to those interested in the property owned in common, the court, at the instance of a
interested party, shall order such measures as it may deem proper, including the
appointment of an administrator.

We likewise sustain the lower court's order fixing the receiver's bond at only P10,000.00 because
the records show, the gross income of the estate under receivership land, can not be lost
amounted quarterly to more or less P7,000.00 only.8 Considering that the parties have been
withdrawing their corresponding share from the net income, it is easy to understand that the bond
already filed sufficiently answers for any cash remaining in the receiver's hands.
Judgment. Without further discussing the other points raised by petitioners, we find no
inclination to hold that the respondent court abused its discretion in the issuance of its questioned
orders.
Petition denied with costs against petitioners.
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala
and Makalintal, JJ., concur.

5. G.R. No. L-28611

January 30, 1929

ILDEFONSO DE LA ROSA, and GO KEE, plaintiffs-appellees,

vs.
FRANCISCO DE BORJA, defendant-appellant.
Sumulong, Lavides and Hilado for appellant.
Crispin Oben for appellees.
OSTRAND, J.:
Over ten years ago, Ildefonso de la Rosa, in his capacity as administrator of the estate of the
deceased Go Lio, brought an action in the Court of First Instance of Nueva Ecija against one
Enrique Go Cotay for the liquidation and partition of a partnership alleged to have been formed
by Go Lio and the also deceased Go Cosing, the father of Go Cotay. After the death of the
original partners, Go Cotay took possession of the property of the partnership and assumed the
management of its affairs. Go Cotay denied the existence of the partnership, but upon trial the
Court of First Instance, on July 20, 1918, rendered a decision declaring that the business relations
between Go Lio Go Cosing were that of a true partnership and held that the estate of Go Lio was
entitled to one-half of the net assets of said partnership. The court further ordered the liquidation
of the partnership for the purpose of distributing its assets.
Thereafter, the trial court, on motion of the plaintiff, appointed a receiver to take charge of the
property in question, but on his own representations, Go Cotay was intrusted with the care of the

property in controversy upon the filing of a bond in the sum of P10,000. Three years later, the
parties to the original action presented the following stipulations in writing to the trial court:
AGREEMENT
Both parties through their respective counsel, submit the following agreement to the
honorable court:
That the case be forwarded to the Supreme Court upon the defendant's appeal, in its
present state, suspending the liquidation proceedings ordered in the appealed judgment;
defendant to remain in possession of the property in controversy upon giving a bond in
favor of the plaintiff in the sum of twenty-five thousand pesos (P25,000), Philippine
currency, which must be filed within a period of twenty, (20) days from this date, in order
to answer for the execution of the judgment to be rendered fixing the plaintiff's
participation in the property in question, should the latter be affirmed by the Supreme
Court, it being understood that the former bond of P10,000 is hereby cancelled.
Both parties so submit it, and respectfully pray the honorable court to approve this
agreement, issuing orders in pursuance thereof.
Cabanatuan, Nueva Ecija, December 7, 1921.
In accordance with the terms of the stipulation, Go Cotay furnished a bond for P25,000, which
reads as follows:
PHILIPPINE ISLANDS, PROVINCE OF NEUVA ECIJA, CABANATUAN
Whereas in an action pending before the Court of First Instance of the Province of Nueva
Ecija, Sixth District, Philippine Islands, wherein Ildefonso de la Rama, administrator of
the intestate estate of Go Lio, deceased, is plaintiff, and Enrique Ortega Go Cotay
defendant, the said defendant has applied to be receiver of the property of this complaint.
And whereas the law gives security to the plaintiff.
Now therefore, know all men by these presents:
That Enrique Go Cotay, of San Isidro, Nueva Ecija as principal obligor, and Francisco de
Borja, of Santa Rosa, Nueva Ecija, Santiago Lucero, of Cabanatuan, Nueva Ecija, and
Antonio Vallarta, of San Isidro, Nueva Ecija, as sureties, do hereby acknowledge
themselves bound jointly and severally to the said plaintiff Ildefonso de la Rosa,
administrator of the estate of the deceased Go Lio, in the sum of twenty-five thousand

pesos (P25,000), to the faithful payment of which we, our heirs, and our legal
representatives, are really and truly and jointly and severally bound.
The conditions of this obligation are as follows:
To answer for the payment of the damages which Enrique Go Cotay as receiver of the
store for the purchase and sale of sundry mercantile goods, abandonment and any other
inexcusable cause, may come to the aforesaid objects contained in the complaint, of
which he is the receiver.
In which case, this obligation shall become null and void; otherwise, it shall remain in
full force effect.
(Sgd.) ENRIQUE GO COTAY
Principal Obligor
The bond was signed on January 13, 1922, by Francisco Borja, Santiago Lucero, and Antonio
Villarta as sureties.
The appeal referred to in the aforesaid stipulations was dismissed by this court on the ground that
the liquidation of the affairs of the partnership was not completed.1 Upon the return of the record
to the Court of First Instance of Nueva Ecija, the proceedings in the liquidation were renewed. In
the meantime Go Cotay continued as a common law receiver, and on December 13, 1924, the
Court of First Instance issued an order in which it was recite that all of the property of the
partnership had disappeared, due to losses sustained during the period from 1918 until 1922 and
that therefore, the plaintiff could recover nothing from the defendant. From that order both
parties appealed to this court, the plaintiff appealing from the order of December 13, 1924, in
which it was declared that the partnership had no assets. The defendant appealed from the
decision of July 20, 1918, in which it was declared that the partnership existed and that the estate
of Go Lio was entitled to one-half of the property in question. This court, in a decision dated
January 15, 1926, affirmed the decision of the 20th of July, 1918, and reversed the order of
December 13, 1924.2 The court further held that while Go Cotay was a manager of the
partnership prior to August 3, 1918, he must be classified as a receiver (depositario) subsequent
to that date and, consequently, was responsible for the losses during that receivership, which
losses amounted to the sum of P60,598.28; that the losses were due to the fact that Go Cotay
continue the business of the partnership while it was in liquidation; that the continuation of the
business after he had been appointed receiver was not authorized by the court and that he,
therefore, was bound to indemnify the estate of Go Lio for one-half of the losses incurred during
that period.

After the case was returned to the Court of First Instance, that court, upon motion of the
administrator De la Rosa, appointed Go Kee, one of the sons and heirs of Go Lio,
coadministrator of the estate. Thereafter, a writ of execution of the judgment of the Supreme
Court was issued against Go Cotay but was returned unsatisfied by the sheriff, who was unable
to find any property belonging to the partnership or to Go Cotay himself. In viewing of this fact,
the plaintiff filed a motion praying the Court of First Instance to issue execution against the
herein defendant, Francisco de Borja, as one of the joint and several sureties on the bond
hereinbefore set forth, but under the date of July 12, 1926, said court denied the motion on the
ground that the sureties were liable only for the damages caused through the fault, negligence or
abandonment of Go Cotay in his capacity as receiver of the partnership property and that the
existence of such damages had not been shown. The plaintiff thereupon filed a petition with the
Supreme Court for a writ of mandamus to compel the Judge of the Court of First Instance to
issue the writ of execution prayed for, but following the decision in the case of De la Riva vs.
Molina Salvador (32 Phil., 277), the Supreme Court denied the petition3 on the ground that
damages in question were not for unlawful appointment of a receiver, but for the receiver's
mismanagement, and that, therefore, the liability of the sureties on the bond could only be
enforced by a separate action and not only by a mere motion in the receivership proceedings.
In conformity with the indications in the order quote, the administrators of the estate of Go Lio
brought the present action upon the aforesaid bond against Francisco de Borja, the sole surviving
surety. The venue was laid in Manila, the coadministrator Go Kee alleging that he was a resident
of that city. In their complaint the plaintiffs set forth the essential facts and prayed that the
defendant be ordered to pay the full amount of the bond, P25,000. The defendant, in his answer,
pleaded the general issue and set up as special defenses (1) that Go Cotay was never appointed
receiver and was only left in possession of the partnership property upon the filing of the bond
referred to; (2) that as surety on the bond in question, he did not undertake to respond for all the
acts of Go Cotay but that his liability is limited to that set forth in the penultimate clause of the
bond, viz., "to answer for the payment of the damages which Enrique Go Cotay as receiver of the
store for the purchase and sale of sundry mercantile goods, abandonment and any other
inexcusable cause, may come to the aforesaid objects contained in the complaint, of which he is
the receiver;" (3) that the bond was not renewed after the appeal referred to in the stipulations of
December 7, 1921, had been finally determined by the Supreme Court and that therefore the
bond had lost its force and effect; and (4) that the decision of the Court of First Instance of
Nueva Ecija dated July 12, 1926, is res judicata. The defendant also set up a counterclaim for the
sum of P8,000 as damages caused by the institution of this action.
Upon trial the Court of First Instance of Manila dismissed the defendant's counterclaim and
rendered judgment in favor of the plaintiffs for the sum of P25,000, with legal interest from the
date of the filing of the complaint and for the costs. From this judgment the defendant appealed.

Under his first assignment of error, the appellant argues in substance that the bond in question
purports to be the bond of a receiver; that the principal Go Cotay never was appointed receiver
for the property and affairs of the partnership; that there therefore was no valid principal
obligation; and that consequently under the provisions of article 1824 of the Civil Code, there
could be no valid bond. This argument seems far-fetched and may be answered in very few
words. It is true that the principal Go Cotay was formally appointed receiver in equity, but he
virtually assumed the obligation of a common law receiver and as such was bound to account for
the assets of the partnership placed under his care. That obligation was perfectly valid and it was
no error to require a bond for its fulfillment. It is true that the court had no power to compel the
execution of the bond, but it had the power to appoint a receiver in equity, and if Go Cotay chose
to give the bond rather than to submit to such a receivership, he is bound by such bond and,
together with his sureties, must take the consequences. As stated in the standard work of High on
Receivers, 4th ed., par. 124:
Where, upon a bill in equity to enforce an interest in a trust fund and for a
receiver pendente lite, the court refuses to appoint a receiver, upon condition of defendant
executing a bond to account as receiver for all goods and money which have come into
his possession, and to pay them over pursuant to the decree of the court, such a bond will
be deemed good as a common-law obligation. And the obligor, although not considered
as a receiver or officer of the court, stands in the light of one who, for a personal
accommodation, has assumed a legal responsibility, and after receiving the benefits of the
obligation he is stopped from denying its legality.
Appellant's second, third and fourth assignments of error deal with the nature and extent of the
liability of the defendant as surety on the bond. It is argued that under the terms of the bond, the
defendant can only be held responsible for negligence and abandonment on the part of the
principal; that no such negligence or abandonment has been shown; and that there is no proof of
looses subsequently to the execution of the bond.
At first blush, this argument may seem rather plausible, but upon further consideration, this
impression vanishes. While the principal Go Cotay was not formally named receiver, it is evident
from the bond itself, as well as from the previous stipulations, that he assumed a receiver's
responsibility for the care and conversation of the property left in his possession and that
responsibility was not confined to acts of negligence or abandonment on his part; "any other
inexcusable cause" would render him liable, and no excuse has been offered for his failure to
account for the property and assets in his possession and under his control. The losses may have
been due to unfortunate business ventures, but acting in the place of a receiver, Go Cotay had no
authority or right to use the assets of the partnership for that purpose and misfortunes of that
character can, therefore, not serve as excuses.

As to the amount of the plaintiff's recovery, it is to be observed that shortly before the execution
of the bond and after Go Cotay had entered upon his common law receivership, the plaintiffs
share of the net assets of the partnership were valued at over P30,000, and the presumption is
that this condition continue until the contrary was shown (Torres vs. Genato, 7 Phil. 204). The
fact that a bond of as much as P25,000 was given strengthens this presumption and indicates that
the disappearance of the property must have occurred after the bond was execute.
The fifth assignment of error relates to the effect of the order of July 12, 1926, in which the
Court of First Instance refuse to issue a writ of execution against the herein appellant, who now
contends that the conclusions contained in that order are res adjudicata. We do not think that
such is the case; in the mandamus case, this court held that in order to enforce the herein
appellant's liability on the bond, a separate action was necessary. The pronouncements of the
Nueva Ecija Court can, therefore, only be regarded as obiter dicta expressed outside of the
jurisdiction of the court and therefore lacking the force of an adjudication.
The sixth assignment of error has reference to the fact that the plaintiff Go Kee, as foreign
subject, was not a resident of the City of Manila, and that, therefore, the present action was
brought in a jurisdiction where neither the plaintiffs nor the defendant were residing. There is
nothing in this contention. The residence referred to in section 377 of the Code of Civil
procedure need not necessarily be permanent and the record shows that Go Kee ha his actual
residence in Manila at the time the action was brought. But be this as it may, the act remains that
the defendant submitted to the jurisdiction of the Manila Court and is not properly raise the point
in question until after the judgment in the case had been rendered. Section 377 of the Code of
Civil Procedure provides among other things, that "the failure of a defendant to object to the
venue of the action at the time of entering his appearance in the action shall be deemed a waiver
on his part of all objection to the place or tribunal in which the action is brought, except in the
actions referred to in the first sixteen lines of this section relating to real estate, and actions
against executors, administrators, and guardians, and for the distribution of estates and payments
of legacies." As will be seen, the defendant's objection came altogether too late.
The defendant's remaining assignments of error are consequences of the foregoing assignments
and need not be discussed.
The appealed judgment is, in our opinion, in accordance with the law and the facts and is
affirmed with the costs against the appellant. So ordered.

6. G.R. No. L-7308

January 9, 1913

RAFAEL MOLINA y SALVADOR, plaintiff-appellant,

vs.
ENRIQUE F. SOMES, ET AL., defendants-appellants.
Bruce, Lawrence, Ross and Block, for plaintiff and appellant.
A.D. Gibbs, for defendants and appellants.
MORELAND, J.:
In 1903 Rafael Molina, the plaintiff herein, sold his business in the Island of Catanduanes to
Antonio de la Riva for $135,000 Mexican currency, to be paid by de la Riva in four equal
installments, the first to be made at the time of the execution of the document, the second year
from the date thereof, the third at the end of two years from that date, with interest at the rate of 5
per cent per annum to be paid at the end of each year. No payment was made by De la Riva
under said contract except the first payment, which was that made at the date of the execution of
the contract. Upon the second installment from Molina brought suit in the Court of First Instance
of Manila (No. 3402) and was given a judgment. An appeal was taken from said judgment by De
la Riva and the Supreme Court affirmed it on the 22nd of March, 1906.1 Pending the appeal

execution was stayed upon the filing of asupersedeas bond, with Enrique F. Somes, the
defendant herein, as one of the sureties. While the suit for this installment was pending, the
succeeding installment, amounting to P38,000, fell due. Default in its payment having been
made, suit was brought in the Court of First Instance of the city of Manila (No. 3829). In this
case, at the instance of Molina, a receiver was appointed to take possession of the property of De
la Riva. Molina succeeded in this action. De la Riva again appealed to the Supreme Court, where
the judgement was affirmed,2while the receivership granted in that action was declared void.
When the first case (No. 3402) was returned to the Court of First Instance after affirmance, De la
Riva's property was still in the hands of the receiver; and, as execution against property thus
in custodia legis could not be had, the Court of First Instance, on motion, entered judgment
against the sureties on the supersedeas bond, including Somes, defendant herein. The sureties
appealed from this judgment, their appeal being docketed as 3412,3 and the order of the Court of
First Instance was affirmed. The judgment in case No. 3402, which was the judgment on the first
unpaid installment, was then satisfied out of the property of Somes. On the 19th of February,
1907, said Molina obtained another judgment against De la Riva in the Court of First Instance on
the last installment due under the contract. Therefore, early in 1907 the situation was this: Somes
had paid the judgment in case 3402 and was, therefore, a creditor of De la Riva for about
P34,000. Molina had two judgments against De la Riva, in cases 3829 and 4766, aggregating
about P18,000. The property of the debtor was released from the receivership and the question of
priority arose between the creditors Somes and Molina. Gibbs, Gale and Carr, who had served
De la Riva as attorneys, had taken judgment by default against De la Riva for P4,500 and had
levied upon practically all his real estate. The levy had been suspended by the receivership, but
was revive when the receivership was terminated by the judgment of the Supreme Court and said
levy was terminated by a sale in the month of January, 1907. Molina obtained writs of execution
on his two judgments, and levied on the property of De la Riva, including the equity of
redemption of the real estate sold under the execution in favor of Gibbs, Gale and Carr. On the
26th of April, 1907, the defendant Somes filed a complaint against Molina and others in the
Court of First Instance of Manila (No. 5448), alleging that by his payment of the judgment he
had become subrogated to the rights of the judgment creditor in case No. 3402, and that , because
this judgment was senior to Molina's judgments in cases Nos. 3829 and 4766, he was entitled to
a postponement of Molina's executions above mentioned until he, Somes, should have
reimbursed himself out of De la Riva's property. Molina entered a demurrer to this complaint,
which was sustained. Somes appealed, the case becoming in this court R.G. No. 4149.4 On this
appeal Somes asked for and obtained from the Supreme Court a preliminary injunction in said
action dated August 3, 1907, restraining further proceedings in the execution of Molina's
judgments in cases Nos. 3829 and 4766. A bond for the injunction in the sum of P10,000 was
given, signed by Gabriel Schmid, Cristina Gaskell and Fridolin Wiget as sureties. It was not
signed by Somes.
The Supreme Court reversed the judgment of the Court of First Instance entered on the order
sustaining the demurrer and returned the case for further proceedings, leaving the injunction

above referred to in full force and effect. (9 Phil. Rep., 653.) The Court of First Instance found in
favor of Somes, holding that he was entitled to satisfy his judgment of P34,000 out of the
specific property levied upon by Molina and belonging to De la Riva in preference to and ahead
of Molina. Molina appealed but was unable to furnish a supersedeas bond; and Somes secured a
writ of execution in case No. 3402, levied on all the property of De la Riva, sold it at public sale
in due form of law, and bought it himself for P10,000. The legality and validity of the sale are
not in question. On that appeal this court reversed the Court of First Instance, holding that, as to
the specific property levied upon and then in the hands of the sheriff, Molina's judgment were
entitled to preference over that of Somes (15 Phil. Rep., 133) in the distribution of the proceeds.
Molina thereupon in July, 1910, began the present action against Somes and the sureties on the
bond given to obtain the injunction of August 3, 1907, praying for judgment against the sureties
for the amount of the bond, P10,000, and against Somes for the value of the property of De la
Riva out of which Molina might have satisfied his executions in 1907, except for what he terms
Somes' unjustifiable interference. The Court of First Instance after trial, gave judgment against
the sureties for P10,000 upon the bond, and against Somes for P11,000 on some other theory. No
appeal has been taken from the judgment against the sureties. Both Molina and Somes have
appealed from the judgment of P11,000 against the latter.
The argument on this appeal discloses that there is a contest between the parties as to the nature
of the action brought by the plaintiff and as to the theory upon which it was tried in the court
below. In that connection the plaintiff says in his brief in this court:
Plaintiff in 1907 held final judgments against Antonio de la Riva aggregating P81,000,
and was engaged in the execution of those judgments against the property of the debtor
then available for the purpose. The defendant Somes interfered with plaintiff's execution,
and successfully maintained his position until all the property of the debtor De la Riva
had disappeared and De la Riva had become absolutely execution-proof. This
interference on the part of Somes was unlawful, as this court decided in R.G. No. 5160
(15 Phil. Rep., 133). It follows that plaintiff has been damaged by defendant's conduct in
the amount of the value of De la Riva's property subjected to plaintiff's levy in 1907, if
that amount was within the figure of plaintiff's judgments. The only question is the
determination of this value, which the trial court found to be P11,000.
He also says: "The complaint in this case, directed as it is against the sureties on the injunction
bond as well as against their principal, is based principally upon the improvident granting of the
injunction, but it also contains the statement of a cause of action, fully proven by the evidence,
against the defendant Somes independently on the injunction proceedings. The Court of First
Instance, in case No. 5448, entered a judgment in favor of Somes declaring that he was entitled
to execute his judgment in case No. 3402 in preference to the execution of plaintiff's judgment in
cases 3829 and 4766. This decision of the Court was subsequently reversed by the Supreme

Court in R.G. No. 5160 (15 Phil. Rep., 133). If plaintiff had been able to furnish
a supersedeas bond in case No. 5448, he would have enjoyed the fruits of his successful appeal
in that case. As he was not able to effect thesupersedeas, Somes proceeded to execute his
judgment by obtaining a writ of execution in No. 3402 and enforcing it, taking the risk of a
reversal upon plaintiff's appeal. It can hardly be doubted that if Somes had retained the property
of De la Riva which he bought on his execution sale in case No. 3402, Molina, upon securing the
reversal in R.G. No. 5160, could have levied in execution of his judgments upon the property in
Somes' possession. It necessarily follows that as Somes had conveyed that property to a third
person, Jose Fortis, so that plaintiff could no longer follow it, Somes had damaged plaintiff to the
extent of the value of the property on which Somes levied in consequence of the erroneous
judgment of the Court of First Instance in Case No. 5448. It is submitted that when an appeal is
taken without supersedeas, and the judgment appealed from is executed, and subsequently
reversed, the appellee is bound to restore the status quo ante or respond in damages for his
failure or inability so to do. Regardless of the injunction proceedings, therefore, Sr. Somes is
bound to give effect to the decision of this court that the judgments of Molina were entitled to
preference over that of Somes and to undo the consequences of the erroneous judgment of the
Court of First Instance."
We cannot agree with the appellant Molina that the action is not only one for the recovery of
damages by reason of the issuance of an injunction but also one to recover damages sustained by
reason of the execution of a judgment which was afterwards reversed on appeal. It appears to us
from the complaint and the opinion of the court below and the general attitude of the parties,
both in the court below and here, that the complaint presents, from every possible legal aspect,
simply an action to recover damages alleged to have been occasioned by the defendant Somes
suing out a temporary injunction which was subsequently vacated by a final judgment of the
Supreme Court. It seems to have been tried altogether on that theory. The judgment of the Court
of First Instance seems also to rest entirely upon that theory. The results of that theory, as well as
the theory itself, have been accepted by the plaintiff not only as against the sureties on the bond,
who have not appealed from the judgment rendered against them on that undertaking, but also as
against Somes, the judgment against whom in the Court of First Instance based on the injunction
theory has been accepted by him (the plaintiff) in that court, as in this, he appealing from such
judgment only by reason of the amount.
Paragraph II of the complaint sets out the ownership of certain judgments upon which he
(plaintiff) had issued executions. Paragraph III alleges the obtaining by Somes of the preliminary
injunction from the Supreme Court, restraining Molina from proceeding further in the execution
of those two judgments. Paragraph IV alleges the making of the bond preliminary to the
injunction and states who were the persons signing the same. Paragraph V alleges the ownership
by Somes of a judgment against De la Riva, against whom the plaintiff also held the two
judgments theretofore referred to in the complaint and alleges that "on the 10th day of May,
1909, he executed said judgment, and upon said execution had sold, and himself bought, all the

property, real and personal, of the aforesaid Antonio de la Riva, while this plaintiff was still
under the restraint of the aforesaid preliminary injunction, and thereafter sold and transferred to a
third party all of the property by him acquired as aforesaid on the execution sale." The last
paragraph of the complaint alleges the value of the property and the fact that De la Riva is
insolvent and has no property out of which the plaintiff's judgments may be paid. It also alleges
"that the aforesaid preliminary injunction, notwithstanding diligent effort on the part of this
plaintiff to have the same vacated, remained continuously in force until after the aforesaid
execution sale of the defendant Enrique F. Somes, and until after the disposition by said Somes
of the property by him acquired as aforesaid at said sale. That said injunction was improperly
issued, and that the defendant Enrique F. Somes was not entitled to said injunction nor to restrain
the execution by this plaintiff of the latter's judgments against Antonio de la Riva, and that said
execution was issued solely upon the affidavit of the defendant Enrique F. Somes, and that the
allegations of said affidavit had been conclusively adjudged to be untrue by the Supreme Court
of the Philippine Islands in cause No. 5448 of the docket of this court." Then follows the prayer
for relief, as follows:
Wherefore plaintiff prays that judgment be rendered against defendant Enrique F. Somes
for the sum of P80,818.06 Philippine currency, with interest thereon at 5 per cent per
annum from July 27, 1903, and against the defendants Gabriel Schmid, Cristina Gaskell
de Schmid, and Fridolin Wiget, jointly and severally, for the sum of P10,000 Philippine
currency, and that plaintiff recover his costs in this action, and for such other and further
relief as the court may deem just and proper.
In its opinion the Court of First Instance says:
This case is before the court for trial upon a complaint by the plaintiff to recover from the
defendant Enrique F. Somes the sum of P80,818.06 and from the other defendants the
sum of P10,000, alleged to be damages suffered by the plaintiff on account of an
injunction issued at the request of the defendant Somes, and a bond given upon which the
other defendants were sureties and by which the plaintiff was restrained from levying an
execution to satisfy judgments obtained by him.
The defendant Somes answered admitting practically all the allegations of the complaint,
except those which alleged that he was the owner of a judgment against one Antonio de la
Riva and had levied execution issued on it, and had sold all of De la Riva's property, and
that the property sold was sufficient to satisfy all of plaintiff's judgments: That De la Riva
was insolvent, and alleged as a special defense that he had obtained an injunction against
the plaintiff and several other persons which after being set aside was finally left in full
effect, and that prior to all proceedings Gibbs, Gale & Carr had obtained judgment
against Antonio de la Riva, levied execution under it, and sold all of the real estate of De
la Riva in the Island of Catanduanes, and also alleged that he, the defendant Somes, had

never levied upon or sold such real estate; but that having obtained judgment against De
la Riva execution issued, and was levied upon the property of De la Riva, and the
property sold for P10,000.
The court further says:
The defendants insist that the plaintiff cannot recover in this action because the damages
suffered on account of conditions which appear from the pleadings must be assessed in
the action or proceeding and in the court trying the action; that is, the action in which the
injunction was issued, which was the basis of the damages.
The court then takes up the questions of procedure relative to the recovery of damages sustained
by reason of the issuance of an injunction, and discusses whether or not the proceedings
instituted for that purpose should be brought in the same action in which the injunction was
issued as an incident thereof, or whether they should be carried on in a separate action. After
thorough consideration it was held that such proceedings must be brought and carried on in the
same action as an incident thereof. The decision concludes as follows:
The defendant Somes having stopped the plaintiff from recovering upon his judgments,
for reasons which were afterwards found to be not valid, is liable for any damages which
the plaintiff may have suffered on account thereof, and the other defendants, as his
sureties, are also liable to the extent of their bond.
The defendant Somes, while the injunction was in force, having levied upon and sold the
property which the plaintiff was restrained from selling, under his execution, having left
the plaintiff without other property of his judgment debtor against which to proceed, has
damaged the plaintiff to the extent of the value of the property which plaintiff has levied
upon, at the time he was restrained from proceeding with the sale.
On his appeal to this court, the plaintiff presented the following assignment of errors:
1. That the said Court of First Instance found as a fact that the damages suffered by
plaintiff amounted only to P11,000.
2. That the said Court of First Instance of Manila rendered judgment against the
defendant Enrique F. Somes in the sum of P11,000 instead of in accordance with the
prayer of plaintiff's complaint.
The opening paragraph of plaintiff's brief on appeal is as follows:
Plaintiff in 1907 held final judgments against Antonio de la Riva aggregating P81,000,
and was engaged in the execution of those judgments against the property of the debtor

then available for the purpose. The defendant Somes interfered with plaintiff's execution,
and successfully maintained his position until all the property of the debtor De la Riva
had disappeared and De la Riva had become absolutely execution proof. This interference
on the part of Somes was unlawful, as this court decided in R.G. No. 5160 (15 Phil. Rep.,
133). It follows that plaintiff has been damaged by defendant's conduct in the amount of
the value of De la Riva's property subjected to plaintiff's levy in 1907, if that amount was
within the figure of plaintiff's judgments. The only question is the determination of this
value, which the trial court found to be P11,000.
The first intimation that the defendant had, so far as shown by the record, that plaintiff based his
right to recover upon the theory of restitution appears in that portion of plaintiff's brief devoted to
answering defendant's brief on appeal. Although one of the special defenses interposed by the
defendant Somes to plaintiff's complaint in the court below was that the property of De la Riva
was not lost to plaintiff by reason of the injunction, which was the basis of his compliant, but,
rather, by reason of the execution of the judgment of the Court of First Instance in case No. 5448
which determined that Somes' judgment was entitled to preference over the two judgments of
Molina, in spite of this plain contention of the defendant that the cause of all the damages, if any,
was the execution of said judgment, nevertheless, the plaintiff did not amend his complaint to
meet the suggestion, but, instead, elected to proceed and did proceed and tried his case upon the
theory upon which he had already placed himself.
We conclude, then, that the plaintiff cannot, under these circumstances, be allowed, at this time,
to change the theory and nature of his cause of action and recover upon grounds never heretofore
set forth.
This conclusion is necessary for several reasons, in addition to the surprise of the defendant
which would naturally follow such a change:
First. Because the findings and judgment of the court of first instance, based upon the
improvident issuance of an injunction, have been accepted by the plaintiff in every particular
except that relating to the amount of damages.
Second. Because of the theory of an action based upon the improvident issuance of an injunction
is incompatible with a cause of action based upon the theory of restitution, for, if the damages
were actually caused by the execution of the judgment in cause No. 5448, then they could not
have been caused by the issuance of the injunction. The injunction did no more than tell Molina
to hold on. It did not order him to turn the property over to Somes or anybody else. It was
restraining, not mandatory. But even if Molina had been under the restraint alleged, he suffered
no injury thereby, as the judgment in case No. 5448 was in force against Molina and he could
not, in the face of it, have applied such property to the payment of his own debt. Under the
judgment, Somes had the sole right to do that. Molina was powerless to benefit himself with De

la Riva's property if there had been no injunction whatever. Somes took and Molina lost the
property not because of any restraint imposed on the latter, but by reason of judgment rights of
the former.
Third. The plaintiff already has a judgment against the sureties upon the bond given to secure the
injunction and also a judgment against Somes based expressly upon the improvident issuance of
that injunction. To permit the plaintiff now to recover upon the theory of restitution would be
permit him to obtain two final judgments in the same cause, each of which is based upon the
theory that the other is wrong. If the damages were caused by the execution of the judgment of
the Court of First Instance in case No. 5448, then the final judgment against the original codefendants of Somes on the theory that the damages were caused by the injunction is entirely
without foundation. We do not believe that the plaintiff ought to be permitted to retain the
benefits of the final judgment against the bondsmen and also to recover and take the benefits of a
judgment against the principal upon a cause of action which proceeds on the theory that said
bondsmen are not liable.
The plaintiff, then, must recover, if he recover at all, upon the allegations of his complaint which
presents a cause of action solely of damages sustained by the obtaining of an injunction, and
upon which theory the cause was presented, tried, decided, and judgment accepted.
We are unable to see how the plaintiff can recover on the theory presented. It is conceded that
Somes did not sign or otherwise agree to the bond upon which the injunction was obtained. He
cannot, therefore, be held upon it. The statute which provides for the issuance of injunctions and
for the undertakings which are the basis of their issuance nowhere lays down a different rule of
liability than that established by the general principles of the law. The statute prescribed the
method by which a party may make himself liable for the damages resulting from an injunction.
It nowhere makes him responsible in any way apart from the bond itself. As a necessary
consequence, in determining whether or not Somes, in this view of the case, is liable in the action
at bar, we must revert to the general principles of the law. In doing this we observe at the outset
that the complaint does not allege any facts upon which the defendant can be held liable; nor
does the evidence, as disclosed by the opinion of the court below, contain a particle of proof
which would tend to establish his liability. In an action for improperly suing out an injunction,
the same principles apply as in cases where it is sought to make a plaintiff liable for bringing an
action. The two essential requisites are malicious prosecution and lack of probable cause. These
are neither alleged nor proved in the case before us.
It may be true that Molina would have gone and collected his executions if Somes had not begun
his action, and that he probably would have been the gainer by so much as he received from such
collection, but it in nowise follows that because Somes brought the action he is liable for
anything that Molina may have failed to collect by reason thereof. In every case where one
brings an action against another and fails to recover, the one against whom the action was

brought has in a real sense been injured and damaged by the action. He has been troubled. He has
hired lawyers. He has procured witnesses. He has paid out money. He may have been obliged to
neglect his business and his profits may have materially decreased. He may have been injured in
his credit and standing. That does not mean, however, that he can recover from the plaintiff the
damages which he suffered by reason of the action having been brought. If that were the case,
there would be an end of actions in court. It is to prevent such a condition that the law has laid
down a rule relative to the liability incurred in bringing an action different from that applicable in
cases where damages are sustained by reason of a direct act. Before one can recover damages
from another by reason of an action having been brought against him, he must show not only that
there was a lack of probable cause but that the action was maliciously brought. In the case at bar,
nothing happened to Molina by reason of any act of Somes except that which naturally followed
from the bringing of the action, assisted by the voluntary acts of Molina, for which latter the
bringing of the action was in no way responsible.
What we have said relative to the bringing of an action will apply to the issuing of an injunction.
In many actions the obtaining of an injunction is the essence of the recovery, and without it a
judgment would be worthless. One who brings an action has a right to all of the incidents and
aids which the law joins to that action. Therefore, in the absence of a statute to the contrary, there
is no more liability incurred in securing an injunction that there is in bringing an action; and
damages for the improper suing out of an injunction will lie only upon the same basis and for the
same reasons as actions for damages for bringing an action.
This proposition is founded upon reason as well as authority. It is apparent that in many cases
actions are entirely futile unless the plaintiff can take advantage of some preliminary remedy. To
that end, legislatures have provided, in various states and countries, that in certain kinds of action
the plaintiff may, upon meeting expressed conditions do certain things as preliminary remedies,
which will insure the efficacy of his judgment, if he secures one. A familiar example of such a
preliminary remedy is the injunction. It is clear, and is demonstrated every day in actual practice,
that many actions would be fruitless if the plaintiff could not obtain an injunction to maintain
the status quo until the final determination of the rights of the parties. It having been ascertained
by the settled experienced of society that an injunction is, in many cases, a necessary prerequisite
to an action, reason as well as logic would, so far as the liability of the person suing out the
injunction is concerned, require that the same principles apply as govern in an action brought to
recover damages for the wrongful bringing of an action. In other words, the principles of liability
which control where a plaintiff is suit for wrongfully bringing an action should be the same
principles which govern in an action brought for the wrongful suing out of an injunction. The
injunction is a necessary incident or part of the action. It is absolutely essential to the action. The
action is worthless without it. It would be surprising to see the act relating to the main thing,
namely, the action, governed by one principle, while the act relating to that which is the essential
incident or part of the action, namely, the injunction, governed by another and different principle.

The attempt to secure that which the law gives for the purpose of making the action worth
bringing, and without which it would be entirely barren, should not entail a greater responsibility
than would the bringing of the action itself, to which it is appurtenant, and to which it necessarily
and really belongs.
The assertion by some text writers and courts that the one who sues out an injunction without
legal cause is liable on the theory that he wrongfully induced or moved the court to take the
action which it did, is in our judgment, without stable foundation. He who obtains a thing by
permission of the law, and by strict compliance with the law, ought not to be held liable in any
manner except that specified in the law under which he operates. He ought not to be held for a
trespass or other wrong, as they assert he may be in replevin, etc. How it can be logically said
that one who, acting in good faith, obtains an injunction or property under a replevin in precisely
the manner required by law has committed a legal wrong against the person as to whom the law
authorizes him to obtain the injunction? The law itself, by virtue of the conditions which it
imposes, fully protects the defendant against the evil effects of the injunction; and that if the
party securing the injunction has performed all that the law requires of him as a condition
precedent to obtaining it, what more can be asked? In return for the restrictions of the injunction,
the defendant has been given certain legal rights against the plaintiff by way of an undertaking
which, by virtue of the law itself, fully compensates him for the change of position. The bond is
full compensation for the privileges which the plaintiff receives and for those which the
defendant loses. The law says so. The statute asserts that the doing of certain things by the
plaintiff shall be a complete compensation to the defendant for that which the law requires him to
give up. If it is not complete compensation, then the law is unjust, in that it requires the
defendant to give up something for which he receives no compensation. It is not to be presumed
or believed that the legislature intended to do such a thing, and it is not to be presumed or
believed that it did do it. But, even if the law be unjust, an injustice of the law cannot be cured by
an injustice to a party. The giving of the undertaking legally equalizes the status of the two. To
put upon the plaintiff the additional burden of a trespass or other wrong would destroy the legal
equilibrium and produce an injustice.
The assertion of text writers that the party in cases of replevin or injunction, wrongfully put the
court in operation, and that, therefore, he is liable as in tort or otherwise apart from his bond to
the defendant therefore, is, in our judgment, also unfounded. Such a theory is bad not only for
the reasons already given but also for the further reason that it makes the plaintiff an insurer of
the judgment of the court. In other words, upon that theory, the plaintiff, before he can safely
obtain an injunction or a replevin, must be certain that the court will decide in his favor; that is,
the plaintiff must insure a judgment of the court in his favor, on the pain of being sued in tort or
other legal wrong, in addition to his liability resulting from the responsibility of his sureties on
the bond. Such a theory nullifies the symmetry of the law and destroys the equality between the
parties which the law establishes. As we have said, the statute asserts conclusively that the giving
of a bond to the defendant is an exact equivalent for the loss which he sustains by reason of his

change of position. In other words, the plaintiff has paid the defendant in full for whatever
benefits he has obtained from him. If, now, we add to that payment the obligation to respond to a
defense in damage for the commission of a tort or other wrong, we at once destroy that equality
which the law has established, and lay a burden upon the plaintiff which, in equity, he ought not
to bear and which, under the law, he is not required to bear. The law expressly states what shall
be his punishment if he is wrong. Courts cannot by their own fiat add anything more. The injury
is caused by operation of the law, not by the act of plaintiff.
It is for these reasons, among others, that we have arrived at the conclusion that an action for
damages for the improper suing out of an injunction must be maintained upon the same
principles which govern an action for the wrongful bringing of an action.
In the case of Meyers vs. Block (120 U.S., 206, 211), the court, having under review this very
question, said, in speaking of the principles upon which an action may proceed which is brought
for the purpose of obtaining damages by reason of the wrongful suing out of an injunction:
Recover, how? By the law of Louisiana damages may be recovered for suing out an
injunction without just cause, independently of a bond. (3 La., 291.) But this cannot be
done in the United States courts. Without a bond no damage can be recovered at all.
Without a bond for the payment of damages or other obligation of like effect, a party
against whom an injunction wrongfully issues can recover nothing but costs, unless he
can make out a case of malicious prosecution. It is only by reason of the bond, and upon
the bond, that he can recover anything.
In the case of Russell vs. Farley (105 U.S., 433, 438), Mr. Justice Bradley, in alluding to the
practice of courts of chancery in granting injunction, says relative to the fundamental reason why
damages cannot be obtained against a person wrongfully suing out an injunction:
And if the legal right is doubtful, either in point of law or of fact, the court is always
reluctant to take a course which may result in material injury to either party, for the
damage arising from the act of the court itself is adamnum absque injuria, for which there
is no redress except a decree for the costs of the suit, or in a particular [proper] case, an
action for malicious prosecution. To remedy this defect [difficulty], the court, in the
exercise of its discretion, frequently resorts to the expedient of imposing terms and
conditions upon the party at whose instance it proposes to act.
The case of the City of St. Louis vs. the St. Louis Gaslight Company (82 Mo., 349-357), says:
Thus it will be seen that the liability of the plaintiff in an injunction suit to respond to the
defendant for damages after dissolution depended upon his voluntary undertaking
contained in the conditions of the decree, or in his separate agreement and bond given to

the court or defendant for that purpose. Of course, when the process has been sued out
maliciously there may be a right of action in favor of the defendant. But this right
depends upon the law governing malicious prosecutions, and has no relation to the claim
for damages urged by defendant in this case. . . .
Such exemption of the plaintiff from damages, in the absence of any terms or conditions
accepted by him to pay them, rests upon the broad policy of the law which regards the
courts open at all times to all persons for the enforcement of their rights by civil action.
Suitors are presumably acting in accordance with law when they obtain in the courts what
the courts award them, and should not be punished for accepting what they could not
obtain except by such orders and judgments. When a suitor procures a writ or order of
injunction upon a fair presentation of facts to the court in good faith he has never been
regarded as responsible in damages therefor, either in law or equity, unless he has made
himself so by some voluntary undertaking. In such case he stands before the law like a
suitor in any other process or proceeding. This I understand to be the rule, as universally
recognized and approved. (Sturgis vs. Knapp, 33 Vt., 486; Gortonvs. Brown, 27 Ill., 489;
Lawton vs. Green, 5 Hun, 157; L. & O.R.R. Co. vs. Applegate, 8 Dana, 289;
Palmervs. Foley, 71 N.Y., 106; Russell vs. Farley, 105 U.S., 433; Iron Mountain
Bank vs. Mercantile Bank, 4 Mo. App., 505.)
In the case of Palmer vs. Foley (71 N.Y., 106, 108), Judge Folger expresses this condition of the
law:
It seems that, without some security given before the granting of an injunction order, or
without some order of the court or a judge, requiring some act on the part of the plaintiff,
which is equivalent to the giving of security such as a deposit of money in court the
defendant has no remedy for any damages which he may sustain from the issuing of the
injunction, unless the conduct of the plaintiff has been such as to give ground for an
action for malicious prosecution.
To the same effect are the following cases: Lawton vs. Green (64 N.Y., 326),
McLaren vs. Bradfrod (26 Ala., 616), Robinson vs. Kellum (6 Cal., 399), Asevado vs. Orr (100
Cal., 293, 34 Pac., 777), Harless vs. Consumers' Gas Trust Co. (14 Ind. App., 545, 43 N.E., 456),
Cox vs. Taylor's Admr. (49 Ky., 17), Hayden vs. Keith (32 Minn., 277, 20 N.W., 195),
Manlove vs. Vick (55 Miss., 567), Keber vs. Mercantile Bank (4 Mo. App., 195), Iron Mountain
Bank vs. same (id., 505), Campbell vs. Carrol (35 Mo. App., 640), Ill., 489, 81 Am. dec., 245),
Hutchins vs. Rogers (22 Wkly. Notes Cas., 79).
Here we have a case in which the action, in a sense, was improperly brought and the injunction
was, in the same sense, improperly obtained. That does not mean, as we have seen, that the
plaintiff is, for that reason, liable for the damages which the defendant may have suffered. Before

that liability can attach, it must appear that the action was brought and the injunction obtained
maliciously and without probable cause. Of course, if the injunction bond were relied upon, as it
was as to part of the defendants, we would have a case in which the lack of probable cause and
the malice would be immaterial; but it is conceded that Somes did not sign the bond and that he
cannot, therefore, be held responsible thereon.
Having found that, conceding that the injunction remained in force until after the levy and sale
by Somes, the plaintiff cannot recover, it becomes unnecessary to determine whether the
injunction was really existent at that time or whether it was merged in the final judgment of the
Supreme Court of January 20, 1908, or in the judgment of the Supreme Court of First Instance of
December 7, 1908, the judgment determining the relative rights of Molina and Somes in the
proceeds of the property here in suit.
The judgment as to Somes is hereby reversed and the complaint as to him is dismissed upon the
merits, without special finding as to costs.

7. [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.
DECISION
PUNO, J.:
In this petition for certiorari, petitioner seeks to annul and set aside the decision and
resolution of the Court of Appeals[1] in CA-G.R. SP No. 36032 dismissing the complaint in Civil
Case No. 94-72076 before the Regional Trial Court, Branch 9, Manila.
The facts show that in 1990, petitioner spouses Victor and Johannah Trinidad obtained a
loan of P31,000,000.00 from respondent Far East Bank & Trust Company to finance the
purchase of the Sta. Maria Ice Plant & Cold Storage in Sta. Maria, Bulacan. The loan was
secured by a mortgage over the ice plant and the land on which the ice plant stands. Petitioner
spouses failed to pay their loan. The bank extrajudicially foreclosed the mortgage and the ice
plant was sold by public bidding on March 22, 1993. Respondent bank was the highest bidder.It
registered the certificate of sale on September 22, 1993 and later took possession of the property.

On November 22, 1993, petitioner spouses filed Civil Case No. 956-M-93 against
respondent bank before the Regional Trial Court, Malolos, Bulacan for reformation of the loan
agreement, annulment of the foreclosure sale and damages. [2] The trial court dismissed the
complaint for petitioners' failure to pay the docket fees. The dismissal was without prejudice to
refiling of the complaint.[3]
On October 28, 1994, petitioners filed Civil Case No. 94-72076 against respondent bank
before the Regional Trial Court, Branch 9, Manila for damages, accounting and fixing of
redemption period.[4] As a provisional remedy, petitioners filed on November 16, 1994 an
"Urgent Petition for Receivership." They alleged that respondent bank took possession of the ice
plant forcibly and without notice to them; that their occupation resulted in the destruction of
petitioners' financial and accounting records making it impossible for them to pay their
employees and creditors; the bank has failed to take care of the ice plant with due diligence such
that the plant has started emitting ammonia and other toxic refrigerant chemicals into the
atmosphere and was posing a hazard to the health of the people in the community; the spouses'
attention had been called by several people in the barangay who threatened to inform the
Department of Environment and Natural Resources should they fail to take action. Petitioners
thus prayed for the appointment of a receiver to save the ice plant, conduct its affairs and
safeguard its records during the pendency of the case.[5]
Instead of an answer, respondent bank filed on November 25, 1994 a "Motion to Dismiss
and Opposition to Plaintiff's Petition for Receivership." It alleged that the complaint states no
cause of action and that venue had been improperly laid. It also alleged that petitioners failed to
pay the proper docket fees and violated the rule on forum-shopping.[6]
In an order dated December 13, 1994, the trial court granted the petition for receivership and
appointed petitioners' nominee, Ricardo Pesquera, as receiver. The order disposed as follows:
"WHEREFORE, premises considered the Urgent Petition for Receivership is GRANTED and
Mr. Ricardo Pesquera to whose appointment no opposition was raised by the defendant and who
is an ice plant contractor, maintainer and installer is appointed receiver. Accordingly, upon the
filing and approval of the bond of TWO MILLION (P2,000,000.00) pesos which shall answer
for all damages defendant may sustain by reason of the receivership, said Ricardo Pesquera is
authorized to assume the powers of a receiver as well as the obligation as provided for in Rule 59
of the Rules of Court after taking his oath as such receiver.
SO ORDERED."[7]
Respondent bank assailed this order before the Court of Appeals on a petition
for certiorari. On January 11, 1996, the Court of Appeals annulled the order for receivership and

dismissed petitioners' complaint for improper venue and lack of cause of action. The dispositive
portion of the decision reads:
"WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the assailed order dated
December 13, 1994 (Annex A, petition) is ANNULLED and SET ASIDE and respondent's
complaint in Civil Case No. 94-72076 in the respondent court (Annexes F, petition; 4, comment),
is DISMISSED. Costs against respondents except the court.
SO ORDERED."
Reconsideration was denied on May 23, 1996.[8] Hence, this petition.
Section 1 of Rule 59 of the Revised Rules of Court provides that:
"Sec. 1. When and by whom receiver appointed.-- One or more receivers of the property, real or
personal, which is the subject of the action, may be appointed by the judge of the Court of First
Instance in which the action is pending, or by a Justice of the Court of Appeals or of the Supreme
Court, in the following cases:
(a) When the corporation has been dissolved, or is insolvent, or is in imminent danger of
insolvency, or has forfeited its corporate rights;
(b) When it appears from the complaint or answer, and such other proof as the judge may
require, that the party applying for the appointment of receiver has an interest in the property or
fund which is the subject of the action, and that such property or fund is in danger of being lost,
removed or materially injured unless a receiver be appointed to guard and preserve it;
(c) When it appears in an action by the mortgagee for the foreclosure of a mortgage that the
property is in danger of being wasted or materially injured, and that its value is probably
insufficient to discharge the mortgage debt, or that the parties have so stipulated in the contract
of mortgage;
(d) After judgment, to preserve the property during the pendency of the appeal, or to dispose of it
according to the judgment, or to aid execution when the execution has been returned unsatisfied
or the judgment debtor refuses to apply his property in satisfaction of the judgment, or otherwise
carry the judgment into effect;
(e) Whenever in other cases it appears that the appointment of a receiver is the most convenient
and feasible means of preserving, administering, or disposing of the property in litigation."
A receiver of real or personal property, which is the subject of the action, may be appointed by
the court when it appears from the pleadings or such other proof as the judge may require, that

the party applying for such appointment has (1) an actual interest in it; and (2) that (a) such
property is in danger of being lost, removed or materially injured; or (b) whenever it appears to
be the most convenient and feasible means of preserving or administering the property in
litigation.[9]
A receiver is a person appointed by the court in behalf of all the parties to the action for the
purpose of preserving and conserving the property in litigation and prevent its possible
destruction or dissipation, if it were left in the possession of any of the parties. [10] The
appointment of a receiver is not a matter of absolute right. It depends upon the sound discretion
of the court[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 Ice Plant;
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 the appointment of a receiver. Petitioners
have not sufficiently shown that the Sta. Maria Ice Plant is in danger of disappearing or being
wasted and reduced to a "scrap heap." Neither have they proven that the property has been
materially injured which necessitates its protection and preservation. [15] In fact, at the hearing on
respondent bank's motion to dismiss, respondent bank, through counsel, manifested in open court
that the leak in the ice plant had already been remedied and that no other leakages had been
reported since.[16] This statement has not been disputed by petitioners.

At the time the trial court issued the order for receivership of the property, the problem had
been remedied and there was no imminent danger of another leakage. Whatever danger there was
to the community and the environment had already been contained.
The "drastic sanctions" that may be brought against petitioners due to their inability to pay
their employees and creditors as a result of "the numbing manner by which [respondent bank]
took the ice plant" does not concern the ice plant itself. These claims are the personal liabilities
of petitioners themselves. They do not constitute "material injury" to the ice plant.
Moreover, the receiver appointed by the court appears to be a representative of
petitioners. Respondent bank alleges that it was not aware that petitioners nominated one Mr.
Pesquera as receiver.[17] The general rule is that neither party to a litigation should be appointed
as receiver without the consent of the other because a receiver should be a person indifferent to
the parties and should be impartial and disinterested. [18] The receiver is not the representative of
any of the parties but of all of them to the end that their interests may be equally protected with
the least possible inconvenience and expense.[19]
The power to appoint a receiver must be exercised with extreme caution. There must be a
clear showing of necessity therefor in order to save the plaintiff from grave and irremediable loss
or damage.[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 court gravely abused its discretion in
issuing the order for receivership. The respondent court, however, went further and took
cognizance of respondent bank's motion to dismiss. And finding merit in the motion, it dismissed
the complaint. Petitioners now claim that the respondent court should have refrained from ruling
on the motion to dismiss because the motion itself was not before it.[22]
Again, we reject petitioners' contention. The motion to dismiss is anchored on improper
venue, lack of cause of action and forum-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;
3. Ordering the Defendant to pay Plaintiffs nominal and exemplary damages in the amount of
PESOS: FIVE HUNDRED THOUSAND and 00/100 (P500,000.00) to deter the repetition of
such unjust and malicious actuations of the Defendant;
4. In order to restore the legal right of the Plaintiff COMMODITIES to redeem its
foreclosed property, a right which COMMODITIES has been unjustly deprived of by the
malicious and bad faith machinations of the Defendant, compelling the Defendant to
produce the correct, lawful, official and honest statements of account and application of
payment. Concomitantly, ordering the Defendant to accept the redemption of the
foreclosed properties pursuant to Rule 39 of the Revised Rules of Court in conjunction with
Act 3135, within the prescribed period for redemption, said period to commence from the
date of receipt by the Plaintiff COMMODITIES of the correct, lawful, official and honest
statements of account and application of payments;
5. Ordering the Defendant to pay attorney's fees in the amount of PESOS: THREE HUNDRED
THOUSAND (P300,000.00); and costs of litigation.
Other reliefs and remedies just and equitable under the circumstances are likewise prayed for."[24]
Petitioners pray for two remedies: damages and redemption. The prayer for damages is based on
respondent bank's forcible occupation of the ice plant and its malicious failure to furnish them
their statements of account and application of payments which prevented them from making a
timely redemption.[25] Petitioners also pray that respondent bank be compelled to furnish them
said documents, and upon receipt 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.

8. EVELINA G. CHAVEZ and G.R. No. 174356

AIDA CHAVEZ-DELES,
Petitioners, Present:
Carpio, J., Chairperson,
- versus - Brion,
Del Castillo,
Abad, and
Perez, JJ.
COURT OF APPEALS and
ATTY. FIDELA Y. VARGAS, Promulgated:
Respondents.

January 20, 2010

x --------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
This case is about the propriety of the Court of Appeals (CA), which hears the case on
appeal, placing the property in dispute under receivership upon a claim that the defendant has
been remiss in making an accounting to the plaintiff of the fruits of such property.
The Facts and the Case
Respondent Fidela Y. Vargas owned a five-hectare mixed coconut land and rice fields in
Sorsogon. Petitioner Evelina G. Chavez had been staying in a remote portion of the land with her
family, planting coconut seedlings on the land and supervising the harvest of coconut
and palay. Fidela and Evelina agreed to divide the gross sales of all products from the land
between themselves. Since Fidela was busy with her law practice, Evelina undertook to hold in
trust for Fidela her half of the profits.
But Fidela claimed that Evelina had failed to remit her share of the profits and, despite demand
to turn over the administration of the property to Fidela, had refused to do so.Consequently,
Fidela filed a complaint against Evelina and her daughter, Aida C. Deles, who was assisting her
mother, for recovery of possession, rent, and damages with prayer for the immediate
appointment of a receiver before the Regional Trial Court (RTC) of Bulan, Sorsogon. [1] In their
answer, Evelina and Aida claimed that the RTC did not have jurisdiction over the subject matter
of the case since it actually involved an agrarian dispute.
After hearing, the RTC dismissed the complaint for lack of jurisdiction based on Fidelas
admission that Evelina and Aida were tenants who helped plant coconut seedlings on the land
and supervised the harvest of coconut and palay. As tenants, the defendants also shared in the
gross sales of the harvest. The court threw out Fidelas claim that, since Evelina and her family
received the land already planted with fruit-bearing trees, they could not be regarded as
tenants. Cultivation, said the court, included the tending and caring of the trees. The court also
regarded as relevant Fidelas pending application for a five-hectare retention and Evelinas
pending protest relative to her three-hectare beneficiary share.[2]
Dissatisfied, Fidela appealed to the CA. She also filed with that court a motion for the
appointment of a receiver. On April 12, 2006 the CA granted the motion and ordained
receivership of the land, noting that there appeared to be a need to preserve the property and its
fruits in light of Fidelas allegation that Evelina and Aida failed to account for her share of such
fruits.[3]

Parenthetically, Fidela also filed three estafa cases with the RTC of Olongapo City and a
complaint for dispossession with the Department of Agrarian Reform Adjudication Board
(DARAB) against Evelina and Aida. In all these cases, Fidela asked for the immediate
appointment of a receiver for the property.
The Issues Presented
Petitioners present the following issues:
1. Whether or not respondent Fidela is guilty of forum shopping
considering that she had earlier filed identical applications for receivership over
the subject properties in the criminal cases she filed with the RTC of Olongapo
City against petitioners Evelina and Aida and in the administrative case that she
filed against them before the DARAB; and
2. Whether or not the CA erred in granting respondent Fidelas application
for receivership.
The Courts Ruling
One. By forum shopping, a party initiates two or more actions in separate tribunals,
grounded on the same cause, trusting that one or the other tribunal would favorably dispose of
the matter.[4] The elements of forum shopping are the same as in litis pendentia where the final
judgment in one case will amount to res judicata in the other. The elements of forum shopping
are: (1) identity of parties, or at least such parties as would represent the same interest in both
actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (3) identity of the two preceding particulars such that any judgment rendered in the
other action will, regardless of which party is successful, amount to res judicata in the action
under consideration.[5]
Here, however, the various suits Fidela initiated against Evelina and Aida involved
different causes of action and sought different reliefs. The present civil action that she filed with
the RTC sought to recover possession of the property based on Evelina and Aidas failure to
account for its fruits. The estafa cases she filed with the RTC accused the two of
misappropriating and converting her share in the harvests for their own benefit. Her complaint
for dispossession under Republic Act 8048 with the DARAB sought to dispossess the two for
allegedly cutting coconut trees without the prior authority of Fidela or of the Philippine Coconut
Authority.
The above cases are similar only in that they involved the same parties and Fidela sought
the placing of the properties under receivership in all of them. But receivership is not an
action. It is but an auxiliary remedy, a mere incident of the suit to help achieve its

purpose. Consequently, it cannot be said that the grant of receivership in one case will amount
to res judicata on the merits of the other cases. The grant or denial of this provisional remedy
will still depend on the need for it in the particular action.
Two. In any event, we hold that the CA erred in granting receivership over the property in
dispute in this case. For one thing, a petition for receivership under Section 1(b), Rule 59 of the
Rules of Civil Procedure requires that the property or fund subject of the action is in danger of
being lost, removed, or materially injured, necessitating its protection or preservation. Its object
is the prevention of imminent danger to the property. If the action does not require such
protection or preservation, the remedy is not receivership.[6]
Here Fidelas main gripe is that Evelina and Aida deprived her of her share of the lands
produce. She does not claim that the land or its productive capacity would disappear or be
wasted if not entrusted to a receiver. Nor does Fidela claim that the land has been materially
injured, necessitating its protection and preservation. Because receivership is a harsh remedy that
can be granted only in extreme situations,[7] Fidela must prove a clear right to its issuance. But
she has not. Indeed, in none of the other cases she filed against Evelina and Aida has that remedy
been granted her.[8]
Besides, the RTC dismissed Fidelas action for lack of jurisdiction over the case, holding
that the issues it raised properly belong to the DARAB. The case before the CA is but an offshoot
of that RTC case. Given that the RTC has found that it had no jurisdiction over the case, it would
seem more prudent for the CA to first provisionally determine that the RTC had jurisdiction
before granting receivership which is but an incident of the main action.
WHEREFORE, the Court GRANTS the petition. The Resolutions dated April 12, 2006
and July 7, 2006 of the Court of Appeals in CA-G.R. CV 85552, are REVERSEDand SET
ASIDE.
The receivership is LIFTED and the Court of Appeals is directed to resolve CA-G.R. CV
85552 with utmost dispatch.
SO ORDERED.

9. G.R. No. 111357 June 17, 1997

TRADERS ROYAL BANK, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, and HEIRS OF THE LATE JOSE C.
TAYENGCO, respondents.
RESOLUTION

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 (Emphasis supplied).
TRB's assignment of errors submits for resolution two vital issues: (1) Is the Court of Appeals
decision dated February 12, 1993 barred by res judicata by virtue of our ruling in G.R. No.
60076 recognizing the propriety of TRB's appointment as receiver? (2) Who is responsible for
TRB's receiver's fee?
With respect to the first assigned error, we are not persuaded.
The elements 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 substantial identity of parties, subject
matter, and cause of action, as between the prior and subsequent actions. 8
The difference between the two causes of action is unmistakable. In G.R. No. 60076, the petition
was for the annulment of the trial court's order requiring Tayengco to render and submit an
accounting of the rental of the buildings and apartments, while C.A. G.R. CV No. 21423 was an
appeal questioning the order of the trial court authorizing the deduction by TRB of its
compensation from the receivership funds. There is clearly no identity of causes of action here.
Clearly, the last element of res judicata is absent in the case at bar.
Procedural obstacles aside, we now answer the principal query posed in the instant petition.

Nobody questions the right of TRB to receive compensation. Section 8, Rule 59 of the Rules of
Court, however, explicitly provides for the manner in which it shall be paid for its services, to
wit:
Sec. 8. Termination of receivership; compensation of receiver. Whenever the
court, of its own motion or on that of either party, shall determine that 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 the circumstances of
the case warrant, to be taxed as costs against the defeated party, or apportioned,
as justice requires. (Emphasis supplied).
It is, therefore, clear that when the services of a receiver who has been properly appointed
terminates, his compensation is to be charged against the defeated party, or the prevailing litigant
may be made to share the expense, as justice requires. Consequently, the 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.