Professional Documents
Culture Documents
In order that the credits provided for in this subdivision may enjoy the The court declared that nothing in the RoC makes notice and hearing
preference they must appear by contracts recorded in the registry of indispensable and mandatory requisites for the issuance of the writ of
vessels, or if they were contracted for the vessel while on a voyage and attachment, the only pre requisite is that the court be satisfied, upon
said vessel has not returned to the port of her registry, they must be consideration of the affidavit of the applicant or of some other person who
made under the authority required for such cases and entered in the personally knows the facts that a sufficient cause of actions exists, that the
certificate of registry of the said vessel. case is one of those mentioned in sec 1 rule 57, that there is no other
sufficient security for the claim sought to be enforced by the action, and that
Sec. 2 PD 214 which is the repealing clause, states that particularly the the amount due to the applicant, or the value of the property the possession
provisions of Art. 580 & 584 of the Code of commerce have been of which he is entitled to recover, is as much as the sum for which the order
repealed. of attachment is granted above all legal counterclaims. If the court be so
satisfied, the order of attachment shall be granted, and the writ shall issue
B) WON the case of Salas v. Adil applicable in the instant case so as to upon the applicant’s posting of bond executed to the adverse party in an
justify the Honorable Respondent Judge in ordering the withdrawal of amount to be fixed by the judge not exceeding the plaintiff’s claim,
the bond conditioned that the latter will pay all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the
As to provisional rememies, such as attachment, respondent judge attachment, if the court shall finally adjudge that the applicant was not
acted in accordance with the existing laws and prevailing jurisprudence. entitled thereto.
2 ways of discharging the attachment: court issued an Order of Preliminary Attachment6 against petitioner. The
following day, the trial court issued a Writ of Preliminary Attachment.
1. By posting of a counterbond;
2. By showing of its improper or irregular issuance. The trial court granted the request of its sheriff for assistance from their
With respect to other provisional remedies; preliminary injunction rule 58; counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo
receivership rule 59; replevin or delivery of personal property rule 60; the San Miguel of RTC Pampanga served on petitioner’s household help in San
rule is the same they may also be issued ex parte. Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond.
TERESA CHAVES BIACO,Petitioner, vs. PHILIPPINE COUNTRYSIDE RURAL Petitioner filed a motion to discharge attachment claiming that the court had
BANK, Respondent. not acquired jurisdiction over her person.
FACTS: The trial court granted the Motion to Discharge Attachment on January 13,
1989 upon filing of petitioner’s counter-bond. The trial court, however, did
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While not rule on the question of jurisdiction and on the validity of the writ of
employed in the Philippine Countryside Rural Bank (PCRB) as branch preliminary attachment.
manager, Ernesto obtained several loans from the respondent bank.
Thereafter private respondent applied for an alias summons which was
As security for the payment of the said loans, Ernesto executed a real estate granted by the court.
mortgage in favor of the bank covering the parcel of land which the real
estate mortgages bore the signatures of the spouses Biaco. ISSUE: W/N the writ was validly implemented
When Ernesto failed to settle the above-mentioned loans on its due date, RULING: there was no proper service of summons, order, and the writ of
respondent bank through counsel sent him a written demand,however, attachment.
proved futile.
*Improper Issuance and Service of Writ of Attachment. In Davao Light &
Respondent bank filed a complaint for foreclosure of mortgage against the Power Co., Inc. v. Court of Appeals, this Court clarified the actual time when
spouses Ernesto and Teresa Biaco before the RTC of Misamis Oriental. jurisdiction should be had:
Summons was served to the spouses Biaco through Ernesto at his office
(Export and Industry Bank). The RTC ruled against them; a writ of execution “It goes without saying that whatever be the acts done by the Court prior to
was served on the spouses. the acquisition of jurisdiction over the person of defendant – issuance of
summons, order of attachment and writ of attachment – these do not and
Petitioner sought the annulment of the Regional Trial Court decision cannot bind and affect the defendant until and unless jurisdiction over his
contending, among others, that the trial court failed to acquire jurisdiction person is eventually obtained by the court, either by service on him of
because summons were served on her through her husband without any summons or other coercive process or his voluntary submission to the
explanation as to why personal service could not be made. The CA affirmed court’s authority. Hence, when the sheriff or other proper officer
RTC decision invoking that judicial foreclosure proceedings are actions quasi commences implementation of the writ of attachment, it is essential that he
in rem. As such, jurisdiction over the person of the defendant is not essential serve on the defendant not only a copy of the applicant’s affidavit and
as long as the court acquires jurisdiction over the res. attachment bond, and of the order of attachment, as explicitly required by
Section 5 of Rule 57, but also the summons addressed to said defendant as
ISSUE: Whether or not the case should be dismissed for lack of jurisdiction well as a copy of the complaint xxx.”
over the person of petitioner?
Furthermore, we have held that the grant of the provisional remedy of
RULING: attachment involves three stages: first, the court issues the order granting
the application; second, the writ of attachment issues pursuant to the order
No. The Court ruled that validly try and decide the case. In a proceeding in granting the writ; and third, the writ is implemented. For the initial two
rem or quasi in rem, jurisdiction over the person of the defendant is not a stages, it is not necessary that jurisdiction over the person of the defendant
prerequisite to confer jurisdiction on the court provided that the court be first obtained. However, once the implementation of the writ
acquires jurisdiction over the res. Jurisdiction over the res is acquired either commences, the court must have acquired jurisdiction over the defendant
(1) by the seizure of the property under legal process, whereby it is brought for without such jurisdiction, the court has no power and authority to act in
into actual custody of the law; or (2) as a result of the institution of legal any manner against the defendant. Any order issuing from the Court will not
proceedings, in which the power of the court is recognized and made bind the defendant.
effective.
WEE vs. TANKIANSEE G.R. No. 171124, February 13, 2008
In this case, the judicial foreclosure proceeding instituted by respondent
PCRB undoubtedly vested the trial court with jurisdiction over the res. A FACTS:
judicial foreclosure proceeding is an action quasi in rem. As such, jurisdiction
over the person of petitioner is not required, it being sufficient that the trial Petitioner Wee has money placements totaling to more than P210M with the
court is vested with jurisdiction over the subject matter. Wincorp, to which, respondent Tansiankee is a vice president and director.
G.R. No. 125027 August 12, 2002 Wincorp extended a loan equal to petitioner’s total money placement to a
ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, corporation, Power Merge, with a subscribed capital of only P37.5M.
respondents.
FACTS: Private respondent filed a complaint for collection of sum of money This credit facility originated from another loan of about P1.5B extended by
against herein petitioner. On August 1, 1988, the sheriff filed his Sheriff’s Wincorp to another corporation [Hottick Holdings]. When the latter
Return showing that summons was not served on petitioner. A woman found defaulted in its obligation, Wincorp instituted a case against it and its surety.
at petitioner’s house informed the sheriff that petitioner transferred her Settlement was, however, reached in which Hottick’s president, Virata,
residence to Sto. Niño, Guagua, Pampanga. The sheriff found out further that assumed the obligation of the surety.
petitioner had left the Philippines for Guam.
Under the scheme agreed upon by Wincorp and Hottick’s president,
Thus, on September 13, 1988, construing petitioner’s departure from the petitioner’s money placements were transferred without his knowledge and
Philippines as done with intent to defraud her creditors, private respondent consent to the loan account of Power Merge through an agreement that
filed a Motion for Preliminary Attachment. On September 26, 1988, the trial virtually freed the latter of any liability. Allegedly, through the false
representations of Wincorp and its officers and directors, petitioner was
enticed to roll over his placements so that Wincorp could loan the same to For a writ to issue under this rule, the applicant must sufficiently show the
Virata/Power Merge. factual circumstances of the alleged fraud because fraudulent intent cannot
be inferred from the debtor’s mere non-payment of the debt or failure to
Finding that Virata purportedly used Power Merge as a conduit and connived comply with his obligation. The applicant must then be able to demonstrate
with Wincorp’s officers and directors to fraudulently obtain for his benefit that the debtor has intended to defraud the creditor.
without any intention of paying the said placements, petitioner instituted
suit for damages with the RTC Manila. Respondent was impleaded in the In the instant case, petitioner’s Affidavit is bereft of any factual statement
complaint as one of the defendants. that respondent committed a fraud. The affidavit narrated only the alleged
fraudulent transaction between Wincorp and Virata and/or Power Merge, by
On the basis of the allegations in the complaint and the Affidavit of which SC affirmed the writ of attachment issued against the latter.
petitioner, RTC ordered the issuance of a writ of preliminary attachment
against the properties not exempt from execution of all the defendants As to the participation of respondent in the said transaction, the affidavit
subject to petitioner’s filing of a P50M-bond. The writ was consequently merely states that respondent, an officer and director of Wincorp, connived
issued. with the other defendants to defraud petitioner of his money placements.
No other factual averment or circumstance detailing how respondent
Arguing that the writ was improperly issued and that the bond furnished was committed a fraud or how he connived with the other defendants to commit
grossly insufficient, respondent moved for the discharge of the attachment. a fraud in the transaction sued upon. In other words, petitioner has not
shown any specific act or deed to support the allegation that respondent is
The other defendants likewise filed similar motions. RTC denied all the guilty of fraud.
motions. The defendants, including respondent filed their respective motions
for reconsideration but the trial court likewise denied the same. The affidavit, being the foundation of the writ, must contain such particulars
as to how the fraud imputed to respondent was committed for the court to
Incidentally, while respondent opted not to question anymore the said decide whether or not to issue the writ. Absent any statement of other
orders, his co-defendants, Virata and UEM-MARA Philippines Corporation factual circumstances to show that respondent, at the time of contracting
(UEM-MARA), assailed the same via certiorari under Rule 65 before the CA. the obligation, had a preconceived plan or intention not to pay, or without
CA, however, denied it and the motion for reconsideration thereon. any showing of how respondent committed the alleged fraud, the general
averment in the affidavit that respondent is an officer and director of
In a petition for review on certiorari before SC, the latter denied the petition Wincorp who allegedly connived with the other defendants to commit a
and affirmed the CA rulings for Virata’s and UEM-MARA’s failure to fraud, is insufficient to support the issuance of a writ of preliminary
sufficiently show that the appellate court committed any reversible error. attachment.
Respondent filed before the trial court another Motion to Discharge In the application for the writ under the said ground, compelling is the need
Attachment, re-pleading the grounds he raised in his first motion but raising to give a hint about what constituted the fraud and how it was perpetrated
the following additional grounds: (1) that he was not present in Wincorp’s because established is the rule that fraud is never presumed.
board meetings approving the questionable transactions; and (2) that he
could not have connived with Wincorp and the other defendants because he Verily, the mere fact that respondent is an officer and director of the
and Pearlbank Securities, Inc., in which he is a major stockholder, filed cases company does not necessarily give rise to the inference that he committed a
against the company as they were also victimized by its fraudulent schemes. fraud or that he connived with the other defendants to commit a fraud.
While under certain circumstances, courts may treat a corporation as a mere
Ruling that the grounds raised were already passed upon by it in the previous aggroupment of persons, to whom liability will directly attach, this is only
orders affirmed by the CA and SC, and that the additional grounds were done when the wrongdoing has been clearly and convincingly established.
respondent’s affirmative defenses that properly pertained to the merits of
the case, RTC denied the motion. Considering that petitioner has not fully satisfied the legal obligation to show
the specific acts constitutive of the alleged fraud committed by respondent,
With the denial of his motion for reconsideration, respondent filed a the trial court acted in excess of its jurisdiction when it issued the writ of
certiorari petition before the CA where the appellate court rendered the preliminary attachment against the properties of respondent.
assailed Decision reversing and setting aside the aforementioned orders of
the RTC and lifting the Writ of Preliminary Attachment to the extent that it The merits of the main action are not triable in a motion to discharge an
concerned respondent’s properties. Petitioner moved for the reconsideration attachment otherwise an applicant for the dissolution could force a trial of
of the said ruling, but the CA denied the same. Hence, petitioner filed a the merits of the case on his motion.
petiton for review on certiorari under Rule 45 before the SC.
However, the principle finds no application here because petitioner has not
ISSUE: yet fulfilled the requirements set by the Rules of Court for the issuance of the
writ against the properties of respondent. The evil sought to be prevented by
Whether the CA was correct in lifting the writ of preliminary attachment the said ruling will not arise, because the propriety or impropriety of the
against respondent based on additional ground that allegedly pertains issuance of the writ in this case can be determined by simply reading the
already to the merits of the main action, i.e., lack of factual circumstances of complaint and the affidavit in support of the application.
fraud.
CHINA BANKING CORPORATION - versus – ASIAN CONSTRUCTION and
HELD: DEVELOPMENT CORPORATION
YES. Section 1(d) of Rule 57 of the Rules of Court which pertinently reads: FACTS:
Section 1. Grounds upon which attachment may issue.-At the China Bank granted respondent Asian Construction and
commencement of the action or at any time before entry of judgment, a Development Corporation (ACDC) an Omnibus Credit Line in the amount of
plaintiff or any proper party may have the property of the adverse party P90, 000,000.00. Alleging that ACDC failed to comply with its obligations
attached as security for the aatisfaction of any judgment that may be under the Omnibus Credit Line, China Bank filed a Complaint for recovery of
recovered in the following cases: sum of money and damages with prayer for the issuance of writ of
preliminary attachment before the Regional Trial Court (RTC) of Makati.
x x x x
(d) In an action against a party who has been guilty of a fraud in contracting The RTC issued an Order granting China Banks prayer for writ of
the debt or incurring the obligation upon which the action is brought, or in preliminary attachment. Consequently, as shown in the Sheriff’s Report, the
the performance thereof. writ of preliminary attachment was implemented levying personal properties
of ACDC, i.e., vans, dump trucks, cement mixers, cargo trucks, utility vehicles, Section 4, Rule 57 of the Rules of Court provides:
machinery, equipment and office machines and fixtures.
Section 4. Condition of applicants bond. - The party applying for the order
upon motion of China Bank, the RTC issued a Summary must thereafter give a bond executed to the adverse party in the amount
Judgment[ in favor of China Bank. China Bank filed a Motion to Take Custody fixed by the court in its order granting the issuance of the writ, conditioned
of Attached Properties with Motion for Grant of Authority to Sell to the that the latter will pay all the costs which may be adjudged to the adverse
Branch Sheriff[10] with the RTC, praying that it be allowed to take custody of party and all the damages which he may sustain by reason of the
ACDCs properties for the purpose of selling them in an auction. attachment, if the court shall finally adjudge that the applicant was not
entitled thereto.
ACDC filed its Opposition to the June 15, 2000 Motion arguing
that there can be no sale of the latters attached properties in the absence of It is clear from the foregoing provision that the bond posted by China Bank
a final and executory judgment against ACDC. According to the CA, selling the answers only for the payment of all damages which ACDC may sustain if the
attached properties prior to final judgment of the appealed case is court shall finally adjudge that China Bank was not entitled to
premature and contrary to the intent and purpose of preliminary attachment attachment. The liability attaches if the plaintiff is not entitled to the
for the following reasons: first, the records reveal that the attached attachment because the requirements entitling him to the writ are wanting,
properties subject of the motion are not perishable in nature; or if the plaintiff has no right to the attachment because the facts stated in
and second, while the sale of the attached properties may serve the interest his affidavit, or some of them are untrue. Clearly, ACDC can only claim from
of China Bank, it will not be so for ACDC. the bond for all the damages which it may sustain by reason of the
attachment and not because of the sale of the attached properties prior to
ISSUE: final judgment.
WON the honorable COURT OF APPEALS rendered the questioned Sale of attached property before final judgment is an equitable remedy
resolutions in a manner not in accord with the provisions of section 11, rule provided for the convenience of the parties and preservation of the property.
57 of the rules of civil procedure, as it shelved the demands of equity by To repeat, the Court finds that the issue of whether the sale of attached
arbitrarily disallowing the sale of the attached properties. properties is for the convenience of the parties and that the interests of all
the parties will be subserved by the said sale is a question of fact. Again, the
RULING: Section 11, Rule 57 of the Rules of Court provides: foregoing issue can only be resolved upon examination of the evidence
presented by both parties which the Court cannot do in a petition
Sec. 11. When attached property may be sold after levy on attachment and for certiorari under Rule 65 of the Rules of Court.
before entry of judgment.- Whenever it shall be made to appear to the court
in which the action is pending, upon hearing with notice to both parties, that SPOUSES YU vs NGO YET TE
the property attached is perishable, or that the interests of all the parties to Facts:
the action will be subserved by the sale thereof, the court may order such
property to be sold at public auction in such manner as it may direct, and the Spouses Gregorio and Josefa Yu purchased from Ngo Yet Te bars
proceeds of such sale to be deposited in court to abide the judgment in the of detergent soap worth P594,240.00 and issued to the latter
action. (Emphasis supplied) three postdated checks as payment. However, upon presentment
of the checks at maturity, said checks were returned dishonored
Thus, an attached property may be sold after levy on attachment and before and stamped “ACCOUNT CLOSED”. Respondent demanded
entry of judgment whenever it shall be made to appear to the court in which payment from petitioners, but they did not heed her demands.
the action is pending, upon hearing with notice to both parties, that the Respondent, through her daughter, filed with RTC for Collection of
attached property is perishable or that the interests of all the parties to the Sum of Money and Damages with Prayer for Preliminary
action will be subserved by the sale of the attached property. Attachment. She also attached to her complaint an affidavit
executed by Sy that petitioners were guilty of fraud in entering
The issue hinges on the determination whether the vehicles, office machines into the purchase agreement for they never intended to pay the
and fixtures are perishable property under Section 11, Rules 57 of the Rules contract price, and that, based on reliable information, they were
of Court, which is actually one of first impression. No local jurisprudence or about to move or dispose of their properties to defraud their
authoritative work has touched upon this matter. This being so, an creditors.
examination of foreign laws and jurisprudence, particularly those of The RTC ordered for the properties of petitioners to be levied and
the United Stateswhere some of our laws and rules were patterned after, is attached consisting of one parcel of land and four units of motor
in order. vehicle. Petitioners filed an Answer with counterclaim, Urgent
Motion to Dissolve writ of Preliminary Attachment, and Claim
In Mossler Acceptance Co. v. Denmark, an order of the lower court in against Surety Bond. The RTC, then, discharged from attachment
directing the sale of attached properties, consisting of 20 automobiles and 2 the Toyota Ford Fierra, jeep, and delivery van on humanitarian
airplanes, was reversed by the Supreme Court of Louisiana. In support of its grounds. The CA later on lifted the RTC Order of Attachment on
contention that automobiles are perishable, Mossler offered testimony to the ground that the complaint and affidavit only contain general
the effect that automobile tires tend to dry-rot in storage, batteries to averments and failed to states particularly how fraud was
deteriorate, crankcases to become damaged, paint and upholstery to fade, committed by petitioners. The Motion for Reconsideration was
that generally automobiles tend to depreciate while in storage. Rejecting likewise denied. The SC also denied Te’s Petition for Review on
these arguments, the Supreme Court of Louisiana held that while there might Certiorari for having been filed late and for failure to show that a
be a depreciation in the value of a car during storage, depending largely on reversible error was committed by the CA.
existing economic conditions, there would be no material deterioration of The RTC, however, apparently not informed of SCs decision, ruled
the car itself or any of its appurtenances if the car was properly cared for, in favor of herein respondents. On their appeal with CA, Spouses
and therefore it could not be said that automobiles were of a perishable Yu questioned only that portion of the July 20, 1994 Decision
nature within the intendment of the statute, which could only be invoked where the RTC declined to rule on their counterclaim for
when the property attached and seized was of a perishable nature. damages. However, Spouses Yu did not dispute the specific
monetary awards granted to respondent Te; and therefore, the
China Bank argues that if the CA allowed the attached properties to be sold, same have become final and executory. The CA, while affirming
whatever monetary value which the attached properties still have will be RTCs decision in toto, made a ruling on the counterclaim of
realized and saved for both parties. China Bank further claims that should Spouses Yu by declaring that the latter had failed to adduce
ACDC prevail in the final judgment of the collection suit, ACDC can proceed sufficient evidence of their entitlement to damages. Hence, this
with the bond posted by China Bank. The Court finds said arguments to be petition.
specious and misplaced.
Issue: Whether or not the appellate court erred in refusing to award actual, As to moral and exemplary damages, to merit an award thereof,
moral and exemplary damages after it was established by final judgment that it must be shown that the wrongful attachment was obtained by
the writ of attachment was procured with no true ground for its issuance. the attachment plaintiff with malice or bad faith, such as by
appending a false affidavit to his application. The SC did not grant
Ruling: moral and exemplary damages. Based on the foregoing testimony,
it is not difficult to understand why Te concluded that Spouses Yu
NO. never intended to pay their obligation for they had available funds
The SC also made mention on the contention of respondent Te in their bank but chose to transfer said funds instead of cover the
that regardless of the evidence presented by Spouses Yu, their checks they issued.
counterclaim was correctly dismissed for failure to comply with Petitioners were, however, awarded temperate or moderate
the procedure laid down in Section 20 of Rule 57. Te contends damages of P50,000 for pecuniary loss when their properties
that as Visayan Surety was not notified of the counterclaim, no were wrongfully seized.
judgment thereon could be validly rendered. The Court said that
such argument was not only flawed as it is also specious. The
K.O. GLASS CONSTRUCTION CO., INC., Petitioner, vs. THE HONORABLE
Visayan Surety, which issued the attachment bond, was notified
MANUEL VALENZUELA, Judge of the Court of First Instance of Rizal, and
of the pre-trial conference to apprise it of a pending claim against
ANTONIO D. PINZON, Respondents.
its attachment bond. Visayan Surety received the notice on July
12, 1993 as shown by a registry return receipt attached to the
records. Moreover, even if it were true that Visayan Surety was THE CASE IS A PETITION FOR CERTIORARI TO ANNUL OR SET ASIDE THE WRIT
left in the proceedings a quo, such omission is not fatal to the OF PRELIMINARY ATTACHMENT ISSUED BY THE RESPONDENT JUDGE
cause of Spouses Yu. In Malayan Insurance Company, Inc. v. Salas,
we held that "x x x if the surety was not given notice when the FACTS OF THE CASE:
claim for damages against the principal in the replevin bond was
heard, then as a matter of procedural due process the surety is On October 6, 1977, an action was instituted in the Court of First
entitled to be heard when the judgment for damages against the Instance of Rizal by Antonio D. Pinzon to recover from Kenneth O.
principal is sought to be enforced against the surety’s replevin Glass the sum of P37,190.00, alleged to be the agreed rentals of
bond." This remedy is applicable for the procedures governing his truck, as well as the value of spare parts which have not been
claims for damages on an attachment bond and on a replevin returned to him upon termination of the lease.
bond are the same. In his verified complaint, the plaintiff asked for an attachment
Spouses Yu contended that they are entitled to their counterclaim against the property of the defendant consisting of collectibles
for damages as a matter of right after Te wrongfully caused the and payables with the Philippine Geothermal, Inc., on the grounds
attachment of the properties as it suggested that Te acted with that :
malice. The SC ruled that the counterclaim disputed therein was the defendant is a foreigner;
not for moral damages and therefore, there was no need to prove that he has sufficient cause of action
malice. In Lazatin v. Twaño, the Court laid down the rule that against the said defendant;
where there is wrongful attachment, the attachment defendant
and that there is no sufficient security for
may recover actual damages even without proof that the
his claim against the defendant in the
attachment plaintiff acted in bad faith in obtaining the event a judgment is rendered in his favor.
attachment. However, if it is alleged and established that the
Defendant Kenneth O. Glass moved to quash the writ of
attachment was not merely wrongful but also malicious, the
attachment on the grounds that:
attachment defendant may recover moral damages and
there is no cause of action against him since
exemplary damages as well. Either way, the wrongfulness of the
the transactions or claims of the plaintiff
attachment does not warrant the automatic award of damages to
were entered into by and between the
the attachment defendant; the latter must first discharge the
plaintiff and the K.O. Glass Construction
burden of proving the nature and extent of the loss or injury
Co., Inc., a corporation duly organized and
incurred by reason of the wrongful attachment.
existing under Philippine laws;
The Court also held that petitioners are not relieved of the burden
that there is no ground for the issuance of
of proving the basis of their counterclaim for damages. To merit
the writ of preliminary attachment as
an award of actual damages arising from a wrongful attachment,
defendant Kenneth O. Glass never intended
the attachment defendant must prove, with the best evidence
to leave the Philippines, and even if he
obtainable, the fact of loss or injury suffered and the amount
does, plaintiff can not be prejudiced
thereof. Such loss or injury must be of the kind which is not only
thereby because his claims are against a
capable of proof but must actually be proved with a reasonable
corporation which has sufficient funds and
degree of certainty. As to its amount, the same must be
property to satisfy his claim; and
measurable based on specific facts, and not on guesswork or
that the money being garnished belongs to
speculation. In particular, if the claim for actual damages covers
the K.O. Glass Corporation Co., Inc. and not
unrealized profits, the amount of unrealized profits must be
to defendant Kenneth O. Glass.
established and supported by independent evidence of the mean
Judge denied the motion and ordered the Philippine
income of the business undertaking interrupted by the illegal
Geothermal, Inc. to deliver and deposit with the Clerk of Court
seizure.
the amount of P37,190.00 immediately upon receipt of the order
The SC also affirmed CAs finding that spouses Yu failed to prove
which amount shall remain so deposited to await the judgment to
their counterclaim of actual damages by relying mainly on
be rendered in the case.
submission of used and unused ticket stubs and ticket sales for
On January 26, 1978, the defendants therein filed a
five (5) days. Thus, Spouses Yu cannot complain that they were
supplementary motion to discharge and/or dissolve the writ of
unreasonably deprived of the use of the passenger bus by reason
preliminary attachment upon the ground that the affidavit filed in
of the subsequent wrongful attachment issued in Civil Case No.
support of the motion for preliminary attachment was not
4061-V-93. Nor can they also attribute to the wrongful
sufficient or wanting in law for the reason that:
attachment their failure to earn income or profit from the
(1) the affidavit did not state that the
operation of the passenger bus. The submitted basis is too
amount of plaintiff's claim was above all
speculative and conjectural. No reports regarding the average
legal set-offs or counterclaims, as required
actual profits and other evidence of profitability necessary to
by Sec. 3, Rule 57 of the Revised Rules of
prove the amount of actual damages were presented.
Court;
(2) the affidavit did not state that there is equipment and properties left by Tirreno pursuant to Section 22 of their
no other sufficient security for the claim Contract of Lease as partial payment for Tirreno’s outstanding obligations.
sought to be recovered by the action as also
required by said Sec. 3; and In 2002, Yllas Lending Corporation caused the sheriff of the trial court to
(3) the affidavit did not specify any of the serve an alias writ of seizure against FBDC. FBDC found out that in 2001,
grounds enumerated in Sec. 1 of Rule 57, respondents filed a complaint for Foreclosure of Chattel Mortgage with
Replevin, against Tirreno, et al. In their complaint, Yllas alleged that they lent
ISSUE: a sum of money to Tirreno et al and in 2000 executed a Deed of Chattel
Mortgage in favor of Yllas as security for the loan. The Chattel Mortgage
WON the issuance of the writ of preliminary covered properties of the Tirreno’s restaurant and bar.
attachment proper
On the same day, FBDC served on the sheriff an affidavit of title and third
HELD: NO party claim.
The respondent Judge gravely abused his discretion in Despite FBDC’s service upon him of an affidavit of title and third party claim,
issuing the writ of preliminary attachment and in not the sheriff proceeded with the seizure of certain items from FBDC’s premises.
ordering the release of the money which had been The sheriff delivered the seized properties to Yllas.
deposited with the Clerk of Court
There being no showing, much less an allegation, that FBDC questioned the propriety of the seizure and delivery of the properties
the defendants are about to depart from the to respondents without an indemnity bond before the trial court, which
Philippines with intent to defraud their creditor, or decided against FBDC. It stated that:
that they are non-resident aliens, the attachment of
their properties is not justified. 1. Section 22 of the lease contract between FBDC and Tirreno is void under
Affidavit of plaintiff failed to allege the requisites Article 2088 of the Civil Code.
prescribed for the issuance of a writ of preliminary
attachment, which renders the writ of preliminary 2. FBDC should have filed a separate complaint against respondents instead
attachment issued against the property of the of filing a motion to intervene. (The trial court quoted Bayer Phils. v. Agana )
defendant fatally defective,
and the judge issuing it is deemed to have acted in FBDC filed a MR, which was denied. Hence this petition to review pure
excess of his jurisdiction questions of law.
ISSUE:
Sec. 1. Grounds upon which attachment may issue. -A plaintiff or any proper
party may, at the commencement of the action or at any time thereafter,
have the property of the adverse party attached as security for the WON the trial court is should have required respondents to file an indemnity
satisfaction of any judgment that may be recovered in the following cases: bond for FBDC’s protection
YES. Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn
(a) In an action for the recovery of money or damages on a cause of action over to respondents the properties subject of this case in view of
arising from contract, express or implied, against a party who is about to respondents’ failure to file a bond.
depart from the Philippines with intent to defraud his creditor;
The bond in Section 14 of Rule 57 (proceedings where property is claimed by
Requirements for issuance of writ of preliminary attachment: third person) is different from the bond in Section 3 of the same rule
(affidavit and bond).
1. Affidavit of the applicant, or some other person who personally knows the Under Section 14 of Rule 57, the purpose of the bond is to indemnify the
facts, showing that: sheriff against any claim by the intervenor to the property seized or for
damages arising from such seizure, which the sheriff was making and for
a. sufficient cause of action exists which the sheriff was directly responsible to the third party.
Section 3, Rule 57, on the other hand, refers to the attachment bond to
b. the case is one of those mentioned in Section 1, Rule 57
assure the return of defendant’s personal property or the payment of
damages to the defendant if the plaintiff’s action to recover possession of
c. there is no other sufficient security for the claim sought to be the same property fails, in order to protect the plaintiff’s right of possession
enforced by the action, and that the amount due the of said property, or prevent the defendant from destroying the same during
applicant, or the value of the property the possession of which he is the pendency of the suit.
entitled to recover, is as much as the sum for which
the order is granted above all legal Because of the absence of the indemnity bond in the present case, FBDC may
counterclaims. also hold the sheriff for damages for the taking or keeping of the properties
seized from FBDC.
2. Bond
PRELIMINARY INJUNCTION
AGOO RICEMILL CORP vs. LBP The RTC issued an Order declaring petitioners in default and allowing
respondent to present evidence ex parte. The RTC ruled that the
FACTS: From October 1993 to October 1995, the ARMC obtained from the Memorandum of Agreement is hereby declared null and void for being
LBP a Term Loan for P2M and two Short-Term Loan Lines (STLL’s) amounting contrary to law and public policy and the structures found within the
to a total of P15M. These loans were secured by real and chattel mortgage unfinished PADRE GARCIA SHOPPING CENTER are hereby declared forfeited
over the ARMC’s four commercial lots, including their improvements and its in favor of the Municipality of Padre Garcia.
rice mill machineries and generator. Demands were made by the LBP, and
After learning of the adverse judgment, petitioners filed a Petition for Relief Issue: Whether the RTC committed grave abuse of discretion amounting to
from Judgment. This Petition was denied by the RTC. Petitioners later filed lack or in excess of jurisdiction in issuing a writ of preliminary mandatory
before the CA a Petition for Certiorari and Prohibition. Also, petitioners filed injunction commanding petitioner to return to respondent
before the CA a Motion for the Issuance of Status Quo Order and Motion for
Issuance of Temporary Restraining Order and/or Writ of Preliminary Ruling: The RTC did not commit grave abuse of discretion. A preliminary
Injunction. The CA issued a Resolution denying the said motion. injunction may be issued at any time before judgment or final order.69 It may
be a prohibitory injunction, which requires a party to refrain from doing a
Issue: Whether the CA committed grave abuse of discretion in denying particular act, or a mandatory injunction, which commands a party to
petitioners’ Motion for the Issuance of Status Quo Order and Motion for perform a positive act to correct a wrong in the past.70 A writ of preliminary
Issuance of Temporary Restraining Order and/or Writ of Preliminary mandatory injunction, however, is more cautiously regarded because it
Injunction (Motion for Injunction). commands the performance of an act.71 Accordingly, it must be issued only
upon a clear showing that the following requisites are established: (1) the
Ruling: NO. The CA did not commit grave abuse of discretion. Essential to applicant has a clear and unmistakable right that must be protected; (2)
granting the injunctive relief is the existence of an urgent necessity for the there is a material and substantial invasion of such right; and (3) there is an
writ in order to prevent serious damage. A TRO issues only if the matter is of urgent need for the writ to prevent irreparable injury to the applicant.7
such extreme urgency that grave injustice and irreparable injury would arise
unless it is issued immediately. Thus, to be entitled to the injunctive writ, We find that the RTC had sufficient bases to issue the writ of preliminary
petitioners must show that (1) there exists a clear and unmistakable right to mandatory injunction as all the requisites for the issuance of such writ were
be protected; (2) this right is directly threatened by an act sought to be established. We agree with the RTC that respondent has a right to recover
enjoined; (3) the invasion of the right is material and substantial; and (4) the five titles because petitioner failed to comply with his obligation to
there is an urgent and paramount necessity for the writ to prevent serious respondent. It bears stressing that respondent was compelled to directly pay
and irreparable damage. CMC to avoid the foreclosure of the chattel mortgages, which respondent
executed in favor of CMC. Considering that respondent has paid most, if not
In this case, no grave abuse of discretion can be imputed to the CA. This is so all, of its obligations to CMC, there is no reason for petitioner to hold on to
because APRI has no clear legal right. A perusal of the Motion for Injunction the titles.
and its accompanying Affidavit filed before the CA shows that petitioners rely
on their alleged right to the full and faithful execution of the MOA. In addition, There is no Deed of Mortgage over the properties covered by the
However, their rights under the MOA have already been declared inferior or said titles. The only document on record is the acknowledgement receipt
inexistent in relation to respondent in the RTC case, under a judgment that dated March 18, 1997 signed by the [petitioner] x x x but other than the
has become final and executory.23 At the very least, their rights under the acknowledgment of the receipt of the titles, there is nothing else to show the
MOA are precisely disputed by respondent. Hence, there can be no "clear terms and conditions under which [petitioner] is to possess the same. At
and unmistakable" right in favor of petitioners to warrant the issuance of a best, therefore, the [petitioner] is merely a depository of the said titles. He
writ of injunction. Where the complainant’s right or title is doubtful or cannot foreclose, dispose of, assign or otherwise deal with the same. Thus,
disputed, injunction is not proper.2 the damages that he may suffer if the land titles are returned to the
[respondent] is practically inexistent compared to the damages which
GEORGE S. H. SY, doing business under the name and style of OPM [respondent] and the owners of the land titles have suffered due to the
INTERNATIONAL CORPORATION,Petitioner, vs. AUTOBUS TRANSPORT continuous possession of the [petitioner] of the said titles, as they cannot
SYSTEMS INC., Respondent. exercise their proprietary rights to the properties covered by the titles.
Facts: Petitioner George S.H. Sy is doing business under the name and style RECEIVERSHIP
of OPM International Corporation (OPM), which is engaged in the sale and
installation of bus air conditioning units. Petitioner entered into a verbal COMMODITIES STORAGE & ICE PLANT CORPORATION vs. COURT OF
agreement with respondent Autobus Transport Systems, Inc.,5 a public utility APPEALS
bus company plying the northern Luzon routes from Manila.6 Under their
agreement, respondent would purchase Konvecta air conditioning units from FACTS:
petitioner and petitioner would finance respondent’s acquisition of twenty-
two (22) units of bus engine and chassis from Commercial Motors Petitioner spouses Victor and Johannah Trinidad obtained a loan
Corporation (CMC). The parties agreed that respondent would amortize the of P31,000,000.00 from respondent Far East Bank & Trust Company to
payments for the Konvecta air conditioning units and the bus units finance the purchase of the Sta. Maria Ice Plant & Cold Storage in Sta. Maria,
separately;8 that petitioner would settle respondent’s account with CMC. As Bulacan. The loan was secured by a mortgage over the ice plant and the land
security, respondent would execute Chattel Mortgages over the buses in on which the ice plant stands. Petitioner spouses failed to pay their loan. The
favor of CMC.10 Once petitioner has fully paid the amortizations to CMC, bank extrajudicially foreclosed the mortgage and the ice plant was sold by
respondent would execute new Chattel Mortgages over the buses, this time, public bidding. Respondent bank was the highest bidder. It registered the
in favor of petitioner.11 In the meantime, respondent would deliver to certificate of sale and later took possession of the property.
petitioner titles to five properties in Caloocan City.
Petitioner spouses filed Civil Case No. 956-M-93 against
Petitioner, however, defaulted in paying the amortizations to CMC, forcing respondent bank before the Regional Trial Court, Malolos, Bulacan for
the latter to demand payment from respondent.15 Consequently, respondent reformation of the loan agreement, annulment of the foreclosure sale and
was compelled to pay some of the obligations directly to CMC. damages. The trial court dismissed the complaint for petitioners' failure to
pay the docket fees. The dismissal was without prejudice to refiling of the
Respondent filed a complaint for Specific Performance21 against petitioner. complaint.
Respondent filed a Motion for the Issuance of a Writ of Preliminary
Mandatory Injunction,40praying for the issuance of a Writ of Preliminary On October 28, 1994, petitioners filed Civil Case No. 94-72076
Mandatory Injunction commanding petitioner to return to respondent the against respondent bank before the Regional Trial Court, Branch 9, Manila
five titles. for damages, accounting and fixing of redemption period. As a provisional
remedy, petitioners filed on November 16, 1994 an "Urgent Petition for
The RTC issued an Order42 granting respondent’s Motion. The RTC ordered Receivership." Petitioners thus prayed for the appointment of a receiver to
petitioner to return the five titles to respondent since he failed to comply save the ice plant, conduct its affairs and safeguard its records during the
with the agreement he made with respondent, i.e. to finance respondent’s pendency of the case. Instead of an answer, respondent bank filed on
obligations with CMC. November 25, 1994 a "Motion to Dismiss and Opposition to Plaintiff's
Petition for Receivership." It alleged that the complaint states no cause of
The CA denied the petition for Certiorari. 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 6.3 The rapid reduction of the Ice Plant into a scrap heap because of evident
forum-shopping. incompetence, neglect and vandalism."
In an order dated December 13, 1994, the trial court granted the A petition for receivership under Section 1 (b) of Rule 59 requires that the
petition for receivership and appointed petitioners' nominee, Ricardo property or fund which is the subject of the action must be in danger of loss,
Pesquera, as receiver. Respondent bank assailed this order before the Court removal or material injury which necessitates protection or preservation. The
of Appeals on a petition for certiorari. On January 11, 1996, the Court of guiding principle is the prevention of imminent danger to the property. If an
Appeals annulled the order for receivership and dismissed petitioners' action by its nature, does not require such protection or preservation, said
complaint for improper venue and lack of cause of action. remedy cannot be applied for and granted.
ISSUE: WON Receivership is proper. 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
RULING: 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
Section 1 of Rule 59 of the Revised Rules of Court provides that: which necessitates its protection and preservation.[15] In fact, at the hearing
on respondent bank's motion to dismiss, respondent bank, through counsel,
"Sec. 1. When and by whom receiver appointed.-- One or more receivers of manifested in open court that the leak in the ice plant had already been
the property, real or personal, which is the subject of the action, may be remedied and that no other leakages had been reported since.[16] This
appointed by the judge of the Court of First Instance in which the action is statement has not been disputed by petitioners.
pending, or by a Justice of the Court of Appeals or of the Supreme Court, in
the following cases: 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
(a) When the corporation has been dissolved, or is insolvent, or is in another leakage. Whatever danger there was to the community and the
imminent danger of insolvency, or has forfeited its corporate rights; environment had already been contained.
(b) When it appears from the complaint or answer, and such other proof as The "drastic sanctions" that may be brought against petitioners due to their
the judge may require, that the party applying for the appointment of inability to pay their employees and creditors as a result of "the numbing
receiver has an interest in the property or fund which is the subject of the manner by which [respondent bank] took the ice plant" does not concern the
action, and that such property or fund is in danger of being lost, removed or ice plant itself. These claims are the personal liabilities of petitioners
materially injured unless a receiver be appointed to guard and preserve it; themselves. They do not constitute "material injury" to the ice plant.
(c) When it appears in an action by the mortgagee for the foreclosure of a Moreover, the receiver appointed by the court appears to be a
mortgage that the property is in danger of being wasted or materially representative of petitioners. Respondent bank alleges that it was not aware
injured, and that its value is probably insufficient to discharge the mortgage that petitioners nominated one Mr. Pesquera as receiver. The general rule is
debt, or that the parties have so stipulated in the contract of mortgage; 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
(d) After judgment, to preserve the property during the pendency of the parties and should be impartial and disinterested. The receiver is not the
appeal, or to dispose of it according to the judgment, or to aid execution representative of any of the parties but of all of them to the end that their
when the execution has been returned unsatisfied or the judgment debtor interests may be equally protected with the least possible inconvenience and
refuses to apply his property in satisfaction of the judgment, or otherwise expense.
carry the judgment into effect;
The power to appoint a receiver must be exercised with extreme caution.
(e) Whenever in other cases it appears that the appointment of a receiver is There must be a clear showing of necessity therefor in order to save the
the most convenient and feasible means of preserving, administering, or plaintiff from grave and irremediable loss or damage. It is only when the
disposing of the property in litigation." 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
A receiver of real or personal property, which is the subject of the action, they run the risk of being impaired, endeavouring to avoid that the injury
may be appointed by the court when it appears from the pleadings or such thereby caused be greater than the one sought to be avoided.
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 PACIFIC MERCHANDISING CORPORATION, plaintiff-appellee, vs.
in danger of being lost, removed or materially injured; or (b) whenever it CONSOLACION INSURANCE & SURETY CO., INC., defendant-appellee,
appears to be the most convenient and feasible means of preserving or
administering the property in litigation.[9] CONSOLACION INSURANCE & SURETY CO., INC., third party plaintiff-
appellee, vs GREGORIO V. PAJARILLO, third party defendant-appellant.
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 Facts: An action for collection of sum of money was filed by Pacific
litigation and prevent its possible destruction or dissipation, if it were left in Merchandising Corporation (plaintiff-appellee) against Consolacion Insurance
the possession of any of the parties.[10] The appointment of a receiver is not & Surety Co., Inc., (defendant- appellee) who in turn filed a third-party
a matter of absolute right. It depends upon the sound discretion of the court complaint against Gregorio V. Pajarillo (third-party defendant-appellant).
and is based on facts and circumstances of each particular case.
The TC rendered judgment in favor of the plaintiff and against the defendant,
Petitioners claim that the appointment of a receiver is justified under Section ordering the latter to pay the former and condemning third defendant to pay
1 (b) of Rule 59. They argue that the ice plant which is the subject of the third-party plaintiff for whatever sums or amounts the latter paid the
action was in danger of being lost, removed and materially injured because plaintiff on account of this judgment.
of the following "imminent perils":
The third-party defendant Gregorio V. Pajarillo appealed said decision. The
"6.1 Danger to the lives, health and peace of mind of the inhabitants living parties, through their respective counsel, submitted the following Stipulation
near the Sta. Maria Ice Plant; of Facts:
6.2 Drastic action or sanctions that could be brought against the plaintiff by 1. A Writ of Execution was issued by the LC in the case Pacific Merchandising
affected third persons, including workers who have claims against the Corporation vs. Leo Enterprises, Inc.,;
plaintiff but could not be paid due to the numbing manner by which the 2. That by virtue of the aforesaid Writ of Execution, the Sheriff of Manila
defendant took the Sta. Maria Ice Plant; levied and attached the following:
A. Second Hand AUTOMATICKET Machine;and building without paying plaintiff for the cost of certain materials that went
B. Cinema Projectors into its construction";
"under Section 7 of Rule 61 of the former Rules of Court, one of the powers
Said items were advertised for sale. of a receiver i8 to pay outstanding debts, and since the said plaintiff's claim
has been outstanding since August 27, 1962, if not before, Pajarillo should
3. That Atty. Greg V. Pajarillo was appointed as Receiver in the case of have paid the same long before the alleged termination of the receivership
Gregorio V. Pajarillo vs. Leo Enterprises, Inc.; on July 1, 1963";
4. That the sale at public auction of the aforementioned items was (2) the procedure outlined in Section 8 of the Rule, namely, that whenever
postponed and was later cancelled due to the representation of Atty. Greg V. the court "shall determine that the necessity for a receiver no longer exists, it
Pajarillo as Receiver of Paris Theatre operated by Leo Enterprises, Inc. 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
5. That the third-party defendant Pajarillo approached Consolacion Insurance in his hands to the persons adjudged entitled to receive them, and order the
(third-party plaintiff) and applied for a surety bond in the amount of discharge of the receiver from further duty as such," has not been followed;
P5,000.00 to be rated in favor of the abovenamed plaintiff in order to and
guarantee to said plaintiff the payment of obligations in its favor by the Leo (4) when Gregorio V. Pajarillo undertook to pay the amount owed to plaintiff
Enterprises, Inc.; (Annex "C") and executed the surety bond (Annex "D") in favor of plaintiff, he
4 6 stepped into the shoes" of the dr Leo Enterprises, Inc., .4 and the
6. That the bond applied for was in fact executed in favor of the pIaintiff with properties of the said debtor having all subsequently passed on to Pajarillo,
third-party defendant Pajarillo as principal and Consolacion Insurance (third- there is no reason, legal or otherwise, for relieving defendants of their said
party plaintiff) as surety in the context of the allegations of the preceding undertaking."
paragraph and a copy of the said bond is attached a ANNEX 'A' to the third
party complaint; The court a quo likewise declared that (1) "the receivership was not
terminated by virtue of the appeal interposed by Leo Enterprises, Inc., one of
7. That to protect third party plaintiff against damage and injury, the third the defendants in Civil Case No. 50201, because a decision which is appealed
party defendant Pajarillo executed in favor of the former an INDEMNITY cannot be the subject of execution";
AGREEMENT,
(2) "granting arguendo that the decision is final and executory, the said
8. That the plaintiff received from Greg V. Pajarillo the sum of P2,000.00 decision cannot bind nor can it be enforced against the plaintiff in the
leaving a balance of P2,562.88 still unpaid aside from interest at the rate of present case because it is not a party in Civil Case No. 50201"; and
1% per month and atto lnen s f cluiaient to 25% of tht amount due as (3) "when Atty. Pajarillo assumed the obligation of Leo Enterprises, Inc., as a
provided for in said undertaking (ANNEX 'C' to tlie complaint); Receiver, there was a subrogation of the party liable and, therefore, the
plaintiff cannot enforce the judgment in Civil Case No. 49691 against Leo
9. That on July 1, 1963, a decision was rendered tne court of First Instance of Enterprises, Inc."
Manila in Civil case No. 50201, copy of' which is attached its ANNEX 'A' to From the foregoing judgment, third-party defendant Gregorio V. Pajarillo
Answer to Third Party Complaint, by virtue of which Greg V. Pajarillo, as said appealed to the CA. The aforesaid Appellate Court, in turn certified the same
Received stololcl making payments to plaintiff; to this Court on the ground that there is no question of fact involved, but
only one of law.
10. That the said decision in Civl Case No. 50201 dated July 1, 1963 was
appealed lix defendant Leo Enterprises, Inc. to the court of Appeals and that Issue: Whether or not third party defendant-appellant Gregorio V. Pajarillo is
the records kere eleattd to the aid ApiIiat court on August 27, 1963; liable to plaintiff for the unpaid amount claimed.
11. That on October 9, 1963, plaintiff's counsel demanded from the said Upon the resolution of this issue will in turn depend the liability of
principal, Greg V. Paiarillo, the payment of the installments corresponding to defendant-third-party plaintiff Consolacion Insurance & surety Co., Inc. under
the months of May, June, July, August and September, 1963, which remain the Surety Bond, on the basis of which it was ordered by the court a quo to
unpaid in spite of said demand, copy of said letter being, attached as ANNEX pay the amount involved to plaintiff-appellee.
'E' to the complaint;
A receiver is not an agent or representative of any party to the action. He is
12. That the defendant was duly notified of the demand made on the an officer of the court exercising his functions in the interest of neither
principal, Greg V. Pajarillo and in spite of said notice the defendant has failed plaintiff nor defendant, but for the common benefit of all the parties in
and refused to pay the unpaid obligation; interest. He performs his duties "subject to the control of the Court," and
every question involved in the receivership may be determined by the court
13. That on December 19, 1963, plaintiff's counsel demanded from the taking cognizance of the receivership proceedings.
defendant the payment of the unpaid obligation of the principal, Greg V.
Pajarillo but refused and failed to pay the same in spite of said demand; Thus, "a receiver, strictly speaking, has no right or power to make any
contract binding the property or fund in his custody or to pay out funds in his
14. That when reminded by third-party plaintiff regarding his obligations in hands without the authority or approval of the court as explained by Justice
favor of the plaintiff, the third-party defendant, Greg V. Pajarillo replied that Moran, speaking for The custody of the receiver is the custody of the court.
he no longer was bound to pay because he had ceased to be the receiver of His acts and possession are the acts and possession of the court, and his
Paris Theatre operated by Leo Enterprises, Inc. by virtue of the decision of contracts and liabilities are, in contemplation of law,
the Court in Civil Case No. 50201 cited above, and for this reason, third- party the contracts and liabilities of the court. As a necessary consequence,
plaintiff refused to pay the demand of the plaintiff 2 receiver is subject to the control and supervision of the court at every step in
his management of the property or funds placed in his hands. He cannot
On the basis of the foregoing Stipulation of Facts, Said court affirmed the LC’s operate independently of the court, and cannot enter into any contract
decision. without its approval.
The trial court predicated its judgment on the following considerations: In the case at bar, appellant Pajarillo does not dispute the fact that he never
secured the court's approval of either the agreement of March 11, 1963, with
(1) Since the unpaid claim represents the cost of certain materials used in the Pacific Merchandising Corporation or of his Indemnity Agreement with the
construction of the Paris Theatre, the possession of which reverted to Consolacion Insurance & Surety Co., Inc. on March 14, 1963, in consideration
Gregorio V. Pajarillo as owner of said property by virtue of the judgment in of the performance bond submitted by the latter to Pacific Merchandising
Civil Case No. 50201, "it is only simple justice that Pajarillo should pay for the Corporation to guarantee the payment of the obligation. As the person to
said claim. otherwise he would be enriching himself by having the said whom the possession of the theater and its equipment was awarded by the
court in Civil Case No. 50201, it was certainly to his personal profit and
advantage that the sale at public auction of the equipment of the theater
was prevented by his execution of the aforesaid agreement and submission
of the aforementioned bond.
In order to bind the property or fund in his hands as receiver, he should have
applied for and obtained from the court authority to enter into the aforesaid
contract. Unauthorized contracts of a receiver do not bind the court in
charge of receivership. They are the receiver's own contracts and are not
recognized by the courts as contracts of the receivership.Consequently, the
aforesaid agreement and undertaking entered into by appellant Pajarillo not
having been approved or authorized by the receivership court should,
therefore, be considered as his personal undertaking or obligation. Certainly,
if such agreements were known by the receivership court, it would not have
terminated the receivership without due notice to the judgment creditor as
required by Section 8 of Rule 59 of the Rules of Court. This must be assumed
because of the legal presumption that official duty has been regularly
performed.
Indeed, if it were true that he entered into the agreement and undertaking
as a receiver, he should have, as such receiver, submitted to the court an
account of the status of the properties in his hands including the outstanding
obligations of the receivership. Had he done so, it is reasonable to assume
that the judgment creditor would have opposed the termination of the
receivership, unless its claim was paid. Having failed to perform his duty, to
the prejudice of the creditor, appellant should not be permitted to take
advantage of his own wrong. The judgment creditor having been induced to
enter into the aforesaid agreement by appellant Pajarillo it was the duty of
the latter to comply with his end of the bargain.
He not only failed to perform his undertaking, but now attempts to evade
completely his liability. Under such circumstances, appellant is not entitled to
equitable relief. No ground for equitable relief can be found in a case where
a party has not only failed to perform the conditions upon which he alone
obtained the execution of the contract, but where it is clear that he never, at
any time, intended to perform them.