Rule 59: RECEIVERSHIP
no. Case Title (GR no., Decision Facts
made by (en banc, etc),
ponente)
Respondent BF Homes, Inc. (BFHI), is a
1 domestic corporation engaged in developing
[ G.R. No. 131683, June 19, 2000 ]
subdivisions and selling residential lots. One of
the subdivisions that respondent developed
JESUS LIM ARRANZA; LORENZO was the BF Homes Paraaque Subdivision.
CINCO; QUINTIN TAN; JOSE When the Central Bank ordered the closure of
Banco Filipino, which had substantial
ESCOBAR; ELBERT FRIEND; CLASSIC
investments in respondent BFHI, respondent
HOMES VILLAGE ASSOCIATION, INC.; filed with the SEC a petition for rehabilitation
BF NORTHWEST HOMEOWNERS'
and a declaration that it was in a state of
ASSOCIATION, INC.; AND UNITED BF suspension of payments. On 18 March 1985,
the SEC placed respondent under a
HOMEOWNERS' ASSOCIATIONS, INC.,
management committee. Upon that
PETITIONERS, VS. B.F. HOMES, INC.
committees dissolution on 2 February 1988,
AND THE HONORABLE COURT OF the SEC appointed Atty. Florencio B. Orendain
APPEALS, RESPONDENT. as a Receiver, and approved a Revised
Rehabilitation Plan.
DAVIDE JR., C.J.: In 1989, respondent, through Orendain,
turned over to UBFHAI control and
administration of security in the subdivision,
the Clubhouse and the open spaces along
Concha Cruz Drive. Through the Philippine
Waterworks and Construction Corporation
(PWCC), respondents managing company for
waterworks in the various BF Homes
subdivisions, respondent entered into an
agreement with UBFHAI for the annual
collection of community assessment fund and
for the purchase of eight new pumps to replace
the over~capacitated pumps in the old wells.
On 7 November 1994, Orendain was relieved
by the SEC of his duties as a Receiver, and a
new Board of Receivers consisting of eleven
members of respondents Board of Directors
was appointed for the implementation of
Phases II and III of respondents rehabilitation.
The new Board, through its Chairman, Albert
C. Aguirre, revoked the authority given by
Orendain to use the open spaces at Concha
Issue Ruling ProvRem Doctrine
Involved
1. Which body has
jurisdiction over
1. The boom in the real estate business all over the country Receivership is aimed at the
petitioners claims, the resulted in more litigation between subdivision preservation of, and at making more
Housing and Land Use owners/developers and lot buyers with the issue of the secure, existing rights; it cannot be
Regulatory Board jurisdiction of the NHA or the HLURB over such controversies used as an instrument for the
(HLURB) or the as against that of regular courts. In the cases that reached this destruction of those rights. (as cited in
Securities and Exchange Court, the ruling has consistently been that the NHA or the the book of Riano, P. 129)
Commission (SEC)? HLURB has jurisdiction over complaints arising from contracts
between the subdivision developer and the lot buyer or those
The power to overrule or revoke the
2. The collateral aimed at compelling the subdivision developer to comply with
issue to be addressed is its contractual and statutory obligations to make the previous acts of the management
"assuming that the subdivision a better place to live in. or Board of Directors of the entity
In the case at bar, petitioners complaint is for specific
HLURB has jurisdiction, under receivership is within the
performance to enforce their rights as purchasers of
may the proceedings receiver’s authority; The business
therein be suspended
subdivision lots as regards rights of way, water, open spaces,
of developing subdivisions and
pending the outcome of
road and perimeter wall repairs, and security. Indisputably then,
corporations being imbued with
the HLURB has jurisdiction over the complaint.
the receivership before The fact that respondent is under receivership does not divest public interest and welfare, any
the SEC?" the HLURB of that jurisdiction. A receiver is a person appointed question arising from the exercise
by the court, or in this instance, by a quasi~judicial
of that prerogative should be
administrative agency, in behalf of all the parties for the
purpose of preserving and conserving the property and brought to the proper agency that
preventing its possible destruction or dissipation, if it were left has technical know-how on the
in the possession of any of the parties. It is the duty of the matter.—In Figueroa v. SEC, this
receiver to administer the assets of the receivership estate; and Court has declared that the power
in the management and disposition of the property committed to overrule or revoke the previous
to his possession, he acts in a fiduciary capacity and with
acts of the management or Board
impartiality towards all interested persons. The appointment of
a receiver does not dissolve a corporation, nor does it interfere of Directors of the entity under
with the exercise of its corporate rights. In this case where there receivership is within a receiver’s
appears to be no restraints imposed upon respondent as it authority, as provided for by
undergoes rehabilitation receivership, respondent continues to Section 6 (d) (2) of P.D. No. 902-A.
exist as a corporation and hence, continues or should continue
Indeed, when the acts of a previous
to perform its contractual and statutory responsibilities to
receiver or management
petitioners as homeowners.
committee prove disadvantageous
1. It should be stressed that the main concern in this case is the
or inimical to the rehabilitation of a
issue of jurisdiction over petitioners complaint against distressed corporation, the
respondent for specific performance. P.D. No. 902~A, as
amended, defines the jurisdiction of the SEC; while P.D. No. succeeding receiver or
957, as amended, delineates that of the HLURB. These two management committee may
Cruz Drive and to collect community quasi~judicial agencies exercise functions that are distinct abrogate or cast aside such acts.
assessment funds; deferred the purchase of from each other. The SEC has authority over the operation of all However, that prerogative is not
new pumps; recognized BF Paraaque kinds of corporations, partnerships or associations with the
absolute. It should be exercised
Homeowners Association, Inc., (BFPHAI) as end in view of protecting the interests of the investing public
the representative of all homeowners in the and creditors. On the other hand, the HLURB has jurisdiction upon due consideration of all
subdivision; took over the management of the over matters relating to observance of laws governing pertinent and relevant laws when
Clubhouse; and deployed its own security corporations engaged in the specific business of development public interest and welfare are
of subdivisions and condominiums. The HLURB and the SEC
guards in the subdivision. involved. The business of
being bestowed with distinct powers and functions, the
Consequently, on 5 July 1995, herein developing subdivisions and
exercise of those functions by one shall not abate the
petitioners filed with the HLURB a class suit performance by the other of its own functions. As respondent corporations being imbued with
"for and in behalf of the more than 7,000 puts it, "there is no contradiction between P.D. No. 902~A and public interest and welfare, any
homeowners in the subdivision" against P.D. No. 957. question arising from the exercise
respondent BFHI, BF Citiland Corporation,
PWCC and A.C. Aguirre Management of that prerogative should be
Corporation "to enforce the rights of brought to the proper agency that
purchasers of lots" in BF Homes Paraaque. has technical know-how on the
Petitioners raised "issues" on the following matter.
basic needs of the homeowners:
rights~of~way; water; open spaces; road and
perimeter wall repairs; security; and the
interlocking corporations that allegedly made
it convenient for respondent "to
compartmentalize its obligations as general
developer, even if all of these are hooked into
the water, roads, drainage and sewer systems
of the subdivision.
In its answer, respondent claimed that (a) it
had complied with its contractual obligations
relative to the subdivisions development; (b)
respondent could not be compelled to abide by
agreements resulting from Orendains ultra
vires acts; and (c) petitioners were precluded
from instituting the instant action on account
of Section 6(c) of P.D. No. 902~A providing for
the suspension of all actions for claims against
a corporation under receivership. Respondent
interposed counterclaims and prayed for the
dismissal of the complaint.
Petitioners thereafter filed an urgent motion
for a cease~and~desist/status quo order.
Acting on this motion, HLURB Arbiter Charito
M. Bunagan issued a 20~day temporary
restraining order to avoid rendering nugatory
and ineffectual any judgment that could be
issued in the case; and subsequently, an Order
granting petitioners prayer for preliminary
injunction was issued enjoining and restraining
respondent BF Homes, Incorporated, its
agents and all persons acting for and in its
behalf from taking over/administering the
Concha Garden Row, from issuing stickers to
residents and non-residents alike for free or
with fees, from preventing necessary
improvements and repairs of infrastructures
within the authority and administration of
complainant UBFHAI, and from directly and
indirectly taking over security in the eight (8)
exit points of the subdivision or in any manner
interfering with the processing and vehicle
control in subject gates and otherwise to
remove its guards from the gates upon posting
of a bond of One Hundred Thousand Pesos
(P100,000.00) which bond shall answer for
whatever damages respondents may sustain
by reason of the issuance of the writ of
preliminary injunction if it turns out that
complainant is not entitled thereto.
Respondent thus filed with the Court of
Appeals a petition for certiorari and prohibition
docketed as CA~G.R. SP No. 39685. It
contended in the main that the HLURB acted
"completely without jurisdiction" in issuing the
Order granting the writ of preliminary
injunction considering that inasmuch as
respondent is under receivership, the "subject
matter of the case is one exclusively within the
jurisdiction of the SEC."
On 28 November 1997, the Court of Appeals
rendered a decision annulling and setting aside
the writ of preliminary injunction issued by the
HLURB. It ruled that private respondents
action may properly be regarded as a "claim"
within the contemplation of PD No. 902~A
which should be placed on equal footing with
those of petitioners other creditor or creditors
and which should be filed with the Committee
of Receivers. In any event, pursuant to Section
6(c) of P.D. No. 902~A and SECs Order of 18
March 1985, petitioners action against
respondent, which is under receivership,
should be suspended.
Hence, petitioners filed the instant petition for
review on certiorari. On 26 January 1998, the
Court issued a temporary restraining order
(TRO) enjoining respondent, its officers,
representatives and persons acting upon its
orders from
(a) taking over/administering the Concha
Garden Row; (b) issuing stickers to residents
and non~residents alike for free or with fees;

2
G.R. No. 125008. June 19, 1997
COMMODITIES STORAGE VS. CA
PUNO, J.:
(c) preventing necessary improvements and
repairs of infrastructures within the authority
and administration of complainant United BF
Homeowners Association, Inc. (UBFHAI); (d)
directly and indirectly taking over security in
the eight (8) exit points of all of BF Homes
Paraaque Subdivision or in any manner
interfering with the processing and vehicle
control in the subject gates; and (e) otherwise
to remove its guards from the gates.
Respondents motion to lift the TRO was
denied.
Petitioner in this case sought for the Whether or not the DECISION OF THE SC ON THE CONTENTION The power to appoint a
appointment of a receiver after its ice CA erred in granting OF THE PETITIONER receiver must be exercised
plant was extrajudicial foreclosed by the petition for NO. with extreme caution.
private respondent bank. certiorari and A petition for receivership under Section 1 There must be a clear
The application for receivership was annulled and set (b) of Rule 59 requires that the property or showing of necessity
granted by the lower court however aside the fund which is the subject of the action must therefor in order to save
the same was annulled and set aside receivership ordered be in danger of loss, removal or material the plaintiff from grave and
on a petition for certiorari filed by by the RTC? injury which necessitates protection or irremediable loss or
private respondent before the CA. preservation. The guiding principle is the damage.20 It is only when
Hence petitioner elevated the case to prevention of imminent danger to the the circumstances so
the SC wherein it maintained their property. If an action by its nature, does not demand, either because
argument that an appointment of a require such protection or preservation, said there is imminent danger
receiver is justified under Section 1 remedy cannot be applied for and that the property sought to
(b) of Rule 59. They argue that the granted.14chanroblesvirtuallawlibrary be placed in the hands of a
ice plant which is the subject of the In the instant case, we do not find the receiver be lost or because
action was in danger of being lost, necessity for the appointment of a receiver. they run the risk of being
removed and materially injured Petitioners have not sufficiently shown that impaired, endeavouring to
because of the following "imminent the Sta. Maria Ice Plant is in danger of avoid that the injury
perils": disappearing or being wasted and reduced to thereby caused be greater
a "scrap heap." Neither have they proven than the one sought to be
6.1 Danger to the that the property has been materially injured avoided.
lives, health and which necessitates its protection and
peace of mind of the preservation.15 In fact, at the hearing on
inhabitants living respondent bank's motion to dismiss,
near the Sta. Maria respondent bank, through counsel,
Ice Plant; 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
6.2 Drastic action or disputed by petitioners.
sanctions that could At the time the trial court issued the order
be brought against for receivership of the property, the problem
the plaintiff by had been remedied and there was no
affected third imminent danger of another leakage.
persons, including Whatever danger there was to the
workers who have community and the environment had already
claims against the been contained.
plaintiff but could The "drastic sanctions" that may be brought
not be paid due to against petitioners due to their inability to
the numbing pay their employees and creditors as a result
manner by which of "the numbing manner by which
the defendant took [respondent bank] took the ice plant" does
the Sta. Maria Ice not concern the ice plant itself. These claims
Plant; are the personal liabilities of petitioners
themselves. They do not constitute "material
6.3 The rapid injury" to the ice plant.
reduction of the Ice
Plant into a scrap
heap because of
evident
incompetence,
neglect and
vandalism.

3.
PHILIPPINE OVERSEAS Then President Corazon 1) Whether or THE RULING OF THE SUPREME COURT: Sequestration is akin to
TELECOMMUNICATIONS Cojuangco Aquino, exercising not the The Supreme Court granted the the provisional remedy of
CORP. VS. SANDIGANBAYAN revolutionary government sequestration of petition. It reversed the Resolution issued preliminary attachment or
powers issued Executive Order properties of by the Sandiganbayan and lifted the writ receivership. It is a
& PCGG Nos. 1 and 2, creating the PCGG POTC and of sequestration issued against petitioner conservatory writ, which
to recover properties amassed by PHILCOMSAT is POTC and PHILCOMSAT. purpose is to preserve
the unseated President Ferdinand still necessary HELD: properties in custodia
Edralin Marcos, Sr., his under the legis, lest the dissipation
GR No. 174462, February 10, immediate family, relatives, and present 1) No. The sequestration of and concealment of the
2016 cronies, "by taking undue circumstances. properties of POTC and PHILCOMSAT "ill-gotten" wealth the
advantage of their public office is no longer necessary under the former President Marcos
Perez, J. and/or using their powers, 2) Whether or present circumstances. and his allies may resort
authority, influence, connections not the Failure to implead POTC and PHILCOMSAT to, pending the final
or relationship," and to sequester appointment of a is a violation of the fundamental principle disposition of the
and take over such properties. PCGG fiscal agent that a corporation has a legal personality properties. It is to
The present litigation is one of in POTC and distinct and separate from its prevent the
the many offspring of the PHILCOMSAT is stockholders; that the filing of a complaint disappearance or
revolutionary orders. justified under against a stockholder is not ipso facto a dissipation pending
Pursuant to Executive Order Nos. the present complaint against the corporation. judgment of whether the
1 and 2, on 14 March 1986, then circumstances. There is no existing sequestration to talk acquisition thereof by the
PCGG Commissioner Ramon A. about in this case, as the writ issued apparent owner was
Diaz issued a letter directing against Aerocom, to repeat, is invalid for attended by some vitiating
Officer-In-Charge Carlos M. reasons hereinbefore stated. anomaly or attended by
Ferrales to sequester and 3) Whether or The basic tenets of fair play and principles some illegal means. Thus
immediately take over POTC and not the present of justice dictate that a corporation, as a by no means is it
PHILCO MS AT among others, sequestration legal entity distinct and separate from its permanent in character.
and to freeze all 'withdrawals, order against the stockholders, must be impleaded as Upon the final disposition
transfers and/or remittances petitioners is defendants, giving it the opportunity to be of the sequestered
under any type of deposit valid by reason of heard. The failure to properly implead properties, the
accounts, trust accounts or clear fatal legal POTC and PHILCOMSAT not only violates sequestration is rendered
placements. infirmities the latters' legal personality, but is functus officio.
POTC is a private corporation, thereto. repugnant on POTC's and PHILCOMSAT's
which is a main stockholder of right to due process.
PHILCOMSAT, a government- 2) No. The appointment of a PCGG
owned and controlled fiscal agent in POTC and PHILCOMSAT
corporation, which was is no longer justified under the
established in 1966 and was present circumstances.
granted a legislative The power of the PCGG to sequester is
telecommunications franchise by merely provisional. None other than
virtue of Republic Act No. 5514, Executive Order No. 1, Section 3(c)
as amended by Republic Act No. expressly provides for the provisional
7949, to establish and operate nature of sequestration.
international satellite
communication in the Philippines.
On 22 July 1987, the Office of the
Solicitor General (OSG), on
behalf of the Republic of the
Philippines, filed a Complaint for
Reconveyance, Reversion,
Accounting and Restitution, and
Damages, docketed as Civil Case
No. 0009, against Jose L. Africa,
Manuel H. Nieto, Jr., Ferdinand E.
Marcos, Imelda R. Marcos,
Ferdinand R. Marcos, Jr., Roberto
S. Benedicto, Juan Ponce Enrile,
and Potenciano Ilusorio
(collectively hereinafter referred
to as "defendants").
The Complaint averred that:
1) Through manipulations and
dubious arrangements with
officers and members of the
Board of the National
Development Corporation (NDC),
purchased NDC's shareholdings
in the Philippine Communications
Satellite Corporation
(PHILCOMSAT), under highly
unconscionable terms and
conditions manifestly
disadvantageous to Plaintiff and
the Filipino people.
2) The NDC officers and
members of the board illegally
manipulated, under the guise of
The act of sequestering the properties of
POTC and PHILCOMSAT was done without
yet determining whether the said
properties was, in truth, ill-gotten.
Sequestration is akin to the provisional
remedy of preliminary attachment or
receivership. It is a conservatory writ,
which purpose is to preserve properties in
custodia legis, lest the dissipation and
concealment of the "ill-gotten" wealth the
former President Marcos and his allies
may resort to, pending the final
disposition of the properties. It is to
prevent the disappearance or dissipation
pending judgment of whether the
acquisition thereof by the apparent owner
was attended by some vitiating anomaly
or attended by some illegal means. Thus
by no means is it permanent in character.
Upon the final disposition of the
sequestered properties, the sequestration
is rendered functus officio.
3) No. The present sequestration
order against the petitioners is not
valid because of clear fatal legal
infirmities thereto.
The ownership of the sequestered
properties have already been finally
adjudged.
In the case at bar, the 34.9% ownership
of the sequestered property has been
finally adjudged. The ultimate purpose of
sequestration was already accomplished
expanding the operations of
PHILCOMSAT, the purchase of
major shareholdings of Cable and
Wireless Limited, a London-
based telecommunication
company, in Eastern
Telecommunications Philippines,
Incorporated (ETPI), which
shareholdings Defendants
Roberto S. Benedicto, Jose L.
Africa and Manuel H. Nieto, Jr.,
by themselves and through
corporations namely Polygon
Investors and Managers, Inc.,
Aerocom Investors and Managers
Inc. and Universal Molasses
Corporation organized by them,
were beneficially held for
themselves and for Defendants
Ferdinand E. Marcos and Imelda
R. Marcos.
when the ownership thereof was adjudged
to the government by the Supreme Court
in Republic of the Phils. v. Sandiganbayan.
Moreover, the said shares in the ownership
of the sequestered properties have
reverted to the Government. The
government now owns 4,727 shares or
34.9% of the sequestered corporations.
As the sequestered property has already
been disposed, the ultimate purpose of
sequestration has already been attained;
the evil sought to be prevented is no longer
present. Evidently, the sequestered
property which was already returned to the
government cannot anymore be dissipated
or concealed.

3) They illegally effected

contracts involving corporations
which they owned and/or
controlled, such as: The contract
between ETPI and Polygon
Investors and Managers, Inc.,
thereby ensuring effective
control of ETPI and advancing
Defendants' scheme to
monopolize the
telecommunications industry.
4) They acted in collaboration
with each other as dummies,
nominees and/or agents of
Defendants Ferdinand E. Marcos,
Imelda R. Marcos and Ferdinand
R. Marcos, Jr. in several
corporations, such as, the Mid-
Pasig Land Development
Corporation and Independent
Realty Corporation which,
through manipulations by said
Defendants, appropriated a
substantial portion of the
shareholdings in POTC-
PHILCOMSA T held by the late
Honorio Poblador, Jr., Jose
Valdez and Francisco Reyes,
thereby further advancing
Defendants' scheme to
monopolize the
telecommunications industry.

5) They received improper

payments such as bribes,
kickbacks or commissions from
overprice in the purchase of
equipment for DOMSAT.

As alleged in the Complaint,

through clever schemes, the
wealth that should go to the
coffers of the government, which
should be deemed acquired for
the benefit of the Republic, went
to the defendants in their own
individual accounts-some,
however, through conduits or
corporations. The property
supposedly acquired illegally was
specifically set out in a list
appended to the Complaint as
Annex A. For instance, Jose L.
Africa, one of the defendants,
allegedly channeled the ill-gotten
wealth in shares of stock in
twenty (20) corporations.

Pursuant to its power to

sequester and to avoid further
dissipation of the sequestered
properties, the PCGG appointed a
comptroller, who controlled the
disbursement of funds of POTC
and PHILCOMSAT. At the same
time, in a Memorandum11 by the
PCGG dated 24 October 2000 to
the Bangko Sentral ng Pilipinas
(BSP), the PCGG informed the
BSP that in all cash withdrawals,
transfer of funds, money market
placements and disbursements of
POTC and PHILCOMSAT, the
approval of the PCGG appointed
comptroller is required. The
Memorandum was to be
disseminated to all commercial
banks and other non-bank
financial institutions performing
quasi-banking functions.
From Civil Case No. 0009 sprung
other cases: (1) Injunction; (2)
Mandamus; and (3) Approval of
the Compromise Agreement.
On 1 March 1991, POTC and
PHILCOMSAT filed separate
complaints for Injunction with
the Sandiganbayan against the
Republic to nullify and lift the
sequestration order issued
against them for failure to file the
necessary judicial action against
them within the period prescribed
by the Constitution and to enjoin
the PCGG from interfering with
their management and
operation, which the
Sandiganbayan granted on 4
December 1991 through a
Resolution.
On 23 January 1995, however,
the Supreme Court, in Republic
v. Sandiganbayan (First
Division), G.R. No. 96073, 240
SCRA 376, January 23, 1995,
reversed the Sandiganbayan
Resolution and ruled that the
filing of Complaint for
Reconveyance, Reversion,
Accounting and Restitution, and
Damages, docketed as Civil Case
No. 0009, was filed within the
required 6-month period.
Besides the complaint for
Injunction, POTC also filed a
complaint for Mandamus against
the Republic before the
Sandiganbayan to compel the
PCGG to return POTC's Stock and
Transfer Book and Stock
Certificate Booklets. The case
was docketed as Civil Case No.
0148.
On 13 May 1993, the
Sandiganbayan granted the
Mandamus, and the Decision
became final and executory.
On 28 June 1996, Atty.
Potenciano Ilusorio (Ilusorio),
one of the defendants in the Civil
Case No. 0009, entered into a
Compromise Agreement with the
Republic. Out of 5,400 or 40o/o
of the shares of stock of POTC in
the names of Mid-Pasig Land
Development Corporation
(MLDC) and Independent Realty
Corporation (IRC), the
government recovered 4, 727
shares or 34.9% of the shares of
stock. Ilusorio, on the other
hand, retained 673 shares or 5%
of the shares of stock.
The Compromise Agreement was
approved by the Sandiganbayan
in an Order dated 8 June 1998.
In opposition to the Compromise
Agreement, MLDC and IRC filed a
Motion to Vacate the
Compromise Agreement on 16
August and 2 October 1998,
respectively, which was denied
by the Sandiganbayan in a
Resolution dated 20 December
1999. In the same Resolution,
the Sandiganbayan directed the
Corporate Secretary of POTC to
issue within ten (10) days from
receipt thereof, the
corresponding Stock Certificate
of the government. Pursuant to
the Order, 4,727 or 34.9%
shares of stock of POTC were
transferred in the name of the
Republic of the Philippines.
Aggrieved, the PCGG, MLDC, and
IRC filed separate petitions
before the Supreme Court to
nullify the Order of the
Sandiganbayan approving the
Compromise Agreement, which
the Supreme Court, on 15 June
2005, declared valid in Republic
of the Phils. v. Sandiganbayan,
G.R. No. 141796 and 141804.
THE RULING OF THE
SANDIGANBAYAN:
The Sandiganbayan denied the
Motion to Vacate the
Compromise Agreement filed by
MLDC and IRC. It directed the
Corporate Secretary of POTC to
issue within ten (10) days from
receipt thereof, the
corresponding Stock Certificate
of the government.
Hence, PCGG, MLDC, and IRC
filed separate petitions before the
Supreme Court to nullify the
order of the Sandiganbayan
approving the Compromise
Agreement.