Rule 59: RECEIVERSHIP

no Case Title (GR no., Decision Facts Issue Ruling ProvRem Doctrine
. made by (en banc, etc), Involved
ponente)

1 Respondent BF Homes, Inc. (BFHI), is a

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
ESCOBAR; ELBERT FRIEND; CLASSIC Banco Filipino, which had substantial
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
1.      Which body has
jurisdiction over
petitioners claims, the
Housing and Land Use
Regulatory Board
(HLURB) or the
Securities and
Exchange Commission
(SEC)?
2.      The collateral
issue to be addressed is
"assuming that the
HLURB has jurisdiction,
may the proceedings
therein be suspended
pending the outcome of
the receivership before
the SEC?"
 
   
1.      The boom in the real estate business all over the country Receivership is aimed at the
resulted in more litigation between subdivision preservation of, and at making more
owners/developers and lot buyers with the issue of the secure, existing rights; it cannot be
jurisdiction of the NHA or the HLURB over such controversies used as an instrument for the
as against that of regular courts. In the cases  that reached destruction of those rights. (as cited in
this Court, the ruling has consistently been that the NHA or the book of Riano, P. 129) 
the HLURB has jurisdiction over complaints arising from
contracts between the subdivision developer and the lot buyer
or those aimed at compelling the subdivision developer to
The power to overrule or revoke
comply with its contractual and statutory obligations to make the previous acts of the
the subdivision a better place to live in. management or Board of Directors
In the case at bar, petitioners complaint is for specific of the entity under receivership is
performance to enforce their rights as purchasers of
within the receiver’s authority; The
subdivision lots as regards rights of way, water, open spaces,
road and perimeter wall repairs, and security. Indisputably
business of developing
subdivisions and corporations
then, the HLURB has jurisdiction over the complaint.
being imbued with public interest
The fact that respondent is under receivership does not divest
the HLURB of that jurisdiction. A receiver is a person and welfare, any question arising
appointed by the court, or in this instance, by a quasi~judicial from the exercise of that
administrative agency, in behalf of all the parties for the
purpose of preserving and conserving the property and
prerogative should be brought to
preventing its possible destruction or dissipation, if it were left the proper agency that has
in the possession of any of the parties. It is the duty of the technical know-how on the matter.
receiver to administer the assets of the receivership estate; —In Figueroa v. SEC, this Court
and in the management and disposition of the property has declared that the power to
committed to his possession, he acts in a fiduciary capacity
overrule or revoke the previous
and with impartiality towards all interested persons. The
appointment of a receiver does not dissolve a corporation, nor acts of the management or Board
does it interfere with the exercise of its corporate rights. In of Directors of the entity under
this case where there appears to be no restraints imposed receivership is within a receiver’s
upon respondent as it undergoes rehabilitation receivership, authority, as provided for by
respondent continues to exist as a corporation and hence,
Section 6 (d) (2) of P.D. No. 902-
continues or should continue to perform its contractual and
statutory responsibilities to petitioners as homeowners. A. Indeed, when the acts of a
  previous receiver or management
It should be stressed that the main concern in this case is the committee prove disadvantageous
issue of jurisdiction over petitioners complaint against or inimical to the rehabilitation of a
respondent for specific performance. P.D. No. 902~A, as
distressed corporation, the
amended, defines the jurisdiction of the SEC; while P.D. No.
957, as amended, delineates that of the HLURB. These two succeeding receiver or
authority given by Orendain to use the open quasi~judicial agencies exercise functions that are distinct
spaces at Concha Cruz Drive and to collect from each other. The SEC has authority over the operation of
all kinds of corporations, partnerships or associations with the
management committee may
community assessment funds; deferred the
purchase of new pumps; recognized BF end in view of protecting the interests of the investing public abrogate or cast aside such acts.
Paraaque Homeowners Association, Inc., and creditors. On the other hand, the HLURB has jurisdiction However, that prerogative is not
(BFPHAI) as the representative of all over matters relating to observance of laws governing absolute. It should be exercised
homeowners in the subdivision; took over the corporations engaged in the specific business of development upon due consideration of all
management of the Clubhouse; and deployed of subdivisions and condominiums. The HLURB and the SEC
being bestowed with distinct powers and functions, the
pertinent and relevant laws when
its own security guards in the subdivision. public interest and welfare are
exercise of those functions by one shall not abate the
Consequently, on 5 July 1995, herein involved. The business of
performance by the other of its own functions. As respondent
petitioners filed with the HLURB a class suit
"for and in behalf of the more than 7,000
puts it, "there is no contradiction between P.D. No. 902~A and developing subdivisions and
P.D. No. 957. corporations being imbued with
homeowners in the subdivision" against  
respondent BFHI, BF Citiland Corporation, public interest and welfare, any
PWCC and A.C. Aguirre Management   question arising from the exercise
Corporation "to enforce the rights of of that prerogative should be
purchasers of lots" in BF Homes Paraaque. brought to the proper agency that
Petitioners raised "issues" on the following has technical know-how on the
basic needs of the homeowners:
matter.
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

2
G.R. No. 125008. June 19, 1997
COMMODITIES STORAGE VS. CA
 
PUNO, J.:
(a) taking over/administering the Concha
Garden Row; (b) issuing stickers to residents
and non~residents alike for free or with fees;
(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 be in danger of loss, removal or material the plaintiff from grave
on a petition for certiorari filed by ordered by the injury which necessitates protection or and irremediable loss or
private respondent before the CA. RTC? 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 demand, either because
argument that an appointment of a not require such protection or preservation, there is imminent danger
receiver is justified under Section 1 said 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 thereby caused be greater
to a "scrap heap." Neither have they proven than the one sought to be
6.1 Danger to the that the property has been materially avoided.
lives, health and injured which necessitates its protection  
peace of mind of the and preservation.15 In fact, at the hearing
 on respondent bank's motion to dismiss,
inhabitants living
respondent bank, through counsel,
near the Sta. Maria
manifested in open court that the leak in
Ice Plant;
the ice plant had already been remedied
and that no other leakages had been
6.2 Drastic action or reported since.16 This statement has not
sanctions that could been disputed by petitioners.
be brought against At the time the trial court issued the order
the plaintiff by for receivership of the property, the
affected third problem had been remedied and there was
persons, including no imminent danger of another leakage.
workers who have Whatever danger there was to the
claims against the community and the environment had
plaintiff but could already been contained.
not be paid due to The "drastic sanctions" that may be
the numbing brought against petitioners due to their
manner by which inability to pay their employees and
the defendant took creditors as a result of "the numbing
the Sta. Maria Ice manner by which [respondent bank] took
Plant; the ice plant" does not concern the ice plant
itself. These claims are the personal
liabilities of petitioners themselves. They do
6.3 The rapid
not constitute "material injury" to the ice
reduction of the Ice
plant.
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 Sequestration is akin to
TELECOMMUNICATIONS Cojuangco Aquino, exercising not the COURT: the provisional remedy of
CORP. VS. revolutionary government sequestration of The Supreme Court granted the petition.  preliminary attachment or
powers issued Executive Order properties of It reversed the Resolution issued by the receivership.  It is a
SANDIGANBAYAN & PCGG Nos. 1 and 2, creating the PCGG POTC and Sandiganbayan and lifted the writ of conservatory writ, which
 sequestration issued against petitioner
GR No. 174462, February to recover properties amassed PHILCOMSAT is POTC and PHILCOMSAT. purpose is to preserve
10, 2016 by the unseated President still necessary HELD: properties in custodia
Ferdinand Edralin Marcos, Sr., under the 1)    No.  The sequestration of legis, lest the dissipation
Perez, J.  his immediate family, relatives, present properties of POTC and PHILCOMSAT and concealment of the
and cronies, "by taking undue circumstances. is no longer necessary under the "ill-gotten" wealth the
advantage of their public office   present circumstances. former President Marcos
and/or using their powers, 2)    Whether or Failure to implead POTC and PHILCOMSAT and his allies may resort
authority, influence, connections not the is a violation of the fundamental principle to, pending the final
or relationship," and to appointment of a that a corporation has a legal personality disposition of the
sequester and take over such PCGG fiscal distinct and separate from its properties.  It is to
properties. The present litigation agent in POTC stockholders; that the filing of a prevent the
is one of the many offspring of and complaint against a stockholder is not disappearance or
the revolutionary orders. PHILCOMSAT is ipso facto a complaint against the dissipation pending
Pursuant to Executive Order justified under corporation. judgment of whether the
Nos. 1 and 2, on 14 March 1986, the present There is no existing sequestration to talk acquisition thereof by the
then PCGG Commissioner circumstances. about in this case, as the writ issued apparent owner was
Ramon A. Diaz issued a letter against Aerocom, to repeat, is invalid for attended by some
directing Officer-In-Charge   reasons hereinbefore stated. vitiating anomaly or
Carlos M. Ferrales to sequester The basic tenets of fair play and principles attended by some illegal
and immediately take over POTC 3)    Whether or of justice dictate that a corporation, as a means.  Thus by no
and PHILCO MS AT among not the present legal entity distinct and separate from its means is it permanent in
others, and to freeze all sequestration stockholders, must be impleaded as character. Upon the final
'withdrawals, transfers and/or order against the defendants, giving it the opportunity to disposition of the
remittances under any type of petitioners is be heard. The failure to properly implead sequestered properties,
deposit accounts, trust accounts valid by reason POTC and PHILCOMSAT not only violates the sequestration is
or placements. of clear fatal the latters' legal personality, but is rendered functus officio.
POTC is a private corporation, legal infirmities repugnant on POTC's and PHILCOMSAT's
which is a main stockholder of thereto. right to due process.   
PHILCOMSAT, a government- 2)    No.  The appointment of a PCGG
owned and controlled fiscal agent in POTC and
corporation, which was PHILCOMSAT is no longer justified
established in 1966 and was under the 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 The act of sequestering the properties of
communication in the POTC and PHILCOMSAT was done without
Philippines. yet determining whether the said
On 22 July 1987, the Office of properties was, in truth, ill-gotten.
the Solicitor General (OSG), on
behalf of the Republic of the  Sequestration is akin to the provisional
Philippines, filed a Complaint for remedy of preliminary attachment or
Reconveyance, Reversion, receivership.  It is a conservatory writ,
Accounting and Restitution, and which purpose is to preserve properties in
Damages, docketed as Civil Case custodia legis, lest the dissipation and
No. 0009, against Jose L. Africa, concealment of the "ill-gotten" wealth the
Manuel H. Nieto, Jr., Ferdinand former President Marcos and his allies
E. Marcos, Imelda R. Marcos, may resort to, pending the final
Ferdinand R. Marcos, Jr., disposition of the properties.  It is to
Roberto S. Benedicto, Juan prevent the disappearance or dissipation
Ponce Enrile, and Potenciano pending judgment of whether the
Ilusorio (collectively hereinafter acquisition thereof by the apparent owner
referred to as "defendants"). was attended by some vitiating anomaly
The Complaint averred that: or attended by some illegal means.  Thus
1)    Through manipulations and by no means is it permanent in character.
dubious arrangements with Upon the final disposition of the
officers and members of the sequestered properties, the sequestration
Board of the National is rendered functus officio. 
Development Corporation
(NDC), purchased NDC's 3)    No.  The present sequestration
shareholdings in the Philippine order against the petitioners is not
Communications Satellite valid because of clear fatal legal
Corporation (PHILCOMSAT), infirmities thereto.
under highly unconscionable The ownership of the sequestered
terms and conditions manifestly properties have already been finally
disadvantageous to Plaintiff and adjudged.
the Filipino people.  In the case at bar, the 34.9% ownership
 
2)    The NDC officers and
members of the board illegally
manipulated, under the guise of
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.
of the sequestered property has been
finally adjudged.  The ultimate purpose of
sequestration was already accomplished
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 Memorandum 11

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.