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JULY 29, 2013

GR NO. 203585

The power to appoint a receiver is a delicate one and should be exercised with extreme caution
and only under circumstances requiring summary relief or where the court is satisfied that
there is imminent danger of loss, lest the injury thereby caused be far greater than the injury
sought to be averted



Petitioners Mila Caboverde Tantano (Mila) and Roseller Caboverde (Roseller) are children of
respondent Dominalda Espina-Caboverde (Dominalda) and siblings of other respondents in this
case, namely: Eve Caboverde-Yu (Eve), Fe Caboverde-Labrador (Fe), and Josephine E.
Caboverde (Josephine). Petitioners and their siblings, Ferdinand, Jeanny and Laluna, are the
registered owners and in possession of certain parcels of land, having purchased them from
their parents, Maximo and Dominalda Caboverde. The present controversy started when
respondents Eve and Fe filed a complaint before the Regional Trial Court where they prayed for
the annulment of the Deed of Sale purportedly transferring certain parcels of land from their
parents Maximo and Dominalda in favor of petitioners Mila and Roseller and their other
siblings, Jeanny, Laluna and Ferdinand. During the pendency of the civil case, Maximo died. Eve
and Fe filed an Amended Complaint with Maximo substituted by his eight (8) children and his
wife Dominalda.
Fearing that the contested properties would be squandered, Dominalda filed with the Regional
Trial Court a Verified Urgent Petition/Application to place the controverted parcels of land
under receivership. Mainly, she claimed that while she had a legal interest in the controverted
properties and their produce, she could not enjoy them, since the income derived was solely
appropriated by petitioner Mila in connivance with her selected kin. She alleged that she
immediately needs her legal share in the income of these properties for her daily sustenance
and medical expenses. Also, she insisted that unless a receiver is appointed by the court, the
income or produce from these properties is in grave danger of being totally dissipated, lost and
entirely spent solely by Mila and some of her selected kin.


(1) Whether or not the CA committed grave abuse of discretion in sustaining the appointment
of a receiver despite clear showing that the reasons advanced by the applicant are not any of
those enumerated by the rules; and

(2) Whether or not the CA committed grave abuse of discretion in upholding the Resolution of
the RTC and ruling that the receivership bond is not required prior to appointment despite clear
dictates of the rules.




First, Dominalda’s alleged need for income to defray her medical expenses and support is not a
valid justification for the appointment of a receiver. The approval of an application for
receivership merely on this ground is not only unwarranted but also an arbitrary exercise of
discretion because financial need and like reasons are not found in Sec. 1 of Rule 59 which
prescribes specific grounds or reasons for granting receivership. The RTC’s insistence that the
approval of the receivership is justified under Sec. 1(d) of Rule 59, which seems to be a catch-all
provision, is far from convincing. To be clear, even in cases falling under such provision, it is
essential that there is a clear showing that there is imminent danger that the properties sought
to be placed under receivership will be lost, wasted or injured.

Second, there is no clear showing that the disputed properties are in danger of being lost or
materially impaired and that placing them under receivership is most convenient and feasible
means to preserve, administer or dispose of them.

Third, placing the disputed properties under receivership is not necessary to save Dominalda
from grave and immediate loss or irremediable damage.


Sec. 2 of Rule 59 is very clear in that before issuing the order appointing a receiver the court
shall require the applicant to file a bond executed to the party against whom the application is
presented. The use of the word "shall" denotes its mandatory nature; thus, the consent of the
other party, or as in this case, the consent of petitioners, is of no moment. Hence, the filing of
an applicant’s bond is required at all times. On the other hand, the requirement of a receiver’s
bond rests upon the discretion of the court.
G.R. No. 110086, 19 July 1999, FIRST DIVISION (Ynares-Santiago, J.)

McAdore Finance and Investment, Inc. (McAdore) and Dagupan Electric Corporation
(DECORP) entered into a contract whereby DECORP shall provide electric power to McAdore’s
Hotel. During the term of their contract, DECORP notice discrepancies between the actual monthly
billings and the estimated monthly billings of McAdore which was later discovered that it was due to
a slow rotation of the meter. DECORP issued a corrected bill but McAdore refused to pay thus,
DECORP disconnected the power supply to the hotel. McAdore commenced a suit against DECORP
for damages with prayer for a writ of preliminary injunction, accompanied by an injunction bond
from several sureties, one of which was Paramount Insurance Corporation (Paramount). Accordinly,
a writ of preliminary injunction was issued and DECORP was ordered to continue the supply of
electric power. The RTC rendered judgment in favor of DECORP and likewise adjudged Paramount
to pay. On appeal by Paramount, the CA affirmed the decision of the trial court. Before this Court,
Paramount contends that the injunction bond was issued to guarantee “actual and material damages
as may be sustained and duly proved by DECORP,” to the effect that it is liable to pay such actual
and material damages only and no other damages.


Whether Paramount is liable to pay actual and material damages only


It may not be amiss to point out that by the contract of suretyship, it is not for the obligee to
see to it that the principal pays the debt or fulfills the contract, but for the surety to see to it that the
principal pay or perform. The purpose of the injunction bond is to protect the defendant against loss
or damage by reason of the injunction in case the court finally decides that the plaintiff was not
entitled to it, and the bond is usually conditioned accordingly. Thus, the bondsmen are obligated to
account to the defendant in the injunction suit for all damages, or costs and reasonable counsel’s
fees, incurred or sustained by the latter in case it is determined that the injunction was wrongfully

The posting of a bond in connection with a preliminary injunction (or attachment under Rule
57, or receivership under Rule 59, or seizure or delivery of personal property under Rule 60) does not
operate to relieve the party obtaining an injunction from any and all responsibility for the damages
that the writ may thereby cause. It merely gives additional protection to the party against whom the
injunction is directed. It gives the latter a right of recourse against either the applicant or his
surety, or against both. In the same manner, when petitioner PARAMOUNT issued the bond in favor
of its principal, it undertook to assume all the damages that may be suffered after finding that the
principal is not entitled to the relief being sought.

G.R. No. 155408. February 13, 2008



Severino Reyes was the father of respondent Jose Reyes and Torcuato Reyes. Upon the death of
Severino, respondent and Torcuato came upon their inheritance consisting of several properties. They
had an oral partition of the properties and separately appropriated to themselves said properties.

Torcuato died with a last will and testament. Petitioner Vivares was the designated executor of
Torcuatos last will and testament, while petitioner Ignaling was declared a lawful heir of Torcuato.

Believing that Torcuato did not receive his full share in the estate of Severino, petitioners instituted an
action for Partition and Recovery of Real Estate before the Camiguin RTC, Branch 28 entitled Julio A.
Vivares, as executor of the estate of Torcuato J. Reyes and Mila R. Ignaling, as heir v. Engr. Jose J.
Reyes.With the approval of the trial court, the parties agreed that properties from the estate of
Severino, which were already transferred in the names of respondent and Torcuato prior to the latters
death on May 12, 1992, shall be excluded from litigation. In short, what was being contested were the
properties that were still in the name of Severino.

For the purpose of collating the common properties that were disputed, the trial court directed the
formation of a three-man commission with due representation from both parties, and the third
member, appointed by the trial court, shall act as chairperson. The disputed properties were then
annotated with notices of lis pendens upon the instance of petitioners. petitioners filed a Motion to
Place Properties in Litigation under Receivership before the trial court alleging that to their prejudice
respondent had, without prior court approval and without petitioners knowledge, sold to third parties
and transferred in his own name several common properties. They further claimed that respondent was
and is in possession of the common properties in the estate of Severino, and exclusively enjoying the
fruits and income of said properties and without rendering an accounting on them and turning over the
share pertaining to Torcuato. Thus, petitioners prayed to place the entire disputed estate of Severino
under receivership. The trial court issued a Resolution, denying respondents motions to discharge
receiver and cancel the notice of lis pendens .

The CA rendered the assailed Decision, sustaining respondents position and granted relief.In reversing
the trial court, the CA reasoned that the court a quo failed to observe the well-settled rule that allows
the grant of the harsh judicial remedy of receivership only in extreme cases when there is an imperative
necessity for it. The CA thus held that it is proper that the appointed receiver be discharged on the filing
of a counterbond pursuant to Sec. 3, Rule 59 of the 1997 Revised Rules on Civil Procedure.

ISSUE: WON Receivership is proper.


Petitioners miserably failed to adduce clear, convincing, and hard evidence to show the alleged
fraud in the transfers and the antedating of said transfers. Moreover, respondent has adduced
documentary proof that Torcuato himself similarly conveyed several lots in the estate of Severino based
on the oral partition between the siblings. To lend credence to the transfers executed by Torcuato but
distrust to those made by respondent would be highly inequitable as correctly opined by the court a

Indeed, receivership is a harsh remedy to be granted only in extreme situations. As early as 1914, the
Court already enunciated the doctrinal pronouncement in Velasco & Co. v. Gochuico & Co. that courts
must use utmost circumspection in allowing receivership, thus:

The power to appoint a receiver is a delicate one and should be exercised with extreme caution and only
under circumstances requiring summary relief or where the court is satisfied that there is imminent
danger of loss, lest the injury thereby caused be far greater than the injury sought to be averted. The
court should consider the consequences to all of the parties and the power should not be exercised
when it is likely to produce irreparable injustice or injury to private rights or the facts demonstrate that
the appointment will injure the interests of others whose rights are entitled to as much consideration
from the court as those of the complainant.
Petitioners cannot now impugn the oral partition entered into by Torcuato and respondent and hence
cannot also assail the transfers made by respondent of the lots which were subject of said agreement,
considering that Torcuato also sold properties based on said verbal arrangement. Indeed, the parties
agreed that the civil action does not encompass the properties covered by the oral partition. In this
factual setting, petitioners cannot convince the Court that the alleged fraudulent transfers of the lots
made by respondent, which purportedly form part of his share in Severinos estate based on the
partition, can provide a strong basis to grant the receivership.

Second, petitioner is willing to post a counterbond in the amount to be fixed by the court based on Sec.
3, Rule 59 of the 1997 Rules of Civil Procedure, which reads:

Sec. 3. Denial of application or discharge of receiver.The application may be denied, or the receiver
discharged, when the adverse party files a bond executed to the applicant, in an amount to be fixed by
the court, to the effect that such party will pay the applicant all damages he may suffer by reason of the
acts, omissions, or other matter specified in the application as ground for such appointment. The
receiver may also be discharged if it is shown that his appointment was obtained without sufficient

Anchored on this rule, the trial court should have dispensed with the services of the receiver, more so
considering that the alleged fraud put forward to justify the receivership was not at all established.

Petitioners advance the issue that the receivership should not be recalled simply because the adverse
party offers to post a counterbond. At the outset, we find that this issue was not raised before the CA
and therefore proscribed by the doctrine that an issue raised for the first time on appeal and not timely
raised in the proceedings in the lower court is barred by estoppel. Even if we entertain the issue, the
contention is nevertheless devoid of merit. The assailed CA decision supported the discharge of the
receiver with several reasons including the posting of the counterbond. While the CA made a statement
that the trial court should have discharged the appointed receiver on the basis of the proposed
counterbond, such opinion does not jibe with the import of Sec. 3, Rule 59. The rule states that the
application may be denied or the receiver discharged. In statutory construction, the word may has
always been construed as permissive. If the intent is to make it mandatory or ministerial for the trial
court to order the recall of the receiver upon the offer to post a counterbond, then the court should
have used the word shall. Thus, the trial court has to consider the posting of the counterbond in
addition to other reasons presented by the offeror why the receivership has to be set aside.