2 provrem central sawmill vs alto surety

7/25/2019 2 Provrem Central Sawmill vs Alto Surety

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G.R. No. L-24508 April 25, 1969

CENTRAL SAWMILLS, INC.,plaintiff-appellee,vs.ALTO SURET ! INSURANCE CO., ET AL.,defendants,

ALTO SURET ! INSURANCE CO.,defendant-appellant.

M. Peres Cardenas for plaintiff-appellee.Aristorenas and Relova for defendant-appellant.

FACTS:

This appeal from the order of the Court of First Instance of Manila dated October 4, 19! inits Civil Case "o. #$%$4, entitled Central &a'mills, Inc. vs. (lto &uret) * Insurance Co., etal., orderin+ the appointment of a receiver of the properties of defendant-appellant (lto

&uret) * Insurance Compan) as 'ell as from the order of October #, 19! den)in+ themotion for reconsideration thereof 'as certified to this Court b) the Court of (ppeals in aresolution

( decision 'as rendered in the above-entitled case in favor of plaintiff and a+ainst thedefendants, ointl) and solidaril), one of 'hich is the defendant (lto &uret) * Insurance Co.,Inc. /0hibit (-eceivership23 that a 'rit of e0ecution /0hibit -eceivership 'as issued toenforce said ud+ment3 that said 'rit of e0ecution 'as returned b) the &heriff of Manilaunsatisfied

on (u+ust 4, 195, the Insurance Commissioner 'rote a letter addressed to (lto &uret) *

Insurance Co., Inc. &tatin+ its financial condition and re6uirin+ the that the stoc7holders ofthe (lto &uret) * Insurance Co., Inc., put up 'ithin fifteen 12 da)s from receipt of this letter,the amount of 8$4$,$!9.!4 in order to cover the impairment or deficit of an e6ual amount,and to compl) immediatel) 'ith all the other re6uirements mentioned in the fore+oin+

8laintiff has offered the provisions of &ection 1, ule 1 of the ules of Court, moreparticularl) para+raph d2 thereof. In support of its claim, plaintiff has cited the case of8hilippine Trust Co. vs. Francisco &antamaria % 8hil. 4%, 'herein the &upreme Courtordered the appointment of a receiver of all the properties and assets of a ud+ment debtorin aid of e0ecution of ud+ment rendered a+ainst it. The action a+ainst the ud+ement debtorin the said case 'as for the recover) of a sum of mone).lawphi1.nt

&econdl) plaintiff has cited the provisions of &ection #, ule 1 of the ule of court,6uoted as follo's

&/C. #. Creditor or stockholder may apply for receiver for corporation. :;hen a corporation has been dissolved, or is insolvent or is in imminentdan+er or insolvenc), or has forfeited its corporate ri+hts, a receiver ma) beappointed on the complaint of a creditor, stoc7holder, or member of thecorporation.


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letter dated Ma) 1, 19! and mar7ed as /0hibit =-eceivership that the defendant

corporation and is in a precarious financial condition.

It must be remembered that plaintiff filed the present petition for receivership in vie' of thereturn of the &heriff of Manila /0hibit C-eceivership2 to the effect that the 'rit of e0ecutionmar7ed /0hibit -eceivership could not be satisfied for the reasons stated therein.

It is not disputed b) the appellant compan) that thou+h in the )ears 19 and 19 it 'as ina position to pa) installments, or &eptember 1, 195 and thereafter, it 'as no lon+er in aposition to mar7 an) pa)ments 'hatsoever.

In vie' of all the above, the issue raised in this appeal is purel) a 6uestion of la'3 thisappeal is therefore be)ond the competence of this Court.

(CCO


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a2 ;hen a corporation has been dissolved, or is insolvent, or is in imminent dan+erof insolvenc), or has forfeited its corporate ri+hts3

b2 ;hen it appears from the complaint or ans'er, and such other proof as the ud+ema) re6uire, that the part) appl)in+ for the appointment of receiver has an interest in

the propert) or fund 'hich is in dan+er of bein+ lost, removed, or materiall) inuredunless a receiver be appointed to +uard and preserve it3

c2 ;hen it appears in an action b) the mort+a+ee for the foreclosure of a mort+a+ethat the propert) is in dan+er of bein+ 'asted or materiall) inured, and that its valueis probabl) insufficient to dischar+e the mort+a+e debt, or that the parties have sostipulated in the contract of mort+a+e3

d2 (fter ud+ment, to preserve the propert) durin+ the pendenc) of an appeal or todispose of it accordin+ to the ud+ment, or to aid e0ecution 'hen the e0ecution hasbeen returned unsatisfied or the ud+ment debtor refuses to appl) his propert) insatisfaction of the ud+ment, or other'ise to carr) the ud+ment into effect3

e2 ;henever in other cases it appears that the appointment of a receiver is the mostconvinient and feasible means of preservin+, administerin+, or disposin+ of thepropert) in liti+ation.

(nd it is undisputed that in the case at bar, the properties bein+ placed under receivershipare not the subect of the action.

>i7e'ise, it is 6uite plain that &ection # of ule 14 is not also applicable to this case. Thissection refers to a receivership, not as an aid to e0ecution of a final ud+ment in an ordinar)action, but as a conse6uence of the dissolution of a corporation or its forfeiture of its

corporate ri+hts3 and 'ith respect to cases of insolvenc) or imminent dan+er of insolvenc) ofcorporations, the receivership contemplated in this section must be in relation e0clusivel) tosuch insolvenc) or imminent dan+er thereof placed before the court in an appropriateprincipal action, and a+ain, not merel) as an ordinar) action.

In an event, it is necessar) or superfluos to brin+ in &ections 1 and # of ule 1, 'hich, tosa) the least, are of doubtful applicabilit), 'hen &ection %9 appears to be clearl) and fittin+l)applicable. If at all, the other provisions of ule 1, ma) be resorted to onl) insofar as the)prescribe the procedure and the bond related to the carr)in+ out of such receivership. Therebein+ no detailed rules under the authorit) of &ection , ule 1#4 no' ule 1%2, thepertinent provisions of ule 1 ma) be adopted. &aid section provides

&/C. . Means to carry !risdiction into effect. : ;hen b) la' urisdiction isconferred on a court or udicial officer, all au0iliar) 'rits, processes and other meansnecessar) to carr) it into effect ma) be emplo)ed b) such court or officer3 and if theprocedure to be follo'ed in the e0ercise of such urisdiction is not specificall) pointedout b) these rules, an) suitable process or mode of proceedin+ ma) be adopted'hich appears most conformable to the spirit of said rules.

;A//FO/, 'ith the above clarification that &ection %9 of ule %9 of the ules of 194!,no' &ection 4% of ule %9 of the current ules, is the provision applicable to thereceivership herein in 6uestion, the same bein+ in aid for mone), the disputed orders of thecourt a 6uo dated October 4, 19! and October 1, 19! are hereb) affirmed, 'ith costsa+ainst defendant-appellant, (lto &uret) * Insurance Compan), Inc.


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Full t0t

epublic of the 8hilippinesSU"REME COURT

Manila

/" ("C

G.R. No. L-24508 April 25, 1969

CENTRAL SAWMILLS, INC.,plaintiff-appellee,vs.ALTO SURET ! INSURANCE CO., ET AL.,defendants,ALTO SURET ! INSURANCE CO.,defendant-appellant.

M. Peres Cardenas for plaintiff-appellee.Aristorenas and Relova for defendant-appellant.

#ARRE$O, J.:

This appeal from the order of the Court of First Instance of Manila dated October 4, 19! inits Civil Case "o. #$%$4, entitled Central &a'mills, Inc. vs. (lto &uret) * Insurance Co., etal., orderin+ the appointment of a receiver of the properties of defendant-appellant (lto&uret) * Insurance Compan) as 'ell as from the order of October #, 19! den)in+ themotion for reconsideration thereof 'as certified to this Court b) the Court of (ppeals in aresolution, the pertinent portions of 'hich read thus

The undisputed evidence presented durin+ the hearin+ on the petition forreceivership is summariEed b) the court a "o, as follo's

That a decision 'as rendered in the above-entitled case in favor of plaintiffand a+ainst the defendants, ointl) and solidaril), one of 'hich is thedefendant (lto &uret) * Insurance Co., Inc. /0hibit (-eceivership23 that a

'rit of e0ecution /0hibit -eceivership 'as issued to enforce saidud+ment3 that said 'rit of e0ecution 'as returned b) the &heriff of Manilaunsatisfied /0hibit C- eceivership23 that on (u+ust 4, 195, the InsuranceCommissioner 'rote a letter addressed to (lto &uret) * Insurance Co., Inc./0hibit /-eceivership2, the last portion of 'hich is 6uoted as follo's

Financial Condition : The e0amination disclosed that the (lto &uret)* Insurance Co., Inc., had, as of


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?our failure to compl) 'ith all the fore+oin+ re6uirements 'ithin thetime limit set forth in this letter 'ill compel us to suspend or revo7e thecertificates of authorit) to do insurance business issued in favor of thecompan), as 'ell as all other certificates +ranted to the compan)sofficers, +eneral a+ents, andGor to recommend the prosecution of itsofficers.

that on Ma) 1, 19!, the Insurance Commissioner addressed another letter mar7ed e0hibit=-eceivership, the last portion of 'hich is also 6uoted as follo's

. Financial Condition as of &eptember %!, 199. : The e0amination disclosed thatthe (lto &uret) * Insurance Compan) Inc., had, as of &eptember %!, 199, totaladmitted assets of 811,1#1.54 as a+ainst total liabilities of 849,1%!.55 and totalnet 'orth or capital deficienc) of 8455,!!9.!4. The capital stoc7 paid-up of89,$!!.!! 'as impaired to the e0tent of 8$4$,$!9.!4, 'hich is e6ual to the paid-upcapital of 8#9,$!!.!! and capital deficienc) of 8455,!!9.!4.

In vie' of the precarious financial condition of the compan), it is re6uired that thestoc7holders of the (lto &uret) * Insurance Co., Inc., put up 'ithin fifteen 12 da)sfrom receipt of this letter, the amount of 8$4$,$!9.!4 in order to cover the impairmentor deficit of an e6ual amount, and to compl) immediatel) 'ith all the otherre6uirements mentioned in the fore+oin+.

eceipt of )our advice 'ithin the fifteen-da) period +iven )ou for compl)in+ 'ith there6uirement stated above, 'ill be appreciated.

In +rantin+ the petition for receivership, the court a "osaid

Firstl), plaintiff has offered the provisions of &ection 1, ule 1 of the ules of Court,more particularl) para+raph d2 thereof. In support of its claim, plaintiff has cited thecase of 8hilippine Trust Co. vs. Francisco &antamaria % 8hil. 4%, 'herein the&upreme Court ordered the appointment of a receiver of all the properties and assetsof a ud+ment debtor in aid of e0ecution of ud+ment rendered a+ainst it. The actiona+ainst the ud+ement debtor in the said case 'as for the recover) of a sum ofmone).lawphi1.nt

&econdl) plaintiff has cited the provisions of &ection #, ule 1 of the ule of court,6uoted as follo's

&/C. #. Creditor or stockholder may apply for receiver for corporation. :

;hen a corporation has been dissolved, or is insolvent or is in imminentdan+er or insolvenc), or has forfeited its corporate ri+hts, a receiver ma) beappointed on the complaint of a creditor, stoc7holder, or member of thecorporation.

In relation to this provision of la', /0hibits /-eceivership and =-eceivership tendto sho' that defendant (lto &uret) * Insurance Co., Inc., is in imminent dan+er ofinsolvenc). (s a matter of fact, no less than the Insurance Commissioner of the8hilippines has manifested in his letter dated Ma) 1, 19! and mar7ed as /0hibit =-eceivership that the defendant corporation and is in a precarious financial condition.

Thirdl), plaintiff has cited the provision of &ection ule %9 of the ules of Court,6uoted as follo's


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&/C. %9.Appointment and bond of receiver. : The ud+e ma), b) order,appoint the sheriff, or other proper officer or person, receiver of the propert)of the ud+ment debtor3 and he ma) also, b) order, forbid a transfer or otherdisposition of, or an) interference 'ith, the propert) of the ud+ment debtornot e0empt from e0ecution. If a bonded officer be appointed receiver, he andhis sureties shall be liable on his official bond as such receiver, but if anotherperson be appointed he shall +ive a bond as receiver as in other cases.

It must be remembered that plaintiff filed the present petition for receivership in vie'of the return of the &heriff of Manila /0hibit C-eceivership2 to the effect that the 'ritof e0ecution mar7ed /0hibit -eceivership could not be satisfied for the reasonsstated therein.

It is not disputed b) the appellant compan) that thou+h in the )ears 19 and 19 it'as in a position to pa) installments, or &eptember 1, 195 and thereafter, it 'as nolon+er in a position to mar7 an) pa)ments 'hatsoever.

In vie' of all the above, the issue raised in this appeal is purel) a 6uestion of la'3this appeal is therefore be)ond the competence of this Court.

(CCO C(&/ "O. $#1

;herefore, ud+ment is rendered a+ainst F. M. ?aptico * Co., >td., ointl) 'ith theHisa)an =eneral &uppl) Co., Inc., for the sum of 8!,!!!.!! 'ith interest thereon atthe rate of 9 per cent per annum from Februar) 11, 19#4, until paid, and 'ith le+alinterest from the filin+ of the complaint to the date of the ud+ment. (nd ud+ment is

rendered a+ainst the defendant F. M. ?aptico * Co., >td., for per cent per annumfrom March , 19#4, plus the le+al interest of per cent per annum on the


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accummulated interest from the date of filin+ of the complaint to that of the ud+ment,to+ether 'ith costs of this action.

It is alle+ed that on such ud+ments there is no' due and o'in+ from the defendant to thepetitioner about 811!,!!!.!!. That on "ovember #, 19#$, the plaintiff as7ed the court to

issue and e0ecution pendin+ the defendants appeal to this court, 'hich re6uest 'as deniedon


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&/CTIO" 1. %hen and by whom receiver appointed. : One or more receiver of thepropert), real or personal, 'hich is subect of the action, ma) be appointed b) theud+e of the Court of First Instance in 'hich the action is pendin+, or b) a @ustice ofthe Court of (ppeals or of the &upreme Court, in the follo'in+ cases

0 0 0 0 0 0 0 0 0

d2 (fter ud+ment, to preserve the propert) durin+ the tendenc) of an appeal or todispose of it accordin+ to the ud+ement, or to aid e0ecution 'hen the e0ecution hasbeen returned unsatisfied or the ud+ment debtor refuses to appl) his propert) insatisfaction of the ud+ment, or other'ise to carr) the ud+ement into effect3

This specific citation naturall) +ave defendant-appellant cause to oppose the petition on the+round that underline provision thus cited, the receivership contemplated is onl) that Bof thepropert), real or personal, 'hich is the subect of the action.B It 'as onl) in its memorandum,'hich is not included in the record on appeal but mentioned onl) in the opposition to themotion for reconsideration of the order +rantin+ the receivership p. !, ecord on (ppeal2,

that plaintiff-appellant must have referred the court a "o to other provisions of the ules,particularl), &ection # of ule 1 and &ection %9 of ule %9. Thus, as ma) be seen from theabove-6uoted portions of its order of receivership, the said court, made reference to all thethree provisions 'hich it said 'ere BofferedB or cited b) the plaintiff-appellee, namel)&ection 1 d2, ule 1, &ection #, ule 1 and &ection %9, ule %9. &eemin+l), the court a"o 'as uncertain as to 'hich particular one of these provisions 'as the proper basis ofauthorit) because it simpl) ruled that Bafter considerin+ the evidence and the ar+umentadduced b) the parties in relation to plaintiffs petition for receivership and furtherconsiderin+ the outstandin+ obli+ations of defendant corporation, the Court is of the opinionthat plaintiffs motion for receivership is 'ell-ta7en and made no commitment as to 'hichrule or provision it 'as rel)in+ upon for its action.

It 'ill be noted that in that case of Philippine #rst Co. vs. $antamaria, above-referred to,this Court cited &ection 45% of the Code of Civil 8rocedure (ct 19!2 in holdin+ that Bit 'asthe dut) of the court to appoint a receiver for the F.M. ?aptico * Co., >td. to protect andpreserve its propert) and assets for the use and benefit of its creditors and, in particular, thispetitioner.B The section cited reads thus

&/C. 45%. &d'e may Appoint Receiver and Prohibit #ransfers, and so forth. : Theud+e ma), b) order, appoint the +overnor, or his deput) of the proper province, orother suitable person, a receiver of the propert) of the ud+ment debtor, and he ma)also, b) order, forbid a transfer or other disposition of, or an) interference 'ith, thepropert) of the ud+ment debtor not e0empt b) la'.

This section 'as under Chapter entitled B8roceedin+s &upplementar) to the /0ecutionB.In other 'ords, it 'as part of the rules of proceedin+ +overnin+ aids to the e0ecution ofud+ments. In the ules of Court of 194!, the said section had its counter-part in &ection %9of ule %9 readin+ as follo's

&/C. %9.Appointment and bond of receiver. : The ud+e ma), b) order, appoint thesheriff, or other proper officer or person, receiver of the propert) of the ud+mentdebtor3 and he ma) also, b) order, forbid the transfer or other disposition of, or an)interference 'ith, the propert) of the ud+ment debtor not e0empt from e0ecution. If abonded officer be appointed receiver, he and his sureties shall be liable on his officialbond as such receiver but if another person be appointed he shall +ive a bond as

receiver as in other cases.#


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Indeed, this is the provision applicable to the circumstances of the case at bar. Clearl),&ection 1 d2 of ule 1%is not applicable here because, as contended b) defendant-appellant, all the cases of receivers contemplated in said section are onl) cases 'herein thepropert) or properties bein+ placed under receivership are those involved in the ver)liti+ation in 'hich such receivership is ordered. This is evident from the openin+ para+raph ofsaid section 'hich sa)s that Bone or more receivers of the property, real or personal, whichis the sb!ect of the action, ma) be appointed ... in the follo'in+ cases. /mphasis OursD. Inother 'ords, this 6ualif)in+ clause, Bthe propert), real or personal, 'hich is the subect of theactionB applies to all the cases specified in the five para+raphs in said &ection 1, 'hich are

&ection 1. : ....

a2 ;hen a corporation has been dissolved, or is insolvent, or is in imminent dan+erof insolvenc), or has forfeited its corporate ri+hts3

b2 ;hen it appears from the complaint or ans'er, and such other proof as the ud+ema) re6uire, that the part) appl)in+ for the appointment of receiver has an interest in

the propert) or fund 'hich is in dan+er of bein+ lost, removed, or materiall) inuredunless a receiver be appointed to +uard and preserve it3

c2 ;hen it appears in an action b) the mort+a+ee for the foreclosure of a mort+a+ethat the propert) is in dan+er of bein+ 'asted or materiall) inured, and that its valueis probabl) insufficient to dischar+e the mort+a+e debt, or that the parties have sostipulated in the contract of mort+a+e3

d2 (fter ud+ment, to preserve the propert) durin+ the pendenc) of an appeal or todispose of it accordin+ to the ud+ment, or to aid e0ecution 'hen the e0ecution hasbeen returned unsatisfied or the ud+ment debtor refuses to appl) his propert) insatisfaction of the ud+ment, or other'ise to carr) the ud+ment into effect3

e2 ;henever in other cases it appears that the appointment of a receiver is the mostconvinient and feasible means of preservin+, administerin+, or disposin+ of thepropert) in liti+ation.

(nd it is undisputed that in the case at bar, the properties bein+ placed under receivershipare not the subect of the action.

>i7e'ise, it is 6uite plain that &ection # of ule 14 is not also applicable to this case. Thissection refers to a receivership, not as an aid to e0ecution of a final ud+ment in an ordinar)action, but as a conse6uence of the dissolution of a corporation or its forfeiture of its

corporate ri+hts3 and 'ith respect to cases of insolvenc) or imminent dan+er of insolvenc) ofcorporations, the receivership contemplated in this section must be in relation e0clusivel) tosuch insolvenc) or imminent dan+er thereof placed before the court in an appropriateprincipal action, and a+ain, not merel) as an ordinar) action.

In an event, it is necessar) or superfluos to brin+ in &ections 1 and # of ule 1, 'hich, tosa) the least, are of doubtful applicabilit), 'hen &ection %9 appears to be clearl) and fittin+l)applicable. If at all, the other provisions of ule 1, ma) be resorted to onl) insofar as the)prescribe the procedure and the bond related to the carr)in+ out of such receivership. Therebein+ no detailed rules under the authorit) of &ection , ule 1#4 no' ule 1%2, thepertinent provisions of ule 1 ma) be adopted. &aid section provides

&/C. . Means to carry !risdiction into effect. : ;hen b) la' urisdiction isconferred on a court or udicial officer, all au0iliar) 'rits, processes and other means


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necessar) to carr) it into effect ma) be emplo)ed b) such court or officer3 and if theprocedure to be follo'ed in the e0ercise of such urisdiction is not specificall) pointedout b) these rules, an) suitable process or mode of proceedin+ ma) be adopted'hich appears most conformable to the spirit of said rules.

;A//FO/, 'ith the above clarification that &ection %9 of ule %9 of the ules of 194!,no' &ection 4% of ule %9 of the current ules, is the provision applicable to thereceivership herein in 6uestion, the same bein+ in aid for mone), the disputed orders of thecourt a 6uo dated October 4, 19! and October 1, 19! are hereb) affirmed, 'ith costsa+ainst defendant-appellant, (lto &uret) * Insurance Compan), Inc.

2 provrem central sawmill vs alto surety

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