LUIS MARIO R. JOSE, PETITIONER, VS. HON. MARIVIC T. BALISI-UMALI AS PRESIDING JUDGE OF RTC, MANILA, BRANCH 20 AND RENE MANUEL R. JOSE/CYNTHIA JOSE, RESPONDENTS.

Jose versus Balisi-Umali

The Case

This is a petition for certiorari under Rule 65 of the Rules of Court, brought by Luis Mario R. Jose against the presiding judge of a branch of the Regional Trial Court of Manila and against Rene Manuel Jose and Cynthia Jose. The petitioner asks the Supreme Court to annul two orders of the trial court concerning a garnished fund of rental deposits. The trial court had first allowed the petitioner to withdraw that fund to pay real estate taxes on properties belonging to the late Domingo Jose, then reversed itself and directed that the fund be administered by the court-appointed receiver of Domel Realty and Development Corporation. The case matters because it is a compact lesson on the extraordinary writ of certiorari, on the effect of an amended complaint on a provisional remedy of attachment, and on who bears the personal liability for real estate taxes.

Procedural History

The case began in the Regional Trial Court of Manila, Branch 20, as a complaint for sum of money and damages filed by Rene Jose and Cynthia Jose against the Spouses Domingo and Emilia Jose and Domel Realty and Development Corporation. A writ of preliminary attachment was issued. The plaintiffs later filed an amended complaint against the Spouses Jose alone, and the petitioner entered the case as a substitute party-defendant, being one of the heirs of the late Domingo Jose.

Before the trial court, the petitioner moved to withdraw rental deposits so that they could be remitted to the City Treasurer of Manila for real estate taxes. The trial court granted the motion in an order dated 28 January 2013, but directed the movant to furnish the court the taxable years, the specific properties, and the amounts involved. The private respondents moved to amend that order, and the trial court denied them on 03 May 2013. On reconsideration, however, the trial court issued the order of 29 July 2013, directing the court-appointed receiver of Domel to furnish the required information. Both sides moved for reconsideration, and both motions were denied on 02 December 2013.

The petitioner then went directly to the Supreme Court by petition for certiorari under Rule 65, alleging grave abuse of discretion amounting to lack or excess of jurisdiction.

Facts

On 01 December 2005, Rene Jose and Cynthia Jose sued the Spouses Domingo and Emilia Jose and Domel Realty and Development Corporation for a sum of money and damages, with a prayer for preliminary attachment. The trial court issued the writ of preliminary attachment on 06 December 2005. On 18 September 2008, the plaintiffs filed an amended complaint for sum of money against the Spouses Jose only. On 05 March 2009, the petitioner, as heir of the late Domingo Jose and as substitute party-defendant, filed his answer.

On 02 March 2012, the petitioner moved to withdraw rental deposits so that they could be released and remitted to the City Treasurer of Manila as payment for real estate taxes. The trial court granted the motion on 28 January 2013, subject to the submission of details. The private respondents then moved to amend that order, arguing that the garnished amount, if released, should pay taxes on properties registered in the name of Domel, and that since the fund belonged to Domel, it should be released to Domel's court-appointed receiver. That motion was denied on 03 May 2013, but on reconsideration the trial court granted it on 29 July 2013 and reiterated the ruling on 02 December 2013.

The trial court found that the garnished amount consisted of rentals payable to Domel, consistent with the writ of attachment issued under the original complaint in which Domel was a party. It also found that the properties listed by the petitioner were not owned by Domel, so that releasing the fund to pay their taxes would unjustly benefit those properties at Domel's expense. The petitioner, in turn, alleged that the trial court had no jurisdiction over the person of Domel or of the receiver, and insinuated that the reversal was due to the influence of the private respondents' counsel, who had been a teacher of the presiding judge's child.

Issues

• Whether or not the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it gave the court-appointed receiver the task of paying the real estate taxes on the subject properties.
• Whether or not the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it issued the assailed orders of 29 July 2013 and 02 December 2013.

Applicable Provisions

Rule 65 of the Rules of Court governs the petition, and the Court states the standard for grave abuse of discretion in these words:

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.

This standard is the measure against which the petitioner's challenge to the two orders must be tested.

Section 6 of Rule 59 of the Rules of Court, on the general powers of a receiver, provides:

Section 6. General powers of receiver. — Subject to the control of the court in which the action or proceeding is pending a receiver shall have the power to bring and defend, in such capacity, actions in his own name; to take and keep possession of the property in controversy; to receive rents; to collect debts due to himself as receiver or to the fund, property, estate, person, or corporation of which he is the receiver; to compound for and compromise the same; to make transfers; to pay outstanding debts; to divide the money and other property that shall remain among the persons legally entitled to receive the same; and generally to do such acts respecting the property as the court may authorize. However, funds in the hands of a receiver may be invested only by order of the court upon the written consent of all the parties to the action.

This provision answers the petitioner's objection that the receiver was a stranger to the case, since the receiver's powers expressly include receiving rents and doing such acts respecting the property as the court may authorize.

Ruling

On the first issue, the Court held that the trial court did not gravely abuse its discretion in giving the receiver the task of paying the real estate taxes. The receiver's authority to receive rents and to act respecting the property as the court may authorize is expressly conferred by Section 6 of Rule 59. The trial court's directive that the receiver furnish the taxable years, the specific properties, and the amounts of tax was therefore a proper exercise of control over the receiver, not an act of a stranger.

On the second issue, the Court upheld both assailed orders. It reviewed the circumstances and found no capricious or whimsical exercise of judgment. The trial court had correctly noted that the amended complaint superseded the original complaint, so that the writ of preliminary attachment, being a provisional remedy issued on the original complaint, was automatically dissolved. It was therefore proper that the garnished amount be delivered to the party against whom attachment had been issued, namely Domel. The Court also stressed that the properties listed by the petitioner were not owned by Domel, so that the original order would have unjustly benefited those properties at Domel's expense. On the tax point, the Court ruled that the liability for taxes generally rests on the owner of the real property at the time the tax accrues, although personal liability may also rest on the entity with the beneficial use of the property. Finally, the Court dismissed as malicious and baseless the petitioner's insinuations about the influence of the private respondents' counsel.

Doctrine

First, grave abuse of discretion, as the ground for certiorari under Rule 65, requires a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined. Second, the filing of an amended complaint supersedes the original complaint, and a writ of preliminary attachment issued on the original complaint is automatically dissolved, so that the garnished fund must be delivered to the party against whom attachment was issued. Third, a receiver appointed by the court may, under Section 6 of Rule 59, receive rents and do such acts respecting the property as the court may authorize, subject to the control of the court. Fourth, the liability for real estate taxes generally rests on the owner of the property at the time the tax accrues, although personal liability may also rest on the entity with the beneficial use of the property.

Disposition

The petition was denied, and the orders of 29 July 2013 and 02 December 2013 were affirmed in toto, with costs against the petitioner.

Remember This

Remember that an amended complaint supersedes the original and dissolves the attachment issued upon it, and that a receiver may act respecting the property as the court authorizes. Examiners use this case to test the standard for grave abuse of discretion under Rule 65 and the effect of an amended complaint on a provisional remedy.