NATALIO VENTOSA, PETITIONER, VS. HON. WENCESLAO FERNAN, ET AL., RESPONDENTS.

By virtue of the resolution (Exhibit A), dated January 6, 1958, of
the stockholders of the La Paz lee Plant and Cold Storage Co., Inc.
(corporation for short), a corporation authorized to manufacture and
sell ice, in Iloilo City, Its franchise, factory and equipments and the
premises were leased to petitioner Natalio Ventosa. The formal document
of lease (Exh. B) was executed on January 31, 1958 arid duly ratified
before Notary Public Pedrito A, Gianzon, and approved in a resolution
(Exh. C), by the Board of 1 irectors of the said company. The contract
of lease was1 further approved by the Public Service Commission on May
2, 1958 (Exh. D). On February 4, 1958, Ventosa allegedly took
possession of the leased premises, including the factory and equipment
and operated the same, as such lessee.

On September 24, 1958, respondent C. N. Hodges and Ricardo Gurrea
filed an action in the CFI of Iloilo (being case No. 4994), against
Manuel Lezama, as President and Paqtiita B. Lezama, as Secretary of the
corporation (Exh. E) praying, among others, for the appointment ex-parte
of a receiver for the properties of the corporation. Respondent Jose
Dineros was appointed receiver and took possession of the plant.
Benjamin Borja was then the one in charge of the factory, as manager,
having been allegedly appointed as such by Ventosa.

Under date of October 1, 1958, petitioner wrote a letter to receiver
Dineros (Exh. H) and another letter dated Oct. 3, 1958, (Exh. H-l),
stating that he could not deliver the possession of the properties of
the corporation, as the same were leased to him and requesting
respondent receiver not to interfere with the management thereof. The
respondent receiver continued to possess and refused to return the
possession of the properties to the corporation.

Petitioner filed in said case No. 4994, a motion to intervene (Exh.
I) and a complaint in intervention (Exh. J). On October 8, 1958, the
defendants Lezama spouses in the civil case, filed their answer, with
counterclaims. On October 13, 1958, the complaint in intervention was
admitted (Exh. J). On October 8, 1958, petitioner filed a motion (Exh.
L) for an order from the respondent Judge, directing the receiver not
to interfere with the management of the corporation, claiming that the
ice-plant was leased to him”, that the receiver had no legal right to
deprive petitioner of the possession thereof during the term of the
lease, without due process of law, and that the only right of the
receiver was to receive from petitioner the monthly rentals stipulated
in the contract of lease. The consideration of the motion was deferred,
until the parties shall have filed their pleadings in the complaint in
intervention.

On October 29, 1958, Hodges and Gurrea filed their answers (Exh. M)
to the complaint in intervention, assailing the contract of lease, and
claiming that the receiver had the power and authority to continue to
operate and manage the ice-plant in question, followed by petitioner’s
answers to the former’s counterclaim (Exh. N).

On November 22, 1958, the respondent Judge denied
petitioner’s motion for restraining order, on the ground that
“plaintiffs are questioning the validity of the contract of lease in
favor of petitioner”. On December 23, 1958, the respondent
Judge issued an order (Exh. S) denying the petitioner’s motion for
reconsideration (Exh. O), because the validity of the contract of
lease, must first be decided before the petitioner could regain or
assume control of the management and administration of the corporation.

The present action for certiorari with preliminary injunction, was filed on January 22, 1959, seeking the annulment of the orders dated November 23, 1958 and December 23, 1958,
claiming that said orders were issued by the respondent. Judge, in
grave abuse of discretion. A preliminary mandatory injunction prayed
for by the petitioner, was issued by this Court.

It appears that on February 8, 1959, respondents Hodges and Gurrea filed with this Court an ex-parte
motion to dismiss the petition on the ground that the lease had already
expired as per order of the Public Service Commission of Jan. 6, 1959
or in the alternative that the writ of preliminary mandatory injunction
be lifted. Petitioner, however, explained that upon motion of Atty.
Roman Cruz, said Commission on February 18, 1959, reconsidered its
order of January 6, 1959, approving the renewal of the lease.
Respondents ex-parte motions were, therefore, denied. The respondent
Judge was directed to cite respondents ‘”.Ose Dineros and Ernesto
Gianzon for contempt, in connection with the said preliminary
injunction, result of which proceeding has not been reported by the
respondent Judge, until the present.

On February 18,1959, respondents Judge Fernan, Gurrea and Hodges
filed their answer to the present petition alleging, among others, that
Hodges was the registered owner of 2230 shares of the capital stock of
the corporation while Gurrea, 215 shares; that they filed civil case
No. 4994 as majority stockholders and in behalf of the corporation, to
recover damages against defendants therein, for the mismanagement of
the corporation; to effect an election of the Board of Directors and
for the appointment of receiver for the properties of said corporation;
that the lease contract was simulated, fictitious and contrary to law;
and if valid, the same had already expired by virtue of the order of
the Public Service Commission dated January 6, 1959. Later, receiver
Dineros filed his answer, with the usual admissions and denials,
alleging as special and affirmative defenses, the same as those of his
corespondents, and also to the following: that the petition lacks the
proper verification; that assuming the lease to be valid, the same
could not be considered as a lien, in the sense the petitioner wanted
to convey in the citation of authorities and that the present
proceeding is not the proper remedy available to petitioner, because he
was not a stranger in the receivership proceedings.

In accordance with our resolution dated April 8, 1959, the parties
adduced their evidence, before Deputy Clerk Ejercito of this Court, as
Commissioner. After petitioner had presented his first witness, Joso
Manuel Lezama, the petitioner asked the Commissioner to limit the
cross-examination of respondent on matters relevant to the main
question pending before this Court. This Court, however, promulgated a
resolution deferring action on said motion to limit evidence, until the
date when this case could be heard on the merits, without prejudice to
the Commissioner continuing the reception of evidence in the meanwhile.
Respondents, thru receiver Dineros, were able to show that he took
possession’ of the ice-plant in the:afternoon of September 27, 1958 and
found therein Benjamin Borja who did net tell him anything, much less
identified himself as manager of the petitioner; that one week
thereafter, Atty. Treflas and Borja told him that the ice-plant was
leased to the petitioner; that in his investigation of the corporate
papers, Borja was not a manager of the said corporation; that the City
Hall papers showed that the license oi the business, taxes paid, and
purchases made of materials, were not in the name of the petitioner
Ventosa but in the name of the corporation.

It would, therefore, appear that the dominant issue in the present
proceeding, is whether or not respondent Judge acted with grave abuse
of discretion, when he issued the order dated November 23, 1958,
denying petitioner’s motion dated October 8, 1958 (Exh. L), which
prayed for an order restraining the respondent receiver Jose S. Dineros
from interfering with the possession, management and control of the
corporation; and his order dated December 23, 1958 (Exh. S), which
denied petitioner’s motion for reconsideration, dated November 26, 1958
(Exh. P).

One fact stands in bold relief from the evidence of record, and that
is, at the time the petitioner had intervened in the civil case No.
4994, the receiver was already in possession, operation and control of
the ice-plant. The receiver took possession of the ice-plant in the
afternoon of Sept. 27, 1958, from the defendants in said civil case No.
4994 and not from the petitioner. It was only on October 8, 1958, that
petitioner filed his motion, in said case, praying that the respondent
receiver be restrained from interfering with the possession and control
of the ice-plant, because he said he was a lessee. As things stand in
the record, before the respondent Court, there was no evidence at all,
showing that the petitioner had been in the actual possession and
control of the ice-plant. As a matter of fact, an issue before that
court is whether or not the intervenor had ever been in possession of
the ice-plant or its properties. Neither is there evidence in said case
that res;.-ondent-reeeiver took over the operation and control of t,a
said ice-plant. There were allegations on the part of petitioner that
he was already in possession of the ice-plant, when the
respondent-receiver forcibly took it over, which the latter denied, by
asserting, also that it was delivered to him, voluntarily, without
objection on the part of anyone.

Having thus submitted himself to the jurisdiction of the respondent
court by his intervention, petitioner necessarily became a party to
Civil Case No. 4994. He must lay his cards before the said court, for
adjudication and determination. “After the appointment of a receiver,
claimants of the property or any interest therein may enforce their
claims only by permission of the court appointing the receiver. Such a
claimant may bo made a party to the suit in. order to establish his
claim; or he may petition to have it heard before a master; or he may,
by express permission of the court, bring a suit for the possession,
care being taken to protect the receiver.

But a receiver will not be ordered to deliver the property to a
claimant until his right is established in one of these modes.” (23
R.C.L- p. 55 and cases cited therein.) “The procedure in the
presentation of claims against a receivership is either by motion or
petition in the same proceeding, or by way of intervention *
* *. But whichever procedure is to be followed, all parties in interest
must be notified of each claim, which shall be determined not in a
summary manner, but after regular hearing.” (Po Pauco vs. Siguenza, et al., 52 Phil. 241; China Banking Corp., et si. vs.
Michelin & Cie., 58 Phil. 261, cited in II Moran’s Comments on the
Rules of Court, 1957 Ed pp.1 99-100.) It is also held that property
under receivership is property in custodia legis which
should, remain under the administration and control of the receivership
court, through its creation, the receiver, for the purpose of
preservation and for the benefit of the party who may be adjudged
entitled to it; that the effect of the appointment of a receiver is to
remove the parties to the suit from the possession of the property (34
Cyc. 183-184, 1S7). These principles of law being true, there must be a
hearing of some form or a regular trial of the issues in the said civil
case No. 4994, as between respondents Gurrea and Hodges, on one hand,
and the petitioner herein, on the other, as intervenor therein, so as
to determine the party who is legally entitled to the possession and
control of the ice-plant in question; and until such party is adjudged
that right, the property must remain under the control and supervision
of the court, through its receiver.

In denying the motion to restrain dated October 8, 1958, and the
motion for reconsideration dated November 26, 1958, the respondent
judge did not act with abuse of discretion, much less grave abuse of
discretion- On the contrary, respondent court acted precisely within
its jurisdiction and on what the law and jurisprudence dictated on the
matter and under the facts obtaining in that particular case. Neither
were the acts capricious and whimsical exercise of judgment.

The questions of whether or not the petitioner was in possession of
the properties of .the corporation prior to and at the time the
respondent-receiver herein took possession of the same, pursuant to the
order of the respondent Court in Civil Case No. 4994; and the other
issues raised by the parties in the present proceedings, can be best
ventilated in the said civil case.

The petition is, therefore, dismissed; the Order of the respondent
Judge complained of affirmed, and the writ of preliminary injunction
issued herein dissolved, with costs against the petitioner.

Bengzon, C. J., Padilla, Bautista Angela, Labrador, Concepcion, Reyes, J. B. L., Barrera, Dizon, Regala and Makalintal, JJ., concur.