PEOPLE’S BANK AND TRUST CO. AND ATLANTIC, GULF AND PACIFIC CO. OF MANILA, PLAINTIFFS AND APPELLANTS, VS. DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER CORPORATION AND CONNELL …

On September 8, 1948, Atlantic Gulf & Pacific Company of
Manila, a West Virginia corporation licensed to do business in the Philippines,
– hereinafter referred to as ATLANTIC – sold and assigned all its rights in the
Dahican lumber concession to Dahican
Lumber Company – hereinafter referred to as DALCO – for the total sum of
$500,000.00, of which only the amount of $50,000.00 was paid.  Thereafter, to develop the concession, DALCO
obtained various loans from the People’s Bank & Trust Company – hereinafter
referred to as the BANK – amounting, as of July 13, 1950, to P200,000.00.  In addition, DAICO obtained, through the
BANK, a loan of $250,000.00 from the Export-Import Bank of Washington D.C.,
evidenced by five promissory notes of $50,000.00 each, maturing on different
dates, executed by both DALCO and the Dahican
American Lumber Corporation, a foreign corporation and a stockholder of DALCO,
– hereinafter referred to as DAMCO, all payable to the BANK or its order.

As security for the payment of the abovementioned loans, on July
13, 1950 DALCO executed in favor of the BANK – the latter acting for itself and
as trustee for the Export-Import Bank of Washington D.C. – a deed of mortgage
covering five parcels of land situated in the province of Camarines
Norte, together with all the buildings and other improvements existing thereon
and all the personal properties of the mortgagor located in its place of
business in the municipalities of Mambulao and Capalonga, Camarines Norte
(Exhibit D).  On the same date, DALCO
executed a second mortgage on the same properties in favor of ATLANTIC
to secure payment of the unpaid balance of the sale price of the lumber
concession amounting to the sum of $450,000.00 (Exhibit G).  Both deeds contained the following provision
extending the mortgage lien to pro­perties to be subsequently acquired –
referred to hereafter as “after acquired properties” – by the
mortgagor:

“All property of every nature and description taken in
exchange or replacement, and all buildings, machinery, fixtures, tools,
equipment and other property which the Mortgagor may hereafter acquire,
construct, install, attach, or use in, to, upon, or in connection with the
premises, shall immediately be and become subject to the lien of this mortgage
in the same manner and to the same extent as if now included therein, and the
Mortgagor shall from time to time during the existence of this mortgage furnish
the Mortgagee with an accurate inventory of such substituted and subsequently
acquired property.”

Both mortgages were registered in the Office of the Register of
Deeds of Camarines Norte.  In addition thereto DALCO and DAMCO pledged
to the BANK 7,296 shares of stock of DALCO and 9,286 shares of DAMCO to secure
the same obligations.

Upon DALCO’s and DAMCO’s
failure to pay the fifth promissory note upon its maturity, the BANK paid the
same to the Export-Import Bank of Washington D.C. and the latter assigned to
the former its credit and the first mortgage securing it.  Subsequently, the BANK gave DALCO and DAMCO
up to April 1, 1953 to pay
the overdue promissory note.

After July 13, 1950, – the date of execution of the mortgages
mentioned above – DALCO purchased various machineries, equipment, spare parts
and supplies in addition to, or in replacement of some of those already owned
and used by it on the date aforesaid. 
Pursuant to the provision of the mortgage deeds quoted heretofore
regarding “after acquired properties”, the BANK requested DALCO to
submit complete lists of said properties but the latter failed to do so.  In connection with these purchases, there
appeared in the books of DALCO as due to Connell Bros. Company (Philippines)
– a domestic corporation who was acting as the general purchasing agent of
DALCO – hereinafter called CONNELL – the sum of P452,860.55
and to DAMCO, the sum of P2,151,678.34.

On December 16, 1952,
the Board of Directors of DALCO, in a special meeting called for the purpose,
passed a resolution agreeing to rescind the alleged sales of equipment, spare parts
and supplies by CONNELL and DAMCO to it. 
Thereafter, the corresponding agreements of rescission of sale were
executed between DALCO and DAMCO, on the one hand, and between DALCO and
CONNELL, on the other.

On January 23, 1953,
the BANK, in its own behalf and that of ATLANTIC,
demanded that said agreements be cancelled but CONNELL and DAMCO refused to do
so.  As a result, on February 12, 1953, ATLANTIC and the BANK, commenced foreclosure proceedings in the
Court of First Instance of Camarines Norte against
DALCO and DAMCO.  On the same date
they filed an ex parte application for the
appointment of a Receiver and/or for the issuance of a writ of preliminary
injunction to restrain DALCO from removing its properties.  The court granted both remedies and appointed
George H. Evans as Re­ceiver.  Upon
defendants’ motion, however, the court, in its order of February 21, 1953, discharged the Receiver.

On March 2, 1953,
defendants filed their answer denying the material allegations of the complaint
and alleging several affirmative defenses and a counterclaim.

On March 4 of the same year, CONNELL filed a motion for
intervention alleging that it was the owner and possessor of some of the
equipments, spare parts and supplies which DALCO had acquired subsequent to the
execution of the mortgages sought to be foreclosed and which plaintiffs claimed
were covered by their lien.  In its order
of March 18, 1953 the Court
granted the motion, as well as plaintiffs’ motion to set aside the order
discharging the Receiver.  Consequently,
Evans was reinstated.

On April 1, 1953,
CONNELL filed its answer denying the material averments of the complaint, and
asserting affirmative defenses and a counterclaim.

Upon motion of the parties the Court, on September 30, 1953, issued an order transferring
the venue of the action to the Court of First Instance of Manila where it was
docketed as Civil Case No. 20987.

On August 30, 1958,
upon motion of all the parties, the Court ordered the sale of all the
machineries, equipment and supplies of DALCO, and the same were subsequently
sold for a total consideration of P175,000.00 which
was deposited in court pending final determination of the action.  By a similar agreement one half (P87,500.00) of this amount was considered as representing the
proceeds obtained from the sale of the “undebated
properties” (those not claimed by DAMCO and CON­NELL), and the other half
as representing those obtained from the sale of the “after acquired
properties”.

After due trial, the Court, on July 15, 1960, rendered judgment as follows:

“IN VIEW WHEREOF, the Court:

1. Condemns Dahican Lumber Co. to pay
unto People’s Bank the sum of P200,000.00 with 7% interest per annum from July
13, 1950, plus another sum of P100,000.00 with 5% interest per annum from July
13, 1950; plus 10% on both principal sums as attorney’s fees;

2. Condemns Dahican Lumber Co. to pay
unto Atlantic Gulf
the sum of P900,000.00 with 4% interest per annum from
July 13, 1950, plus 10% of
the principal as attorney’s fees;

3. Condemns Dahican Lumber Co. to pay
unto Connell Bros, the sum of P425,860.55, and to pay unto Dahican
American Lumber Co. the sum of P2,151,678.34 both with legal interest from the
date of the filing of the respective answers of those parties, plus 10% of the
principals as attorney’s fees;

4. Orders that of the sum realized from the sale of the properties
of P175,000.00, after deducting the recognized expenses, one-half thereof be
adjudicated unto plaintiffs, the Court no longer specifying the share of each
because of their announced intention under the stipulation of facts to ‘pool
their resources’; as to the other one half, the same should be adjudicated unto
both plaintiffs, and defendant Dahican American and
Connell Bros, in the proportion already set forth on page 9, lines 21, 22 and
23 of the body of this decision; but with the understanding that whatever
plaintiffs and Dahican American and Connell Bros.
should receive from the P175,000.00 deposited in the Court shall be applied to
the judgments particularly rendered in favor of each;

5. No other pronouncement as to costs; but the costs of the
receivership as to the debated properties shall be borne by People’s Bank, Atlantic
Gulf, Connell Bros., and Dahican American Lumber Co., pro-rata.”

On the following day, the Court issued the following
supplementary decision:

“IN VIEW WHEREOF, the dispositive
part of the decision is hereby amended in order to add the following paragraph
6:

6. If the sums mentioned in paragraphs 1 and 2 are not paid within
ninety (90) days, the Court orders the sale at public auction of the lands
object of the mortgages to satisfy the said mortgages and costs of foreclosure.”

From the above-quoted decision, all the parties appealed.

Main contentions of plaintiffs as appellants are the following:
that the “after acquired properties” were subject to the deeds of
mortgage mentioned heretofore; that said pro­perties were acquired from
suppliers other than DAMCO and CONNELL; that even granting that DAMCO and
CONNELL were the real suppliers, the rescission of the sales to DALCO could not
prejudice the mortgage lien in favor of plaintiffs; that considering the
foregoing, the proceeds obtained from the sale of the “after acquired
properties” as well as those obtained from the sale of the “undebated properties” in the total sum of P175,000.00
should have been awarded exclusively to plaintiffs by reason of the mortgage
lien they had thereon; that damages should have been awarded to plaintiffs
against defendants, all of them being guilty of an attempt to defraud the
former when they sought to rescind the sales already mentioned for the purpose
of defeating their mortgage lien, and finally, that defendants should have been
made to bear all the expenses of the Receivership, costs and attorney’s fees.

On the other hand, defendants-appellants contend that the trial
court erred:  firstly, in not holding
that plaintiffs had no cause of action against them because the promissory note
sued upon was not yet due when the action to foreclose the mortgages was
commenced; secondly, in not holding that the mortgages aforesaid were null and
void as regards the “after acquired properties” of DALCO because they
were not registered in accordance with the Chattel Mortgage Law, the court
erring, as a consequence, in holding that said properties were subject to the
mortgage lien in favor of plaintiffs; thirdly, in not holding that the
provision of the fourth paragraph of each of said mortgages did not
automatically make subject to such mortgages the “after acquired
properties”, the only meaning thereof being that the mortgagor was willing
to constitute a lien over such properties; fourthly, in not ruling that said
stipulation was void as against DAMCO and CONNELL and in not awarding the
proceeds obtained from the sale of the “after acquired properties” to
the latter exclusively; fifthly, in appointing a Receiver and in holding that
the damages suffered by DAMCO and CONNELL by reason of the depreciation or loss
in value of the “after acquired properties” placed under receivership
was damnum absque
injuria and, consequently, in not awarding to
said parties the corresponding damages claimed in their counterclaim; lastly,
in sentencing DALCO and DAMCO to pay attorney’s fees and in requiring DAMCO and
CONNELL to pay the costs of the Receivership, instead of sentencing plaintiffs
to pay attorney’s fees.

Plaintiffs’ brief as appellants submit six assignments of error,
while that of defendants also as appellants submit a total of seventeen.  However, the multifarious issues thus before Us may be resolved, directly or indirectly, by deciding the
following issues:

Firstly, are the so-called “after acquired properties”
covered by and subject to the deeds of mortgage subject of foreclosure?;
secondly, assuming that they are subject thereto, are the mortgages valid and
binding on the properties aforesaid inspite of the
fact that they were not registered in accordance with the provisions of the
Chattel Mortgage Law?; thirdly, assuming again that the mortgages are valid and
binding upon the “after acquired properties”, what is the effect
thereon, if any, of the rescission of sales entered into, on the one hand,
between DALCO and DAMCO, and between DALCO and CONNELL, on the other?; and
lastly, was the action to foreclose the mortgages premature?

A. Under the fourth paragraph of both deeds of mortgage, it is
crystal clear that all property of every nature and description taken in
exchange or replacement, as well as all buildings, machineries, fixtures,
tools, equipments, and other property that the mortgagor may acquire,
construct, install, attach, or use in, to, upon, or in connection with the
premises – that is, its lumber concession – “shall immediately be and
become subject to the lien” of both mortgages in the same manner and to the
same extent as if already included therein at the time of their execution.  As the language thus used leaves no room for
doubt as to the intention of the parties, We see no
useful purpose in discussing the matter extensively.  Suffice it to say that the stipulation
referred to is common, and We might say logical, in all cases where the
properties given as collateral are perishable or subject to inevitable wear and
tear or were intended to be sold, or to be used – thus becoming subject to the
inevitable wear and tear – but with the understanding – express or implied –
that they shall be replaced with others to be thereafter acquired by the
mortgagor.  Such stipulation is neither
unlawful nor immoral, its obvious purpose being to maintain, to the extent
allowed by circumstances, the original value of the properties given as
security.  Indeed, if such properties
were of the nature already referred to, it would be poor judgment on the part
of the creditor who does not see to it that a similar provision is included in
the contract.

B. But defendants contend that, granting without admitting, that
the deeds of mortgage in question cover the “after acquired
properties” of DALCO, the same are void and ineffectual because they were
not registered in accordance with the Chattel Mortgage Law.  In support of this and of the proposition
that, even if said mortgages were valid, they should not prejudice them, the
defendants argue (1) that the deeds do not describe the mortgaged chattels
specifically, nor were they registered in accordance with the Chattel Mortgage
Law; (2) that the stipulation contained in the fourth paragraph thereof
constitutes “mere executory agree­ments to give
a lien” over the “after acquired properties” upon their
acquisition; and (3) that any mortgage stipulation concerning “after
acquired properties” should not prejudice creditors and other third
persons – such as DAMCO and CONNELL.

The stipulation under consideration strongly belies defendants’
contention.  As adverted to hereinbefore,
it states that all property of every nature, buildings, machinery etc. taken in
exchange or replacement by the mortgagor “shall immediately be and become
subject to the lien of this mortgage in the same manner and to the same extent
as if now included therein”.  No
clearer language could have been chosen.

Conceding, on the other hand, that it is the law in this
jurisdiction that, to affect third persons, a chattel mortgage must be
registered and must describe the mortgaged chattels or personal properties
sufficiently to enable the parties and any other person to identify them, We
say that such law does not apply to this case.

As the mortgages in question were executed on July 13, 1950 with
the old Civil Code still in force, there can be no doubt that the provisions of
said code must govern their interpretation and the question of their
validity.  It happens, however, that
Articles 334 and 1877 of the old Civil Code are substantially reproduced in
Articles 415 and 2127, respectively, of the new Civil Code.  It is, therefore, immaterial in this case
whether we take the former or the latter as guide in deciding the point under
consideration.

Article 415 does not define real property but enumerates what are
considered as such, among them being machinery, re­ceptacles, instruments or
replacements intended by the owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and shall tend
directly to meet the needs of the said industry or works.

On the strength of the above-quoted legal provisions, the lower
court held that inasmuch as “the chattels were placed in the real
properties mortgaged to plaintiffs, they came within the operation of Art. 415,
paragraph 5 and Art. 2127 of the New Civil Code”.

We find the above ruling in agreement with our decisions on the
subject:

(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334, paragraph
5 of the Civil Code (old) gives the character of real property to machinery,
liquid containers, instruments or replacements intended by the owner of any
building or land for use in connection with any industry or trade being carried
on therein and which are expressly adapted to meet the requirements of such
trade or industry.

(2) In Cu Unjieng e Hijos
vs. Mabalacat Sugar Co. 58 Phil. 439, We held that a
mortgage constituted on a sugar central includes not only the land on which it
is built but also the buildings, machinery and accessories installed at the
time the mortgage was constituted as well as the buildings, machinery
and accessories belonging to the mortgagor, installed after the
constitution thereof.

It is not disputed in the case at bar that the “after
acquired properties” were purchased by DALCO in connection with, and for
use in the development of its lumber concession and that they were purchased in
addition to, or in replacement of those already existing in the premises on July 13, 1950.  In law, therefore, they must be deemed to
have been immobilized, with the result that the real estate mortgages
involved herein – which were registered as such – did not have to be registered
a second time as chattel mortgages in order to bind the “after acquired
properties” and affect third parties.

But defendants, invoking the case of Davao
Sawmill Company vs. Castillo, 61 Phil. 709, claim that the “after acquired
properties” did not become immobilized because DALCO did not own
the whole area of its lumber concession all over which said properties were
scattered.

The facts in the Davao Sawmill case,
however, are not on all fours with the ones obtaining in the present.  In the former, the Davao
Sawmill Company, Inc. had repeatedly treated the machinery therein involved as personal
property by executing chattel mortgages thereon in favor of third
parties, while in the present case the parties had treated the “after
acquired properties” as real properties by expressly and
unequivocally agreeing that they shall automatically become subject to the lien
of the real estate mortgages executed by them. 
In the Davao Sawmill decision, it was, in
fact, stated that “the characterization of the property as chattels by the
appellant is indicative of intention and impresses upon the property the
character determined by the parties” (61 Phil. 712, Underlines
supplied).  In the present case, the
characterization of the “after acquired properties” as real property
was made not only by one but by both interested parties.  There is, therefore, more reason to hold that
such consensus impresses upon the properties the character determined by the
parties who must now be held in estoppel to question
it.

Moreover, quoted in the Davao Sawmill
case was that of Valdez vs. Central Altagracia Inc.
(225 U.S. 58) where it was held that while under the general law of Puerto
Rico, machinery placed on property by a tenant does not become immobilized,
yet, when the tenant places it there pursuant to contract that it shall belong
to the owner, it then becomes immobilized as to that tenant and even as
against his assignees and creditors who had sufficient notice of such
stipulation.  In the case at bar it is
not disputed that DALCO purchased the “after acquired properties” to
be placed on, and be used in the development of its lumber concession, and
agreed further that the same shall become immediately subject to the lien
constituted by the questioned mortgages. 
There is also abundant evidence in the record that DAMCO and CORNELL had
full notice of such stipulation and had never thought of disputing its validity
until the present case was filed. 
Consequently, all of them must be deemed barred from denying that the
properties in question had become immobilized.

What We have said heretofore
sufficiently disposes of all the arguments adduced by defendants in support of
their contention that the mortgages under foreclosure are void, and, that, even
if valid, are ineffectual as against DAMCO and CONNELL.

Now to the question of whether or not DAMCO and CONNELL have
rights over the “after acquired properties” superior to the mortgage
lien constituted thereon in favor of plaintiffs.  It is defendants’ contention that in relation
to said pro­perties they are “unpaid sellers”; that as such they had
not only a superior lien on the “after acquired properties” but also
the right to rescind the sales thereof to DALCO.

This contention – it is obvious – would have validity only if it
were true that DAMCO and CONNELL were the suppliers or vendors of the
“after acquired properties”. 
According to the record, plaintiffs did not know their exact identity
and description prior to the filing of the case at bar because DALCO, in
violation of its obligation under the mortgages, had failed and refused
theretofore to submit a complete list thereof. 
In the course of the proceedings, however, when defendants moved to
dissolve the order of receivership and the writ of preliminary injunction
issued by the lower court, they attached to their motion the lists marked as
Exhibits 1, 2 and 3 describing the properties aforesaid.  Later on, the parties agreed to consider said
lists as identifying and describing the “after acquired properties”,
and engaged the services of auditors to examine the books of DALCO so as to
bring out the details thereof.  The
report of the auditors and its annexes (Exhibits V, V-1 – V-4) show that
neither DAMCO nor CONNELL had supplied any of the goods of which they
respectively claimed to be the unpaid seller; that all items were supplied by
different parties, neither of whom appeared to be DAMCO or CONNELL; that, in
fact, CONNELL collected a 5% service charge on the net value of all items it
claims to have sold to DALCO and which, in truth, it had purchased for DALCO as
the latter’s general agent; that CONNELL had to issue its own invoices in
addition to those of the real suppliers in order to collect and jus­tify such
service charge.

Taking into account the above circumstances together with the
fact that DAMCO was a stockholder and CONNELL was not only a stockholder but
the general agent of DALCO, their claim to be the suppliers of the “after
acquired properties” would seem to be preposterous.  The most that can be claimed on the basis of
the evidence is that DAMCO and CONNELL pro­bably financed some of the
purchases.  But if DALCO still owes them
any amount in this connection, it is clear that, as financiers, they can
not claim any right over the “after acquired properties” superior to
the lien constituted thereon by virtue of the deeds of mortgage under
foreclosure.  Indeed, the execution of
the rescission of sales mentioned heretofore appears to be but a desperate
attempt to better or improve DAMCO and CONNELL’s
position by enabling them to assume the role of “unpaid suppliers”
and thus claim a vendor’s lien over the “after acquired
properties”.  The attempt, of
course, is utterly ineffectual, not only because they are not the “unpaid
sellers” they claim to be but also because there is abundant evidence in
the record showing that both DAMCO and CONNELL had known and admitted from the
beginning that the “after acquired properties” of DALCO were meant to
be included in the first and second mortgages under foreclosure.

The claim that Belden, of ATLANTIC, had given
his consent to the rescission, expressly or otherwise, is of no consequence and
does not make the rescission valid and legally effective.  It must be stated clearly, however, in
justice to Belden, that, as a member of the Board of Directors of DALCO, he
opposed the resolution of December 16, 1952 passed by said Board and the
subsequent rescission of the sales.

Finally, defendants claim that the action to foreclose the
mortgages filed on February 12, 1953 was premature because the promissory note
sued upon did not fall due until April 1 of the same year, concluding from this
that, when the action was commenced, the plaintiffs had no cause of
action.  Upon this question the lower
court says the following in the appealed judgment:

“The other is the defense of prematurity
of the causes of action in that plaintiffs as a matter of grace, conceded an
extension of time to pay up to 1 April, 1953 while the action was filed on 12
February, 1953, but as to this, the Court taking it that there is absolutely no
debate that Dahican Lumber Co., was insolvent as of the date of the filing of
the complaint, it should follow that the debtor thereby lost the benefit to the
period,

‘. . . unless he gives a guaranty or security for the debt . . .’
(Art. 1198, New Civil Code);

and as the
guaranty was plainly inadequate since the claim of plaintiffs reached in the
aggregate, P1,200,000 excluding interest while the aggregate price of the
‘after-acquired’ chattels claimed by Connell under the rescission contracts was
P1,614,675.94, Exh. 1, Exh. V, report of auditors, and as a matter of fact,
almost all the properties were sold afterwards for only P175,000.00,
page 47, Vol. IV, and the Court understanding that when the law permits the
debtor to enjoy the benefits of the period notwithstanding that he is insolvent
by his giving a guaranty for the debt, that must mean a new and efficient
guaranty, must concede that the causes of action for col­lection of the notes
were not premature.”

Very little need be added to the above.  Defendants, however, contend that the lower
court had no basis for finding that, when the action was commenced, DALCO was
insolvent for purposes related to Article 1198, paragraph 1 of the Civil
Code.  We find, however, that the finding
of the trial court is sufficiently supported by the evidence, particularly the
resolution marked as Exhibit K which shows that on December 16, 1952 – in the
words of the Chairman of the Board – DALCO was “without funds, neither
does it expect to have any funds in the foreseeable future” (p. 64, record
on appeal).

The remaining issues, namely, whether or not the pro­ceeds
obtained from the sale of the “after acquired properties” should have
been awarded exclusively to the plaintiffs or to DAMCO and CONNELL, and if in
law they should be distributed among said parties, whether or not the
distribution should be pro-rata or otherwise; whether or not plaintiffs are entitled
to damages; and, lastly, whether or not the expenses incidental to the
Receivership should be borne by all the parties on a pro-rata basis or
exclusively by one or some of them are of a secondary nature as they are
already impliedly resolved by what has been said heretofore.

As regard the proceeds obtained from the sale of the “after
acquired properties” and the “undebated
properties”, it is clear, in view of our opinion sustaining the validity
of the mortgages in relation thereto, that said proceeds should be awarded
exclusively to the plaintiffs in payment of the money obligations secured by
the mortgages under foreclosure.

On the question of plaintiffs right to
recover damages from the defendants, the law (Articles 1313 and 1314 of the New
Civil Code) provides that creditors are protected in cases of contracts
intended to defraud them, and that any third person who induces another to
violate his contract shall be liable for damages to the other contracting
party.  Similar liability is demandable under
Arts. 20 and 21 – which may be given retroactive effect
(Arts. 2252-53) – or under Arts. 1902 and 2176 of the
Old Civil Code.

The facts of this case, as stated heretofore, clearly show that
DALCO and DAMCO, after failing to pay the fifth promissory note upon its
maturity, conspired jointly with CONNELL to violate the provisions of the
fourth paragraph of the mortgages under foreclosure by attempting to defeat
plaintiffs’ mortgage lien on the “after acquired properties”.  As a result, the plaintiffs had to go to
court to protect their rights thus jeopardized. 
Defendants’ liability for damages is therefore clear.

However, the measure of the damages suffered by the plaintiffs is
not what the latter claim, namely, the difference between the alleged total obligation
secured by the mortgages amounting to around P1,200,000.00,
plus the stipulated interest and attorney’s fees, on the one hand, and the
proceeds obtained from the sale of the “after acquired properties”,
and of those that were not claimed neither by DAMCO nor CONNELL, on the
other.  Considering that the sale of the
real properties subject to the mortgages under foreclosure has not been
effected, and considering further the lack of evidence showing that the true
value of all the properties already sold was not realized because their sale
was under stress, We feel that We do not have before Us the true elements or
factors that should determine the amount of damages that plaintiffs are
entitled to recover from defendants.  It
is, however, our considered opinion that, upon the facts established, all the
expenses of the Receivership, which was deemed necessary to safeguard the
rights of the plaintiffs, should be borne by all the defendants, jointly and
severally, in the same manner that all of them should pay to the plaintiffs,
jointly and severally, the attorney’s fees awarded in the appealed judgment.

In consonance with the portion of this decision concerning the
damages that the plaintiffs are entitled to recover from the defendants, the
record of this case shall be remanded below for the corresponding proceedings.

MODIFIED AS ABOVE INDICATED, the
appealed judgment is affirmed in all other respects.  With costs.

Concepcion, C.J., Reyes, J.B.L., Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez,
and Castro, JJ.,
concur.