ANTONIETTA O. DESCALLAR, PETITIONER, VS. THE HON. COURT OF APPEALS AND CAMILO F. BORROMEO, RESPONDENTS.

Assailed in this petition for review on certiorari is the
decision dated July 29, 1992 of the Court of Appeals in CA-G.R. SP No. 27977,
affirming the orders dated March 17, 1992 and April 27, 1992 of the trial court
in Civil Case No. MAN-1148,
granting respondent’s petition for receivership and denying petitioner’s motion
for reconsideration thereof.

On August 9, 1991, respondent Camilo Borromeo, a realtor, filed
against petitioner a civil complaint for the recovery of three (3) parcels of
land and the house built thereon in the possession of the petitioner and
registered in her name under Transfer Certificates of Title Nos. 24790, 24791
and 24792 of the Registry of Deeds for the City of Mandaue. The case was docketed as Civil Case No.
MAN-1148 of the Regional Trial Court, Branch 28, Mandaue City.

In his complaint, Borromeo alleged that he purchased the property
on July 11, 1991 from Wilhelm Jambrich, an Austrian national and former lover
of the petitioner for many years until he deserted her in 1991 for the favors
of another woman. Based on the deed of
sale which the Austrian made in his favor, Borromeo filed an action to recover
the ownership and possession of the house and lots from Descallar and asked for
the issuance of new transfer certificates of title in his name.

In her answer to the complaint, Descallar alleged that the
property belongs to her as the registered owner thereof; that Borromeo’s
vendor, Wilhelm Jambrich, is an Austrian, hence, not qualified to acquire or
own real property in the Philippines. He has no title, right or interest whatsoever in the property which he
may trans­fer to Borromeo.

On March 5, 1992, Borromeo asked the trial court to appoint a
receiver for the property during the pend­ency of the case. Despite the petitioner’s opposition, Judge
Mercedes Golo-Dadole granted the application for receivership and appointed her
clerk of court as receiv­er with a bond of P250,000.00.

Petitioner filed a motion
for reconsideration of the court’s order, but it was denied.

Petitioner sought relief
in the Court of Appeals by a petition for certiorari (CA-G.R. SP No.
27977 “Antonietta O. Descallar vs. Hon. Mercedes G. Dadole, as Judge, RTC
of Mandaue City, Branch 28, and Camilo F. Borromeo”).

On July 29, 1992, the
Court of Appeals dismissed the petition for certiorari.

In due time, she appealed
the Appellate Court’s decision to this Court by a petition for certiorari
under Rule 45 of the Rules of Court.

In a nutshell, the issue
in this appeal is whether the trial court gravely abused its discretion in ap­pointing
a receiver for real property registered in the name of the petitioner in order
to transfer its posses­sion from the petitioner to the court-appointed
receiver. The answer to that question
is yes.

The Court is amazed that
the trial court and the Court of Appeals appear to have given no importance to
the fact that the petitioner herein, besides being the actual possessor of the
disputed property, is also the registered owner thereof, as evidenced by TCTs
Nos. 24790, 24791, and 24792 issued in her name by the Regis­ter of Deeds of
Mandaue City on December 3, 1987. Her
title and possession cannot be defeated by mere verbal allegations that
although she appears in the deed of sale as vendee of the property, it was her
Austrian lover, Jambrich, who paid the price of the sale of the property
(Sinoan vs. Soroñgan, 136 SCRA 407). Her Torrens certificates of title are indefeasible or incon­trovertible (Sec. 32, P.D. 1529).

Even if it were true that an impecunious former waitress, like
Descallar, did not have the means to purchase the property, and that it was her
Austrian lover who provided her with the money to pay for it, that circumstance
did not make her any less the owner, since the sale was made to her, not to the
open-handed alien who was, and still is, disqualified under our laws to own
real property in this country (Sec. 7, Art. XII, 1987 Constitution). The deed of sale was duly registered in the
Registry of Deeds and new titles were issued in her name. The source of the purchase money is
immaterial for there is no allegation, nor proof, that she bought the property
as trustee or dummy for the monied Austrian, and not for her own benefit and
enjoy­ment.

There is no law which declares null and void a sale where the
vendee to whom the title of the thing sold is transferred or conveyed, paid the
price with money obtained from a third person. If that were so, a bank
would be the owner of whatever is purchased with funds borrowed from it by the
vendee. The holding of the trial court
and the Court of Appeals that Jambrich, notwithstanding his legal incapacity to
acquire real property in the Philippines, is the owner of the house and lot which his erstwhile mistress,
Antonietta, purchased with money she obtained from him, is a legal heresy.

In view of the above circumstances, we find the order of
receivership tainted with grave abuse of dis­cretion. The appointment of a receiver is not proper where the rights of
the parties (one of whom is in possession of the property), are still to be
determined by the trial court.

“Relief by way of receivership is equitable in nature, and a
court of equity will not ordinarily ap­point a receiver where the rights of the
parties depend on the determina­tion of adverse claims of legal title to real
property and one party is in possession.” (Calo, et al. vs. Roldan, 76
Phil. 445).

Only when the property is in danger of being materially injured
or lost, as by the prospective fore­closure of a mortgage thereon for
non-payment of the mortgage loans despite the considerable income derived from
the property, or if portions thereof are being occupied by third persons
claiming adverse title there­to, may the appointment of a receiver be justified
(Motoomul vs. Arrieta, 8 SCRA 172).

In this case, there is no showing that grave or irremediable
damage may result to respondent Borromeo unless a receiver is appointed. The property in question is real property,
hence, it is neither perishable or consummable. Even though it is mortgaged to a third person, there is no
evidence that payment of the mortgage obligation is being neglected. In any event, the private respondent’s
rights and interests, may be ade­quately protected during the pendency of the
case by causing his adverse claim to be annotated on the peti­tioner’s
certificates of title.

Another flaw in the order
of receivership is that the person whom the trial judge appointed as receiver
is her own clerk of court. This
practice has been frowned upon by this Court:

“The respondent judge committed grave abuse of discretion in connection with the appointment of
a receiver. x x x. The instant case is similar to Paranete vs.
Tan, 87 Phil. 678 (1950) so that what was there said can well apply to the
actuations of the respondent judge. x x
x ‘We hold that the respondent judge has acted in excess of his jurisdiction
when he issued the order above adverted to. That order, in effect, made the clerk of court a sort of a receiver
charged with the duty of receiving the proceeds of sale and the harvest of
every year during the pendency of the case with the disadvantage that the clerk
of court has not filed any bond to guarantee the faithful discharge of his
duties as deposi­tary; and considering that in actions involving title to real property, the appointment of
a receiver cannot be entertained because its effect
would be to
take the property out of the possession of the defendant, except in extreme
cases when there is clear proof of its necessity to save
the plaintiff from grave and irremediable loss or damage, it is evident that the action of the
respondent judge is unwarranted and unfair to the de­fendants. (Mendoza vs. Arellano, 36 Phil. 59; Agonoy
vs. Ruiz, 11 Phil. 204; Aquino vs. Angeles David, 77 Phil. 1087; Ylarde vs.
Enriquez, 78 Phil. 527; Arcega vs. Pecson, 44 Off. Gaz., [No. 12], 4884, 78
Phil. 743; De la Cruz vs. Guinto, 45 Off. Gaz. pp. 1309, 1311; 79 Phil.
304).’” (Abrigo vs. Kayanan, 121 SCRA 20.)

During the pendency of this appeal, Judge Dadole rendered a
decision in Civil Case No. MAN-1148 upholding Borromeo’s claim to Descallar’s
property, annulling the latter’s TCTs Nos. 24790, 24791 and 24792 and ordering
the Register of Deeds of Mandaue City to issue new ones in the name of
Borromeo. This circumstance does not
retroactively validate the receivership until the decision (presumably now
pending appeal) shall have attained finality.

WHEREFORE, finding grave abuse of discretion in the order
of receivership which the respondent Court of Appeals affirmed in its decision
of July 29, 1992 in CA-­G.R. SP No. 27977, the petition for certiorari
is hereby GRANTED and the decision of the appellate court, as well as the order
dated March 17, 1992 of the Regional Trial Court of Mandaue City, Branch 28, in
Civil Case No. MAN?1148, are hereby ANNULLED and SET ASIDE. Costs against the private respondent.

SO ORDERED.

Cruz, (Chairman), Bellosillo, and
Quiason, JJ., concur.

Davide, Jr., J., no part.