ALEJANDRO ALVAREZ, PETITIONER, VS. JOSE O. VERA, JUDGE OF FIRST INSTANCE OF MANILA, AND CECILIO BAUTISTA, RESPONDENTS.

This is a petition for certiorari filed by
the petitioner Alejandro Alvarez for the review and annulment of the
order issued by the respondent judge, Honorable Jose O. Vera, on April
26, 1937, appointing a receiver in civil case No. 49220 of the Court of
First Instance of Manila.

The pertinent facts necessary for the resolution of the question of law raised in this proceeding are as follows:

Tomas Morales was the owner of a city property consisting in a lot
with apartments, situated at Nos. 311-315 Requesens Street and No. 1315
M. Natividad Street, Manila, covered by transfer certificate of Torrens
title No. 9025. The herein petitioner claims to have bought the
property in question of Tomas Morales on July 23, 1928, for the sum of
P30,000. The corresponding deed of sale was executed but was not
registered in the registry of deeds or noted in the certificate of
title. Neither has the corresponding transfer of title been made in his
name.

Inasmuch as Tomas Morales had agreed to secure the obligation
contracted by one Candido Liwanag with the herein respondent Cecilio
Bautista, by virtue of a building contract whereby Cecilio Bautista
delivered to Candido Liwanag the sum of P7,102, said Tomas Morales
constituted a mortgage on the property in question in favor of said
respondent for the sum of P7,500. Said mortgage was registered in the
registry of deeds and noted on the aforesaid transfer certificate of
title No. 9025, on March 12, 1931.

As contractor Candido Liwanag had failed to comply with the terms
of the building contract, the herein respondent Cecilio Bautista, on
June 8, 1932, brought an action against him and Tomas Morales in the
Court of First Instance of Manila (civil case No. 42156). The case was
decided in favor of the plaintiff. Upon appeal to this court (G. R. No.
41628, 6 Phil, 1021), the judgment was modified by ordering the therein
defendants to pay to the therein plaintiff the sum of P7,870 as
damages, in a decision dated July 29, 1935 (Exhibit 2).

On November 27, 1935, as the defendants in said case No. 42156 had
failed to comply with the order in the judgment therein, the sheriff of
the City of Manila, after notice by publication in the newspaper “La
Opinion”, sold the mortgaged property at public auction, the same
having been adjudicated to the execution creditor Cecilio Bautista who
was the highest bidder.

On December 18, 1935, the herein petitioner Alejandro Alvarez, for
the first time, intervened in said civil case No. 42156, by filing his
opposition to the approval of said sale at public auction, alleging
that he is the owner of the property which was the subject matter of
the sale (Exhibit 1).

On the same date, December 18, 1935, Alejandro Alvarez filed a
complaint in civil case No. 49220 of the Court of First Instance of
Manila, against the herein respondent Cecilio Bautista, and Tomas
Morales, Candido Liwanag and the sheriff of the City of Manila, praying
that the mortgage, constituted by Tomas Morales in favor of Cecilio
Bautista on the property in question, be declared null and void, for
being fraudulent; that the registration of said mortgage in the
registry of deeds and the notation thereof in certificate of title No.
9025 be cancelled, and that the sale at public auction be annulled.

On January 27, 1936, the Court of First Instance of Manila, then
presided over by the Honorable Quirico Abeto, issued an order in civil
case No. 42156, overruling the opposition of the herein petitioner
Alejandro Alvarez and approving the sale at public auction in favor of
the therein plaintiff and herein respondent Cecilio Bautista, ordering
at the same time the therein defendants Tomas Morales and Candido
Liwanag to pay jointly and severally to said plaintiff the sum of
P4,543.65, representing the unpaid balance of the debt.

By virtue of said approval, the register of deeds of the City of
Manila issued the corresponding transfer certificate of title in the
name of the herein respondent Cecilio Bautista, without notation of any
lien in favor of the petitioner Alejandro Alvarez, thereby cancelling
transfer certificate of title No. 9025 in the name of Tomas Morales.

On April 20, 1936, the herein respondent filed an answer to the
complaint in the above-mentioned civil case No. 49220 instituted by the
herein petitioner Alejandro Alvarez (Exhibit 3).

On July 23, 1936, upon petition of the purchaser Cecilio Bautista,
a writ of possession of the property in question was issued in his
favor in civil case No. 42156, by virtue of which the sheriff of the
City of Manila delivered the possession thereof to him. The herein
petitioner, however, has been receiving the rental of the property up
to the present.

Inasmuch as the real estate taxes on the property in question,
corresponding to the years 1932 and 1933, had not been paid, the
government of the City of Manila distrained the same with all its
improvements. The herein respondent Cecilio Bautista, however, redeemed
said property on November 26, 1932, by paying said taxes. Thereafter,
said respondent has been the one paying the taxes of the property in
question, including the premiums on the insurance policy of the
apartments.

On April 7, 1937, the herein respondent Cecilio Bautista filed in
said civil case No. 49220 of the Court of First Instance of Manila a
motion praying for the appointment of a receiver of the property in
question as well as of the rental thereof, alleging as a reason
therefor the fact that it is he who has been paying the real estate tax
and insurance of the property; that said property is in danger of being
materially injured and the rental thereof run the risk of being lost;
and that the petitioner has not filed any bond to secure the
reimbursement to the movant of the rents due and accumulated in case
the latter won the case (Exhibit A). This motion, which is not under
oath and is not accompanied by a supporting affidavit, was set for
hearing on April 1,1937. The plaintiff having failed to appear in order
to oppose the motion in question, the court, motu proprio, transferred the hearing thereof to give him the opportunity to file his opposition thereto.

On April 26, 1937, the respondent judge, Honorable Jose O. Vera,
overruling the opposition of the petitioner, granted said motion in an
order entered to that effect on said date, the pertinent part of which
reads as follows:

“The defendant Cecilio Bautista, in applying for
the appointment of a receiver during the pendency of the hearing of
this case, has alleged that he hag no other plain, speedy and adequate
remedy to protect his rights, and that the property in question is in
danger of deteriorating or of being damaged, unless his petition is
granted. He likewise alleges it unjust that, altho he is paying the
real estate tax and the insurance of the property, and it appears from
his allegations that he i& the legal owner thereof, the same is in.
the possession of the plaintiff who, while he collects as he is in fact
collecting the rents, pays no attention to the due conservation thereof
and to the payment of insurance and other taxes.

“The court
is of the opinion that, taking into consideration all the facts
appearing in the allegations of both parties and their statements in
open court, the petition is just and, therefore, grants it.”

In deciding said motion, the respondent judge did not require the
other respondent Cecilio Bautista to file any bond to secure payment of
the damages that might be caused to the petitioner as a result of the
appointment of a receiver.

The payments made by the respondent Cecilio Bautista for real
estate taxes up to April 7, 1937, the date on which he filed his motion
for the appointment of a receiver, amounted to P1,076.65.

The only question to be decided in this proceeding is whether or
not the respondent judge abused his discretion in ordering the
appointment of a receiver in civil case No. 49220 of the Court of First
Instance of Manila, in spite of the fact that the motion filed to that
effect is not under oath nor accompanied by a supporting affidavit, and
the corresponding bond had not been filed.

On this point this court has established the following doctrines:

“Under section 174 of the Code of Civil Procedure
the appointment of a receiver lies within the sound discretion of the
court. (Mendoza vs. Arellano and B. de Arellano, 36 Phil., 59.) In the
American courts the same principle obtains. (53 C. J., 34.) It is not a
matter of strict or absolute right or an imperative requirement. (Id.)
Even when stipulated for by the parties the appointment of a receiver
is not a matter of right. (Carolina Portland Cement Co. vs.
Baumgartner, 99 Fla., 987.)” (Sanson vs. Barrios, 63 Phil., 198.)

“The writ of certiorari will not lie to set aside an order appointing a
receiver in a foreclosure suit, only because the finding of fact of the
court (that the mortgaged property was in danger of being wasted and
that its value was probably insufficient to discharge the mortgage
debt), was based partly on the report of a commissioner appointed for
the purpose, and as to such report no hearing was had. The
irregularities which such procedure might involve do not go to the
jurisdiction of the appointing court as to justify this court to review
by certiorari the proceedings had in the court below.” (Munoz vs.
Locsin and Melendreras Vda. de Munoz, 63 Phil., 811.)

“In
the appointment of receivers, the Philippine Code of Civil Procedure
gives the judges of the Courts of First Instance an unusually wide
discretion, and subsection 4 of section 174 of the Code has no direct
counterpart in any American or English statute. But the discretion thus
conferred must not be exercised arbitrarily, and sound reasons for the
appointment of a receiver should appear in the record of the case.”
(Tuason vs. Concepcion, 54 Phil., 408.)

“The appointment of
a receiver pendente lite is largely a matter in the discretion of the
lower court which will not be disturbed upon appeal, unless there has
been a clear abuse, but such discretion is not absolute or arbitrary,
and is to be exercised for the promotion of justice and where no other
adequate remedy exists.” (Teal Motor Co. vs. Court of First Instance of
Manila, 51 Phil., 549.)

“In an action in ejectment, not only
the soil but everything thereon growing is in litigation and though the
power should be sparingly used, it may sometimes be found necessary in
such cases to appoint a receiver in order to prevent waste and the
exercise of the court’s discretion in that respect will not be reviewed
by certiorari.” (Almarez and Avila vs. Florentine 46 Phil, 407.)

“The receivership here in question may possibly prove of little
efficacy, but certiorari goes to the jurisdiction and will not lie to
correct mere errors of judgment on the part of the lower tribunals.”
(Berbari vs. Imperial andChicote, 43 Phil., 222, 225.)

It is inferred from the foregoing quotations that this court has
constantly held that the appointment of a receiver lies within the
jurisdiction of the court, which has a wide discretion in the exercise
of such power. A mere error of judgment on the part of the court,
acting within its jurisdiction, cannot be remedied by certiorari.
Whether or not there is necessity of a receiver is a matter to be
determined by the competent court, and this court will not interfere in
the exercise of such discretion by certiorari, unless the lower court
has acted with abuse thereof.

In the case under consideration, when the property in question was
mortgaged to the herein respondent Cecilio Bautista by Tomas Morales to
secure an obligation contracted by one Candido Liwanag with the
former—which mortgage was duly noted on transfer certificate of title
No. 9025 issued in the name of said Tomas Morales and registered in the
registry of deeds on March 12, 1931—there was no notation thereon of
any sale or transfer of said property in favor of the herein petitioner
Alejandro Alvarez. In civil case No. 42156, Cecilio Bautista brought an
action against Candido Liwanag and Tomas Morales on June 8, 1932, for
the foreclosure of the mortgage in question, judgment having been
rendered in his favor in the lower court, and in this court on appeal
on July 29, 1935. After the notices by publication made in the
newspaper “La Opinion” of the City of Manila, the sheriff sold the
property at public auction, the same having been adjudicated to said
mortgagee Cecilio Bautista for the reason that he was the highest
bidder. During all that time, the herein petitioner Alejandro Alvarez
neither filed any opposition nor intervened therein to protect his
alleged rights. It was only on December 18, 1935, when he filed his
opposition to the confirmation of said sale (Exhibit 1). In spite of
the fact that, according to allegation of said petitioner, he had
acquired the property by purchase from Thomas Morales on June 23, 1928,
and was already the absolute owner thereof from said date, he did not
care to take the necessary steps for the transfer of the title thereto
of the lien in his favor. Furthermore, while it was he who had been
receiving the rents, he allowed the government of the City of Manila to
distrain the property for nonpayment of the real estate taxes as well
as the insurance premiums for the subsequent years. In the opinion of
this court, these facts are sufficient to warrant the appointment of
the receiver, and the respondent judge, in doing so, committed no abuse
of discretion.

With respect to the lack of an oath in the motion Exhibit A and of
the supporting affidavit, suffice it to quote the decision of this
court, in the case of Sabado vs. Cristina Gonzales, Inc. (53Phil., 77O,
778), which reads as follows:

“The second point raised by counsel for the
petitioner may at first blush seem to rest on a more solid foundation
but this impression disappears upon closer examination. In the case of
AMriano Velasco & Co. vs. Gochuico & Co. (28 Phil., 39), this
court, speaking through Justice Moreland, said: ‘A proceeding for the
appointment of a receiver should be by petition and not by motion. The
petition should be by petition and not by motion. The petition should
be verified and should have attached to it such affidavits as the
petitioner may deem necessary for the sub-stantion of allegations set
forth in the petition.’

“That this is a sound rule of
procedure will not be disputed, and its non-observation by the
interested party may well serve as sufficient justification for
refusing to appoint a receiver. It should therefore be generally
followed and the failure to do so may be regarded as an error. But this
error does not necessarily go to the jurisdiction of the court and, if
so, a writ of certiorari will not lie to set aside an appointment of a
receiver, made without the observation of the procedure indicated,
unless there has been such a gross abuse of discretion on the part of
the court as to virtually amount to a failure of jurisdiction.”

With respect to the failure to file a bond to answer for any damage
that might accure to the therein plaintiff and herein petitioner
Alejandro Alvarez, by reason of the appointment of the receiver, the
pertinent part of Section 177 of the Code of Civil Procedure reads as
follows:

“SEC. 177. Obligations for damages on appointment of reciever.—
If a receiver be appointed upon ex parte application, the court, before
making the order, may require from the plaintiff or person filling the
application for such appointment, an obligation with sufficient
surities, to be approved by the court, * * *.”

From the above-quoted legal provisions, it will be seen, in the
first place, that the filling of said bond refers to cases where the
petition for the appointment of a receiver is made ex parte. Such is
not the case under consideration. The petitioner Alejandro Alvarez was
duly notified of the petition for the appointment of a receiver Exhibit
A. Said petition was set for hearingbut, for failure of the petitioner
to appear, the court, motu proprio, transferred it in order
to give him the opportunity to file his written opposition thereto,
which he in fact did on April 17, 1937.

In section 177 of the Code of Civil Procedure is not obligatory. The court may require it or not at its discretion, as the petitioner himself so admits on page 4 of his memorandum in support of his petition.

Furtheremore, it being a question of procedure, the filling of a
bond provided for in said section 177 doest not necessarily affect the
jurisdiction of the court as to warrant the issuance of a writ of
certiorari. In the case of Sabado vs. Cristina Gonzalez, Inc., supra, this court laid down the following doctrine:

“‘An error in procedure in suing for the
appointment of a receiver does not necessarily go to the jurisdiction
of the court and certiorari will not lie to set aside the appointment
unless the error is substantially prejudicial to the adverse party or
unless there has been such a gross abuse of discretion on the part of
the court as to virtually amount to a failure of jurisdiction.”

Therefore, the case, in brief, is that the petitioner Alejandro
Alvarez, on the one hand, claims to be the owner of the property in
litigation, for having purchased the same—without registering said
purchase—from Tomas Morales, the original owner thereof, prior to the
constitution of the duly registered mortgage on the same property by
said Tomas Morales in favor of the herein respondent Cecilio Bautista.
On the other hand, said respondent Cecilio Bautista likewise claims to
be the owner of the same property, for having purchased it at a public
auction sale, by virtue of a writ of execution issued in his favor in
an action brought by him against Tomas Morales, for the foreclosure of
the said mortgage. Notwithstanding the writ of possession issued in
favor of the respondent Cecilio Bautista, the petitioner continues to
be in possession of the real property and its improvements, and to
collect the rents. The appointment of a receiver is, therefore, the
most expedient and the most adequate means of conserving and
administering the property in litigation, during the pendency of the
action, which is precisely what has been done by the respondent judge.

For the foregoing considerations, this court is of the opinon and
so holds: (1) That in a litigation where the plaintiff claims to be the
owner of a property registered under the Torrens system, together with
the improvements thereon, for having acquired it by purchase from the
original owner thereof, and is in possession of the same—without
registering such purchase—prior to the constitution of the mortgage
thereon by the original owner in favor of the defendant, who
opportunely registers the lien and later purchases the same property at
an execution sale and obtains a writ of possession thereof, which is
disregarded, the appointment of a receiver lies for the expedient and
adequate conservation of said property and the rents thereof during the
pendency of the case; (2) that while the lack of an oath in a motion
praying for the appointment of a receiver constitutes a defect which
may give rise to the denial of the said motion, it does not affect the
jurisdiction of the court and can not serve as a ground for certiorari;
(3) that the filing of a bond by the applicant is a requisite which the
court may require when the appointment of a receiver is applied for ex parte,
and, as such requisite is procedural in character and it depends upon
the sound discretion of the person appointing the receiver to require
it or not, the omission thereof can not be a ground for certiorari, and
(4) that, under such circumstances, the court which orders the
appointment of a receiver does not commit an abuse of discretion.

Wherefore, the petition for certiorari is denied, with costs to the petitioner.

Avancena, C. J., Abad Santos, Imperial, Diaz, Laurel, and Concepcion, JJ., concur.