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COMMODITIES STORAGE v. CA

FACTS:

The petition for certiorari seeks to annul and set aside the decision and resolution of the Court of Appeals dismissing the complaint in Civil Case No. 94-72076 before the Regional Trial Court. The petitioners obtained a loan from the respondent bank to finance the purchase of an ice plant and cold storage. The loan was secured by a mortgage over the ice plant and the land on which it stood. Petitioners failed to pay their loan, leading to the bank's extrajudicial foreclosure of the mortgage.

The ice plant was sold in a public bidding and the bank was the highest bidder. On November 22, 1993, petitioners filed a case against the bank for reformation of the loan agreement, annulment of the foreclosure sale, and damages, but it was dismissed for failure to pay the docket fees. On October 28, 1994, petitioners filed a new case against the bank for damages, accounting, and fixing of redemption period. As a provisional remedy, they filed an urgent petition for receivership to save the ice plant. The trial court granted the petition for receivership and appointed a receiver.

The Court of Appeals later annulled the order for receivership and dismissed the complaint for improper venue and lack of cause of action. Petitioners filed this petition for certiorari.

ISSUES:

  1. Whether or not the trial court erred in granting the petition for receivership and appointing a receiver.

  2. Whether or not the Court of Appeals erred in annulling the order for receivership and dismissing petitioners' complaint.

RULING:

  1. No, the trial court did not err in granting the petition for receivership and appointing a receiver. The appointment of a receiver is within the sound discretion of the court and is based on the facts and circumstances of each particular case. In this case, the court found that the property in litigation, the ice plant, was in danger of being lost or materially injured and that the appointment of a receiver was the most convenient and feasible means of preserving and administering the property. Thus, the trial court acted within its discretion in granting the petition for receivership.

  2. No, the Court of Appeals did not err in annulling the order for receivership and dismissing petitioners' complaint. The Court of Appeals found that the complaint failed to state a cause of action and that venue had been improperly laid. Moreover, the Court of Appeals found that the appointment of a receiver was not justified under Section 1(b) of Rule 59 because the petitioners did not have an actual interest in the property and the property was not in danger of being lost or materially injured. Therefore, the Court of Appeals correctly annulled the order for receivership and dismissed the complaint.

PRINCIPLES:

  • The appointment of a receiver is within the sound discretion of the court and is based on the facts and circumstances of each particular case.

  • A receiver may be appointed when it appears that the party applying for such appointment has an actual interest in the property and that the property is in danger of being lost, removed, or materially injured.

  • The appointment of a receiver is not a matter of absolute right and depends on the sound discretion of the court.