Chavez vs. Court of Appeals

Receivership may not be granted where the party seeking it merely complains of non-remittance of profits but does not allege or prove that the property or its productive capacity is in danger of being lost, removed, or materially injured; and the filing of multiple actions seeking receivership in different tribunals does not constitute forum shopping because receivership is an auxiliary remedy, not an independent action, and its grant or denial in one case will not amount to res judicata on the merits of another.

Respondent Fidela Y. Vargas, a lawyer, owned a five-hectare mixed coconut land and rice fields in Sorsogon. Petitioner Evelina G. Chavez had been residing on a remote portion of the land with her family, planting coconut seedlings and supervising the harvest of coconut and palay. The two agreed to divide the gross sales of all products from the land between themselves, and because Vargas was busy with her law practice, Chavez undertook to hold in trust for Vargas the latter's half of the profits. Chavez's daughter, Aida Chavez-Deles, assisted her mother in these activities. The dispute arose when Vargas claimed that Chavez failed to remit her share of the profits and refused to turn over administration of the property despite demand.

Respondent Fidela Y. Vargas, a lawyer by profession, owned a five-hectare mixed coconut land and rice fields in Sorsogon. Petitioner Evelina G. Chavez had been staying in a remote portion of the land with her family, planting coconut seedlings and supervising the harvest of coconut and palay. Vargas and Chavez agreed to divide the gross sales of all products from the land between themselves. Because Vargas was preoccupied with her law practice, Chavez undertook to hold in trust for Vargas the latter's half of the profits. Chavez's daughter, Aida Chavez-Deles, assisted her mother in these activities.

Vargas subsequently claimed that Chavez had failed to remit her share of the profits and, despite demand to turn over administration of the property, had refused to do so. Vargas accordingly filed a complaint against Chavez and Deles for recovery of possession, rent, and damages, with a prayer for the immediate appointment of a receiver, before the Regional Trial Court of Bulan, Sorsogon, Branch 65. In their answer, Chavez and Deles asserted that the RTC lacked jurisdiction over the subject matter because the case actually involved an agrarian dispute.

After hearing, the RTC dismissed the complaint for lack of jurisdiction, based on Vargas's own admission that Chavez and Deles were tenants who helped plant coconut seedlings on the land and supervised the harvest, and who shared in the gross sales. The court rejected Vargas's argument that because Chavez and her family received the land already planted with fruit-bearing trees they could not be considered tenants, ruling that cultivation includes the tending and caring of trees. The RTC also took into account Vargas's pending application for a five-hectare retention and Chavez's pending protest relative to her three-hectare beneficiary share.

Dissatisfied, Vargas appealed to the Court of Appeals and simultaneously filed a motion for the appointment of a receiver. On April 12, 2006, the CA granted the motion and ordered receivership of the land, noting an apparent need to preserve the property and its fruits in light of Vargas's allegation that Chavez and Deles had failed to account for her share of such fruits. Parenthetically, Vargas had also filed three estafa cases with the RTC of Olongapo City and a complaint for dispossession with the Department of Agrarian Reform Adjudication Board against Chavez and Deles, in all of which she sought the immediate appointment of a receiver for the property.

• Forum Shopping: Petitioners argued that respondent Vargas was guilty of forum shopping because she had earlier filed identical applications for receivership over the subject properties in the criminal estafa cases before the RTC of Olongapo City and in the administrative case before the DARAB.
• Propriety of Receivership: Petitioners contended that the CA erred in granting Vargas's application for receivership, the property not being shown to be in danger of loss, removal, or material injury as required under the Rules of Civil Procedure.

• Forum Shopping: Whether respondent Vargas was guilty of forum shopping by filing applications for receivership in multiple actions — the civil case before the RTC, the estafa cases before the RTC of Olongapo City, and the administrative case before the DARAB.
• Receivership: Whether the CA erred in granting respondent Vargas's application for receivership over the disputed property.

• Forum Shopping: No. The various suits involved different causes of action and sought different reliefs; receivership is merely an auxiliary remedy, not an independent action, so its grant or denial in one case will not amount to res judicata on the merits of the others.
• Receivership: Yes. The CA erred in granting receivership because Vargas failed to allege or prove that the property was in danger of being lost, removed, or materially injured; her grievance was limited to non-remittance of profits, which does not satisfy the requisites of Section 1(b), Rule 59 of the Rules of Civil Procedure.

• Forum Shopping: Forum shopping exists when a party initiates two or more actions in separate tribunals grounded on the same cause, hoping that one tribunal would favorably dispose of the matter. Its elements are identical to those of litis pendentia: (1) identity of parties or interests represented; (2) identity of rights asserted and relief prayed for, founded on the same facts; and (3) identity such that any judgment in one action would amount to res judicata in the other. Here, the civil case sought recovery of possession based on failure to account for fruits; the estafa cases accused Chavez and Deles of misappropriating and converting Vargas's share of harvests; and the DARAB complaint sought dispossession for allegedly cutting coconut trees without prior authority. These involved different causes of action and different reliefs. The cases were similar only in that they involved the same parties and that Vargas sought receivership in all of them. But receivership is not an action; it is an auxiliary remedy, a mere incident of the suit. The grant or denial of this provisional remedy in one case depends on the need for it in that particular action and will not amount to res judicata on the merits of the other cases.

• Receivership: A petition for receivership under Section 1(b), Rule 59 of the Rules of Civil Procedure requires that the property or fund subject of the action is in danger of being lost, removed, or materially injured, necessitating its protection or preservation. The object is the prevention of imminent danger to the property. Vargas's main grievance was that Chavez and Deles deprived her of her share of the land's produce; she did not claim that the land or its productive capacity would disappear or be wasted if not entrusted to a receiver, nor that the land had been materially injured. Because receivership is a harsh remedy granted only in extreme situations, Vargas was required to prove a clear right to its issuance, which she failed to do. Moreover, the RTC had already dismissed Vargas's action for lack of jurisdiction, finding that the issues properly belonged to the DARAB. Since the case before the CA was but an offshoot of that dismissed RTC case, it would have been more prudent for the CA to first provisionally determine that the RTC had jurisdiction before granting receivership, which is merely an incident of the main action.

• Forum Shopping — Forum shopping is the initiation of two or more actions in separate tribunals grounded on the same cause, in the hope that one or the other tribunal would favorably dispose of the matter. Its elements mirror those of litis pendentia: (1) identity of parties, or at least such parties as representing the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment in one action will, regardless of which party is successful, amount to res judicata in the other. The Court applied this doctrine to hold that Vargas's multiple suits did not constitute forum shopping because they involved different causes of action and reliefs, and because receivership — the common element among them — is merely an auxiliary remedy, not an independent action.

• Receivership as an Auxiliary Remedy — Receivership is not an action but an auxiliary remedy, a mere incident of the suit to help achieve its purpose. Its grant or denial in one case will not amount to res judicata on the merits of another case. The Court relied on this principle to distinguish receivership from an independent cause of action in the forum shopping analysis.

• Requisites of Receivership under Rule 59 — Under Section 1(b), Rule 59 of the Rules of Civil Procedure, receivership requires that the property or fund subject of the action is in danger of being lost, removed, or materially injured, necessitating its protection or preservation. Its object is the prevention of imminent danger to the property. The Court held that a mere claim of non-remittance of profits, without any allegation that the property itself is in danger of loss or material injury, does not justify the appointment of a receiver. Receivership is a harsh remedy that can be granted only in extreme situations, and the applicant must prove a clear right to its issuance.

• "But receivership is not an action. It is but an auxiliary remedy, a mere incident of the suit to help achieve its purpose. Consequently, it cannot be said that the grant of receivership in one case will amount to res judicata on the merits of the other cases." — This passage articulates the ratio decidendi on the forum shopping issue, distinguishing receivership from an independent action and explaining why its grant in one case cannot constitute res judicata in another.

• "Here Fidela's main gripe is that Evelina and Aida deprived her of her share of the land's produce. She does not claim that the land or its productive capacity would disappear or be wasted if not entrusted to a receiver. Nor does Fidela claim that the land has been materially injured, necessitating its protection and preservation. Because receivership is a harsh remedy that can be granted only in extreme situations, Fidela must prove a clear right to its issuance. But she has not." — This passage sets out the ratio decidendi on the receivership issue, applying the requisites of Rule 59 to the facts and explaining why the CA's grant of receivership was erroneous.

• Philippine National Construction Corporation vs. Dy, G.R. No. 156887, October 3, 2005, 472 SCRA 1 — Cited for the definition of forum shopping as the initiation of two or more actions in separate tribunals grounded on the same cause.
• Cruz vs. Caraos, G.R. No. 138208, April 23, 2007, 521 SCRA 510 — Cited for the elements of forum shopping, which are the same as those of litis pendentia.
• Commodities Storage & Ice Plant Corp. vs. Court of Appeals, G.R. No. 125008, June 19, 1997, 274 SCRA 439 — Cited for the rule that receivership requires the property to be in danger of being lost, removed, or materially injured, and that its object is the prevention of imminent danger to the property.
• Vivares vs. Reyes, G.R. No. 155408, February 13, 2008, 545 SCRA 80 — Cited for the principle that receivership is a harsh remedy that can be granted only in extreme situations.

• Section 1(b), Rule 59, Rules of Civil Procedure — Governs the appointment of a receiver and requires that the property or fund subject of the action is in danger of being lost, removed, or materially injured, necessitating its protection or preservation. The Court applied this provision to hold that Vargas's complaint of non-remittance of profits did not satisfy the requisite of imminent danger to the property, and that the CA therefore erred in granting receivership.

Antonio T. Carpio (Chairperson, Second Division), Arturo D. Brion, Mariano C. del Castillo, and Jose P. Perez concurred. No separate concurring opinions were written.