G.R. No. 155408 ; February 13, 2008
Julio A. Vivares and Mila G. Ignaling, petitioners, vs. Engr. Jose J. Reyes, respondent.

FACTS

Petitioners Julio Vivares, as executor, and Mila Ignaling, as heir, of the estate of Torcuato Reyes, filed an action for Partition and Recovery of Real Estate against respondent Jose Reyes before the Camiguin RTC. The case involved the unsettled estate of their father, Severino Reyes. The parties agreed to exclude properties already transferred to the brothers’ names before Torcuato’s death, limiting the dispute to properties still registered under Severino. Petitioners later moved to place these disputed properties under receivership, alleging respondent was fraudulently selling and transferring properties, exclusively enjoying their fruits without accounting for Torcuato’s share.
The RTC granted the motion and appointed a receiver. Respondent opposed, claiming an oral partition with Torcuato allowed such transfers, and later moved to discharge the receiver by posting a counterbond. He also sought to cancel a notice of lis pendens on a tax declaration, arguing a portion belonged to a third party, Elena Unchuan, and was erroneously included. The RTC denied both motions. The Court of Appeals reversed, ordering the receiver’s discharge upon posting of a counterbond and canceling the lis pendens annotation. Petitioners elevated the case to the Supreme Court.

ISSUE

The core issues are: (1) whether the Court of Appeals erred in reversing the RTC’s order placing the estate under receivership and allowing discharge via a counterbond; and (2) whether it erred in ordering the cancellation of the notice of lis pendens.

RULING

The Supreme Court partly granted the petition. On the first issue, the Court affirmed the CA’s ruling to discharge the receiver. A receivership is a harsh remedy to be granted cautiously. Under Rule 59, Section 3 of the Rules of Court, a receiver may be discharged if the party in possession posts a sufficient counterbond to answer for damages. The respondent’s offer to file a counterbond warranted the receiver’s discharge, as it adequately secured the preservation of the property in dispute. The CA correctly found the RTC’s refusal to accept the counterbond constituted grave abuse of discretion.
On the second issue, the Court modified the CA’s decision, ruling the notice of lis pendens should remain. A lis pendens serves as a warning to prospective purchasers of pending litigation over the property. The CA’s factual finding that Unchuan’s property was erroneously included was premature, as the determination of ownership and boundaries of the disputed lot is a matter for the trial court to resolve in the main partition case. Therefore, the annotation must stay until a final ruling on these issues is rendered. The case was remanded to the trial court for further proceedings.