GR 3097; (January, 1907) (Digest)
FACTS
– On 4 June 1903 the parties executed a preliminary contract for the sale of Rafael Molina y Salvador’s abaca‑related business in Albay. Paragraphs 5, 6, and 8 imposed (i) a restriction on the buyer’s disposition of the business before full payment, (ii) a right for the buyer to sell the business and remit one‑third of the proceeds to the seller, and (iii) a right of first refusal for the seller if the buyer later received an offer within three years.
– On 27 July 1903 a final deed of sale transferred the business and a detailed inventory of movable and immovable property for the price of ₱134,736.12. The buyer (Antonio de la Riva) paid ₱33,659.03 (¼) and undertook to pay the balance in two equal installments due 27 July 1904 and 27 July 1905.
– Molina recovered the first installment in Rafael Molina v. Antonio de la Riva (1906). To collect the second installment, Molina sued for the balance, alleging that the contract created a mortgage on the property in his favor and that a receiver should be appointed under Sec. 174 of the Code of Civil Procedure to prevent deterioration of the assets.
– The trial court (21 Aug 1905) appointed a receiver, overruled the defendant’s demurrer, and on 22 Nov 1905 entered judgment for ₱38,159.03 with interest and costs, ordering the receiver to sell the property if payment was not made within ten days. The defendant appealed, filing a bill of exceptions.
ISSUE
Whether the preliminary contract’s paragraphs 5, 6, and 8, and the subsequent deed of sale, created a lien or mortgage on the conveyed property that would justify the appointment of a receiver under Sec. 174 of the Code of Civil Procedure.
RULING
The Supreme Court held that the contracts were simple purchase‑and‑sale agreements; ownership passed to the buyer, and the seller retained no lien, mortgage, or proprietary interest in the property. Paragraph 6 merely authorized the buyer to sell the business and remit a third of the proceeds to the seller, while paragraph 8 granted the seller a right of first refusal, not a secured claim. Consequently, the plaintiff was a general creditor and could not invoke Sec. 174 for a receiver’s appointment.
The Court affirmed the judgment for the monetary sum but reversed the lower court’s order appointing a receiver and modified the dispositive portion to award only the monetary judgment (principal, interest, and costs). No costs were awarded to either party in the Supreme Court.
Thus, absent a specific lien or mortgage, a receiver cannot be appointed merely because a creditor seeks payment of a debt.