G.R. No. L-33081 March 10, 1976
EULALIO ARCE, LEONOR LAPERAL, LORENZA ARCE, PEDRO GARCIA, RAMON ARCE, JR., NIEVES DRUECO, MAURO ARCE, PRISCILLA SORIANO, and AURELIA ARCE, petitioners, vs. THE HON. CARLOS L. SUNDIAM, Judge, Court of First Instance of Bulacan, Branch IV (Baliuag), and ESPERANZA ARCE, MARCELINO VERGEL DE DIOS, EXALTACION ARCE, MANUEL ARABIT, EVANGELINE ARCE, and ALICIA S. BUSTOS, respondents.

FACTS

The petitioners and private respondents are heirs of the late Ramon Arce. His estate was fully settled and partitioned in 1962, with new titles issued to the legatees in specific pro indiviso shares. In 1970, private respondents filed an action for partition and accounting against petitioners before the Court of First Instance of Bulacan. They alleged that petitioners Eulalio Arce and Mauro Arce had unilaterally managed certain properties held in common, including mango orchards, rental properties, and a family business known as “Selecta,” since 1962. The complaint further asserted that the managing heirs failed to render an accounting or deliver the plaintiffs’ shares of the income, concealed loans secured by mortgaging common properties, and had recently denied plaintiffs access to the business factory.
On the very date the complaint was filed, the respondent judge issued an ex parte order appointing Mrs. Alicia S. Bustos as receiver over the disputed properties. The order cited the allegations in the verified complaint as showing “a need for the appointment of a receiver.” The receiver posted a bond of P10,000.00 as ordered. Petitioners challenged this appointment via certiorari.

ISSUE

Whether the respondent judge acted with grave abuse of discretion in appointing a receiver ex parte upon the filing of the complaint.

RULING

Yes. The Supreme Court annulled the appointment, holding it was issued with grave abuse of discretion. While judges have broad discretion in appointing receivers under Rule 59 of the Rules of Court, such power is not arbitrary and must be exercised with extreme caution, as receivership is a harsh remedy that deprives owners of property control. The legal logic requires that sound reasons for the appointment must be evident from the record. The Court found no such compelling grounds here. The mere allegations of mismanagement and failure to account, while serious, were not supported by any preliminary showing of an urgent necessity to preserve the property or prevent its loss or material injury pending litigation. The properties had been under the management of some heirs for over eight years since the estate’s closure, and there was no demonstration of imminent danger or waste. The appointment was made ex parte without a hearing, based solely on the unverified allegations in the initiatory pleading. The Court emphasized that a receivership should not be granted merely because it is asked for or where another remedy exists, such as a preliminary injunction. The precipitate appointment, without establishing a clear factual basis for the extreme remedy, constituted a capricious and whimsical exercise of power correctible by certiorari.