G.R. No. L-14941; January 31, 1964
Natalio Ventosa, petitioner, vs. Hon. Wenceslao L. Fernan, Judge of the Court of First Instance of Iloilo, C. N. Hodges, Ricardo Guttea and Jose Dineros, as Receiver of the La Paz Ice Plant & Cold Storage Co., Inc., respondents.

FACTS

Petitioner Natalio Ventosa entered into a lease contract for the franchise, factory, and equipment of La Paz Ice Plant and Cold Storage Co., Inc., approved by the corporation’s stockholders, board of directors, and the Public Service Commission. He took possession and operated the plant. Subsequently, respondents C.N. Hodges and Ricardo Gurrea, as majority stockholders, filed a derivative suit (Civil Case No. 4994) against the corporate officers for mismanagement and secured the appointment of respondent Jose Dineros as receiver. The receiver took possession of the plant from the manager appointed by Ventosa.
Ventosa filed a motion to intervene in the case and a complaint in intervention, asserting his rights under the lease. He also filed a motion in the trial court seeking an order to restrain the receiver from interfering with his management, arguing that the receiver’s role was limited to collecting the stipulated rentals. The respondent judge deferred action on this motion pending the resolution of the pleadings on the complaint in intervention and subsequently denied Ventosa’s motion for a restraining order and a motion for reconsideration. The court held that the validity of the lease contract, which was directly assailed by Hodges and Gurrea as simulated and fictitious, must first be adjudicated before Ventosa could regain control.

ISSUE

Whether the respondent judge committed grave abuse of discretion in denying Ventosa’s motion to restrain the receiver and in maintaining the property under receivership despite Ventosa’s claim of a prior leasehold right.

RULING

The Supreme Court ruled that the respondent judge did not commit grave abuse of discretion. The legal logic is anchored on the nature of property under receivership and the proper procedure for adjudicating claims against it. Property placed under receivership is in custodia legis; it is removed from the possession of the parties and placed under the court’s control through the receiver for preservation and for the benefit of the party ultimately adjudged entitled thereto. A receiver’s possession is the possession of the court, and the court must retain control until conflicting claims are resolved.
When a third party, like Ventosa, asserts a claim adverse to the receivership, the claim cannot be settled summarily. The established procedure is for the claimant to establish his right through a regular hearing in the receivership proceeding, either by motion, petition, or intervention, with all interested parties notified. Here, the validity of Ventosa’s lease was directly contested by the plaintiffs in the main case. Therefore, the trial court correctly required a full hearing on the merits of the intervention to determine who was legally entitled to possession before altering the receiver’s control. The orders denying the restraining motions were a proper exercise of judicial discretion to maintain the status quo and prevent prejudgment of the issue. The petition for certiorari was dismissed, the orders were affirmed, and the preliminary injunction issued by the Supreme Court was dissolved.