G.R. No. L-9594; February 18, 1914
F. C. AREY, ET AL., petitioners, vs. ADOLPH WISLIZENUS, ET AL., respondents.

FACTS:
This is an original action for certiorari. The respondent, The Insular Lumber Company, filed a complaint in the Court of First Instance against the petitioners, F.C. Arey and his associates, for the collection of a considerable debt. The petitioners had assumed an indebtedness from another entity and incurred additional debt by purchasing the respondent’s lumber. Based on this complaint, the lower court appointed a receiver for the petitioners’ business. The petitioners challenged this appointment, arguing that the court acted in excess of its jurisdiction.

ISSUE:
Whether or not the Court of First Instance exceeded its jurisdiction in appointing a receiver over the petitioners’ business in an action primarily for the collection of a debt.

RULING:
Yes, the lower court exceeded its jurisdiction. The Supreme Court annulled the appointment of the receiver and all related proceedings.

The Court held that the appointment of a receiver is an extraordinary remedy governed by Section 174 of the Code of Civil Procedure. Citing its precedents in Bonaplata vs. Ambler and Rocha & Co. vs. Crossfield, the Court reiterated that a receiver may be appointed only in specific instances, such as: (1) certain corporation cases; (2) where the plaintiff has an interest in the property or fund subject of the action; (3) in an action to foreclose a mortgage; or (4) where it is the most feasible means of preserving the property during litigation.

The respondent’s action was essentially one for debt. The Court found that the respondent did not allege ownership or a lien over the petitioners’ specific property. Even assuming the lumber was delivered on consignment, the contract itself indicated a sale. Following Strong vs. Van Buskirk-Crook Co., the Court ruled that in a simple action for debt, where no lien upon specific property is asserted, a plaintiff has no interest in the defendant’s property that would authorize a receivership prior to the return of an execution unsatisfied. A receiver cannot be appointed merely to assist in the collection of a debt. Therefore, the appointment was without legal basis. Costs were taxed against the respondent, The Insular Lumber Company.