A Collection of Case Digests

Villamor vs. Umale – On Appointment of a Receiver or Management Committee

84

A corporation may be placed under receivership, or management committees may be created to preserve properties involved in a suit and to protect the rights of the parties under the control and supervision of the court...

In the case of Villamor v. Umale, the Supreme Court tackled whether the Court of Appeals properly placed the corporation, Pasig Printing Corporation, under receivership and created a receiver or management committee.

Reversing the Court of Appeals, the Supreme Court said:

A corporation may be placed under receivership, or management committees may be created to preserve properties involved in a suit and to protect the rights of the parties under the control and supervision of the court. Management committees and receivers are appointed when the corporation is in imminent danger of “(1) [d]issipation, loss, wastage or destruction of assets or other properties; and (2) [p]aralysation of its business operations that may be prejudicial to the interest of the minority stockholders, parties-litigants, or the general public.”

Applicants for the appointment of a receiver or management committee need to establish the confluence of these two requisites.1âwphi1 This is because appointed receivers and management committees will immediately take over the management of the corporation and will have the management powers specified in law.  This may have a negative effect on the operations and affairs of the corporation with third parties,  as persons who are more familiar with its operations are necessarily dislodged from their positions in favor of appointees who are strangers to the corporation’s operations and affairs.

PPC waived its rights, without any consideration in favor of Villamor. The checks were already in Villamor’s possession. Some of the checks may have already been encashed. This court takes judicial notice that the goodwill money of ₱18,000,000.00 and the rental payments of ₱4,500,000.00 every month are not meager amounts only to be waived without any consideration. It is, therefore, enough to constitute loss or dissipation of assets under the Interim Rules.

Respondent Balmores, however, failed to show that there was an imminent danger of paralysis of PPC’s business operations. Apparently, PPC was earning substantial amounts from its other sub-lessees. Respondent Balmores did not prove otherwise. He, therefore, failed to show at least one of the requisites for appointment of a receiver or management committee.