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PROVISIONAL REMEDIES (Rule 59)

RULE 59
RECEIVERSHIP
Sec. 1. Appointment of receiver.- Upon a  verified application, one or
more receivers of the property subject of the action or proceeding may be
appointed  by the court where the action is pending, or, By the  Court  of
Appeals or by the Supreme Court,  or   a member thereof, in the following
cases:

a.) When it appears from the verified  application, and such other proof the
court may require, that the   party applying for the appointment of a
receiver has   an interest in the property or fund which is   the subject  of
the action or proceeding, and  that  such property or fund is in danger of
being lost,   removed, or  materially injured unless a receiver by
appointed to administer and preserve it;

b.) When it appears in an action by the mortgagee for the foreclosure of a

mortgage that the property in is danger of being wasted or dissipated or
materially injured, and that its value is probably insufficient to
discharge the mortgage debt, or  that the parties have so stipulated in the
contract of mortgage;

c.) After  judgment, to   preserve   the   property during the pendency of an

appeal, or to dispose of   it according   to the judgment, or to aid
execution   when the writ of execution has been returned unsatisfied or
the judgment obligor refuses to apply his property in satisfaction  of the
judgment, or otherwise   to  carry the judgment into effect;

d.) Whenever in other cases it appears that  the appointment of the receiver
is the most convenient and feasible   means of preserving, administering,
or   disposing of the property in litigation.

During the pendency of an appeal, the  appellate court may allow an

application for the appointment   of a  receiver   to be filed in and decided
by   court  of origin and the receiver appointed to be subject to the control
of said court.

RECEIVER - an indifferent person, neutral between the parties, appointed by  the  court to
receive and preserve the property  in  litigation  pendente lite when it is not seem reasonable to
the court that either party will  hold it.

Q: Who among the parties does the receiver represent?

A: Neither the plaintiff nor the defendant. He is an AGENT OF THE COURT.

Example: The ownership of a piece of land is in controversy. To be fair for both parties claiming
the land, especially when  both of  them  are in possession of it, the court  will manage it. The
court will appoint a receiver and the income will be deposited. So it is the same as an
administrator.

Q: Who appoints the receiver?

A: 1. Court where the case is pending.
2. By the CA, or a member thereof.
3. By the SC, or a member thereof.

Under the new rules the application for receivership is now  verified.  

Q: What are grounds for receivership ?

A: We have a,b,c,d of section 1.

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PROVISIONAL REMEDIES (Rule 59)
a) When it appears from the verified  application, and such other proof the court
may require, that the  party applying for the appointment of a  receiver has  an
interest in the property or fund which is  the subject  of  the action or
proceeding, and  that  such property or fund is in danger of being lost,
removed, or  materially injured unless a receiver by  appointed to administer
and preserve it;

BAR Q : A filed a case against B to collect unpaid loan. B, the defendant has no other
property left except a piece of land. Meaning of A wins, that land is the only property the
he can levy. And to preserve the property A, the plaintiff  filed an application to place
the property under  receivership.  Is the petition proper?
ANSWER: The SC said NO, because receivership is only proper when the property to be
placed under receivership is the subject of the litigation. In this  case, the  subject  of litigation is
not the property but money. I am  collecting  a loan which is different from recovery of
possession or ownership of land.

QUESTION: Suppose the defendant is trying to destroy the property or run away with it or
dispose it?
ANSWER: You better get an attachment and not a receivership. That  is the tricky part.

b.) When it appears in an action by the mortgagee for the foreclosure of a mortgage
that the property in is danger of being wasted or dissipated or materially
injured, and that its value is probably insufficient to discharge the mortgage
debt, or that the parties have so stipulated in the contract of mortgage;

This applies or granted by law to a mortgagee.

Under the law on mortgage, if the mortgagor cannot pay, mortgagee can foreclose. And if the
property is in danger of being wasted or dissipated or materially injured, mortgagee can ask for
receivership.

Or the parties have stipulated in their agreement that while foreclosure proceeding is going on,
they can place the property under receivership. In Bank Mortgage Contracts, meron nito.

c.) After  judgment, to  preserve  the  property during the pendency of an appeal, or
to dispose of  it according  to the judgment, or to aid  execution  when the writ
of execution has been returned unsatisfied or the judgment obligor refuses to
apply his property in satisfaction  of the judgment, or otherwise  to  carry the
judgment into effect;

Generally, you file a Provisional Remedy while the case is going on. Except under par. c.

Receivership is not only available while the case is pending. It is available even after judgment
to:
1. preserve the property during the pendency of an appeal.

QUESTION: Where will you file you petition for receivership? Before the CA or  the trial
court?
ANSWER: The  last  par. of sec. 1, appellate court may allow the filing  of  the receivership in
the trial court that decided it although the trial court  has already lost jurisdiction because of the
appeal.

QUESTION: Is  this  supported by Rule 41?

ANSWER: YES. Rule 41, Section 9, last paragraph. Once the appeal is perfected, the
trial court  losses  jurisdiction over  the  case except to issue orders for the
preservation  and  protection of the rights of the parties while on appeal. This is part
of the Residual Powers of the RTC.

2. dispose of it according to the judgment.

3. to aid execution when the writ of execution has been returned

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PROVISIONAL REMEDIES (Rule 59)
unsatisfied or the judgment obligor refuses to apply his property in
satisfaction of the judgment.

QUESTION: Is  this  provision or ground supported by the rules  on  execution?  Is
there a provision in the rules of court ?
ANSWER: YES, in remedies in aid of execution. Rule 39 sec. 41. In the  execution stage,  you
can appoint a receiver to preserve the property which  is  to  be levied.

4. carry the judgment into effect.

d.) Whenever in other cases it appears that  the appointment of the receiver is the
most convenient and feasible  means of preserving, administering, or  disposing
of the property in litigation.

It’s the broadest. Anything under the sun can fall on this ground.

Sec. 2. Bond on appointment on receiver.- Before issuing   the   order

appointing a receiver, the  court shall require the applicant to file a bond
executed to the   party against whom the application is   presented, in an
amount to fixed by the court, to the effect that the   applicant will pay
such party all damages he   may sustain by reason of the appointment of
such receiver in  case  the applicant shall have procured   such
appointment without sufficient cause, and the court may, in   its
discretion, at any time after the   appointment require   an  additional
bond as further   security  for such damages.

REQUISITES FOR RECEIVERSHIP:

1. Verified application. (under Section 1).
2. Bond (under this section – 2).

Sect. 3. Denial of application or discharge of receiver. – The application

may be denied, or the receiver discharged, when the adverse party files a
bond executed to the applicant, in an amount to be fixed by the court, to
the effect that such party will pay the applicant all damages he may
suffer by reason of the acts, omissions, or other matters specified in the
application as ground for such appointment. The receiver may also be
discharged if it is shown that his appointment was obtained without
sufficient cause.

Sect. 4. Oath and bond of receiver.- Before entering upon his duties, the
receiver shall be sworn to perform them faithfully, and shall file a bond,
executed to such person and in such sum as the court may direct, to the
effect that he will faithfully discharge his duties in the action or
proceeding and obey the orders of the court.

Do not confuse the bond here with the bond in Section 2.

Section 2 – Bond is posted by the party.

Section 4 – Bond is posted by the receiver.

Sect. 5. Service of copies of bonds; effect of disapproval of the same. – The

person filing a bond in accordance with the provisions of this Rule shall
forthwith serve a copy thereof on each interested party, who may except
to its sufficiency or of the surety or sureties thereon. If either the
applicant’s or the receiver’s bond is found to be insufficient in amount, or
if the surety or sureties thereon fail to justify, and a bond sufficient in
amount with sufficient sureties approved after justification is not filed
forthwith, the application shall be denied or the receiver discharged, as
the case may be. If the bond of the adverse party is found to be
insufficient in amount or the surety or sureties thereon fail to justify, and
a bond sufficient in amount with sufficient sureties approved after
justification is not filed forthwith, the receiver shall be appointed or re-
appointed, as the case may be.

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PROVISIONAL REMEDIES (Rule 59)
Sec. 6. General powers of receiver.- Subject  to the   control of the court in
which the action or   proceeding is pending, a receiver shall have the
power to bring and defend in such capacity, actions in his  own name: to
take and keep possession of the property  in controversy; to receive rents;
to collect debts due to himself as receiver or to the fund, property,
estate, person,  or corporation of which he is a receiver;   to compound
for and compromise the same; to make   transfers; to pay outstanding
debts; to dived the money and other property   that shall remain among
the  persons legally entitled to receive the same; and generally to do such
acts respecting the property as the court  may authorize. However, funds
in the hands of a  receiver may   be invested only by order of the court
upon which consent of all parties to the action.

No action may be filed by or against a  receiver without leave of the court

which appointed him.

What are the powers of the receiver? Just read the provision. It is like the power of  the
manager.
The last paragraph is new. The one who files an  action  for receivership must secure the
permission of the court.

Sec.  7.  Liability for refusal or  neglect   to deliver property to receiver.- A

person who refuses or neglects,   upon reasonable demand, to deliver  to
the receiver   all the property,  money,   books,  deeds, notes, bills,
documents and papers within his power or control,   subject  of   or
involved in   the  action   or proceeding , or in case of disagreement, as
determined and  ordered by the court, may be punished   for   contempt
and   shall be liable to the  receiver   for  the money or the value of the
property and other things so refused or neglected to be surrendered ,
together with all damages that may have been sustained by the  party or
parties entitled thereto as a consequence of   such refusal or neglect.

If you refuse or neglect to deliver the property  to the receiver , you will be liable for contempt of
court.

Sec.  8. Termination of receivership;  compensation  of receiver.-Whenever

the court, motu propio  or on  motion of either party, shall determine
that   the necessity  for a receiver no longer exists, it   shall, after due
notice to all interested parties and hearing, settle the accounts of the
receiver, direct  the delivery  of the funds and other property in his
possession  to  the  person adjudged to  be  entitled  to receive them, and
order the discharge of the   receiver from   further duty as such. The court
shall allow   the receiver such reasonable compensation as the
circumstances  of  the case warrant, to be  taxed as   costs against the
defeated party or apportioned as   justice requires.

QUESTION: When do you terminate a receivership?

ANSWER: When the grounds enumerated under section 1 no longer exists.

Sect. 9. Judgment to include recovery against sureties.- The amount, if

any, to be awarded to any party upon any bond filed in accordance with
the provisions of this Rule, shall be claimed, ascertained, and granted
under the same procedure prescribed in Section 20 of Rule 57.

QUESTION: How do you claim for damages?

ANSWER: Follow Rule 57, Sect. 20.
Take note: No separate action to claim for damages

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