Receivership

PROVISIONAL REMEDIES (Rule 59) R U L E 5 9 RECEIVERSHIP Sec. 1. Appointment Appointment of receiver.- Upon a verified application, application, one or  more receivers of the property subject of the action or proceeding may be appointed appointed by the court where where the action is pending, pending, or, By  the the Cour Courtt of Appe Appea als or by the the Supr Suprem eme e Court ourt,, or a mem member  ber  thereof, in the following cases: a.) When it appears appears from the verified verified applicatio application, n, and such such other proof  proof  the court may require, require, that the party applying applying for the appointment  appointment  of a receiv receiver er has has an inter interest est in the the proper property ty or fund fund which which is the subject of the action or proceeding, and that such property or fund  is in danger danger of being being lost, lost, removed, removed, or materially materially injured injured unless unless a receiver by appointed to administer and preserve it; b.) When it appears in an action by the mortgagee for the foreclosure foreclosure of  a mo mort rtga gage ge that that the the prop proper erty ty in is dang danger er of bein being g wast wasted ed or  diss dissip ipat ated ed or mate materi rial ally ly inju injure red, d, and and that that its valu value e is prob probab ably  ly  insufficient to discharge the mortgage debt, or that the parties have so stipulated in the contract of mortgage; c.) After After judgme judgment, nt, to preser preserve ve the proper property ty duri during ng the penden pendency cy of  an appeal, appeal, or to dispose dispose of it according according to the judgmen judgment, t, or to aid  aid  execution when the writ of of execution has has been returned unsatisfied  or the judgment judgment obligor refuses to apply his property in satisfaction of the judgment, or otherwise to carry the judgment into into effect; d.) Whenev Whenever er in other other cases cases it appear appears s that that the appointm appointment ent 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 appl applic icat atio ion n for for the the appo appoin intm tmen entt of a recei receive ver r to be filed filed in and  and  decided by court of origin and the receiver appointed to be subject to the control of said court.

- 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.

RECEIVER

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 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.

Property of 

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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 Property of 

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PROVISIONAL REMEDIES (Rule 59) 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 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 i n 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 Property of 

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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. 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. Property of 

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PROVISIONAL REMEDIES (Rule 59)  Take note: No separate action to claim for damages

Property of 

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