RECEIVERSHIP

RULE 59
 RECEIVERSHIP

• RECEIVERSHIP IS A PROVISIONAL REMEDY WHEREIN THE COURT APPOINTS A REPRESENTATIVE

TO PRESERVE, ADMINISTER, DISPOSE OF AND PREVENT THE LOSS OR DISSIPATION OF THE REAL
OR PERSONAL PROPERTY DURING THE PENDENCY OF AN ACTION.
 PURPOSE OF RECEIVERSHIP

• Protect and preserve the rights of the parties during the pendency of the main
action, during the pendency of an appeal or as an aid in the execution of a
judgment when the writ of execution has been returned unsatisfied
 WHEN IS THE REMEDY OF RECEIVERSHIP AVAILABLE?

• May be applied for at any stage of the action and even after final
judgment
 WHO IS A RECEIVER?

• PERSON APPOINTED BY THE COURT IN BEHALF OF ALL THE PARTIES TO AN ACTION FOR THE
PURPOSE OF PRESERVING THE PROPERTY INVOLVED IN THE SUIT AND TO PROTECT THE RIGHTS
OF ALL THE PARTIES UNDER THE DISCRETION OF THE COURT
 WHICH COURT MAY APPOINT A RECEIVER?

• (SEC. 1, RULE 59)

• court where action is pending
• court of appeals or supreme court or a member thereof

• During pendency of appeal, appellate court may allow receiver to be

appointed by court of origin
 CASES WHEN A RECEIVER MAY BE APPOINTED

• Applicant has an interest in the property or fund subject of the action is in danger of being lost,
removed, or materially injured
• Mortgaged property is in danger of being dissipated or materially injured and that its value is
probably insufficient to discharge the mortgage debt
• Stipulation in the contract of mortgage
• To preserve the property after judgment during the pendency of the appeal or to dispose it
according to judgment
 CASES WHEN A RECEIVER MAY BE APPOINTED

• To aid execution when execution has been returned unsatisfied

• Judgment debtor refuses to apply his property in satisfaction of the judgment or to carry on the
judgment
• Appointment of receiver is most convenient and feasible means of preserving, administering or
disposing of the property in litigation
 WHAT IS THE REQUIREMENT BEFORE AN ORDER OF
APPOINTMENT MAY BE ISSUED?

• GR: The applicant must file a bond executed in favor of the party against whom
the application is presented, in an amount fixed by court, to pay damages in case
receivership is procured without sufficient cause. (Sec. 2, rule 59)
• The court may require an additional bond for further security
 POWERS OF A RECEIVER

• Bring and defend in such capacity actions in his own name with leave of court
• Take and keep possession of the property in controversy
• Receive rents
• Collect debts due to himself as receiver or to the fund, property, estate, person, or corporation of which
he is the receiver
• Compound for and compromise the same
• Make transfers
• Pay outstanding debts
 POWERS OF A RECEIVER

• Divide the money and other property that shall remain among the persons legally entitled to
receive the same‘
• Generally, to do such acts respecting the property as the court may authorize
• Invest funds in his hands, ONLY by order of the court upon the written consent of all the parties
 LIABILITY FOR REFUSAL OR NEGLECT TO DELIVER
PROPERTY TO RECEIVER
• Contempt; and
• 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
 GROUNDS FOR THE DISCHARGE OF RECEIVER

• Posting of counterbond by adverse party (sec. 3, rule 59)

note: where counterbond is insufficient or defective, receiver may be re-appointed (sec. 5,
rule 59)
• Appointment of receiver was made without sufficient cause (sec. 3, rule 59)
• Insufficient or defective applicant’s bond (sec. 5, rule 59)
• Insufficient or defective receiver’s bond (sec. 5, rule 59)
• Receiver no longer necessary (sec. 8, rule 59)
 TERMINATION OF RECEIVERSHIP

• By court motupropio or on motion by either party

• Based on the following grounds:
• Necessity for receiver no longer exists
• Receiver asserts ownership over the property (Martinez V. Graño, G.R. No. L-25437, August 14, 1926)
• After due notice and hearing to all interested party
• 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