Civil Procedure: Rule 59 Receivership

Sec. 1. Appointment of receiver. – Upon a verified application , one or more receivers of the property subject of the actin 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 as 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 be 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 is in danger of being wasted or dissipated or materially injured, and that its value is probable 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 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 a 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 the court of origin and the receiver appointed to be subject to the control of said court.


Commodities Storage v. Court of Appeals

G.R. No. 125008

A petition for receivership requires that the property or fund which is the subject of the action must be in danger of loss, removal or material injury which necessitates protection or preservation.  In the instant case, there is no sufficient showing that the ice plant is in danger of disappearing or being wated and reduced to a ‘scrap heap.” At the time the trial court issued the order for receivership of the property, the problem had been remedied and there was no imminent danger of any leakage.

Neither party to a litigation should be appointed as receiver without the consent of the other because a receiver should be a person indifferent to the parties and should be impartial and disinterested. The receiver is not the representative of any of the parties but of all of them to the end that their interests may be equally protected with the least possible inconvenience and expense.

Sec. 2. Bond on appointment of 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 be 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, I its discretion, at any time after the appointment, require an additional bond as further security for such damages.


Sec. 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 b 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.


Sec. 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.


Sec. 5. Service of copies of bonds; effect of disapproval of 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 of 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 and 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; o collect debts due to himself as receiver or to the fund, property, estate, person, or corporation of which he is the receiver; to compound and compromise the same; to make transfers; to pay outstanding debts; to divide 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 the written consent of all the parties to the action.

            No action may be filed by or against a receiver without leave of the court  which appointed him.


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 of 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.


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 n 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 thereceiver 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.


Sec. 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.


Reference:  University of the Philippines


About Magz

First of all, I am not a lawyer. I'm a graduate of AB Political Science and went to the College of Law but stopped going to law school for some reasons. I'm a passionate teacher who has been teaching English to speakers of other languages and a person who likes writing and blogging. I lost some important files and software when my computer broke down so the reason I created this website is to preserve the notes, reviewers and digests I collected when I was at the law school and at the same time, I want to help out law students who do not have enough time to go and read books in the library.

Posted on December 19, 2011, in Civil Procedure and tagged . Bookmark the permalink. Leave a comment.

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