RULE 59

Receivership

Section 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 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
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 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. (1a)

Section 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, in its discretion, at any time after the
appointment, require an additional bond as further security for such damages. (3a)

Section 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.
(4a)

Section 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. (5a)

Section 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 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. (6a)

Section 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 the
receiver; to compound for 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. (7a)

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

Section 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. (n)

Section 8. Termination of receivership; compensation of receiver. — Whenever the court, motu proprio 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. (8a)

Section 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. (9a)

Receivership

Larrobis vs Phil veterans bank

, said foreclosure and the subsequent sale at public auction should be set aside and declared null and
void ab initio since they are already barred by prescription; the court a quo erred in sustaining the
respondent’s theory that its having been placed under receivership by the Central Bank between April
1985 and August 1992 was a fortuitous event that interrupted the running of the prescriptive period;13
the court a quo’s reliance on the case of Provident Savings Bank vs. Court of Appeals14 is misplaced since
they have different sets of facts; in the present case, a liquidator was duly appointed for respondent
bank and there was no judgment or court order that would legally or physically hinder or prohibit it from
foreclosing petitioners’ property; despite the absence of such legal or physical hindrance, respondent
bank’s receiver or liquidator failed to foreclose petitioners’ property and therefore such inaction should
bind respondent bank;15 foreclosure of mortgages is part of the receiver’s/liquidator’s duty of
administering the bank’s assets for the benefit of its depositors and creditors, thus, the ten-year
prescriptive period which started on February 27, 1981, was not interrupted by the time during which
the respondent bank was placed under receivership

Chavez vs CA

Two. In any event, we hold that the CA erred in granting receivership over the property in
dispute in this case. For one thing, a petition for receivership under Section 1(b), Rule 59 of the
Rules of Civil Procedure requires that the property or fund subject of the action is in danger of
being lost, removed, or materially injured, necessitating its protection or preservation. Its object
is the prevention of imminent danger to the property. If the action does not require such
protection or preservation, the remedy is not receivership.6

Here Fidela’s main gripe is that Evelina and Aida deprived her of her share of the land’s
produce. She does not claim that the land or its productive capacity would disappear or be
wasted if not entrusted to a receiver. Nor does Fidela claim that the land has been materially
injured, necessitating its protection and preservation. Because receivership is a harsh remedy that
can be granted only in extreme situations,7 Fidela must prove a clear right to its issuance. But she
has not. Indeed, in none of the other cases she filed against Evelina and Aida has that remedy
been granted her.8