Rule 59 - (3/5 MT) Receivership

Question 1

Main purpose of receivership

Answer 1

appointing of receiver is for the purpose of [pad] preserve, administer, dispose of the property subject matter of the litigation DURING the pendency of the litigation

Question 2

Kinds of Receivership

Answer 2

1. R as a main action
2. R as a provisional remedy - governed by R59

Question 3

what is the remedy when you are a SH of a corp & you have grounds that the BoD is mismanaging the affairs resulting to prejudce of the corp?

what is the name of the case to be filed?

Answer 3

apply for Receivership as a main action by instituting a derivative suit to the effect that the court will appoint someone to pad the assets of the corp

Question 4

INSTANCES of receivership

Answer 4

1. when it appears from the verified application & other proof required, applicant has an INTEREST in the prop or fund subject to the proceeding [AND] the same is in danger of being [lrmi] lost, removed, or materially injured unless a receiver be appointed to [pad]

• Creditor filing R against an insolvent Debtor

2. action by Mortgagee for the foreclosure of mortgage where the property is in danger of [wdmi] wasted, dissipated, materially injured (AND**) its value is probably insufficient to discharge the mortgage debt (or) parties stipulated in CoMortagage

• file R who will preserve the building pending the hearing and approval of foreclosure of mortgage

3. After judgment,
   - preserve prop. pending appeal
   - dispose according to judgment
   - aid in the execution when the same is returned unsatisfied, J.Obligor refuses to apply his prop

TN: even final judgments, so this prov rem can still be had even if the main action is done provided that judgment has not been fully executed

4. Cases where appointment of R is the most convenient & feasible means of [pad] of the prop in litigation

Question 5

A’s property has been attached for satisfaction of judgment however is insufficient

what can B do even after final judgment?

Answer 5

as long as the judgment has not been truly enforced &in order to aid the execution & satisfaction of the judgment, B may apply for receivership

Question 6

Who may grant Receivership?

Answer 6

1. Trial court
2. CA
3. SC [or] any member thereof

TN: during pendency of appeal, appellate court MAY allow to be filed & decided by court of origin and receiver subject to the said court

Question 7

who may be appointed as receiver?

Answer 7

Commodities Storage & Ice Plant Corp v. CA

A receiver is NOT a representative of any of the parties but of ALL the parties such that their interest may be equally protected with the least possible inconvenience & expense

one who has the qualifications in administration and management of property

Question 8

can you file a case against a court-appointed receiver?

Answer 8

Generally, No because a receiver is an agent of the court

Exception, with leave of court

Question 9

REQUISITES for the appointment of a receiver

Answer 9

1. verified application
2. applicant must have an interest in the property [and] show ground for appoint of R exists
3. Notice & Hearing (no ex parte)
4. Applicant’s bond
5. Rcvr must be sworn to perform his duties faithfully [and] Receiver’s bond

Question 10

when filing for receivership, can you provide therein the bond immediately from application?

Answer 10

No, as it is to be fixed by the court.

Question 11

Applicant’s Bond

v.

Receiver’s Bond

Answer 11

AB
- [procedure] mandatory
- [LB]: sec 2
- [purpose] answer for damages may be caused to the party against should there be no reason for appoint of R
- at any time, court may require additional bond

RB
- [procedure] discretionary but required (?)
- [LB]: sec 4
- [purpose] guarantees receiver’s performance

Question 12

how to oppose/discharge a receiver?

Answer 12

1. application may be denied [or] receiver discharged when the adverse party files an OPPOSITION BOND/counterbond executed to the applicant, in an amount fixed by court, such that adverse party may answer for damages the applicant may suffer by reason of acts, omissions, or other matters based on the applicant’s ground for appointment
2. receiver may be discharged if it is shown that his appointment was obtained without sufficient cause

Question 13

in what instance can an opposition to a receivership be had without a counterbond/opposition bond?

Answer 13

if it is established that there is no ground for appointment of receiver then court may deny R [or] discharge the R

Question 14

General Powers & Duties of a Rcvr

LB:

Answer 14

Rule 59 Section 6

1. bring & defend, in such capacity actions in his own name
2. take & keep possession of property in controversy
3. receive rents
4. collect debts, fund, property, estate, person, or corporation
5. compound for & compromise
6. make transfers
7. pay outstanding debts
8. divide money & property remaining among the persons legally entitled to receive the same
9. Generally, acts respecting the property as the courts authorize. However, funds may be invested only by order of the court upon the written consent of all the parties to the action

Question 15

A was appointed as Rcvr for ABC corp. A brought an action against all the creditors of ABC. Creditors argues that A has no legal personality.

is their argument tenable?

Answer 15

Banco Filipino Savings & Mortgaging Bank v. BSP

• to bring and defend actions in his own name

SC ruled that once a corporation is closed and placed under a receivership, actions against such corporation shall be named of the receiver [AND] any action filed by the corporation shall be filed by the receiver

Question 16

A’s property was foreclosed by the bank but A argues that the period to foreclose has prescribed which is beyond 10 years.

Bank argues that the period they were under receivership should not be counted in the 10 year period for the instituting of the foreclosure likened to a fortuitous event

Rule

Answer 16

Larrobis v. Philippine Veteran Bank

• take & keep possession of property in controversy

prescriptive period for foreclosure is not interrupted by the period of receivership.

Question 17

Can receivers invest the property or the funds of the managed corp placed in his possession?

Answer 17

Rule: funds may be only invested by order of the court and written consent of all parties to the action

1. has to be purported investment of the funds of the receiver with prior leave of court
2. written consent of all parties to the action

Question 18

Consequence of refusal or neglect to deliver property to the Rcvr

Answer 18

1. punished for contempt
2. liable to receiver for the money or property refused to surrender
3. damages that may have been sustained by party entitled to as a consequence of refusal/neglect

Question 19

insofar as a receiver is concerned, what is the distinction between action for direct & action for indirect cotempt?

Answer 19

[indirect]
- against the person who refuses to deliver things to be placed under receivership

[direct]
- against the Rcvr

Question 20

what is the process should the rcvr be no longer necessary?

Answer 20

the court, motu proprio [or] upon motion of either party

1. after notice to all interested parties, and
2. after hearing;

• Settle the accounts of the receiver
• Direct the Delivery of the funds & other property to the person entitled to receive them
• Order the discharge of the receiver from further duty