g.

Cases:

i. Acuña v. Caluag, 101 Phil 446 (1957)

Whether or not the respondent Judge can issue the questioned orders despite the perfected appeal.

Ruling:

Yes, he can.

Although the perfection of an appeal deprives the trial court of jurisdiction over the case, nevertheless,
under the law, said court retains jurisdiction as regards the preservation of the property under
litigation and involved in the appeal, including necessarily the authority to appoint a receiver who
has the power to take and keep possession of the property in controversy.

The question litigated in the appeal is whether the petitioners or respondent Santos has a better right to
possession. The appointment of the receiver with order to deliver possession to him does not
touch upon, much less decide that question.

Related provision:

Sec. 1

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
ii. Central Sawmill v. Alto Insurance, 27 SCRA 997 (1969)

Issue:

Whether or not receivership under Rule 59, Sec. 1 may be resorted to in an action for collection of a debt
where there is already a final and executory judgment. (hence, not involved involved in the very litigation)

Ruling:

No. Rule 59, Sec. 1 is not applicable here because, as contended by defendant-appellant, all the
cases of receivers contemplated in said section are only cases wherein the property or properties
being placed under receivership are those involved in the very litigation in which such
receivership is ordered.

In the case at bar, the properties being placed under receivership are not the subject of the action.

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
iii. Descallar v. CA, 224 SCRA 566 (1993)

Whether the trial court gravely abused its discretion in appointing a receiver for real property registered in
the name of the petitioner in order to transfer its possession from the petitioner to the court-appointed
receiver?

3. The appointment of a receiver is not proper where the rights of the parties (one of whom is in
possession of the property), are still to be determined by the trial court.

Only when the property is in danger of being materially injured or lost, as by the prospective foreclosure of
a mortgage thereon for non-payment of the mortgage loans despite the considerable income derived from
the property, or if portions thereof are being occupied by third persons claiming adverse title thereto, may
the appointment of a receiver be justified

Only when the property is

in danger of being materially injured or lost,

as by the prospective foreclosure of a mortgage thereon for non-payment of the mortgage loans
despite the considerable income derived from the property, or
if portions thereof are being occupied by third persons claiming adverse title thereto,

may the appointment of a receiver be justified

In this case, there is no showing that grave or irremediable damage may result to respondent Borromeo
unless a receiver is appointed. The property in question is real property, hence, it is neither perishable or
consummable.

2. Another flaw in the order of receivership is that the person whom the trial judge appointed as
receiver is her own clerk of court.

RECEIVER; A PERSON INDIFFERENT TO THE PARTIES - The general rule is that 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.

3. In actions involving title to real property, the appointment of a receiver cannot be entertained
because its effect would be to take the property out of the possession of the defendant , except in
extreme cases when there is clear proof of its necessity to save the plaintiff from grave and irremediable
loss or damage.
iv. Commodities Storage & Ice Plant Corp., v. CA, 274 SCRA 439

1. A receiver of real or personal property, which is the subject of the action, may be appointed by the
court when it appears from the pleadings or such other proof as the judge may require, that the party
applying for such appointment has
(1) an actual interest in it; and
(2) that such property is in danger of being lost, removed or materially injured; or
(b) whenever it appears to be the most convenient and feasible means of preserving or
administering the property in litigation.

In the instant case, there is no necessity for the appointment of a receiver. Petitioners have not sufficiently
shown that the Sta. Maria Ice Plant is in danger of disappearing or being wasted and reduced to a "scrap
heap." Neither have they proven that the property has been materially injured which necessitates its
protection and preservation.

The "drastic sanctions" that may be brought against petitioners due to their inability to pay their
employees and creditors as a result of "the numbing manner by which respondent bank took the ice plant"
does not concern the ice plant itself. These claims are the personal liabilities of petitioners
themselves. They do not constitute "material injury" to the ice plant.

2. Moreover, the receiver appointed by the court appears to be a representative of petitioners.

Respondent bank alleges that it was not aware that petitioners nominated one Mr. Pesquera as receiver.
The general rule is that 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 power to appoint a receiver must be exercised with extreme caution. There must be a clear
showing of necessity therefor in order to save the plaintiff from grave and irremediable loss or
damage.
v. Pacific Merchndising Corp., Consolacion Insurance & Surety Co., 73 SCRA 564

ISSUE: Whether or not a receiver can enter into any contract without court’s approval.
RULING:
NO. A receiver is not an agent or representative of any party to the action. He is an officer of the
court exercising his functions in the interest of neither plaintiff nor defendant, but for the common
benefit of all the parties in interest. He performs his duties "subject to the control of the Court",
and every question involved in the receivership may be determined by the court taking
cognizance of the receivership proceedings.

Thus, "a receiver, strictly speaking, has no right or power to make any contract binding the
property or fund in his custody or to pay out funds in his hands without the authority or approval
of the court
vi. Alcantara vs. Abbas, 9 SCRA 54

ISSUE: is the removal valid?

HELD:
No. If it was error to remove Alcantara, a clearer error occurred when Bacaron — the defendant —
was appointed, as receiver without bond, over the objection of Alcantara — the plaintiff. The general
rule is that neither party to a litigation should be appointed receiver without the other's consent
because "a receiver ought to be an indifferent person between the parties" and "should be
impartial and disinterested".

Note that Bacaron was the defendant, and his personal interest would conflict with his duties to the court
and the plaintiff. Furthermore, under the Rules of Court, the receiver must file a bond; and yet Bacaron
was exempted from such obligation.

The effect of the whole proceeding was to discharge the receiver ship at the request of the defendant,
without so much a bond — contrary to sec. 4, Rule 61, of the Rules of Court.
vii. Abrigo v. Kayanan, 121 SCRA 20

Whether the appointment of receiver was proper?

Considering that in actions involving title to real property, the appointment of a receiver cannot be
entertained because its effect would be to take the property out of the possession of the
defendant, except in extreme cases when there is clear proof of its necessity to save the plaintiff
from grave and irremediable loss or damage.

In this case, the reason for the appointment of the receiver was the fact that the land had been
entered by numerous squatters. However, a receiver who is also burdened with his duties as Clerk of
Court cannot be in a better position than the actual possessors in dealing with the squatters.

The appointed receiver does not acquire any advantage from the owners and/or present possessors, nor
is he in a better position in order to protect the respective interest of the herein parties for he has to apply
as are the present possessors deprived of their possession, for the same remedies and relief normally
afforded to an aggrieved property owner. A receiver is not endowed with extra legal power to take the
law in his hands with a view to quell and disband the squatters short of taking legal action; nor is
he conferred with a magic wand not possessed by herein party-litigants as property owners.

On the contrary, the receivership placed the parties at a disadvantage. He stands between the squatters
and owner-possessors, so much so that any action of the owner-possessor against the squatters will
have to pass through the receiver. Whereas, if the status quo were left undisturbed, the owner-possessor,
whose holding over the parcel of land under litigation is actually occupied and entered by squatters can
take direct legal action as he has the legal right to proceed against the intruders.

The respondent judge should at least have accepted the bond offered by the petitioner. Rule 59, Sec. 4
(now section 3) stipulates that "the receiver (may be) discharged when the party opposing the
appointment 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."
 C. RECEIVERSHIP

a. Rule 59, Sections 1-9

-A petition for receivership under Section 1 (b) of Rule 59 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

-Unlike the other provisional remedies which can be availed of only before final judgment, receivership
may be resorted to even after the judgment has become final and executory,

b. Distinguish Receivership from attachment

1. As to purpose

Receivership

To 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.

Attachment

> To seize the property of the debtor in advance of final judgment and to hold it for purposes of
satisfying said judgment;

> To acquire jurisdiction over the action by actual or constructive seizure of the property

2. As to subject property

Receivership

The property or fund to be placed under receivership is the subject of the action, and that it is in
danger of being lost, removed, or materially injured

Attachment

The property attached is not necessarily the subject of the action.

3. Appointment of receiver

Receivership

Appointment of a receiver for the purpose of preserving and conserving the property in litigation.

Attachment
No such appointment in attachment.
c. Grounds for receivership
Sec 1
(a)
1.The applicant has actual interest in the property; and
2.(a) Such property is in danger of being lost, removed, or materially injured; or
(b) Whenever it appears to be the most convenient and feasible means of preserving or
administering the property in litigation

(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

-Generally, neither party to a litigation should be appointed as a receiver without the consent of the other.
-Neither the plaintiff nor the defendant is represented by the receiver. He is an officer of the court.

Requisites for the appointment of receiver

1.Verified application
2.Applicant must have interest in the property
3.Property is in danger of being lost, removed, materially altered, etc.
4.Need to preserve or administer the property
5.Notice and hearing
6.Bond (Sec. 2, Rule 59)
d. Receivership bond

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.

e. Powers of a Receiver

NOTE:

1. Such powers of the receiver are subject to the control of the court in which the action or proceeding is
pending.

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

General Powers of a Receiver

1. Bring and defend, in such capacity, actions in his own name;

2. To take and keep possession of the property in controversy;

3. To receive rents;

4. To collect debts due to himself as receiver or to the fund, property, estate, person, or corporation
of which he is the receiver;

5. To compound for and compromise the same;

6. To make transfers;

7. To pay outstanding debts;

8. To divide the money and other property that shall remain among the persons legally entitled to
receive the same; and

9. Generally to do such acts respecting the property as the court may authorize.

10. Invest the funds in the hands of the receiver, however may only be done by order of the court
upon written consent of all parties to the action
What happens when a person refuses or neglects to deliver property to the receiver?
In sum:
1.Contempt;
2.Liable for the money or the value of the property that was refused or neglected to be
surrendered; AND
3.Plus, damages sustained by the party caused by such refusal or neglect.

f. Instances/Grounds for termination of receivership

DENIAL OF APPLICATION OR DISCHARGE OF RECEIVER

•Adverse party files a counterbond to answer for damages (Rule 59, Sec. 3);

•If the appointment sought or granted is without sufficient cause (Rule 59, Sec. 3);

•Applicant's bond is insufficient (Rule 59, Sec. 5); or

•Receiver's bond is insufficient (Rule 59, Sec. 5)

Clerk of Court NOT to be Appointed as Receiver

Necessity of Imminent Danger to Property

Discretion to be exercised with Extreme Caution

Can there be an ex parte receivership order? Ambot

Termination of receivership
In sum:
•Termination can be done motu proprio or on motion of either parties.
•There must be due notice and hearing.
•Termination includes settlement of the receiver’s account, delivery of the funds and properties in
his possession, and order of discharge of receiver.

When do you terminate a receivership?

◉Answer. When the grounds under Section 1 no longer exist.
Compensation of receiver
In sum:
•No fixed amount. Reasonable compensation
•The compensation is to be taxed as costs against the defeated party OR the prevailing litigant
may be made to share the expense as justice requires.

Procedure to claim damages on applicant’s bond

To recover an award on the applicant’s bond, it is necessary: (N 2BHI)
1.That the claimant has secured a favorable judgment in the main action, meaning that the plaintiff has
No cause of action and was not, therefore, entitled to the provisional remedy of receivership;
2.That due Notice be given to the other party and his surety or sureties, notice to the principal not being
sufficient;
3.That the application for damages, showing claimant’s right thereto and the amount thereof, be filed in
the same action
Before trial or
Before appeal is perfected or
Before the judgment becomes executory; and

4.That there should be a proper Hearing and the award for damages should be Included in the final
judgment.

Take Note:

•The procedure outlined is required to be followed only in proceedings:

1.Against the bond filed by the applicant for receivership, which answers for the damages that the
adverse party may sustain by reason of the appointment of a receiver in case the applicant shall
have procured the appointment without sufficient cause (Section 2, Rule 59); or

2.Against the counterbond posted by the party opposing the appointment of the receiver,
conditioned to pay all the damages the applicant may suffer by reason of the acts, omissions, or
other matters in the application for receivership. (Section 3, Rule 59)

•No separate action to claim for damages.