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RULE 59RECEIVERSHIP

1 Making Enterprises vs Marfori

Issue: When receiver may be appointed

Ruling

Appointment of a receiver is not proper where the applicant s failed to show how the building as well as the incomethereof would disappear or be wasted if not entrusted to a receiver. They were not able to prove that the propertyhas been materially injured, necessitating its protection and preservation. Because receivership is a harsh remedythat can be granted only in extreme situations, respondents must prove a clear right to its issuance.

Facts

Marfori acquired the Marsman Building from DBP. He leased the lot on which it was built from the PPA. He thenincurred huge expenses for the rehabilitation of the building. Three years later, he executed a dacion en pago andassignment of rights transferring the ownership of Marsman Building to Making Enterprises, Inc.

Marforis wife, however, alleged that she did not consent to the transfer. She filed a complaint with the RTC to annulthe assignment and prayed for the appointment of a receiver to preserve the rentals of the building.

2 Commodities Storage and Ice Plant vs CA

Issue: When and by whom a receiver may be appointed

RULING

Alleged leak problems and the destruction of financial and accounting record do not constitute material injury to theice plant that necessitates the appointment of a receiver. The applicants have not sufficiently shown that the Sta.

Maria Ice Plant is in danger of disappearing or being wasted and reduced to a scrap heap. Further, the alleged leakproblems have already been remedied. Whatever danger there was to the community and environment have alreadybeen contained.

FACTS

Petitioner spouses Trinidad obtained a P31M from Far East Bank to finance the purchase of the Sta. Maria Ice Plantand Cold Storage. The loan was secured by a mortgage over the land and the ice plant. They failed to pay their loan.The property was extrajudicially foreclosed and sold to Far East Bank.

Petitioners filed a petition for receivership alleging that the bank failed to take care of the ice plant with due diligenceand that its occupation resulted in the destruction of the petitioners financial and accounting records.

3 Traders Royal Bank vs IAC & Heirs of TayengcoIssue

Compensation of receiver

Ruling

When the service of a receiver who has been properly appointed terminates, his compensation is to be chargedagainst the defeated party, or the prevailing litigant may be made to share the expenses as justice requires. (Section

8, Rule 59). Consequently, the trial courts order approving TRBs compensation to be charged solefunds under its receivership is without legal justification.

Facts

The Traders Royal Bank was appointed a receiver pendente lite of disputed properties. When the courspoused Jose and Salvacion Tayengco as the lawful owners of the properties, the receivership prterminated. TRB rendered its final accounting of the funds under receivership. Then it deducted P2receiver fees. The RTC approved the final accounting and the automatic deduction of receivers fee.

4 Vigan Electric Light vs Arciaga

Issue

When a receiver may be appointed for a corporation

Ruling

Where the motion for appointment of a corporate receiver did not contain sufficient facts to show that Vimminent danger of insolvency, and that receivership was necessary to prevent fraud or to preserveproperty from loss, injury or diminution in value for the security of all parties in interest, the appointmenis not proper.

It has been ruled that an allegation that a defendant is insolvent is simply a conclusion of law and instatement of one of the essential conditions necessary to be pleaded to warrant the appointment of asolvency or insolvency of a corporation can ordinarily be shown by proof of its assets, their value, theliabilities and attendant circumstances. In other words, it is necessary that the applicant allegessufficient to show insolvency or the imminence of insolvency, rather than broad conclusions.

Facts

NPC filed an action for collection of unpaid electric power and energy furnished to VELCO. Subsequenentered into a compromise agreement containing the terms and conditions of payment of the debgranted by the CFI. VELCO paid the downpayment as stipulated and the balance in monthly installmen

Assistant Fiscal Tabanda filed an urgent motion for the appointment of a receiver on the ground thaimminent danger of insolvency. He alleged that VELCO has a known total indebtedness of more thanpesos and its assets are not sufficient to cover its lawful obligations. Thus, the appointment of a receivconvenient and feasible means to protect and preserve the funds, properties and income of VELCgranted the petition and appointed Atty. Redoble, a clerk of court, as receiver.

5 Surigao Development Bank vs Buslon

IssueWho may be appointed receiver and when

Ruling

Where the President and Treasurer of the bank failed to return or to account for the shortage of its cabank incurred operational losses and numerous irregularities and unlawful banking practices were disoperation, respondent judge had sufficient basis in finding that SDB was in imminent danger of insolvenfraud and mismanagement were involved, there was an imperative necessity for the appointment oprevent further loss of funds and to preserve the assets still existing.

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The prohibition against appointment of interest party does not apply where there is no showing that the Central Bankhas any property or money claim against the bank. Therefore, the appointment of the Superintendent of Banks asreceiver is proper.

FactsSDB has a capital stock of 1 million pesos deposited with the Pacific Banking Corporation. DBP subscribed to 50%of SDBs shares. As stockholder, DBP filed an action for accounting and restitution of unexplained shortage of over ahalf million pesos. It also prayed for the appointment of a receiver pendente lite. While the case was pending, theCentral Bank and the Republic filed a civil case and quo warranto proceedings with the CFI in connection withvarious violations of the banks charter and by laws and anomalous banking operation with prayer for theappointment of a receiver.

6 Dolar vs Sundiam

IssueWhether a receiver may be appointed over property in custodia legis

RulingWhere a piece of property which originally is part of the estate of the deceased person is sold by an heir and saidpiece of property is, by mistake, subsequently inventoried or considered part of the decedents estate and, thereafter,sold to another person with the approval of the probate court, a receiver may be appointed by the court during thependency of the motion to set aside the second sale to protect the rights of the real owner of the property.

The principal object of the ancillary relief of receivership is to secure and preserve the property or the thing incontroversy pending litigation in order that a judicial tribunal may be able to effectively bestow to the parties litigantthe rights to which they are entitled, or exact from them the obligations to which they are subject, under the law.Ordinarily, therefore, this remedy will not lie where the property involved is already in custody of law, such as that inthe hands of the executor or administrator.

In this case, however, the subject property was already sold by the heir of the deceased. Thus, the probate court no

longer has jurisdiction to authorize the estate administrator to resell the property.FactsTupas Jr. sold two parcels of land that he inherited from his father to Lumampao. Subsequently, Luis Tupas wasappointed administrator of the estate. In his project partition, the subject parcels of land was assigned to Tupas Jr.However, upon authority of the probate court, Luis sold the same to Cirilo Dolar for the payment of taxes due to thegovernment. While the complaint for recovery of the properties was pending before the CFI, Lumampao filed apetition for the appointment of a receiver with the probate court. Respondent Judge Sundiam granted the petition.

7 Ysasi vs Fernandez

IssueWhether a husband may be deprived of his powers of administration over conjugal partnership properties upon mereallegations of abuse of such powers.

RulingNo, a husband may not be forced to surrender his statutory right to administer the conjugal properties by the simpleexpedient of charging him with the naked averment that he has forfeited that right. The purpose of receivership is topreserve or protect the rights of the parties during the pendency of the main action. At stake here are the husbands

power of administration and the wifes right to be protected from abuse thereof. The wifes right rests upon proof ofsuch abuse. Absent such proof, the wifes right does not exist. Therefore, the placement of Hacienda Manucao-Aunder the receivership of BPI is improper.

FactsJuan and Maria Ysasi owned Hacienda Manucao-A. Juan supervised the hacienda. Their son, Jon, took over themanagement of the hacienda. When Jon resigned as manager, Juan designated Bilbao to take his place. Jon,

however, refused to turn over the hacienda to Bilbao upon the claim that his mother already padministered the property.

Maria filed a petition to be appointed receiver pendent elite of the conjugal partnership properties on fraud and abandonment without just cause. Respondent judge granted the petition.

8 Salas vs Quinga

IssueIs an administratrix required to render accounting and return products of the land pending appeal?

RulingYes. Respondent Quinga, having obtained a writ of execution pending appeal and thus taken possess

in dispute, she thereby replaced the receiver for all legal purposes in the collection of its produce. justice, therefore, the decree of the CA to deliver to the winning party the material possession of the lall the funds which the receiver may have in his hands applies to her as well, as if she were the receive

FactsSalas is the occupant of a parcel land that she claimed as hers. She allegedly mortgaged it to Datoonrecto sale. When the latter died, the land was included in his estate. Quinga was appointed adminestate. Salas filed an action for reconveyance of property against her and consigned the amount of her

The CFI dismissed the complaint. The land was placed in Quingas possession and Salas was odamages.for failure to pay Datoons share in the produce of the land. The CA, however, reversed theordered Quinga to reconvey the property and to turn over the produce of the land which she received.

9 Duque vs CFI

IssueWhen a second receiver may be appointed

RulingA second receiver may be appointed pending motion for the removal of receiver who abused his pprotection of the rights of the parties. However, inasmuch as the appointed second receiver has consto perform as clerk of court, his appointment shall stand only until such time another person is appointe

FactsPilar Normandy et al. sought the declaration of nullity of certain contracts between WARVETS EnFilipinas Merchandising Corporation. Saura was appointed receiver for the properties involved in the ciet al. filed a motion for the removal of Saura due to alleged abuses of power and presented evidence ttheir charges. Before Saura started presenting evidence, Duque et al. filed a motion for appointmenreceiver. Respondent CFI denied the motion on the ground that the appointment of a second receiver wconfusion to the management of the affairs of the receivership.