G.R. No. L-24508 April 25, 1969
CENTRAL SAWMILLS, INC., plaintiff-appellee, vs. ALTO SURETY & INSURANCE CO., ET AL., defendants, ALTO SURETY & INSURANCE CO., defendant-appellant.

FACTS

Central Sawmills, Inc. obtained a final and executory judgment against Alto Surety & Insurance Co., Inc. for a sum of money. A writ of execution was issued but was returned unsatisfied by the Sheriff of Manila. The Insurance Commissioner’s letters revealed the defendant corporation’s precarious financial condition: as of December 31, 1957, it had a net worth of P70,602.35 with an impaired capital, and by September 30, 1959, it had total admitted assets of P161,121.84 against total liabilities of P649,130.88, resulting in a capital deficiency of P488,009.04. The Commissioner stated the company was in a “precarious financial condition” and required its stockholders to cover the impairment. Plaintiff filed a petition for receivership of the defendant’s properties. The Court of First Instance of Manila granted the petition and appointed a receiver. Defendant appealed, and the Court of Appeals certified the case to the Supreme Court, stating the issue raised was purely a question of law.

ISSUE

Whether or not, in an action for the collection of a debt where there is already a final and executory judgment, the court has the authority to appoint a receiver of the properties of the judgment debtor which are not involved in the action, in aid of the execution of said judgment.

RULING

Yes. The Supreme Court affirmed the orders appointing a receiver. The Court held that Section 39 of Rule 39 of the Rules of 1940 (now Section 43, Rule 39 of the 1964 Rules) expressly authorizes the appointment of a receiver of the property of the judgment debtor when a writ of execution is returned unsatisfied. This provision is a specific grant of power for receivership in aid of execution in money judgments. The precedent in Philippine Trust Co. vs. Santamaria (53 Phil. 463) was cited, where the Court ordered the appointment of a receiver of all properties and assets of a judgment debtor under similar circumstances. The Court clarified that Sections 1 and 2 of Rule 61 (now Rule 59) regarding receivership in actions where the property is in litigation or due to corporate dissolution or insolvency were of doubtful applicability to this case, as the properties were not the subject of the action and the receivership was sought purely as an aid to execution. The provisions of Rule 61 may be adopted only for procedural aspects, pursuant to Section 6 of Rule 124 (now Rule 135), which allows courts to employ all necessary means to carry jurisdiction into effect.