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EN BANC

G.R. No. L-14890             September 30, 1963

CONRADO ALCANTARA, Petitioner, vs. HON. MACAPANTON ABBAS, Presiding Judge, Branch II of the Court of First Instance of Davao and MARTIN T. BACARON, Respondents.

Conrado Alcantara in his own behalf as petitioner.
Desquitado and Acurantes for respondent Martin T. Bacaron.

BENGZON, C.J.:chanrobles virtual law library

          The Case.- Petitioner seeks to annul the order of the respondent judge removing him as receiver, and appointing Martin T. Bacaron in his place.chanroblesvirtualawlibrarychanrobles virtual law library

          Material Facts. - In March, 1957, Alcantara sued Bacaron partly to foreclose the chattel mortgage executed by the latter on a caterpillar tractor with its accessories (Civil Case No. 2282 of Davao). Pursuant to a clause in the mortgage contract, the Davao court designated Alcantara as receiver of the tractor; and he duly qualified as such. Thereafter, with the court's approval, he leased the machine to Serapio Sablada. Upon the expiration of the lease, and after Sablada's failure to return the machine, said court at the instance of Alcantara,¹ declared Sablada to be in contempt of court and fined him in the amount of P100.00 on October 6, 1958.chanroblesvirtualawlibrarychanrobles virtual law library

          Meanwhile, on October 2, 1958, alleging that Alcantara had neglected his duties as receiver, because he did not get the tractor, Bacaron petitioned the court to relieve such receiver, and to appoint him (Bacaron) as the receiver instead.² Opposing the petition, Alcantara made the following manifestations, in a pleading to the court dated November 26, 1958.

2. That in fact the herein plaintiff-receiver has exerted all efforts to secure the possession of the tractor will question, and has come to court time and again to compel the lessee, Serapio Sablada, to deliver the tractor to the receiver, but it seems that even Honorable Court is at mercy of said Serapio Sablada;.chanroblesvirtualawlibrarychanrobles virtual law library

3. That in fact, until and unless the tractor is delivered to the receiver as ordered by the Honorable Court, the said Serapio Sablada is liable to the Honorable Court for continues contempt in as much as the subject of the contempt is non-compliance with the order of the Honorable Court; ....chanroblesvirtualawlibrarychanrobles virtual law library

6. That in the view of the attendant circumstances related to the tractor in this case, it most respectfully prayed that the plaintiff-receiver be immediately authorized to file a case of replevin with damages against the person of Serapio Sablada, holding his surety bond liable therefor, if proper, as most legal and expedient procedure to retake the tractor in question. .

          However, despite the above representations, the respondent dent judge of the Davao court, in an order dated December 10, 1958, relieved Alcantara and appointed Bacaron as receiver of the tractor, without bond, with authority to receive the sum of P2,000.00 in Alcantara's hands as rentals of the tractor, and to the end the same for repairs if necessary.chanroblesvirtualawlibrarychanrobles virtual law library

          His motion to reconsider having been denied, Alcantara filed with this Court the instant special civil action. And his request a preliminary injunction was issued to restrain enforcement of His Honor's aforesaid order of December 10, 1958.chanroblesvirtualawlibrarychanrobles virtual law library

          The questions are: (a) the propriety of Alcantara's removal; and (b) the legality of Bacaron's appointment and qualifications.chanroblesvirtualawlibrarychanrobles virtual law library

          Discussion. - It appears that acting on the complaint of Alcantara on September 11, 1958, ³ the court required Sablada under pain of contempt, to deliver the tractor on or before September 30, 1958, at the junction of the Davao Penal Colony Road and the National Road going to Agusan in Panabo, Agusan. It also appears that upon Sablada's failure, he was declared to be contempt on October 6, 1958, and fined P100.00 - as previously stated. The order further said that upon failure to pay in one week, he will be imprisoned for ten days. Lastly, the order directed Alcantara to take steps to recover possession of the tractor, with the admonition that "should he fail to take possession of the tractor within fifteen (15) days after notice thereof, he may relieved as receiver and the defendant who is willing to be the receiver may be appointed in his place".chanroblesvirtualawlibrarychanrobles virtual law library

          Then on December 10, 1958, the court - overlooking or overruling Alcantara's pleading - issued the order now in question, which for convenience is quoted below:.

          It appearing that plaintiff-receiver failed to take steps to take possession of the tractor leased to Sablada and bring it to Davao City as directed in the Order of the Court dated October 6, 1958, the plaintiff is hereby relieved as receiver, and in his stead the defendant is hereby appointed as receiver without bond. Upon his qualification as such receiver, the defendant is hereby authorized to receive from the plaintiff the sum of P2,000.00 representing the rentals received by the latter from Sablada for the use of the tractor, and to spend said sum or so much thereof as may be necessary for bringing the tractor to Davao City and for payment of necessary repairs; and the plaintiff is hereby ordered to turn over to the defendant the said sum of P2,000.00 on demand.

          It is not clear what steps the court had in mind when it declared that "plaintiff-receiver failed to take steps to take possession of the tractor leased to Sablada". It could have meant that Alcantara failed to take the tractor directly from the hands of Sablada from the place where it was, without resorting to official help. If the court meant - as it must have meant - that Alcantara failed to exhaust judicial remedies to compel Sablada to comply with the order to place the tractor at the "junction" previously mentioned, then it fell into error, because Alcantara had in effect, suggested that Sablada be held in "continuous contempt" (Annex J) i.e., imprisoned until he placed the tractor at the "junction"; and the court instead of acting accordingly under Rule 64, sec. 7⁴ held Alcantara to be negligent, and removed him.chanroblesvirtualawlibrarychanrobles virtual law library

          In this connection, it should be observed that in his aforesaid pleading of November 26, 1958, Alcantara even asked for permission to sue Sablada for replevin.chanroblesvirtualawlibrarychanrobles virtual law library

          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 to a litigation should be appointed receiver without the other's consent ⁵ because "a receiver ought to be an indifferent person between the parties"⁶ and "should be impartial and disinterested"⁷. Note that Bacaron was the defendant, and his personal interest would conflict with his duties to the court and the plaintiff.⁸ 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.⁹chanrobles virtual law library

          Conclusion. - Such mistakes causing prejudice to petitioner, call for interference with that discretion which usually vests in trial courts in the matter of receivership Consequently, the order of December 10, 1958, should be, and is hereby annulled. Costs against respondent Bacaron. So ordered.

Padilla, Bautista Angelo, Concepcion, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Labrador and Reyes, J.B.L., JJ., took no part.

¹And of Bacaron.chanroblesvirtualawlibrarychanrobles virtual law library

²He also complained against Sablada.chanroblesvirtualawlibrarychanrobles virtual law library

³And of Bacaron.chanroblesvirtualawlibrarychanrobles virtual law library

⁴SEC. 7. Imprisonment until order obeyed. - When the contempt consists in the omission to do an act which is yet in the power of the accused to perform, he may be imprisoned by order of a superior court until he performs it.chanroblesvirtualawlibrarychanrobles virtual law library

⁵Clark on Receivers, 2nd Ed., Vol. 1, p. 138.chanroblesvirtualawlibrarychanrobles virtual law library

⁶Moran, Rules of Court, Vol. III, 1963 Ed., p. 84 and cases.chanroblesvirtualawlibrarychanrobles virtual law library

⁷75 Corpus Juris Secundum, p. 721.

          By the way, Alcantara could be properly appointed, because there was consent of the parties in the chattel mortgage contract. - 75 Corpus Juris Secundum, p. 722.

⁸Appointment of Defendant as receiver held error. - Penn. Mut. Life vs. Cudd, 172 S.E. 787, 75 Corpus Juris Secundum. p. 722.chanroblesvirtualawlibrarychanrobles virtual law library

⁹SEC. 4. Denial of application or discharge of receiver on defendants bond. - .. The application may also be denied, or the receive, 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.