The Case. Petitioner  seeks to annul  the order  of the respondent judge removing him as receiver, and appoint- ing  Martin T. Bacaron in his place.

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 Alcantara vs. Hon.  Abbas,  et al. 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.

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 in 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 the Honorable Court is at the mercy of  said  Serapio  Sablada;

"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 continuous contempt in as much as the subject of the contempt is non-compliance with the order of  the Honorable Court; * * *

"6. That  in view of the  attendant  circumstances related to  the tractor in this case, it is 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 the most  legal and  expedient procedure to retake the tractor  in question.

However,  despite  the  above   representations,  the  respondent   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 spend  the  same for repairs if necessary.

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

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

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,^[3] 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 in 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  posses- sion  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 be  relieved  as receiver and the defendant who is willing to  be the receiver  may be appointed in his place."

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 this Court dated October 6,  1958, the  plaintiffis  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  not  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. 7^[4] held Alcantara  to  be negligent,  and removed him.

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.

If  it was error to remove  Alcantara, a  clearer error occured 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 ^[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 receivership at the request of tlje defendant, without so much as a bond contrary to sec.  4, Rule 61, of the Rules of Court.^[9]

Conclusion. Such  mistakes  causing prejudice to  petitioner,, call  for interference with  that  discretion which usuaHy vest 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.

 

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^[1] And of Bacaron.

^[2] He also complained against Sablada.

^[3] And of Bacaron.

^[4] Sec.  7. Imprisonment until order obeyed. When the contempt consist 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.

^[5] Clark on Receivers, 2nd Ed. Vol. I, p. 138.

^[6] Moran, Rules of Court,  Vol.  Ill, 1963 Ed. p. 84 and cases.

^[7] 75 Corpus Juris Secumdum 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 Secumdum p. 722.

^[8] Appointment of Defendant as receceiver held error. Penn. Mut. Life vs. Cudd, 172 S.E. 787, 75 Corpus Juris Secundum p. 722

^[9] SEC. 4 Denial of application or discharge of receiver on defendant's bond. * * * The application may also be denied, or the receiver discharged, when the party opposing the appointment files a bond executed to the applicant in amount to be fixed by the court, to effect that such party will pay the applicant all damages he may suffer by reason of the acts, ommissions, or other matters specified in the application as ground for such appointment.