Page 1 of 6

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-29119

February 18, 1928

TEAL MOTOR CO., INC., a corporation organized

under the laws of the Philippine Islands, and E. H.
TEAL., petitioners,
vs.
COURT OF FIRST INSTANCE OF MANILA, E. M.
BACHRACH and THEODORE G. DAVIS, receiver of
the TEAL MOTOR CO., INC., respondents.
Chas.
E.
Tenney
for
petitioners.
DeWitt, Perkins & Brady and Basilio Francisco for
respondents.
Ohnich & McFie for respondent judge and receiver.
STATEMENT
The original complaint in which the receiver was
appointed alleges that the Teal Motor Company, Inc., is a
domestic corporation, with a capital stock of P1,000,000
divided into 10,000 shares of the par value of P100
each, of which 8,000 shares have been issued 3,999 of
which are in the name of Bachrach and one in his
nominee, and 3,998 in the name of Teal and two in the
name of his nominees. That on August 28, 1926, Teal
represented to Bachrach that he had subscribed and
paid in full for P500,000 or 50 per cent of all the capital
stock of the corporation. That payment therefore had
been made by the transfer and delivery to the company
of certain assets which were of the fair and reasonable
value of that amount. That said representations were
false and were known to be false at the time they were
made, and were made by Teal for the purpose of
inducing Bachrach to subscribe to the capital stock of
the company, and to render it financial assistance and to
cause him to enter into agreement, which he did. That
relying thereon on August 28, 1926, plaintiff entered into
the contract and subscribed to, and paid for P300,000 of
the capital stock of the company, and the defendant Teal
then transferred to plaintiff P100,000 of the capital stock
then standing in his name, thus apparently making the
stock of the Teal Motor Company fully paid to the
amount of P800,000, of which one block of P400,000
was held by the plaintiff and his nominee, and the other
by the defendant Teal and his nominees, it being the
agreement and intention of the parties that Bachrach
and Teal "were virtually to become partners in the form
of a corporate organization, each to have fifty per cent
of its capital stock." That they further agreed that
Bachrach should have two members on the board of
directors out of the five, and that Teal should have the
remaining three "with an undertaking to pass resolution
in regard to any matters coming before any meeting of
the board of directors upon the approval of" Teal and
Bachrach, all of which was made a part of the
agreement. That since that date the corporation has
been under the control of Teal, who has "so managed
and conducted the business of the corporation, as to
dissipate and misapply its assets and otherwise has
neglected the management of its business and affairs,
that said defendant corporation, Teal Motor Co., Inc., is
in imminent danger of insolvency, and the dissipation
and loss of its assets and business." That by virtue of the
agreement, the promissory notes transferred to the
defendant Teal Motor Co., Inc., by the defendant Teal,

amounting to P168,870.81 in part of his original

subscription to the capital stock, were thereafter
discounted by the company to the plaintiff, and that
from and out of the amount of said notes, at least
P45,000 was not paid by the original makers at their
maturity, by reason of which Bachrach made a demand
upon the defendant Teal and the company as endorsers,
and that Teal, taking advantage of his authority as
President of the company, caused checks to be drawn
on the account of the company and payments thereof to
be made to Bachrach, who in turn delivered the notes to
the company "where most of them still remain unpaid
and uncollected." That Bachrach made a demand upon
the defendant Teal to make good to the defendant
company the amount of the notes, for he was personally
liable to the company. That notwithstanding such
repeated demands "the defendant Teal has failed and
refused and still fails and refuses to make good said
notes, or any part thereof, to the defendant Teal Motor
Co., Inc., to the injury and prejudice of the latter, and,
without the relief hereinafter prayed for, it will be
impossible for the Teal Motor Co., Inc., to enforce against
E. H. Teal its rights in the premises, to the injury,
damage and prejudice of said company and of its
stockholders."
It is further alleged that on or about July 10, 1926, it was
the custom in the Philippine Islands to sell automobiles
by the taking of an initial partial payment, the balance of
the purchase price to be evidenced by a series of
promissory notes secured by a chattel mortgage upon
the automobile. The notes of his nature have been
discounted from time to time by the company to plaintiff
in the aggregate amount of P582,950.54, of which there
remains due and unpaid at least P298,274.08, upon the
undertaking of the company to keep in its possession
the said chattel mortgages takes as security for the
payment of the notes. That Teal, as President and
without the knowledge or consent of plaintiff or the
authority of the board of directors, and by an
arrangement with the purchasers of such automobiles,
upon which the mortgages were given, has cancelled
the mortgage securities, and caused the purchasers to
sign new notes secured by new mortgages, which new
notes in turn has discounted to Bachrach or other
persons "for the purpose of concealing the true
precarious financial condition of the defendant, Teal
Motor Co., Inc., to the damage and prejudice of its
stockholders, and to the damage and prejudice of the
plaintiff." "That said notes so doubly discounted,
remaining unpaid on July 31, 1927, exceeded P100,000,
of which amount a large portion is still outstanding and
unpaid," all of which is a fraud upon the creditors of the
corporation. That on July 31, 1927, Teal was overdrawn
in the amount of P6,845.30 without authority of the
board of directors, and has refused to make good the
amount of the overdraft. That about October 15, 1926,
the Negros Transportation Company executed its certain
promissory note for P13,950 and delivered it to the
defendant Teal, who in the same month sold it to plaintiff
for P13,252.50, and it is then alleged the amount of the
note from the Negros Transportation Company and
issued a receipt therefor. That plaintiff never knew of
this until October, 1927, when he promptly made a
demand for the payment of this note, which was not
paid until November 12, 1927, Like allegations in
substance are made as to the sale of a fire engine to
one Arsenio Escudero. It is then alleged that the
defendant Teal caused a Buick automobile to be sold to
his wife and charged to his personal account.
That as a result of an inventory of the assets of the
corporation made as July 31, 1927, it appears that the

Page 2 of 6

original inventory was groossly and fraudulently made

by false inventory values, so that there was a resulting
loss during that period of P248,394.03. Further
allegations are also made as to the sale of two motorbuses amounting to P16,918.60. It is then alleged "that
the defendant, E. H. Teal, taking advantage of his
position as the president of the defendant, Teal Motor
Co., Inc., has secretly and fraudulently, as aforesaid,
otherwise conducted the business of the defendant, Teal
Motor Co., Inc., to his own benefit and to the great
damage and prejudice of this plaintiff as a stockholder
and creditor thereof, and the remaining property and
funds of the defendant, Teal Motor Co., Inc., is in danger
of being lost or materially injured unless a receiver shall
be appointed to guard and preserve the same until this
can be finally disposed of; and that in any case the
appointment of a receiver is the most convenient and
feasible means of preserving and administering the
property of said defendant, Teal Motor Co., Inc., during
the pendency thereof." "For the above reasons, plaintiff
respectfully alleges that in order to obtain an application
of the property and interests in property of the
defendant, Teal Motor Co., Inc., to and upon the claims
of this plaintiff and other creditors of said defendant
corporation, and in order to prevent the depreciation of
said property and the loss and destruction of the value
thereof as a going concern, it is necessary that this court
shall appoint a receiver for the purpose of taking
possession of and conducting the business of the
defendant, Teal Motor Co., Inc., and to sell said property
and business, or so much thereof as may be necessary
to satisfy the debts and claims against the same, and
that under the said circumstances the appointment of
such a receiver by this court, for the protection of the
value of said property and of the interests of all concern,
is an imperative necessity.
Wherefore it is prayed
(1) That a receiver be appointed, etc.
A copy of the agreement in question between the
respective parties is attached to, and made a part of,
the complaint, and marked Exhibit A.
Based upon that complaint, the plaintiff applied to the
lower court for the appointment of the receiver, pending
which the defendant applied to this court for a writ of
certiorari, upon which a hearing was had, and on
December 17, 1927, the application was denied in the
following order:
After a full consideration of the petition for the
writ of certiorari and injunction, the return, the
answer, demurrer, arguments and citation of
authorities of the respective parties, the court is
of the opinion that the allegations, that the
respondent Judges is without jurisdiction in the
premises, is not supported thereby.
The petition for the writ of certiorari is,
therefore, hereby denied and the temporary
injunction heretofore issued is hereby dissolved.
And without any finding as to costs, it is so
ordered.
The lower court then made an order appointing a
receiver, and the instant case is another and a different
petition for a writ of certiorari, to which a copy of the
original complaint, in which a receiver was appointed, is
attached to, and made a part of, the petition, in which it

is alleged that "in issuing the said order of December 19,

1927, appointing a receiver, the said defendant, the
Court of First Instance of the City of Manila, exceeded its
jurisdiction and attempted to confer powers upon the
said receiver, which are improper, illegal, and in excess
of the jurisdiction of the said Court of First Instance of
Manila and which were not under consideration by this
Honorable Supreme Court in the said action
for certiorari G. R. No. 28816," following which is a
complete copy of the order of the lower court appointing
Theodore G. Davis as receiver, with a full and detailed
statement of all of his powers and duties.
It is then alleged that pursuant to the order of such
improper and illegal powers, the receiver notified the
attorneys for Teal and the company that they were
discharged, and the attorneys for the receiver then
entered "their appearance on behalf of Teal Motor Co.,
Inc., in substitution of said Ross, Lawrence & Selph; to all
of which said Ross, Lawrence & Selph filed their
objection in said case No. 32777." That on December 27,
1927, Chas. E Tenney, with the approval of Ross,
Lawrence & Selph, entered his appearance as one of the
attorneys for Teal and Teal Motor Co., Inc., and the
attorneys for the receiver "challenged the right of the
undersigned to appear as attorney for said Teal Motor
Co., Inc." It is then alleged that:
On the 29th day of December, 1927, said
Theodore G. Davis, receiver, filed in said case
No. 32777, a petition, of which a copy of which
is attached hereto, made part hereof and
marked "Exhibit D," praying as follows:
"Now
thereupon your
receiver
respectfully prays that an order be
entered herein substituting the receiver
as party defendant for and in place of
Teal Motor Co., Inc., in the above cause;
approving the substitution of the
attorneys of your receiver in the place
and stead of the attorneys of record for
said
corporation,
and
an
order
commanding the defendant E. H. Teal to
be and appear before his Honorable
Court at a time certain to be fixed by
the court then and there to show cause,
if any he has, why he should not be
punished for contempt for violation of
the said order of this Honorable Court
of December 19, 1927, and upon
hearing of this petition your receiver be
given such further instructions in the
premises as this Honorable Court may
deem and proper."
At a hearing of said case No. 32777 on
December 31, 1927, before said Court of First
Instance of Manila, pending the resolution of
said petition of the receiver, filed on December
29, 1927, the said Court of First Instance
through Hon. Antonio M. Opisso, acting Judge of
said
Court,
refused
to
recognize
the
undersigned as attorney of the said Teal Motor
Co., Inc., or to permit him to appear as such
attorney, in spite of due and formal demand by
the undersigned that he be so recognized, to
which refusal due exception was made.
On the 16th day of January, 1928, the said E. H.
Teal and Teal Motor Co., Inc., filed in said case
No. 32777 of the court of First Instance of
Manila, a motion to set aside the said order

Page 3 of 6

appointing a receiver, dated December 19,

1927, for the reason that the said order
conferred upon the receiver powers which are
improper, illegal, and in excess of the
jurisdiction of the said Court of First Instance, a
copy of which motion is attached hereto made
part hereof and marked "Exhibit E."
On the 18th day of January, 1928, the said Court
of First Instance of Manila denied the said
motion to set aside the order appointing a
receiver; and the said E. H. Teal and Teal Motor
Co., Inc., defendants, duly excepted to the
denial of said motion.
And that on January 19, 1928, the receiver, relying upon
his illegal, improper and excessive powers, presented to
the court an ex parte application for authority to pay
obligations, among which is the following:
(SCHEDULE D)
TEAL
MOTOR
MANILA, P. I.

COMPANY,

INCORPORATED

ACCOUNTS PAYABLE-DUE JANUARY 20TH, 1928

HASKINS
&
SELLS,
A
....................................................
=========

C.

MOTOR
THEO.

CO.,
G.

Petitioners pray:
That an order be issued to the said Court of First
Instance of Manila, to certify to this Honorable Supreme
Court, at the time and place to be specified by this
court, the transcript of the record and proceedings in the
said case entitled E. M. Bachrach, plaintiff, vs. E. H. Teal
and Teal Motor Co., Inc., defendants, No. 32777 of the
said Court of First Instance of Manila, that the same may
be reviewed by this court; and requiring the said
defendants herein in the meantime, to desist from
further proceedings in the matter to be reviewed; that,
on final hearing, judgment be rendered setting aside and
annulling the said order dated December 19, 1927
appointing a receiver in said case No. 32777; and for
such further relief as may deem equitable and for the
costs of this action.
It will thus been that the petitioners not only challenge
the legal right of the lower court to appoint a receiver,
but they also claim and assert that the powers and
duties of the receiver, as defined in his order of
appointment, are "illegal improper and excessive."

P.
P4,500

I hereby certify that the foregoing statement is true and

correct according to the books of the Teal Motor
Company, Inc.
TEAL
By
Receiver

Inc., and notified the said receiver not to pay to the said
Haskins & Sells the said sum of four thousand five
hundred pesos (P4,500) on account of said claim.

INC.
DAVIS

As the said defendant, Theodore G. Davis, receiver, well

knew, the claim of Haskins & Sells, mentioned in said
"Schedule D," was denied and contested by the said E.
H. Teal and Teal Motor Co., Inc., as not as just claim
against Teal Motor Co., Inc., on the ground that any
claim of Haskins & Sells was against the said E. H.
Bachrach, personally, and not against the said Teal
Motor Co., Inc.,; and the said Theodore G. Davis,
receiver, in said "Schedule D" certified that the said
claim was due according to the books of the company,
although said receiver well knew that the entry in the
books of the company referring to the said claim did not
appear in any book of the company at the time when
said receiver took charge thereof, and was only put on
the books of said Teal Motor Co., Inc., about two weeks
after such time on the direction of said Haskins & Sells
with the authority of the said Theodore G. Davis,
receiver.
On the presentation of said ex parte application, dated
January 19, 1928, the said Court of First Instance of
Manila, granted the same without the knowledge of or
notice to the said E. H. Teal Motor Co., and the
undersigned attorney, being informed of this fact thru
the daily newspapers of Manila, did, on January 20,
1928, request the said Court of First Instance of Manila
to suspend the order approving such application in so far
as it referred to the said claim of Haskins & Sells, in
order to give the said E. H. Teal and the said Teal Motor
Co., Inc., an opportunity to oppose the said claim; and
the said Court of First Instance of Manila, granted the
said request of the said E. H. Teal and Teal Motor Co.,

JOHNS, J.:
It will be noted that the original suit in which the
receiver was appointed was not brought to dissolve the
corporation or to terminate its existence. It is there
specifically alleged that to obtain an application of the
property and interests of the defendant corporation to
and upon the claims of the plaintiff and other creditors,
and to prevent the depreciation of its property "and the
loss and destruction of the value thereof as a going
concern" it is necessary that a receiver be appointed to
sell its property and business, or so much thereof as
may be necessary to satisfy the debts and claims
against the same, and that the appointment of a
receiver "for the protection of the value of said property
and of the interests of all concerned, is an imperative
necessity." In other words, the plaintiff prays for the
appointment of a receiver pendente lite to protect and
preserve the assets of the corporation pending the
litigation, and in the end to have them applied to the
satisfaction of plaintiff's claim and those of other
creditors, and it was upon such grounds and for such
purposes, that the plaintiff asked the lower court to
appoint a receiver.
High on Receivers is recognized as standard authority in
the United States, in particular, and in the fourth edition,
on page 12, paragraph 7, author says:
Discretionary character of the jurisdiction;
discretion defined. The appointment of a
receiver pendente lite, like the granting of an
interlocutory injunction, is to a considerable
extent a matter resting in the discretion of the
court to which the application is made, to be
governed by a consideration of the entire
circumstances of the case. And since the
appointment of a receiver is thus a discretionary
measure, the action of the lower court in
appointing or denying a receiver pendente
lite will not be disturbed upon appeals unless

Page 4 of 6

there been a clear abuse. But the discretion

thus vested in the chancellor in the matter of
appointing receiverspendente lite is not an
absolute or arbitrary one but it is a sound
judicial
discretion
in
view
of all the
circumstances of the case, to be exercised for
the promotion of justice where no other
adequate remedy exists.
In view of the allegations made in the original suit and of
the hearing that was had in this court on the first
petition for a writ of certiorari, was cannot say, as a
matter of law, that the lower court abused its discretion
in the appointment of a receiver.
The attorney for the petitioners cites and relies upon the
following decisions of this court; Arey vs. Wislizenus (26
Phil., 625); Rocha & Co. vs. Crossfield and Figueras (6
Phil., 355); Bonaplata vs. Ambler and Mcmicking (2 Phil.,
392); Strong & Trowbridge vs. Van Buskirk-Crook Co. (10
Phil., 190); Molina vs. De la Riva (7 Phil., 302), in which it
was held, in substance, that "A receiver cannot be
appointed for the purpose of assisting in the collection of
debts secured by no lien on the property to be
administered.
The legal principles laid down in those decisions are
good law, and if the original complaint in this case was
confined and limited to the sole and exclusive purpose
of collecting a debt, which is not secured by a lien, the
contention of the petitioners would have to be
sustained.
Section 174 of the Code of Civil Procedure provides that
a receiver may be appointed:
1. When a corporation has been dissolved or is
insolvent, or is in imminent danger of
insolvency, or has forfeited its corporate rights;
2. Where it is made to appear by the complaint
or answer, and by such other proof as the judge
may require, that the party making the
application for the appointment of receiver has
an interest in the property of fund which is the
subject of the action and it is shown that the
property or fund is in danger of being lost,
removed, or materially injured unless a receiver
shall be appointed to guard and preserve it.
The original complaint in this case specifically alleges
that the defendant corporation "is insolvent, or is in
imminent danger of insolvency," and that Bachrach "has
an interest in the property or fund, which is the subject
of the action, and it is shown that the property or fund is
in danger of being lost, removed or materially injured,
unless a receiver shall be appointed to guard and
preserve it." Hence, under such allegations, it must
follow that the court had jurisdiction to appoint a
receiver, which was a matter largely in its discretion,
and in the absence of an abuse of discretion, the order
must be sustained. But the question of the illegal,
improper and excessive powers vested in the receiver is
another and a very different question.
As stated, the authority for the appointment is found in
section 174 of the Code of Civil Procedure.
Section 175 says:

General Powers of a Receiver. The receiver

shall have, under the control of the court in
which the action is pending, power to bring and
defend actions in his own name, as receiver; to
take and keep possession of the property in
controversy; to receive rent, to collect debts
due to himself as receiver, or to the fund,
property, estate, person, or corporation of which
he is receiver; to compound for and compromise
the same; to make transfers; and generally to
do such acts respecting the property as the
court may authorize.
The sole purpose and intent of having a receiver
appointed was to protect and preserve the property
pending the litigation arising of the original suit, and to
prevent its alleged fraudulent disposal, so that in the
end the assets of the corporation would be kept intact
and applied to the payment of the amount of any
judgment which the plaintiff might recover and to the
claims of any other creditors of the corporation. It was
never the purpose or intent that the receiver should be
vested with all of the powers and duties of a permanent
receiver, or that he should have any other powers and
duties that those specified and defined in section 175 of
the Code of Civil Procedure. The appointment of a
receiver did not dissolve the corporation, and it does not
in the least interfere with the exercise of its corporate
rights. There is no legal principle by which the receiver
in the original suit, in which he was appointed, could
claim or assert the right to appear and legally represent
either litigant. Suffice it to say that the lower court
eventually denied that the right to the receiver.
High on Receivers, page 2, section 1, says:
A receiver defined, distinguished from the
trustee. A receiver is an indifferent person
between the parties to a cause, appointed by
the court to receive and preserve the property
or fund in litigation pendente lite, when it does
not seem reasonable to the court that either
party should hold it. He is not the agent or
representative of either party to the action, but
is uniformly regarded as an officer of the court,
exercising his functions in the interest of neither
plaintiff nor defendant, but for the common
benefit of all parties in interest. He should be a
person wholly impartial and indifferent to all
parties in interest. Being an officer of the court,
the fund or property intrusted to his care is
regarded as being in custodial legis for the
benefit of whoever may finally establish title
thereto, the court itself having the care of the
property by its receiver, who is merely its
creature or officer, having no powers other than
those conferred upon him by the order of his
appointment, or such as are derived from the
established practice of courts of equity.
That is the law and is the rule which every receiver
should follow.
It further appears that since his appointment and on his
own motion, the receiver made application to, and
obtained an order from, the court to pay a number of
claims against the corporation which did not have any
legal preference, amounting to P30,000 or P40,000,
among which is the claim of Haskins & Sells, the legality
of which as such was denied and bitterly contested by
the corporation, and, as to that particular claim, that the
receiver was not only instrumental in having it
presented, allowed and ordered paid, but that he

Page 5 of 6

actively aided and assisted in having it allowed, over

and against the vigorous protest and objection of the
corporation.
Nothing said in this opinion should be construed as
having passed upon decided the merits of the claim of
Haskins & Sells against the corporation. That is a matter
on which we do not now have or express an opinion. But
we do say that, upon the record before us, it was the
duty of the receiver on behalf of the corporation, to
contest rather than to aid and facilitate the allowance of
the claim, and, in particular, its payment at this time,
together with all other similar claims.
As one of the grounds for the appointment of a receiver,
the complaint in the original suit alleges that the
corporation is in imminent danger of insolvency, and
that it is necessary to have a receiver appointed to
protect and preserve the assets of the corporation
pending the suit, for the use and benefit of the plaintiff
and the creditors of the corporation. There is no claim or
pretense that the claim of Haskins & Sells has any legal
preference over any other unsecured claim, and yet
without even a claim of preference unsecured debts
against the corporation have been allowed and ordered
paid in full, amounting to P30,000 or P40,000 the legal
effect of which is to nullify and overthrow the very
purpose for which the receiver was appointed, and to
pay in full certain specified unsecured claims against a
corporation which is in imminent danger of insolvency,
in a case where a receiver was appointed to protect and
preserve the assets of the corporation pending the
original suit.
Upon that question High Receivers, section 428, says:
But it is error, in such a case, to direct the
receiver to pay the creditors of defendants out
of collections and sales made by him, before it
is finally determined whether they are entitled
to priority of payment out of the funds; since,
even if they are entitled to priority, it is
premature to direct the payment before their
claims have been ascertained and allowed by
the court. And before such direction is given, an
account should be taken and an opportunity
afforded to prove the claims of creditors upon
the one hand, and to contest them upon the
other.
And in section 439b, the same author says:
No preference allowed as between creditors of
the same class. Where a court of equity has
appointed a receiver over the estate of an
insolvent debtor and the receiver has taken
possession of his property, no creditor will be
allowed, by obtaining judgment against the
insolvent after the receiver has taken
possession, to obtain a preference over other
creditors of the same class, and this is true even
though the action in which the judgment was
recovered was instituted before the receiver
actually took possession of the property.
Hence, it must follow that unsecured claims which do
not have a preference ought not to be paid pending the
receivership until a final order of distribution has been
made among all of the creditors of the corporation
whose claims have been presented and allowed.

As to the question of impairing the obligation of a

contract, in section 273d, High says:
Cannot impair contract liability of original party.
While, as has already been shown, a receiver
is in no way bound by the contracts or
covenants of the person over whose estate he is
appointed, it is equally true that where a valid
and subsisting contract has been entered into
by his principal and a third person, receiver who
is afterward appointed can do no act which will
in any way impair the obligations of such
contract, and the obligee may therefore
maintain an action the insolvent to recover
damages resulting from a violation of the
agreement, and to such action the receiver is
neither a necessary nor a proper party. . . . But
it is to be observed, in such case, that any
judgment which may be rendered should run
against the obligor only and not against his
receiver.
That is in harmony with the decision of this court
in International Banking Corporation vs. Corrales (14
Phil., 360).
The authority of the receiver is limited to the allowance
of claims which are recoverable against the corporation.
Section 335, High on Receivers, says:
* * * And they have no authority to allow a
demand, which is not a proper charge upon the
fund in their hands, without the consent of all
persons interested in having claim rejected, the
receivers in this respect being considered as
guardians of the rights of all persons in interest.
And when receivers have disallowed demands
against the corporation, and the matter has
been referred to referees for judgment, it is the
duty of the receivers to resist the allowance of
the demands before the referees, and to
continue their defense so long as it may, in their
opinion, be rendered effectual.
When his powers are derived wholly from statute, the
same author, in section 322, says:
When receivers over corporations are appointed
under a statute which regulates their functions
and prescribes their powers and duties, it is held
that they derive their powers wholly from the
statute under which they are appointed, and
have no authority other than such as is thus
conferred. But to warrant them in the exercise
of a power, it need not be expressly conferred,
and if it can be fairly implied, either from the
general scope and purpose of the statute, or as
an incident to a power expressly given, there is
sufficient warrant for its excercise.
As to the functions of a receiver, the author, in section
175, says:
* * * And it is necessary to a proper
understanding of the functions of a receiver,
and of the real nature of his office, to bear in
mind that he is not appointed for the benefit
merely of the plaintiff on whose application the
appointment is made, but for the equal benefit
of all persons who may establish rights in the
cause, and that he is to the plaintiff's agent, but

Page 6 of 6

is equally the representative of all parties in his

capacity as an officer of the court.

Procedure, together with those which are germane to

such powers and duties.

It should be borne in mind that a receiver in a pending

suit should be neutral, fair and impartial between the
litigant parties, and that should be knowingly or wilfully
become a partisan or favor either party at the expense
of the other, upon a proper showing, it would be ground
for his removal. Legally speaking, the court assumes
that the plaintiff has made out a prima facie case at the
time the receiver was appointed; otherwise, the receiver
ought not to be appointed. Be that as it may, no final
decision is made on the actual merits of the case until
both parties have been heard on their respective
contentions, at which time a final decision is then made,
and during that period, through the receiver, the
property is in custodia legis pending the final decision
for either the plaintiff or the defendant in the original
suit, and it is for such reason that the law makes it the
imperative duty of a receiver to be neutral, fair and
impartial between the litigants.

With these admonitions, restrictions and limitations on

powers and duties, the appointment of the receiver by
the lower court is sustained and the writ denied, without
costs to either party. So ordered.

In the absence of something exceptional and of some

special reason, the powers and duties of the receiver in
the instant case should be confined and limited to those
specified and defined in section 175 of the Code of Civil

Johnson, Villamor, Ostrand, Romualdez and Villa-Real, JJ.,

concur.

Separate Opinions
MALCOLM, J., concurring:
I agree that the writ of certiorari should not be granted,
and only desire to point out that as an appeal has been
taken from the allowance of the Haskins & Sells claim,
that matter is here removed from the field of discussion.