Republic Of The Philippines v. Bisaya Land Transportation Co

CASTRO, J.:

This is an appeal from the "Resolution" of the Court of First Instance of Manila. dated April 3, 1968, Hon. Francisco Geronimo presiding, granting the petition of the Republic of the Philippines to (1) the for quo warranto it filed against the respondent Bisaya Land Transportation Company, Inc., and its Board of consisting of Miguel Cuenco, Manuel Cuenco, Jose P. Velez, Jesus P. Velez and Federico A. Reyes, and later including the now member thereof, Antonio V. Cuenco, Carmen Cuenco, Dioscoro B. Lazaro and Manuel V. Cuenco, Jr., and (2) the cross-claim filed by respondent Miguel Cuenco against his co-respondent.

The Bisaya Land Transportation Company is a corporation organized on or about June 10, 1935 under Act No. 1459, otherwise known as the Corporation Law, for the principal purpose of engaging in the business of land and water transportation, having its domicile and principal place of business in Cebu City. The instant case came into being on March 21, 1959, when the Republic of the Philippines, through the then Solicitor General Edilberto Barot, filed a petition for quo warranto in the Court of First Instance of Manila, docketed as Special Civil Case No. 39766, for the dissolution of the Bisaya Land Transportation Company. The petition alleges that respondent corporation, through its co-respondents named therein, acting in their offended as officers and controlling stockholder of the corporation, by conspiring and confabulating together and with the aid offended their associates, agents and confederates, had violated and continues to violate, offended and continues to offend the proceeding of the Corporation Law and other statutes of the Philippines by having committed and continuing to commit acts amounting to a forfeiture of the present corporation's franchise, rights and private and, through venous means, misused and continues to and continues to abuse, the terms of its franchise, palpably in contravention of the law and public policy.

The acts allegedly committed by the corporation, through as corespondent, are embodied in nine causes of action which, in substance, are as follows: FIRST CAUSE OF ACTION To conceal its illegal transaction, respondent corporation falsely reconstituted its articles of incorporation in July 1948 by adding new cattle ranch, agriculture, and general merchandise; SECOND CAUSE OF ACTION On May 25, 1948, respondent corporation through its Board of Directors, adopted a resolution authorizing it to acquire 1,024 hectares of public land in Zamboanga and 10,000 hectares of timber concession in Mindanao in violation of Section 6, Act No. 143); THIRD CAUSE OF ACTION In May, 1949, respondent office constituting themselves as Board of Directors of respondent corporation, passed a resolution authorizing the corporation to lease a pasture land of 2,000 hectares of cattle ranch on a public land in Bayawan, Negros Occidental; FOURTH CAUSE OF ACTION From August 1946 to the end of 1952, respondent corporation operated a general merchandise store, a business which is neither for, nor incidental to, the accomplishment of its principal business for which it was organized, i.e., the operation of land and water transportation; FIFTH CAUSE OF ACTION Respondent corporation snowed Mariano Cuenco and Manuel Cuenco to act as president in 1945 to 1948 and 1953 to 1954, respectively, when at that time, neither of them owned a single stock; SIXTH CAUSE OF ACTION In violation of its charter and articles of incorporation, as well as applicable statutes concerning its operation, it engaged in mining by organizing the Jose P. Velez Coal Mines, and allowing said corporation to use the facilities and assets of respondent corporation; SEVENTH CAUSE OF ACTION It imported and sold at black market prices to third persons truck spare Parts, the of which were appropriated by respondent directors; EIGHTH CAUSE OF ACTION It paid its laborers and employees wages below the minimum wage law to the great prejudice of its labor force, and in violation of the laws of the state, manipulating its books and records so as to make it appear that its laborers and employees were and have been paid their salaries and wages in accordance with the minimum wage law; NINTH CAUSE OF ACTION It deliberately failed to maintain accurate and faithful stock and transfer books since 1945 up to the filing of the petition, enabling it to defraud the state, mislead the general public, its creditors, investors and its stockholders by not accurately and faithfully making a.

an adequate, accurate and complete record of dividend distribution, and b. an adequate, accurate and complete record of transfers of its stocks. The petition for quo warranto prayed that during the pendency of the action, a receiver be appointed by the court for the purpose of preserving the assets of the respondent corporation pursuant to section I (a) of Rule 61 of the Rules of Court.

Under date of April 17, 1959, respondents (except Miguel Cuenco) filed a motion to dismiss the petition for quo warranto on the grounds of lack of cause of action, prescription, and the failure of the Solicitor General to the court's permission as required in section 4 of Rule 66 of the Rules of Court. The motion to dismiss was denied on June 27, 1959. On April 25, 1959, respondent Miguel Cuenco filed his answer admitting certain allegations and denying others, especially participation in the acts imputed to respondent corporation which were made the basis of the quo warranto proceedings.

He alleged several other causes, namely: (1) that stock dividends were issued to respondents Manuel Cuenco and Jose P. Velez, without giving the same benefit to other stockholders; (2) that, thru respondent directors, Bisaya had destroyed company payrolls, books of accounts and other records; (3) that Bisaya Land had allowed Manuel Cuenco to use corporate funds, facilities and stocks for his personal benefit; and (4) that, to cover up these irregularities, said directors had manipulated the corporate books and accounts. Moreover, he set up a cross-claim against respondents-directors to recover from them, for the benefit of Bisaya, under several causes of action, the aggregate sum of P4,336,701.19. Respondent Miguel Cuenco also prayed for the appointment of a receiver without bond for the purpose of preserving the assets of respondent corporation.

On May 6, 1959, respondents (except Miguel Cuenco) filed a motion to dismiss Miguel Page Cuenco's cross-claim on the ground, among others, that the claims subject of the cross-claim could not be pleaded by respondent Miguel Cuenco since they did not arise out of the transactions or occurrences that were the subject-matter of the original petition for quo warranto which did not assert any claim against respondent directors or any one of them, which would thus entitle respondent Miguel Cuenco to claim indemnity from the others. On September 19, 1959, the lower court deferred resolution on the cross-claim after trial on the merits.

Under date of September 25, 1959, respondents (except Miguel Cuenco) filed their answer, denying as well as admitting certain facts and setting up special and affirmative defenses, and praying that judgment be rendered dismissing the petition. Also, on October 19, 1959, respondents (except Miguel Cuenco) filed their answer to the cross-claim. On January 29, 1960, respondents (except Miguel Cuenco) filed a petition for certiorari with the Supreme Court (G.R. No. L-16593, Bisaya Land Transportation Company vs. Judge Bonifacio Isip), questioning the, orders of the lower court dated June 27, 1959 (denying respondents' [except Miguel Cuenco] motion to dismiss quo warranto and September 19, 1959 (deferring resolution on the motion to dismiss Miguel Cuenco's cross-claim).

However, on February 11, 1960, the Supreme Court dismiss the petition on the ground that the orders complained of were interlocutory. On February 23, 1960, the lower court appointed the clerk of court as commissioner to receive the evidence of the parties. Thereafter, on February 28, 1962, respondent corporation filed a motion for judgment on consent, manifesting its consent to and moving for judgment to be rendered ordering the dissolution of respondent Bisaya Land transportation Company, inc.

and, in furtherance of that dissolution, ordering its board of directors to proceed to the liquidation of its assets in accordance with the provisions of the corporation law. In said motion for judgment on consent, respondent corporation did not admit having committed any act requiring its forcible dissolution, but alleged, as reason for the filing of said motion, that the pendency of the petition of quo warranto had prejudiced the corporation its business. as well as its innocent stockholders, and that its business interests that late relief be given to the corporation and to its thousands of stockholders; and that the majority of the board of directors and stockholders representing more than two-thirds of its capital stock had indicated their election to voluntarily dissolve the corporation as the most feasible remedy to the corporation's problems brought about by the respondent Miguel Cuenco.

The petitioner, Republic of the Philippines, filed a manifestation stating that the motion for judgment on consent being in accordance with the petition for quo warranto, the matter of the implementation of the dissolution of respondent corporation be submitted to the discretion of the lower court. Respondent Miguel Cuenco, on the other hand, filed his answer agreeing to such judgment, but urging that a receiver be appointed, and that judgment be rendered on his cross-claim. On May 27, 1963, respondents (except Miguel Cuenco) filed their motion to withdraw motion for judgment on consent on the grand that the conditions to which the motion was subject had not been accepted.

Miguel Cuenco opposed said withdrawal and pressed for the appointment of a receiver, which was, in turn objected to by respondent corporation. The denial of the motion to withdraw was questioned by respondent corporation in a petition for prohibition filed with the Supreme Court, docketed as G.R. No. L-22097, which was, however, dismiss by this Court. Several incidents followed thereafter which, for purposes of the disposition of the present case, need not be set forth herein.

The motion to withdraw judgment on consent was, on December 3, 1963, denied by the lower court which, however, granted receivership. From this order, respondent corporation filed a petition for certiorari with the Court of Appeals (CA-G.R. No. 33266-R), which issued an ex-parte writ of preliminary injunction enjoining the lower court from enforcing its order of December 3, 1963. On January 29, 1968, the Supreme Court in G.R. No. L-23012 annulment all the proceedings in the Court of Appeals in CA-G.R. No. 33266-R, on the ground that the latter court had no jurisdiction over said case.

On October 20, 1966, the then Solicitor General Barredo (now Supreme Court Justice) filed a motion for dismissal of the quo warranto proceedings, to which motion respondent Miguel Cuenco riled his opposition on December 3, 1966. On April 3, 1968, the court a quo issued a resolution granting petitioner's motion for the dismissal of the action for quo warranto, and dismissing respondent Miguel Cuenco's cross-claim. Respondent and cross-claimant Miguel Cuenco has appealed to this Court to question this resolution.

Six errors are imputed by appellant Miguel Cuenco to the lower court in issuing its resolution of April 3, 1968, namely: I THE LOWER COURT ERRED IN NOT ORDERING ENTRY OF JUDGMENT DISSOLVING RESPONDENT-APPELLEE CORPORATION ON THE STRENGTH OF IT'S OWN MOTION CONSENTING TO AND PRAYING FOR SUCH JUDGMENT, DESPITE APPELLANT MIGUEL CUENCO'S INSISTENT PLEA FOR ACTION ON THE SAID MOTION. II THE LOWER COURT ERRED IN FAILING TO CONSIDER THAT RESPONDENT-APPELLEE CORPORATION'S MOTION FOR JUDGMENT OF DISSOLUTION WAS A CONFESSION OF JUDGMENT OR, AT ANY RATE, THAT THE ENTRY OF SUCH JUDGMENT HAD BEEN FORMALLY AGREED TO BY THE SOLICITOR GENERAL AS WELL AS APPELLANT MIGUEL CUENCO. III THE LOWER COURT ERRED IN HOLDING THAT THE EVIDENCE SO FAR ADDUCED BY PETITIONER WAS INSUFFICIENT TO DISSOLVE THE CORPORATION, AND IN NOT HOLDING INSTEAD THAT THE SAID EVIDENCE HAS MORE THAN SUFFICIENTLY ESTABLISHED FACTS CONSTITUTING PRACTICALLY ALL THE GROUNDS FOR QUO WARRANT AGAINST A CORPORATION AND SHOWING THAT RESPONDENT-APPELLEE CORPORATION WAS AND IS BEING OPERATED VIRTUALLY AS A CRIME SYNDICATE AND, HENCE, MUST BE ORDERED DISSOLVED.

IV THE LOWER COURT ERRED IN HOLDING THAT THE SOLICITOR GENERAL WAS VESTED WITH ABSOLUTE AND UNLIMITED POWER TO DISCONTINUE THE STATE'S LITIGATION AND ACCORDINGLY TO HAVE THE QUO WARRANT PETITION DISMISSED, IF AND WHEN IN HIS OPINION THIS SHOULD BE DONE, AND IN NOT HOLDING INSTEAD THAT THE SOLICITOR GENERALS MOTION FOR DISMISSAL OF THE PETITION IS DEVOID OF ANY MERIT, AND INDEED MUST BE DENIED. V THE LOWER COURT ERRED IN HOLDING THAT THE CROSS-CLAIM FILED BY APPELLANT MIGUEL CUENCO AGAINST HIS CO-RESPONDENTS DOES NOT PRECLUDE THE DISMISSAL OF THE PETITION WITHOUT HIS CONSENT AND IN NOT HOLDING INSTEAD THAT BY REASON OF THE SAID CROSS-CLAIM, THE SOLICITOR GENERAL COULD NOT MOVE FOR THE DISMISSAL OF THE PETITION OVER APPELLANT MIGUEL CUENCO'S OBJECTION. VI THE LOWER COURT ERRED IN DISMISSING THE CROSS-CLAIM.

Appellant argues, on his first and second assignments of error, that the lower court should have rendered judgment dissolving appellee corporation on the strength of its own motion consenting to and praying for its dissolution, as such Motion amounted to a confession of judgment, besides the fact that it had been formally agreed to by the Solicitor General as well as by appellant Miguel Cuenco. The claim is without merit. As pointed out in the brief for Petitioner-appellee Republic of the Philippines, a motion for judgment on consent is not to be equated with a judgment by confession.

The former is one the provisions and terms of which are settled and a agreed upon by the parties to the action, and which is entered in the record by the consent and sanction of the court, Hence, there must be an unqualified agreement among the parties to be bound by the judgment on consent before said judgment may be entered. The court does not have the Power to supply terms, provisions, or essential details not previously agreed to by the parties (49 C.J.S. 308). On the other hand, a judgment by confession is not a Plea but an affirmative and voluntary act of the defendant himself, Here, the court exercises a certain amount of supervision over the entry of judgment, as well as equitable jurisdiction over their subsequent status (Ibid., pp. 268-269).

The records would show that there was no meeting of the minds among the parties hereto with respect to the motion for judgment on consent filed by appellee corporation and agreed to by petitioner appellee. Whereas, appellee corporation conditioned its motion in that its liquidation shall be effected by its Board of Directors, appellant Miguel Cuenco would agree to such liquidation only if his cross-claim was first summarily adjudged and a receiver appointed by the court to effect said liquidation. On the other hand, the petitioner-appellee would have the matter regarding the implementation of the dissolution of appellee corporation submitted to the discretion of the lower court.

And, before the parties could come to an unqualified agreement as to the judgment requested to be entered by appellee corporation, the latter decided to withdraw its motion for judgment on consent. Clearly therefore, in view of the non-agreement of the parties as to the terms, and considering the nature of a judgment by consent as explained above, it can not be said that the lower court erred in not rendering judgment dissolving respondent corporation on the basis of the motion for judgment by consent filed by appellee corporation. On the third assignment of error, appellant Miguel Cuenco would attribute error to the court a quo in not holding that the evidence which petitioner had presented in the hearings established facts constituting practically all the grounds for quo warranto against a corporation.

It will be recalled that at the before the Clerk of Court who was appointed commissioner to remove the evidence of the petitioner, the latter had presented three wit , namely, Juan P. Mata, Clemente Vasquez and Silverio Mata, and several exhibits which were Identified by said witnesses. After a very careful and deliberate consideration of the evidence adduced by petitioner, the lower court came to the conclusion that the same did not really warrant a quo warranto by the State that could truly justify to decapitate corporate life, and that the corporate acts or missions complained of had not resulted in substantial injury to the public, nor were they wilful and clearly obdurate. The court found that the several acts of misuse and misapplication of the funds and/or assets of the Bisaya Land Transportation Co., Inc. were committed new particularly by the respondent Dr. Manuel Cuenco with the cooperation of Jose P. Velez, for the commission of which they may be personally held liable.

There appears to be no reason for us to disregard the findings of the trial court, which, applying well settled doctrines, ought to be given due weight and credit (De la Rama vs. Ma-ao Sugar Central, L-17504 & L-17506, Feb. 28, 1969). Besides, the court a quo found that the controversy between the parties was more personal than anything else and did not at all affect public interest.

Thus, the Court held: A careful perusal of the above-quoted letters patently reveals that rather than public interest the personal interests of both Dr. Manuel Cuenco and Mr. Miguel Cuenco are principally involved in this controversy. The allegations, therefore, of Solicitor Barredo in his motion for dismissal of action filed on October 20, 1966 x x x x x x x x x 6. That in a large sense, this case involves personal controversies among the Cuenco's, and their relatives, by consanguinity and affinity, involving their respective interests as stockholders in the Bisaya Land Transportation Company, Inc., more than anything else; 7.

That, such private controversies can be ventilated in appropriate stockholders' suits which do not have to occupy the time and attention of government officials which can be better devoted to matters of more direct public interest. are well founded.

After a very careful and conscientious study of the records of this case, this court is not prepared to say that sufficient competent evidence has been adduced to impeach the motive of Solicitor General Barredo in filing his motion for dismissal, since honesty rather than dishonesty, good faith rather than bad faith should always be presumed in the absence of clear contrary evidence. The Solicitor General explained that after having been briefed on the evidence by Solicitor Rosete before the negotiation of an amicable settlement between the parties involved in this case started, he had already in mind asking for the dismissal of the quo warranto proceeding for he believed in all sincerity that the evidence so far presented did not justify the dissolution of the corporation through a quo warranto proceeding. He admitted that even after he had filed the motion for dismissal he continued the negotiation for the settlement of the case, but he explained that it was because of the request of the respondent and cross-claimant Miguel Cuenco and his wife that he continue to use his good offices to effect an amicable settlement between the parties.

The Solicitor General himself asserts that the only purpose of his ration for the of this quo warranto is to take the State out of an unnecessary court litigation, so that the dismissal of the case would result in the disposition solely of the quo warranto by and between petitioner Republic of the Philippines and the respondents named therein. Other interested parties who might feel aggrieved, therefore, would not be without their remedies since they can still maintain whatever claims they may have against each other. It has been held that relief by dissolution will be awarded only where no other adequate remedy is available, and is not available where the rights of the stockholders can be, or are, protected in some other way (16 Fletcher Cyc.

Corporations, 1942 Ed., pp. 812-813, citing "Thwing vs. McDonald", 134 Minn. 148,156 N.W. 780,158 N.W. 820, 159 N.W. 564, Ann. Cas.

1918 E 420; Mitchell vs. Bank of St. Paul, 7 Minn. 252, cited in De la Rama vs. Ma-ao Sugar Central, supra).

The third assignment of error, therefore, should be disregarded. The pivotal question in this case is case in the fourth assignment of error, i.e., whether or not the lower court erred in holding that the Solicitor General was vested with full power to manage and control the State's litigation, which includes the power to continue such litigation, if and when in his opinion this should be done. Appellant would maintain the negative of the above proposition, giving three main reasons therefor, namely: 1.

The evidence so far adduced was in fact sufficient to dissolve the respondent corporation; 2. There was a pending motion of respondents for judgment on consent, by virtue of which instead of dismissal of the petition, the corporation should be considered dissolved; 3. A cross-claim has been interposed by Miguel Cuenco which precluded the dismissal of the petition for quo warranto.

It will be noted that the first two reasons, given in support of the fourth assigned error, have already been discussed in connection with appellant's first three assignments of error, and shown to be unworthy of serious consideration. We shall dwell on the third reason in our discussion of the fifth assignment of error. Meeting squarely the issue of whether or not the Solicitor General is vested with absolute and unlimited power to discontinue the State's litigation and, accordingly, to have the quo warranto petition dismissed, if and when in his opinion this should be done, the general rule seems to be that the plaintiff may do so with the approval of the court, subject to be defined exceptions (such as, for example, where the answer sets up a counterclaim which cannot stand independently of the main action).

The right of the plaintiff to dismiss an action with the consent of the court is universally recognized with certain well-defined exceptions. If the plaintiff discovers that the action which he commenced was brought for purposes of enforcing a right or a benefit, the advisability or necessity of which he later discovers no longer exists, or that the result of the action would be different from what he had intended, then he should be permitted to withdraw his action, subject to the approval of the court. The plaintiff should not be required to continue the action, subject to some well-defined exceptions, when it is not to his advantage so to do.

Litigation should be discouraged and not encouraged. Courts should not with require parties to litigate when they no longer desire so to do. Courts, in granting permission to dismiss an action, of course, should always take into consideration the effect which said dismissal would have upon the rights of the defendant.

... in the case of a municipality, where the agents of the public are spending public money, we are of the opinion that such agent should not be required to continue an action when (a) it clearly appears that there is no longer a necessity therefor, or (b) when it clearly appears that to continue the action, the result would be prejudicial to the interests of the public. We think that this conclusion is more in harmony with the rational conduct of public affairs than the opposite rule.ℒαwρhi৷ (City of Manila vs. Ruymann, 37 Phil. 421, 424-425, 427, cited in Metropolitan Water District vs. De los Angeles, 55 Phil. 776, 790.) American authorities likewise uphold the power and authority of the state attorney to control and manage all litigation in behalf of the State, which power involves the power to discontinue the same if and when, in his opinion, this should be done.

(7 Am. Jur. 2d 18- 19).

Thus, in State vs. Finch, 280 Pac. Rep. 910, 912, 915, the Attorney General moved to dismiss a liquor prosecution brought against one of the defendants by the county attorney, which motion was overruled. On appeal, the Kansas Supreme Court held: And, as a rule, the attorney-general has power, both under the common law and by statute, to make any disposition of the state's litigation that the deems for its best interest; for instance, he may abandon, discontinue, dismiss, or compromise it.

But he cannot enter into any agreement with respect to the conduct of litigation which will bind his successor in office, nor can he empower any other person to do so. ... The attorney-general may dismiss any suit or proceeding, prosecuted solely in the public interest, regardless of the relator's wishes.

... Where the attorney-general is empowered, either generally or specifically, to conduct a criminal prosecution, he may do any act which the prosecuting attorney might do in the premises; that is, he can do each and every thing essential to prosecute in accordance e with the law of the land, and this includes appearing in proceedings before the grand jury. So an attorney-general, even at common law.

had the right to enter a nolle prosequi; although he could not do so during the trial without leave of court. x x x x x x x x x ... At common law the duties of the attorney-general, as chief law officer of the realm, were very numerous and varied.

He was the chief legal adviser of the crown, and was instructed with the management of all legal affairs and the prosecution of all suits, civil and criminal, in which the crown was interested. He alone could discontinue a criminal prosecution by entering a nolle prosequi; therein. ...

It is generally acknowledged that the attorney-general is the proper party to determine the necessity and advisability of undertaking or prosecuting actions on the part of the state.

Thus it has been' held that the discretion of the attorney-general in determining what the public interests require as to bringing an action against a domestic business corporation or its officers is absolute, and cannot be made the subject of inquiry by the courts. x x x x x x x x x ... The power effectively to control a prosecution involves the power to discontinue if, and when, in the opinion of the prosecutor in charge, this should be done.

We are of the opinion the trial court should have sustained the Attorney-General's motion to dismiss in the instant case. In a much later case, State vs. City of Kansas, 350 P2d 37, the authority of the Attorney-General to dismiss any time before submission, a quo warranto proceeding commenced by the State on the relation of the county attorney questioning certain ordinances of the city of Kansas making part of the city a portion of the Fairfax industrial district, was declared by the Kansas Supreme court to be absolute, and a duty that could not be questioned, notwithstanding 18 months had passed subsequent to the commencement of the action and after the commissioner had fixed the date the hearing was to begin. Said the court: Applying the above reasoning to our present case we conclude the attorney general by his motion to intervene and supersede the county attorney exercised his powers and duties under the constitution and appropriate statutes; this was as far as he could go as an executive officer and as an attorney and officer of this court.

Since he is an officer of the judicial branch, under the separation of powers of the three branches of government, he was limited and restricted in his conduct before this court by the code of professional ethics to the same extent any other lawyer would be. If, therefore, the attorney-general considered the action unmeritorious, he not only had the authority but he also had a duty to move for dismissal. ...

x x x x x x x x x Any plaintiff has an absolute right to dismiss his action any time before submission. (G.S. 1949, 603105; Bavuso vs. Angwin, 166 Kan. 469, 201 P. 2d 1057) and in Kinsch vs. Missouri Kansas-Texas Railroad Co., 183 Kan.

224, 326 P. 2d 327, when plaintiff moved to dismiss before final submission, this court held the trial court committed reversible error in overruling such motion. x x x x x x x x x ... As previously stated, the attorney-general, plaintiff herein, had an absolute right to dismiss this action and the allegations in Quindaro's pleadings must fall because they clearly show that Quindaro, one municipality, is questioning the organization, or reorganization, of the city, another municipality, and this can be done only by the estate through its proper officers.

Well might the State vs. city of Kansas case, supra, be applied to the present case, since in our jurisdiction it is the Solicitor General Who must commence the action involved herein (Rule 66, Sec. 3) and he, therefore, also has, before submission, the right to terminate of the same where he deems it best for the interest of the State. (See also: Lyle vs. Luna, 338 P2d 1060, 1065) In his fifth assignment of error, appellant Miguel Cuenco claims that the lower court erred in holding that the cross-claim filed by him did not proceeding the dismissal of the petition without his consent, and in not holding that by reason of the said cross-claim, the Solicitor General could not move for the dismissal of the petition over appellant Miguel Cuenco's objection. Citing the proceeding of 2 and 4 of Rule 17 of the Rules of Court, appellant opines that since his cross-claim cannot remain pending for independent adjudication, it being allegedly interwoven with the petition for quo warranto, the lower court should not have dismissed said petition.

The position taken by appellant Miguel Cuenco is legally untenable. The Provision of Section 2 of Rule 17, invoked by him in support of his stand, is inapplicable.

It governs dismissal of an action by order of the court, prohibiting such dismissal against defendants objection where a counterclaim which cannot remain pending for respondent adjudication by the court has been pleaded by a defendant prior to the service upon him of plaintiffs motion to dismiss. It advisedly omits reference to a cross-claim as a factor to be considered by the court in determining whether, considering the circumstances set forth therein, an action should be dismissed. The reason could be that the framers of the rules realized that the policy against dismissal of an action behind the provision involved, while applicable to a counterclaim, is not so with respect to a cross-claim, expense in preparing for his defense, only to see the case dismissed without prejudice at the instance of plaintiff, thereby putting the defendant "to expense literally for nothing."

(Francisco, Revised Rules of Court, Vol. I, p. 980, citing McCann vs. Bently Stores Corp., 34 F. Supp.

234, 3 Fed. Rules of service 41a., Case 3 [W.D. Mo. 1940]).

On the other hand, the dismissal of the main action would only benefit the cross-claim and not result in any prejudice or disadvantage to him. Neither do the provisions of Section 4 of Rule 17 help the position taken by appellant Miguel Cuenco. For although this section makes the provisions of Rule 17 also applicable to the dismissal of a claim, what it actually contemplates is the allowance or allowance of a motion to dismiss a cross-claim as an "independent"

action against which a counterclaim has been interposed. It does not intend to prohibit the dismissal of an action just because a cross-claim which cannot be the subject to independent adjudication, has been pleaded. Section 4, Rule 17, should taken in correlation with Section 2 of the same Rule which would have included also "cross-claim,"

instead of merely mentioning "counterclaim, as a bar to the dismissal of an action where the same cannot remain pending for independent adjudication, if it had really been its intention to do so. A cross-claim is allowed to be interposed by a party against a co-party to enable the former to recover from the latter whatever he might be made liable to pay to the plaintiff. Considering then the nature of a cross-claim, we fail to grasp the logic in appellant Miguel Cuenco's objection to the dismissal of the main action - the quo warranto proceedings.

The withdrawal or dismissal of said action would effectively prevent him from suffering any prejudice exonerate him from any liability, to evade or mitigate rules grant him the right to file a cross-claim dismissal of the main action would not wipe out hi cross-claim, since, if minded to do he may subsequently bring the corresponding action based thereon (Watts vs. Watts, 15 S.W. 2d 998; Severance vs. Heyl and Patterson, 174 A. 789). In view of our conclusion that the court a quo committed no error in dismissing the quo warranto proceedings, it also stands to reason that it acted correctly in dismissing appellant Miguel Cuenco's cross- claim. A cross-claim is proper only where the cross-claimant stands to be prejudiced by the filing of an action against him.

Hence, where such action has been dismissed, his cross-claim would have no leg to stand on (Sm. 7, Rule 6, 4 Moore's Federal Practice Under the New Rules p. 693).

This disposes of the sixth assignment of error. ACCORDINGLY, without prejudice to the rights of the private parties herein to take proper steps to enforce whatever causes of action they may have against each other, the order of the lower court embodied in its "Resolution" dated April 3, 1968, granting the Solicitor General's motion to dismiss the quo warranto proceedings and dismissing appellant Miguel Cuenco's cross-claim, is hereby upheld; the receivership on the respondent corporation's property and assets is hereby ordered terminated, effective upon the lapse of thirty (30) days from the date of promulgation of this decision; and the receiver is directed to render, within three (3) months from the finality of this decision, a full and complete accounting to the Board of Directors of the respondent corporation.

No costs. Muñoz Palma, Martin, Fernandez and Guerrero, JJ., concur. Makasiar, J., took no part.