REPUBLIC OF THE PHILIPPINES
VS.
BISAYA LAND TRANSPORTATION CO., INC.
FACTS:
The Bisaya Land Transporation 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 began when the Republic of the Philippines, through Solicitor General Edilberto Barot, filed a petition for quo warranto in the CFI of Manila for the dissolution of the Bisaya Land Transportation Company.
The petition alleges that respondent corporation, through its co-respondents named therein, acting in their official capacity as officers and controlling stockholders of the said corporation, by conspiring and confabulating together and with the aid of their associates, agents and confederates had violated and continues to violate, offended and continues to offend the provisions of the Corporation law and other statutes of the Philippines by having committed and continuing to commit acts amounting to a forfeiture of the respondent corporation's franchise, rights and privileges and, through various means, misused and continues to misuse, abused and continues to abuse the terms of its franchise, palpably in contravention of the law and public policy.
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 secure 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.
The petition, herein provided, is an appeal from from the "Resolution" of the Court of First Instance of Manila, dated April 3, 1968, granting the petition of the Republic of the Philippines to dismiss (1) the petition for quo warranto it filed against the respondent Bisaya Land Transportation Inc., and its Board of Directors; and (2) the cross-claim filed by respondent Miguel Cuenco against his co-respondents.
Respondents (except Miguel Cuenco) filed a motion to dismiss the cross-claim of Miguel Cuenco 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 does 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.
Respondent corporation filed a motion for judgment on consent on the ground that the said corporation did not admit having committed any act requiring its forcible dissolution, but alleged, as a reason for the filing of said motion, that the pendency of the petition of quo warranto had prejudiced the corporation in its business, as well as its innocent stockholders, and that its business interests required that immediate relief be given to the corporation and to its thousands of stockholders.
Petitioner Republic, on the other hand, 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. The motion to withdraw judgment on consent was denied by the lower court.
On October 20, 1996, then, Solicitor General Barredo, filed a motion for dismissal of the quo warranto proceedings, to which motion respondent Miguel Cuenco filed his opposition.
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. Hence, this petition.
ISSUE:
Whether or not 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 warranto petition dismissed, if and when in his opinion this should be done and in not holding instead that the Solicitor General's motion for dismissal of the petition is devoid of any merit, and indeed must be denied.
RULING:
The Court ruled, that 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 well-defined exceptions (such as, where the answer sets up a countrclaim which cannot stand independently of the main action).
The Solicitor General himself asserts that the only purpose of his motion for the dismissal of this quo warranto is to take the State out of unnecessary court litigation, so that the dismissal of the case would result in the disposition solely of this quo warranto by and between petition 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.
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.
Litigation should be discouraged and not encouraged. Courts should not 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.
Thus, in State vs. Finch: "As a rule, the attorney-general has the power, both under the common law and by statute, to make any disposition of the State's litigation that he deems for its best interest".
In a jurisprudence it provides that the authority of the Solicitor General to commence the action involved herein (Rule 66, Sec.3), he therefore, also has, before submission, the right to terminate the same where he deems it best for the interest of the State.
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