G.R. No. L-29618, January 9, 1978
Bisaya Land Transportation Co., Inc., et al. vs. Hon. Francisco Geronimo, et al.

FACTS

The Republic of the Philippines filed a quo warranto petition in 1959 seeking the dissolution of Bisaya Land Transportation Co., Inc. Private respondent Miguel Cuenco, a minority stockholder, filed an answer with a cross-claim against the other directors (petitioners herein) and prayed for the appointment of a receiver to preserve corporate assets. After protracted proceedings, the corporation moved for a consent judgment for dissolution in 1962, which Miguel Cuenco agreed to but insisted on receivership. The trial court eventually appointed a receiver in 1963. In 1966, the Solicitor General moved to dismiss the quo warranto proceedings. The trial court granted this motion on April 3, 1968, dismissing the main action and Miguel Cuenco’s cross-claim. The court also ordered the receiver to render an accounting and turn over management to the board of directors once the order became final.
Miguel Cuenco appealed the dismissal of the cross-claim to the Supreme Court (G.R. No. L-31490). After this appeal was perfected, the petitioners filed a motion in the trial court to discharge the receiver, arguing that the dismissal of the main action necessitated the termination of the ancillary remedy of receivership. The respondent judge denied this motion on August 17, 1968, prompting the petitioners to file the instant certiorari petition.

ISSUE

Whether the respondent judge committed grave abuse of discretion in denying the motion to discharge the receiver after dismissing the main quo warranto action and despite the perfection of an appeal on the dismissed cross-claim.

RULING

The Supreme Court denied the petition and upheld the order denying the discharge of the receiver. The legal logic is anchored on the nature of the appealed order and the court’s retained jurisdiction over ancillary matters. The Court clarified that the trial court’s order of April 3, 1968 was not a final judgment that terminated the entire case. While it dismissed the main action and the cross-claim, the order specifically directed future actions concerning the receivership, making it interlocutory with respect to that remedy. Crucially, Miguel Cuenco’s appeal (G.R. No. L-31490) from the dismissal of his cross-claim perfected the jurisdiction of the Supreme Court over that specific matter, but it did not automatically divest the trial court of all jurisdiction.
The trial court retained jurisdiction to issue orders for the preservation of the status quo and the protection of the rights of the parties pending the appeal. The receivership was precisely such a protective measure. Discharging the receiver immediately would have altered the corporate management and asset control, potentially rendering the appeal moot or causing irreparable injury. The Court found no grave abuse of discretion in the respondent judge’s decision to maintain the receivership to preserve the subject matter of the litigation during the pendency of the appeal. The ruling emphasizes that ancillary remedies like receivership can survive the dismissal of the principal action if necessary to serve the ends of justice and prevent prejudice during an ongoing appellate review.