G.R. No. L-25547. November 27, 1967
JUAN M. SERRANO AND SILVER LINERS, INC., PLAINTIFFS-APPELLANTS, VS. MUÑOZ (HI) MOTORS, INC., DM TRANSIT CORPORATION, BENITO MACROHON, AS SHERIFF OF QUEZON CITY, AND ENRIQUE MEDI…
CASTRO, J.:
The fundamental issue in
this appeal is whether the Court of First Instance of Quezon City has
jurisdiction over civil case 8835 before it.
Disavowing jurisdiction, the court, in two separate orders of July 19
and September 21, 1965, dismissed the complaint against all the defendants
(Enrique Medina of the Public Service Commission, Muñoz
(Hi) Motors, Inc., DM Transit Corporation, and Benito Macrohon
as Sheriff of Quezon City) with costs against the
plaintiffs Juan M. Serrano and the Silver Liners, Inc.
According
to the allegations of the complaint, Juan M. Serrano was granted by the
Public Service Commission (PSC) in case 83104 a certificate of public
convenience to operate in Manila and Quezon City eight[1] auto-trucks for passengers and freight. On August 22, 1963 Serrano mortgaged
this certificate to Muñoz (Hi) Motors, Inc.
(hereinafter referred to as the MHMI), as additional collateral to secure an indebtedness on account of the purchase of four buses. The
parties to this chattel mortgage
thereafter applied to the PSC for approval thereof. At the instance of the MHMI, the sheriff of Quezon City foreclosed the chattel mortgage of October
24, 1961[2] and that of August 22, 1963, and, on October 31, 1964, executed a certificate of sale in favor of the MHMI as the highest bidder.
On January 7, 1965
the MHMI sold
some units and certificates of public convenience, among them, the certificate
granted to Serrano in PSC case 83104, to the DM Transit Corporation
(hereinafter referred to as the DMTC). Acting on the petition filed jointly
by the MHMI and the DMTC on January
22, 1965, the PSC, thru Commissioner Medina, in an order issued on March 4, 1965, provisionally approved the said
sale, and authorized the DMTC to operate “under the provisional authority
here granted.” Serrano moved to have this order set aside.
On
March 26, 1965 Serrano sold to the Silver Liners, Inc. (hereinafter
referred to as the SLI) the line he was
authorized to operate by virtue of the certificate of public convenience
issued in PSC case 83104, and authorized the latter to file with the PSC the
corresponding application for approval of the said sale.
On April 5, 1965 Commissioner Medina issued an order
in the following tenor:
“[t]he certificate of sale clearly
mentions the units operated by the judgment-debtor but does not mention that
the franchise or certificates of public convenience for the operation of said
units are also included in the sale. In
view, however, of the manifestation of counsel for DM Transit and Muñoz (Hi) Motors, Inc., to the effect that the certificate
of public convenience was included in the notice of sale and that it was the
intention of the Sheriff (who is now present in open Court), to sell also the
franchise, the Commission believes that, in fairness to all, the hearing of
this case should
be postponed until JUNE 15, 1965, at 9:00 a.m., to give all the parties
sufficient and ample opportunity to present their evidence, pro and con, in
support of their respective allegations, and for the Sheriff, if necessary, to make the
corrections if any error has been committed.”
At
the instance of the MHMI, the sheriff of Quezon
City “once more announced the foreclosure of the chattel mortgages dated
October 24, 1961 and August 22,
1963,” and the sale of among
others, “the certificate of public convenience issued in PSC Case No.
83104,” to be held on June 14, 1965.
In view of this
development, Serrano and the SLI, on June 9,
1965, filed the
present complaint the pertinent and important portions of which read:
“6. That the plaintiff, Juan M. Serrano, and the
defendant, Muñoz (HI) Motors, Inc., filed the
corresponding application for the approval of the chattel mortgage of said
certificate with the Public Service Commission. However, before the Public Service Commission
could decide the application, the plaintiff, Juan M. Serrano, filed a motion
with drawing the same on the ground
that the mortgagee, Defendant Muñoz (HI) Motors,
Inc., had violated their agreement.
Until now the Public Service Commission has not acted on the application
for approval of the chattel mortgage of the certificate of public convenience. Neither has it acted on the motion of Juan M.
Serrano to withdraw the application.”
** ** **
“11. That the issuance of the provisional approval,
Exhibit ‘C’, presupposes the existence of a sale and transfer of the
certificate of public convenience issued in Case No. 83104 by the Sheriff of Quezon City to Muñoz (HI) Motors,
Inc., which is not a fact. Hence the defendant,
Enrique Medina, is liable for damages for the issuance of the provisional
approval, Exhibit ‘C’, under Art. 32 of the Civil Code of the
Philippines because the plaintiff, Juan M. Serrano, was deprived of his
property without due process of law.”
** ** **
“14. That the announced sale on June 14, 1965 is at once illegal and violative of the rights of the plaintiffs. Unless immediately restrained by this
Honorable Court with the issuance ex parte
of a writ of preliminary injunction,
the plaintiff will suffer great and irreparable injury in addition to what
they, especially Juan M. Serrano, have already suffered by reason of the acts
above complained of.
“15. That as
a consequence of the issuance of the provisional approval, Exhibit ‘C’,
on March 4, 1965 the plaintiffs
have been unable to operate the eight (8) units attached to the certificate of
public convenience issued in Case No. 83104 and the plaintiff, Juan M.
Serrano, has been unable to substitute
four (4) of said units as shown by the order of the Public Service Commission
in Case No. 65-2654, a certified copy of
which being attached as Exhibit ‘F’”.
** ** **
“WHEREFORE, it is respectfully prayed that judgment be rendered
in favor of the plaintiffs and against the defendants by restraining
permanently the defendant, Sheriff of Quezon City and
his deputies from again foreclosing the chattel mortgages on October 24, 1961
and August 22, 1963 and selling at public auction the chattels mortgaged,
especially the certificate of public convenience issued in Case No. 83104, and
ordering the defendants, to pay jointly and severally, the plaintiffs the
following:
(a)
Actual damages in the amount of
P50,390.00 as of June 8, 1965
and daily thereafter at the rate of P560.00;
(b)
Moral damages to Juan M. Serrano
in the amount of P10,000.00;
(c)
Exemplary damages in such amount
as may be fixed by the Honorable Court;
(d)
Attorney’s fees in the amount of P10,000.00,
and the costs.
“It is further prayed that there be issued ex parte immediately a writ of preliminary injunction
restraining the defendant, Sheriff of Quezon City and
his deputies, from proceeding with the announced sale on June 14, 1965 of the
chattels enumerated in Exhibit ‘E’.”
Acting on the complaint
and on an urgent motion subsequently filed by the plaintiffs for the issuance
of an ex parte writ of preliminary
injunction, the court directed the parties to maintain the status quo upon
the filing by the plaintiffs of a P5,000 bond, and set
the motion for hearing on June 26, 1965. The
defendants opposed the motion.
Commissioner Medina, on June 22, 1965, moved for the dismissal of
the complaint against him on three grounds:
that the CFI has no jurisdiction over not only the subject-matter of the
action but as well his person as Public Service Commissioner; that the
complaint states no cause of action against him; and that “Article 32 of the Civil Code is not applicable to judicial
orders.”
The rest of the
defendants, on the following day, June 23, filed their answer, in which they
alleged, among other things, that the certificate of public convenience issued
in PSC case 83104 is included in the chattel mortgage of August 22, 1963; that
the PSC had in fact approved the said mortgage; that the said certificate was
actually included in the foreclosure sale conducted by the sheriff of Quezon City, although the latter, through inadvertence,
failed to mention it in the certificate of sale of October 31, 1964; and that
the MHMI has requested the sheriff “to conduct another foreclosure sale in
order to supplement and correct the first one.” They further alleged that
the complaint states no cause of action, and that the plaintiffs are in estoppel and guilty of laches. They accordingly prayed that the complaint be
dismissed as against them, and that the sheriff of Quezon City be ordered to proceed with the foreclosure
sale. The plaintiffs, on July 8,
1965, opposed the motion to dismiss filed by Commissioner Medina.
By its order of July 19,
1965 the CFI dismissed the complaint as against Commissioner
Medina. The plaintiffs moved to have
this order set aside or clarified, because it did not specify any ground for
the dismissal. Per its order of August
23, 1965 the CFI held in abeyance consideration of the plaintiffs’ prayer for
preliminary injunction, to afford the plaintiffs opportunity to file a motion
for reconsideration of the order of July 19, and to give the rest of the
defendants equal opportunity to file motions to dismiss, “so that the
court can make a clear cut ruling on the question of jurisdiction over the
instant case.”
On August 24, 1965 the MHMI and
the DMTC moved to dismiss the complaint on the ground that the court has no
jurisdiction over the subject-matter of the action. The plaintiffs thereafter filed their
opposition.
On September 21, 1965
the CFI dismissed the complaint for lack of jurisdiction over the
subject-matter thereof; on the following October 16, it denied the plaintiffs’
motion to set aside the said order.
Hence
the present recourse.
In Perez Cardenas vs. Camus,[3]
we held
that jurisdiction over the subject-matter is determined by the allegations of
the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of
the claims asserted therein — a matter that can be resolved only after and as
a result of the trial. Nor may the
jurisdiction of the court be made to depend upon the defenses set up in the answer or upon the motion to
dismiss, for, were we to be governed by such rule, the question of
jurisdiction would depend almost
entirely upon the defendant.
As can be gleaned from
the portions of the complaint hereinbefore quoted, namely, paragraph 11 in
relation to paragraph 15, and paragraph 6 in relation to paragraph 14, three distinct
issues present themselves for resolution.
1. Paragraphs 11 and 15
squarely assail the PSC order of March
4, 1965. According to the
appellants, this order “presupposes the existence of a sale and transfer
of the certificate of public convenience issued in Case No. 83104 by the Sheriff of Quezon City to Muñoz (Hi) Motors,
Inc., which is
not a fact”, because the said certificates of public convenience
was not mentioned in the
sheriff’s certificate of sale of October 31, 1964; the PSC order approving provisionally
the sale by the MHMI in favor of the DMTC, of, among others, the said
certificate, and authorizing the latter to
operate the line covered thereby, thus deprived Serrano of his property
“without due process of law”, and prevented the appellants from
operating the eight units attached to the said certificate and Serrano from substituting four of the said
units.
In sum, therefore, paragraphs 11 and 15 assail
the PSC order of March 4, 1965 as erroneous because the MHMI could not
have legally transferred the certificate of public convenience in question to
the DMTC for the reason that the sheriff’s
certificate of sale of October 31, 1964 did not include the said certificate of public convenience among the properties sold to the MHMI in the
foreclosure sale.
It is our view that the
resolution of this aspect of the case falls within the exclusive province of
the PSC.
Under section 20(g) of
the Public Service Law,[4] the PSC is the body invested with the power and authority to approve a sale or
transfer of a certificate of public convenience. As we emphasized in Garcia vs. Bonifacio, et al.,[5] that
“[I]f as appellant represents, the certificate
sold to him was later illegally transferred to Peña, who now holds the Commission’s approval and
certificate, there is no better place than the Commission itself to thresh out the respective rights of the parties, bearing in mind that said Commission is
the only entity empowered to withdraw the certificate from Peña
and to transfer it to herein plaintiff or grant him a new certificate.”
We
have indeed sustained the power and authority of the PSC (a) to approve
provisionally the transfer of a certificate of public convenience where the
conditions laid down by section 20(g) are satisfied,[6] and (b) to grant provisional authority to a
vendee to operate a franchise pending determination of the legality of the
sale.[7]
Entirely apart from the
above considerations, we note from the order of March 4, 1965 that Serrano has filed an “urgent
motion to set (it) aside”. Orderly
procedure demands that the PSC pass upon this phase of the controversy; from an
adverse resolution thereon, the appellants may yet appeal to this Court.[8]
“[t]he commission having jurisdiction
to determine whether a corporation has the right to do or not to do a thing for
which the commission’s approval is sought, orderly procedure requires that the
commission pass upon that phase of the controversy before the courts adjudge
it. The obvious reason for this is
stated in St. Clair Borough v. Tomaqua & Pottsville
Elec. Ry. Co., 259 Pa. 462, 103 A. 287, 289, 5 A.L.R.
20: ‘Otherwise different phases of the
same case might be pending before the commission and the courts at one time,
which would cause endless confusion.”[9]
The order of the PSC did not deprive Serrano of his property[10]
“without due process of law”.
The order is provisional in nature, “may be modified or revoked by
the Commission at any time”,[11] is “subject
to whatever action that may be taken on the basic application” for the
sale and transfer filed by the MHMI in favor of the DMTC, and is “valid only during the pendency of said application, but not beyond SIX (6) MONTHS
from the date hereon (March 4, 1965),” which period, by the way, has
already expired. Neither were the appellants deprived of their day in court. For, the PSC, in its order of April 5,
1965, clearly stated
that “in fairness to all” and “to give all the parties
sufficient and ample opportunity to present their evidence, pro and con, in
support of their respective allegations”, “the hearing of this case
should be postponed until June 15, 1965, at 9:00 a.m.“
2. The CFI likewise did not
err in dismissing the complaint, even if it prayed for damages against
Commissioner Medina, for failure to
state a sufficient cause of action.
Article 32 of the Civil Code, relied upon by the appellants in
support of their claim for damages, provides in its
last paragraph that the responsibility for damages “herein set forth is not demandable from a judge unless his
act or omission constitutes a
violation of the Penal Code or other penal statute.” We do not now decide — as we believe we are not
called upon to do so — whether article 32 of the Civil Code may be utilized as the
legal basis of an action for
damages against a PSC commissioner. But
assuming that the said provision of law does authorize recovery of damages
from a member of the PSC in proper cases, the dismissal must yet be
sustained. Nowhere does the complaint
allege that, in issuing the order of March 4,
1965, Commissioner
Medina did so in violation of the Revised Penal Code or any other penal
statute. It does not charge him with
knowingly rendering an unjust judgment,[12] or rendering an unjust judgment by reason of
inexcusable negligence or ignorance,[13] or knowingly rendering an unjust
interlocutory order or decree,[14] or transgressing any other penal law.
3. Finally, the CFI did not err in dismissing the complaint
against the rest of the defendants. The
complaint does not state a cause of action against them. Paragraph 6 thereof alleges that Serrano filed a motion with the PSC
withdrawing the application filed by him and the MHMI for approval of the
chattel mortgage over the certificate of public convenience in question,
“on the ground that the mortgagee, Defendant Muñoz
(HI) Motors, Inc., had violated their agreement”, and, on that basis,
paragraph 14 asserts that “the announced sale on June 14, 1965 is at once
illegal and violative of the rights of the
plaintiffs”, and that if the sheriff of Quezon
City be not immediately restrained from proceeding with the intended
foreclosure and sale of the said certificate, they “will suffer great and
irreparable injury”. These
averments are altogether too imprecise and therefore cannot be dignified as
constituting a legally sufficient statement of the “ultimate facts”
required in the formulation of a cause of action; they are at best mere
conclusions of law which, obviously, cannot take the place of “ultimate
facts.”[15]
ACCORDINGLY, the orders of July 19 and September
21, 1965, dismissing
the complaint, are affirmed, at plaintiffs-appellants’ cost.
Dizon, Acting C.J., Makalintal, Bengzon, Zaldivar, Sanchez, Angeles, and
Fernando, JJ., concur.
Concepcion, C.J., and Reyes, J.B.L.,
J., on official leave.
[1]
According to the order of the PSC of June
29, 1965 this certificate is good for only four units (see pp. 13 to 17 of brief for the
defendant-appellee Enrique Medina).
[2]
This chattel mortgage covers indebtedness relative to the sale of
transportation units by the MHMI
to Serrano.
[3]
L-17191, July 30, 1962.
[4]
“Acts requiring the approval of the Commission. Subject to
established limitations and
exceptions and saving provisions to the contrary, it shall be unlawful for any
public service or for the owner, lessee or operator thereof, without the
approval and authorization of the Commission previously had –
“(g) To
sell, alienate, mortgage, encumber or lease its property franchises, certificates, privileges, or rights, or any
part thereof; or merge or consolidate its property, franchises, privileges or
rights, or any part thereof, with those of any other public service. The
approval herein required shall be given, after
notice to the public and after hearing the persons interested at a public hearing, if it be
shown that there are just and reasonable grounds for making the mortgage or
encumbrance, for
liabilities of more than one year maturity, or the
sale, alienation, lease, merger, or
consolidation to be approved, and that the same are not detrimental to the
public interest, and in case of a sale, the date on which the same is to be consummated shall be
fixed in the order of approval: Provided, however, that nothing herein
contained shall be construed to prevent the transaction from being negotiated
or completed before its approval or to prevent the sale, alienation, or lease
by any public service of any of its property in the ordinary course of its
business.”
[5]
104 Phil. 656.
[6]
Dagdag, Jr., et al. vs. Public Service
Commission, et al., 104 Phil. 162.
[7]
Orlanes and Banaag Trans.
Co. vs. Public Service Commission, 57 Phil. 624.
[8]
Sec. 35, Public Service Law.
[9]
Pittsburgh Rys. Co. v. Public Service
Commission, 174 A. 670, 672; see
also In State ex rel. and to Use of Cirese, et al. vs.
Ridge (1940), 138 S.W. 2d 1012, 1015 and cases therein cited.
[10]
Certificates of public convenience are valuable assets. They are included in the term
“property”. (Raymundo vs. Luneta Motor Co.,
58 Phil. 889).
[11]
See note 6.
[12]
Art. 204, R.P.C.
[13]
Art. 205, R.P.C.
[14]
Art. 206, R.P.C.
[15]
See Rodriguez vs. Tan, 91 Phil. 724, 726; Remonte,
et al. vs. Bonto, et al., L-19900, Feb. 28, 1966; Llanto
vs. Ali Dimaporo, et al., L-21905, March 31, 1966; and the cases therein
cited.