G.R. No. L-5868 December 29, 1953
SANCHO MONTOYA, in his own behalf and as guardian ad litem of the minors ISMAEL, FELICITAS, DIVINA and NAPOLEON, all surnamed MONTOYA, petitioners, vs. MARCELINO IGNACIO, respondent.

FACTS

On January 5, 1949, Tomasita Arca, a school teacher, boarded a jeepney in Tanza, Cavite, paid her fare, and was on her way to Cavite City when the jeepney collided with a Luzon Bus Line bus in barrio Ligton, Rosario, resulting in her death. She left a widower, Sancho Montoya, and four minor children. The widower and children, as petitioners, filed an action for damages against the owners of the jeepney, claiming a breach of the carrier’s obligation to transport the passenger safely and seeking P31,000 in indemnity. The defendants claimed the bus driver was at fault, as shown by a fiscal’s investigation and a subsequent criminal case for reckless imprudence, and argued the civil case should await the criminal case’s termination. One defendant, Cayetano Tahimik, also denied ownership of the jeepney. The lower court dismissed the case, finding no proof that the collision was due to the jeepney driver’s negligence. The Court of Appeals affirmed the dismissal but on a different ground: it found that Marcelino Ignacio owned the jeepney but had leased it to Leoncio Tahimik under a contract dated June 8, 1948, and that Tahimik was operating it at the time of the accident. The petitioners sought review, arguing the lease contract was void for lack of approval by the Public Service Commission as required by law.

ISSUE

Whether the lease of the jeepney by its owner, Marcelino Ignacio, to Leoncio Tahimik, without the approval of the Public Service Commission, absolves Ignacio from liability for damages arising from its operation, resulting in the death of a passenger.

RULING

The Supreme Court reversed the decision of the Court of Appeals. It held that under Section 16(h) of the Public Service Law, the lease of a property covered by a public service franchise requires the approval of the Public Service Commission. This approval is necessary to protect public interest, as the Commission must ensure the lease does not detrimentally affect service. Since the lease was made without such approval, Marcelino Ignacio remained the operator of the jeepney in contemplation of law and was therefore responsible for damages incident to its operation, including the collision that caused Tomasita Arca’s death. The Court rejected the argument that the lease was valid between the parties despite the lack of approval, clarifying that while such a transfer may be binding inter partes, it is not effective against the public or the Commission. Consequently, Ignacio was ordered to pay the petitioners P31,000 in damages.