G.R. No. L-11153; September 30, 1958
LEONARDO GARCIA, plaintiff-appellant, vs. FRANCISCO BONIFACIO and SIMPLICIO PEÑA, defendants-appellees.

FACTS

Plaintiff-appellant Leonardo Garcia filed a complaint in the Manila Court of First Instance to recover damages and to compel defendants-appellees Francisco Bonifacio and Simplicio Peña to convey to him a certificate of public convenience covering a jeepney, which he claimed to have purchased. The certificate was originally issued to Eustacio Lazcano. Lazcano sold it to defendant Simplicio Peña on February 15, 1953. Peña, in turn, sold it to defendant Francisco Bonifacio on June 19, 1953. Plaintiff Garcia then acquired the certificate and a jeepney from Bonifacio by an absolute deed of sale dated February 27, 1956. Subsequently, Garcia discovered that the certificate in Lazcano’s name, which he bought from Bonifacio, had already been cancelled. This cancellation occurred because defendant Peña presented to the Public Service Commission a false deed of sale from Lazcano to himself dated April 28, 1955, and obtained a new certificate in his own name. Peña also requested and received permission from the Commission to drop the very jeepney (previously transferred to Bonifacio and then to Garcia) from the service. As a result, Garcia was prevented from operating the jeepney. The trial court, presided by Judge Bienvenido Tan, dismissed Garcia’s complaint. The court held that Garcia had no rights enforceable before the courts, not even for damages, because he had not secured the approval of the Public Service Commission for the sale of the certificate. The court implied that Garcia should seek relief from the Commission itself.

ISSUE

Whether the court of first instance correctly dismissed the complaint, holding that the plaintiff had no cause of action for specific performance (conveyance of the certificate) or for damages, due to his failure to secure the required approval of the Public Service Commission for the sale of the certificate of public convenience.

RULING

The Supreme Court AFFIRMED the order of dismissal. The Court held that the trial court had no authority to grant the relief demanded by Garcia (conveyance of the certificate and the privilege to operate the jeepney) because the sale of the certificate had not been approved by the Public Service Commission as required by law. Section 20(g) of the Public Service Act ( Commonwealth Act No. 146 ) explicitly provides that no sale, alienation, or lease of a certificate of public convenience shall be lawful without the prior approval and authorization of the Commission. The approval is not a mere formality; the Commission must, after notice and hearing, determine that the sale is just, reasonable, and not detrimental to the public interest. The Court emphasized that the consummation of the sale and the right to operate under the certificate begin only on the date fixed by the Commission in its order of approval.
The Court rejected Garcia’s arguments: (1) that he could not properly go to the Commission because there was a dispute over the terms of the sale (with Bonifacio allegedly denying the full sale), citing Del Rosario vs. Vergara where the Commission approved a sale despite the seller’s denial; and (2) that the Commission could not award the monetary damages he sought. Regarding damages, the Court ruled that: (a) Garcia could not claim damages for loss of earnings from the jeepney operation because he had no right to operate it without the Commission’s approval, which he never sought; (b) any claim for moral or exemplary damages would depend on the outcome of the approval process and the clarification of the parties’ rights, and could only be awarded if the disapproval was based on actionable acts of the defendants; and (c) attorney’s fees could not be charged to the defendants when the complaint was dismissed. The Supreme Court concluded that the Commission was the proper forum to thresh out the parties’ rights, as it is the only entity empowered to transfer or issue certificates of public convenience.