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 MEDINA, as Public Service Commissioner, defendants-appellees.

FACTS

Plaintiff Juan M. Serrano was granted a certificate of public convenience by the Public Service Commission (PSC) to operate eight auto-trucks. He mortgaged this certificate to defendant Muñoz (Hi) Motors, Inc. (MHMI) on August 22, 1963. The parties applied for PSC approval of the mortgage. At MHMI’s instance, the Sheriff of Quezon City foreclosed the chattel mortgages and executed a certificate of sale in favor of MHMI on October 31, 1964. On January 7, 1965, MHMI sold certain units and certificates, including Serrano’s, to defendant DM Transit Corporation (DMTC). Acting on a joint petition, PSC Commissioner Enrique Medina issued an order on March 4, 1965, provisionally approving the sale and authorizing DMTC to operate. Serrano moved to set this order aside. On March 26, 1965, Serrano sold the line to co-plaintiff Silver Liners, Inc. (SLI). On April 5, 1965, Commissioner Medina issued an order noting that the sheriff’s certificate of sale did not mention the franchise but, based on manifestations from counsel, postponed the hearing to allow evidence on whether the certificate was included. The sheriff announced a new foreclosure sale for June 14, 1965. On June 9, 1965, Serrano and SLI filed a complaint in the Court of First Instance (CFI) of Quezon City seeking to permanently restrain the sheriff from proceeding with the foreclosure sale, and claiming damages against all defendants. They alleged that the PSC’s provisional approval order deprived Serrano of his property without due process and that the PSC had not acted on the application for approval of the chattel mortgage nor on Serrano’s motion to withdraw it. The CFI, in separate orders dated July 19 and September 21, 1965, dismissed the complaint against all defendants for lack of jurisdiction. Plaintiffs appealed.

ISSUE

Whether the Court of First Instance of Quezon City has jurisdiction over the subject matter of the civil case filed by the plaintiffs.

RULING

No, the Court of First Instance of Quezon City does not have jurisdiction. The Supreme Court affirmed the CFI’s orders dismissing the complaint. The Court held that jurisdiction is determined by the allegations in the complaint. The complaint raised three distinct issues: (1) an attack on the PSC’s order of March 4, 1965, which provisionally approved the sale and authorized DMTC to operate; (2) a challenge to the validity of the foreclosure sale conducted by the sheriff; and (3) a claim for damages under Article 32 of the Civil Code against Commissioner Medina for issuing the allegedly void order. Regarding the first issue, the Court ruled that the Public Service Commission has exclusive, original jurisdiction over all matters concerning the sale, mortgage, or transfer of certificates of public convenience, as provided by the Public Service Act ( Commonwealth Act No. 146 ). The CFI cannot review, reverse, modify, or annul PSC orders; such review is exclusively vested in the Supreme Court. On the second issue, the Court held that the validity of the foreclosure sale, which hinges on whether the certificate of public convenience was validly included in the chattel mortgage and its foreclosure, is a question intrinsically linked to the PSC’s authority to approve such a mortgage. This matter falls within the PSC’s primary jurisdiction. Concerning the third issue, the claim for damages under Article 32 of the Civil Code against Commissioner Medina was deemed insufficient. The Court stated that Article 32 applies to violations of constitutional rights by private individuals, not to judicial or quasi-judicial acts. Commissioner Medina’s order was a quasi-judicial act, and the allegations in the complaint were mere conclusions of law, not ultimate facts, thus failing to formulate a cause of action. Therefore, the CFI correctly dismissed the complaint for lack of jurisdiction over the subject matter.