G.R. No. L-26542 November 18, 1967
P.D.P. TRANSIT, INC. and EUSEBIO DAPLAS, plaintiffs-appellants, vs. MUÑOZ (HI) MOTORS, INC., DM TRANSIT, INC. and ALFREDO ABEJA, in his capacity as Deputy Sheriff of Quezon City, defendants-appellees.

FACTS

Plaintiffs P.D.P. Transit, Inc. and Eusebio Daplas filed a complaint in the Court of First Instance of Quezon City against defendants Muñoz (Hi) Motors, Inc., D.M. Transit, Inc., and Deputy Sheriff Alfredo Abeja. The complaint alleged that plaintiff corporation purchased truck chassis and engines from defendant Muñoz (Hi) Motors, Inc. on installment, secured by chattel mortgages. After making payments, an agreement was allegedly made regarding a loan from the Development Bank of the Philippines. However, in June 1964, defendant Muñoz (Hi) Motors, Inc., in alleged illicit combination with defendant DM Transit, Inc., extra-judicially foreclosed the chattel mortgages on the trucks and repossessed them through the defendant sheriff. The complaint further alleged that during the auction sale on July 16, 1964, the sheriff, in collusion with the defendants, included and sold plaintiff Daplas’s certificate of public convenience (franchise to operate passenger buses), which was not part of the mortgaged properties. This franchise was subsequently transferred to DM Transit, Inc. The plaintiffs sought the annulment of the foreclosure sale, damages, and a preliminary injunction to restrain the transfer and operation of the franchise. The defendants moved to dismiss the complaint on the ground of lack of jurisdiction, arguing that the subject matter involved the validity of the sale of a certificate of public convenience, which falls under the exclusive jurisdiction of the Public Service Commission pursuant to Section 20 of the Public Service Act. The lower court granted the motion to dismiss.

ISSUE

Whether the Court of First Instance of Quezon City erred in dismissing the complaint on the ground of lack of jurisdiction over the subject-matter.

RULING

Yes, the Court of First Instance erred in dismissing the complaint. The Supreme Court set aside the order of dismissal and remanded the case for further proceedings. The Court held that while the Public Service Commission has authority to approve the transfer of a public service franchise and determine the transferee’s qualifications to serve the public interest, the causes of action alleged in the complaint—specifically, the validity of the auction sale on grounds of fraud, the due execution and genuineness of the instrument of sale, and the inclusion of a property (the certificate of public convenience) not covered by the chattel mortgage—are matters that properly belong to the exclusive jurisdiction of the ordinary courts of justice. The Public Service Commission is a body of limited jurisdiction, administrative in character, and lacks the power to adjudicate such questions. Therefore, the Court of First Instance has jurisdiction over the subject matter of the complaint.