Y TRANSIT CO., INC. vs.

NLRC
DOCTRINE: If the approval has not been obtained the transfer or lease is valid and binding Thus, had there been any real contract between Y Tranist Co., Inc. and Yujuico Transit Co.,
between the parties although not effective against the public and the Public Service Inc. of Y Transit Co., Inc. and Jesus Yujuico regarding the sale or transfer of the buses, the
Commission. The approval is only necessary to protect the public interest. former may avail of its remedies to recover damages. Petition is hereby DISMISSED.

FACTS:
1. Yujuico Transit Co., Inc., mortgaged 10 of its buses to the DBP to secure a loan in the
amount of P2.7M
2. Board of Directors of Yujuico passed a resolution authorizing its President, Jesus
Yujuico, to enter into a dacion en pago arrangement with the DBP whereby he
would transfer to the DBP the Saint Martin Technical Institute in consideration of
the full settlement of the obligations of three companies, one of which is Yujuico
Transit Co. Consequently, the company transferred the ownership of its mortgaged
properties, including the buses to Jesus Yujuico.
3. Yujuico Transit Employees Union (Associated Labor Union) filed 2 consolidated
complaints against Yujuico Transit for Unfair Labor Practice and non-payment of
living allowance.
4. Jesus Yujuico sold the subject buses to petitioner Y Transit Co., Inc. for P3.4M
5. LA: dismissed the unfair labor practice complaint but held Yujuico Transit Co., liable
for non-payment of living allowances in the amount of P142,490.49. The 10 buses
were levied. Because of this, Y Transit Co., Inc. filed Affidavits of 3rd Party Claim.
6. Private respondents opposed the 3rd party claim on the ground that the transactions
leading to the transfer of the buses were void because they lacked the approval of
the BOT as required by the Public Service Act.
7. LA: Y Transit Co., Inc. had valid title to the buses and that the BOT, by its
subsequent acts had approved the transfer. Registration of a motor vehicle is not
the operative act that transfers ownership, unlike in land registration cases.
8. NLRC reversed the LAs decision on the ground that the transfer of the buses lacked
the BOT Approval.

ISSUE: W/N BOT Approval is necessary for the transfer of the buses to be valid.

RULING: YES. In Montoya vs. Ignacio the law really requires the approval of the Public Service
Commission in order that a franchise, or any privilege pertaining thereto, may be sold or
leased without infringing the certificate issued to the grantee. Since a franchise is personal in
nature any transfer or lease thereof should be notified to the Public Service Commission so
that the latter may take proper safeguards to protect the interest of the public.

If the approval has not been obtained the transfer or lease is valid and binding between the
parties although not effective against the public and the Public Service Commission. The
approval is only necessary to protect the public interest.

There being no prior BOT approval in the transfer of property from Yujuico Transit Co., Inc. to
Jesus Yujuico, it only follows that as fas as the BOT and 3rd parties are concerned., Yujuico
Transit Co., In. still owned the properties and Yujuico, and later, Y Transit Co., Inc. only held
the same as agents of the former.