Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-33827 March 4, 1931

BATANGAS TRANSPORTATION CO. and ELISEO SILVA, petitioners-appellants, vs. ORLANES and BANAAG TRANS. CO., INC., respondent-appellee. ----------------------------G.R. No. L-33839 March 4, 1931

ORLANES & BANAAG TRANS. CO., INC., petitioner-appellant, vs. BATANGAS TRANSPORTATION CO., respondent-appellee. L. D. Lockwood and C. de G. Alvear for Batangas Transportation Co. Rivera and Francisco for appellant Silva. Menandro Quiogue for Orlanes and Banaag Transportation Co. VILLAMOR, J.: On August 14, 1928, the applicant, the Orlanes & Banaag Trans. Co. applied for a certificate of public convenience to operate auto-trucks for the transportation of passengers and freight on the following five lines: Mabini-Tiaong, Fishery of Pansipit (San Nicolas)-San Luis, Inecbulan-Aplaya de Bauan, San Pablo-Dolores and Nasugbu-Manila. (Case No. 17059 of the Public Service Commission.). This application was opposed by the Batangas Transportation Co. in writing on December 6 and December 19, 1928, as shown by the record, alleging that the Mabini-Bauan and Batangas-Lipa lines applied for by the Orlanes & Banaag Trans. Co. are already covered by the application filed by the opponent, the Batangas Transportation Co., case No. 16824, as well as the Lipa-Tiaong line via Lumangbayan and the Pansipit-Taal-San Luis line; that the opponent, the Batangas Transportation Co., has already been operating on the Bauan-Batangas route for ten years and is at present maintaining a half-hour schedule thereon; that a part of the Taal-San Luis line has been applied for by Cayetano Orlanes in case No. 16470, and that, therefore, the present application filed by the Orlanes & Banaag Trans. Co should be limited to that part of the line extending from the Pansipit Fishery to Taal; that opponent Batangas Transportation Co. has also covered the whole line from San Luis to San Nicolas via Lemery and Taal in the former application, No. 16824, with a half-hour service. An opposition was also filed by Eliseo Silva, alleging that he is an auto-truck operator, at present rendering a regular service between Banaybanay and Lipa, under a certificate of public convenience issued to him by the Public Service Commission in case No. 16098 with a fixed schedule of trips; that the service he is at present rendering is sufficient to satisfy the public needs for auto-trucks; and that the proposed operation by Orlanes & Banaag will not promote the public convenience, as required by Act No. 3108, but, on the contrary, will cause ruinous competition. The commission heard this application together with those numbered 19364, 20343, 20747, and 20883, and on April 29, 1930, passed upon it authorizing the Orlanes & Banaag Trans. Co. and the Batangas Transportation Co. to operate the Mabini-Tiaong line, with a joint and combined schedule, so that both companies would render an alternate half-hour service; and issuing a certificate of public convenience to the Batangas Transportation Co. to operate the Pansipit Fishery-San Luis line, at the same time denying the application filed by the Orlanes & Banaag Trans. Co.

And with reference to the opposition filed by Eliseo Silva, the commission, by an order dated June 26, 1930, acting on the motion for reconsideration filed by said opponent, required the applicant Orlanes & Banaag Transportation Co. to observe and comply with the following condition when making trips on the Lipa-Banaybanay-San Jose line:. The applicant is hereby prohibited from accepting passengers and freight in Lipa or at any point beyond Lipa, going towards Banaybanay or any other point before, or from Banaybanay or any other point beyond Banaybanay, going to Lipa or at any point before. The resolution regarding the Mabini-Tiaong line originated the appeal taken by the Batangas Transportation Co. (G.R. No. 33827), and that of the Pansipit Fishery- San Luis line is the object of the appeal taken by the Orlanes & Banaag Trans. Co. (G.R. No. 33893). The appellant Batangas Transportation Co. (G.R. No. 33827) makes the following assignments of error: 1. The Public Service Commission erred in granting a certificate of public convenience to the applicant, Orlanes & Banaag Transportation Co, to operate a transportation service between Mabini, Batangas, and Tiaong, Tayabas via Bauan, Batangas, San Jose, and Lumangbayan (old Rosario). 2. The Public Service Commission erred in not holding that the Batangas Transportation Co. has a preferred right to extend its lines and operate exclusively on any part of the above line where it does not now operate. 3. The Public Service Commission erred in denying the motion for reconsideration of the Batangas Transportation Co. Eliseo Silva filed a petition for review of the commission's original resolution in case No. 17059 before the amendatory order referred to above was issued, and in order to obtain a categorical order with respect to the exclusion of the Banaybanay-Lipa line he appealed, making the following assignments of error:. In not excluding Banaybanay-Lipa from the Mabini-Tiaong line, granted to the appellee in the decision rendered in this case; and. In denying the motion for reconsideration filed by the herein appellant. For a better understanding of the case we deem it convenient to take into account the facts considered by the commission, in issuing the order appealed from. The commission states the following in its decision:. Mabini-Tiaong Route: The black dotted line marked X in the sketch is that referred to in the application filed by the Orlanes & Banaag Transportation Company; the red pencil dotted line indicates the portions objected to by the Batangas Transportation Company; the line in red pencil show the present routes operated by the Batangas Transportation Company. The opposition, then, only covers the following portions:. Mabini, Bauan, Batangas, San Jose, Old Rosario or Lumangbayan and Tiaong. The lines at present operated by opponent Batangas Transportation Company start at Bauan for Batangas, Patay, going towards Ibaan; and Lipa and Rosario. These lines are at present operated by the Batangas Transportation Company, covered by case No. 16825, and the lines mentioned in this route have been applied for in case No. 16824. At present the line in black ink represents the present lines of the Orlanes & Banaag Transportation Company and the black dotted lines represent also the Cayetano Orlanes route under special permits.

On the other hand, the Orlanes & Banaag Transportation Company has applied for the Mabini-Batangas and Batangas-Lipa portion via San Jose, in cases Nos. 15173 and 16470 and the Lipa-Lumangbayan portion was also applied for in case No. 15470. The Lumangbayan-Tiaong portion, although only applied for in case No. 17059, is merely, according to the allegations, the connection of the route of the applicant passing through Tiaong, with said applicant's Batangas-Lipa route via San Jose, and Cuenca-Lipa by way of Banaybanay. According to case No. 12746, the applicant Orlanes & Banaag Transportation Company is also at present operating a portion of the Lipa-Rosario line and from Bauan to Batangas and is also operating on the Lipa-Batangas line under a special permit, where the opponent Batangas Transportation Company has never operated. So that, in view of the foregoing, the most reasonable and equitable way would be, since certain portions are jointly operated by both companies, or the Orlanes & Banaag Transportation Company and the Batangas Transportation Company along entirely parallel lines (Bauan-Batangas), and since the line between Lipa and Batangas is also operated, although by special permit, by the Orlanes & Banaag Transportation Company; and since also the opponent the Batangas Transportation Company, has in some cases, applications prior to those filed by the applicant Orlanes & Banaag Transportation Company, the commission believes that the only way to remove these difficulties would be to permit both the applicant Orlanes & Banaag Transportation Company, as well as the opponent Batangas Transportation Company, to operate jointly an hourly service so that the public may have a half-hour service between Tiaong and Mabini, via Bauan, Batangas, San Jose, Banaybanay, Lipa, Lumangbayan, to Tiaong. In favor of the applicant, for instance, is the fact that in this case, application has been made for the line from Mabini to Tiaong; there is at present a regular service from Bauan to Batangas up to Patay going towards Ibaan, which coincides with that of the Batangas Transportation Company; the same may be said of the applicant's regular line from Lipa to Rosario, and the applicant also operates, under special permit, the line between Batangas and Lipa, via Banaybanay. These operations are authorized in cases Nos. 15173, 16470, and 17059. In favor of the Batangas Transportation Company, there is, on the other hand, the fact that it operates a regular service between Bauan and Batangas up to Patay in the direction of Ibaan, and also the Lipa line in the direction of Rosario which are wholly coincident with those of the applicant; and also in favor of the opponent Batangas Transportation Company is the fact that prior to this case it filed an application to operate along the routes here applied for. (See cases Nos. 16824 and 16825.). To this end, if any part has not yet been applied for by these two companies, they should present their respective applications and determine how they are to render a joint half-hour service which will fit in with the other services already rendered by said companies. In recognition of the right which the Batangas Transportation Company has to several portions of this route, the amended application filed by the Orlanes & Banaag Transportation Company contains the following statement: "On the Mabini-Tiaong line, the applicant shall not accept passengers from the town of Bauan to Batangas and vice-versa; nor shall it accept passengers from Lipa to Lumangbayan (Rosario) and vice-versa." (Amended application of the Orlanes & Banaag Transportation Co., dated March 16, 1929.) But there is something more, and that is that as between the applications filed by the Orlanes & Banaag Transportation Company and by the Batangas Transportation Company, the one presented by the latter was filed prior to that of the Orlanes & Banaag Transportation Company; the numbers of their respective cases are the best evidence. There remain some portions for which the Batangas Transportation Company has not filed an application. For example: From Aplaya de Bauan, via Bauan, San Jose, Lipa, and Banaybanay.

xxx

xxx

xxx

The Orlanes & Banaag Transportation Company also filed an application for the Pansipit Fishery line (San Nicolas), San Luis, via Mercado de Taal, as did also the Batangas Transportation Company in case No. 16824. There is only a slight difference between the routes applied for by both companies in that while that of the Orlanes & Banaag Transportation Company goes to the Pansipit Fishery, that of the Batangas Transportation Company goes as far as the barrio of Sto. Tomas. That is to say, that while the former goes across the river to the fishery, the latter stops on the bank of the river in the barrio of San Nicolas. This line then was not operated by any carrier up to the time the Batangas Transportation Company filed its application in case No. 16824 and the Orlanes & Banaag Transportation Company in case No. 17059. From the same opposition of the Batangas Transportation Company dated December 6, 1928, it may be seen that it admits the fact that the applicant has applied for the Taal-San Luis line in case No. 16470, and therefore alleges in its opposition that the application should be limited to the part of the line from the Pansipit Fishery to Taal. The opponent has also applied for the San Luis-San Nicolas line, via Lemery and Taal in case No. 16824. Wherefore, in view of the foregoing, it is held that the applicant Batangas Transportation Company is entitled to operate along this line in order to extend its service, so that instead of stopping at Taal, it may continue on to San Nicolas, as applied for. xxx xxx xxx

For the foregoing considerations, and in view of the evidence and the facts established in these records, in accordance with the principles laid down by this commission and the doctrines of the Honorable Supreme Court; and taking into account the public needs and convenience, and that the establishment of these companies and the authority granted them to do business shall adequately and properly promote the public interests, we hereby issue the following. ORDER The Mabini-Tiaong line is hereby adjudicated to the Orlanes & Banaag Transportation Company and the Batangas Transportation Company, for parallel operation with a combined schedule to be submitted by both companies within the period of thirty days from the promulgation of this decision, in such a manner that both companies shall alternately render a half-hour service, to be combined with their present operations, subject to the terms, conditions, and regulations hereinafter set forth. The San Luis-San Nicolas route via Lemery and Taal is likewise adjudicated to the Batangas Transportation Company, dismissing the opposition filed by the Orlanes & Banaag Transportation Company, and this operation shall also be subject to the terms, conditions, and regulations hereinafter specified. Considering the motion for reconsideration filed by Eliseo Silva with reference to the decision rendered in case No. 17059, the commission said: In the motion and at the oral argument in open session, the movant contended that both in the decision rendered in this case, and in that rendered in case No. 17059, the Banaybanay-Lipa route is included, without any prohibition or restriction with regard to the authority given in said decisions as to this route, the same being part of the line operated by the opponent-movant Silva, according to the certificate of public convenience to the latter in case No. 16098. The movant also contends that in other applications similar to those of Mariano Uy Tek Ko and

Segismundo, et al., the route in question was also applied for, but on account of the movant's opposition, the applications were denied. A careful examination of the records of this commission shows that this contention is well founded. According to the certificate of public convenience issued in favor of Eliseo Silva in case No. 16098, Banaybanay-Lipa is a part of the lines of this opponent. Besides Eliseo Silva, the Batangas Transportation Co. is also an operator along the route in question. And in several cases wherein applications were made for said route, the same were denied. In view of all the foregoing and considering that the request contained in the motion for reconsideration is justified, the commission hereby grants the same and orders the applicant the Orlanes & Banaag Transportation Co. to observe and comply with the following condition when making trips along the Lipa-Banaybanay-San Jose line authorized in this case: "The applicant is hereby prohibited from taking passengers and freight from Lipa or beyond to Banaybanay or any point before, or from Banaybanay or beyond to Lipa or any point before." This condition is hereby included in the ones prescribed in the first condition of the decision rendered in this case on April 28th, 1930, and the applicant is hereby admonished that upon the first violation of said condition the certificate of public convenience issued to it by said decision shall be cancelled. Accepting, as we do, the facts set forth in the decision of the commission, we believe the resolution appealed from is supported by the evidence of record, and, in accordance with section 35 of Act No. 3108, we find no reason either to reverse or modify said resolution. The ground alleged by the Batangas Transportation Co. that being an old operator in the Province of Batangas, it is entitled to the exclusive right of extending its line of operations to any public thoroughfare that may be constructed in said province, is untenable; for this would be equivalent to establishing a monopoly in this business in its favor. The decision of this court in Javier vs. Orlanes (53 Phil., 468), cited in support of the appellant Batangas Transportation Co., has not the effect of establishing in favor of an old carrier a sort of Torrens title on all lines constructed or to be constructed for public traffic within the jurisdiction of the province where it operates. It is true that in the decision cited it was held that before permitting a new company or a new operator to invade the territory of another already established with a certificate of public convenience, thereby entering into competition with it, if this be for the benefit of the public, the prior operator must be given an opportunity to extend its service in order to meet the public needs in the matter of transportation. This refers to a definite line, operated by one operator, on which a new operator should not be allowed to operate, without the former having refused to extend its services on the line already operated to meet the public needs in the matter of transportation. But this rule is not applicable to lines or roads not operated by the old carrier, in which case the opportunity to exploit the transportation business along those new lines must be given to all those who may apply for it, notwithstanding the fact that the former carrier has a certificate of public convenience to engage in this business in a definite province. Inasmuch as the record shows that the order appealed from is in accordance with the facts stated in the commission's decision, and inasmuch as it has not been shown that there was abuse of discretion on the part of the commission, we are of opinion that the appeal taken by the Batangas Transportation Co. should be dismissed. In regard to the appeal taken by Eliseo Silva, it will suffice to say that the right conferred upon him by his certificate of public convenience to operate on the Banaybanay-Lipa line is safeguarded by the order issued by the commission on June 26, 1930, quoted above, and hence, we believe this appeal has no merit. With reference to the Pansipit-San Nicolas line, the Orlanes & Banaag Trans. Co. bases its appeal upon the fact that being an operator in the Province of Batangas at present, it is entitled to extend its service to

the San Luis-Pansipit line. The Batangas Transportation Co., in turn, argues that since it holds a certificate of public convenience to operate an auto-truck service in the Province of Batangas, it is entitled to extend its service to the new lines of San Luis-Taal and Taal and Taal-San Nicolas in question. The record shows that the applicant Orlanes & Banaag Trans. Co. has a permit to operate its auto-trucks from certain points in the Province of Batangas to Manila, but without any right to handle passengers at intermediate points within said Province of Batangas; whereas the Batangas Transportation Co. has a certificate of public convenience to operate its auto-trucks for passengers and freight between several points of said Province of Batangas. With regard to the new lines or routes within the jurisdiction of the Province of Batangas recently opened to public traffic, financial conditions and business facilities being equal, we believe priority in the filing of the application to be an important factor in determining the right to the certificate applied for. According to the record, no one had operated on this line until the Batangas Transportation Co. filed its application in case No. 16824, after which the Orlanes & Banaag Trans. Co. also applied for it in the present case No. 17059. It is true that the Orlanes & Banaag had applied for the Taal-San Luis line in case No. 16470, but it does not appear that the commission acted upon it until it was again included in the present case No. 17059. The Batangas Transportation Co. then was the first to apply for the San Luis-San Nicolas line via Taal. And considering the financial condition of this company and its capacity to render satisfactory service to the public, we believe the commission was right in issuing the certificate of public convenience in question to it, with the understanding, however, that the commission should require the Batangas Transportation Co. to run its auto-trucks to the Pansipit Fishery, crossing the river in the barrio of San Nicolas. The appellant Orlanes & Banaag Trans. Co. erroneously contends that the appellee is not entitled to ask for a positive remedy in this case, being a mere opponent, for the appellee is also an applicant, as the decision appealed from shows. By virtue of the foregoing, the decision appealed from must be, and is hereby, affirmed with regard to the lines in question, Mabini-Tiaong and San Luis-Pansipit (San Nicolas). Without costs So ordered. Avancea, C.J., Johnson, Malcolm, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.

Separate Opinions STREET, J., concurring and dissenting: I dissent from the decision rendered in G.R. No. 33827, and concur in the decision rendered in G.R. No. 33839. Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-24701

December 16, 1970

INTESTATE TESTATE OF TEOFILO M. TIONGSON, petitioner, vs. THE PUBLIC SERVICE COMMISSION and MARIO Z. LANUZA, respondents.

Graciano C. Regala and Associates for petitioner. E. R. Castro and D. A. Guzman for respondents.

MAKALINTAL, J.: On May 11, 1965 the Public Service Commission decided its Case No. 124626, approving the application of Mario Z. Lanuza for a certificate of public convenience to install and operate a 20-ton daily capacity ice-plant in Pagsanjan, Laguna, and to sell the ice to be produced in said municipality as well as in the municipalities of Longos, Paete, Pakil, Pangil, Siniloan, Famy, Sta. Maria, Cavinti, Magdalena, Majayjay, Nagcarlan, Rizal, Lilio, Sta. Cruz, Lumban, Pila and Victoria, all in the province of Laguna. Three existing operators had opposed the application. One of them, Victorino de Pea, who has an ice-plant in Mauban, Quezon, withdrew his opposition after the applicant excluded the municipality of Luisiana from the territory originally applied for. Another oppositor, Emilio Gomez, did not appeal from the decision of the Public Service Commission. The petitioner here, the Estate of Teofilo M. Tiongson, remains the only oppositor in the present appeal. The petitioner is the grantee of a certificate of public convenience to maintain and operate a 30-ton (increased to 40 tons in 1960 and then to 70 tons in 1964) ice plant in San Pablo City, with authority to sell ice therein as well as in the municipalities of Sta. Cruz, Rizal, Nagcarlan, Calauan, Victoria, Pila, Lumban, Paete, Pakil, Pangil, Cavinti, Siniloan and Alaminos. There is no question as to the applicant's financial capacity. The principal issue is whether there is sufficient need for ice in the places stated in the decision to justify the establishment of a plant in Pagsanjan with the daily capacity authorized by the Commission. This issue is essentially one of fact on which, as a rule, the findings of the Commission are binding on this Court unless it clearly appears that there is no evidence to reasonably support them. 1 Such findings in this case, and the conclusion derived therefrom, are as follows: At one of the hearings of this case, applicant, a businessman and Filipino citizen, manifested that at present there is no ice plant in Pagsanjan, Laguna; that there was formerly one in that municipality but it was transferred to San Pablo City; that the nearest ice plant is located in Kalayaan (Longos, Laguna) which is about 10 kilometers from Pagsanjan, Laguna; that there is a demand for ice by the people of Pagsanjan and of the towns proposed to be served by the applicant because the present supply of ice coming from ice plant operators and distributed by ice dealers is inadequate; that in the territory proposed to be served by applicant, ice is needed for "halo-halo," for cooling soft drinks and drinking water, and for the preservation of the fish caught by fishermen; that aside from these refreshment parlors, there are "sari-sari" stores selling soft drinks; that along Laguna de Bay from Lumban to Sta. Maria, Laguna, from 30% to 50% of the people are engaged in fishing throughout the year; that fishes caught consist of "dalag," "hito," "carpa", "banak," and "shrimps" and to preserve these fishes from the time they are caught until they are sold or disposed of, ice is needed; that ice is also needed in movie houses where soft drinks are sold, in homes, clinics and hospitals that in a small town where there are about 20 stores, about 6 blocks of ice of 300 lbs. each are consumed during the day, and in a big town like Sta. Cruz, the consumption is about 20 blocks of ice of 300 lbs. each during the rainy season and the consumption is about double during the dry season; and that due to the inadequacy of ice supply in the towns proposed to be served by applicant, an ice block of ice of 300 lbs. costs from P5.00 to P8.00. xxx xxx xxx

Applicant presented the following witnesses: Manuel Zaide, a fish dealer of Paete, Laguna; Willie Limlengco, a businessman and sari-sari store owner of Pagsanjan Laguna; Conrado Almario, a refreshment parlor and sari-sari store owner of Lumban, Laguna; Alfonso Rebong, Municipal Mayor of Victoria, Laguna; and Ernesto Marina, business (sic) and sari-sari store owner of Pila, Laguna.

All witnesses presented at the hearings of this case manifest that there is shortage of ice supply in the territory proposed to be served by the applicant, especially during summer months; that the fish dealers do not get their ice requirements so that most often fish are not preserved in ice when sent to other places to be sold like Sta. Maria, San Pablo City, or Manila; and that when the ice supply is inadequate, shrimps which are shipped to Manila are often cooked to minimize spoilage. The oppositors to this application have not established to the satisfaction of the Commission the adequacy of the service rendered by them in the eighteen (18) municipalities proposed to be served by the applicant, considering that most of these municipalities are far from the locations of their ice plants. After a thorough examination of the evidence submitted by the parties and after a careful consideration of our records on existing service in the territory applied for, and considering that an ice plant which manufactures its ice in the locality where it sells that commodity is more advantageous and convenient to the general public in that locality than ice plant located some kilometers away, and that applicant is financially capable of undertaking the installation, and maintaining the operation of the proposed service, the Commission believes that the oppositions filed by Emilio Gomez, operator of an ice plant in San Juan, Longos, Laguna, and Teofilo Tiongson, operator of an ice plant in San Pablo City, in this case should be, as these are hereby overruled and that the application herein filed may be, as it is hereby, APPROVED. The foregoing findings are assailed on two grounds: (1) that only eight witnesses were presented by the applicant, who individually testified as to the need for ice in each of only seven of the municipalities included in the application; and (2) that their testimony even as to those referred to by them is deficient. We have gone over the record in this regard and found enough support therein for the decision appealed from. Manuel Zaide is a fish dealer in Paete, Willie Limlengco is a sari-sari and refreshment store-owner in Pagsanjan; Conrado Almario has a similar business in Lumban; Alfonso Rebong was the municipal mayor of Victoria since 1960; Ernesto Marina is a businessman in Pila; Jose Acuiza is a businessman and fisherman in Pakil; Jose Maceda was the municipal secretary of Pagsanjan; and Eligio Lorenzo is a grocery merchant in Sta. Cruz. They all affirmed the inadequacy and frequent lack of ice supply in their respective localities not only for home consumption but also for restaurants and refreshment parlors as well as for the fishing industry or occupation of the inhabitants, particularly in the regions bordering Laguna Bay. It is true their combined testimony did not cover all the municipalities applied for, but the applicant himself, respondent here, demonstrated sufficient familiarity with the entire area to be able to give evidence, as he did, on the ice-supply situation in everyone of them. He did a lot of traveling as owner of three movie houses in Pagsanjan, Sta. Cruz and Pila, and in connection with his application in this case personally conducted a thorough investigation of the local demands for ice in the municipalities covered by said application. That he is the applicant does not necessarily affect his credibility; on the contrary, such an investigation was necessary and called for by sound business policy, for no one would invest capital in the production and sale of any commodity without first ascertaining the needs of the prospective market. One significant fact may be noted insofar as the petitioner's existing ice plant in San Pablo is concerned. The petitioner formerly operated another plant in Pagsanjan, and in each of them it had one delivery truck to service the customers in different municipalities. The Pagsanjan plant, however, was closed in 1952 and transferred to San Pablo, and since then the petitioner has been maintaining only one delivery-truck service, with a single dealer-employee in charge. Under the circumstances the Public Service Commission correctly remarked that "the oppositors have not established ... the adequacy of the service rendered by them in the eighteen (18) municipalities proposed to be served by the applicant, considering that most of these municipalities are far from the locations of their ice-plants. The "prior operator" and "protection of investment" rules cited by petitioner cannot take precedence over the convenience of the public. There is no ice plant at present in Pagsanjan; and from the testimony of the witnesses for the applicant there exists a great demand for ice not only there but also in certain neighboring municipalities. There is nothing in the record to show that the petitioner had exerted efforts to meet this demand before the respondent made his offer to service the areas where ice was needed. 2 Moreover the respondent is authorized to produce only 20 tons of ice daily, whereas the petitioner has

been allowed to increase its daily capacity from 30 to 40 tons in 1960, and recently, in 1964, to 70 tons. This only proves that there is indeed a great demand for ice in the area applied for by the respondent, and negates the probability of ruinous competition. On the contrary the resulting competition will undoubtedly benefit the public through improvement in the service and reduction in retail prices. On the whole, we find no reason to deviate from the rule heretofore consistently applied that findings and conclusions of fact made by the Public Service Commission, when supported by evidence, are binding upon this Court. WHEREFORE, the decision appealed is affirmed, with costs against the petitioner. Reyes, J.B.L., Zaldivar, Castro, Fernando, Teehankee, Barredo and Villamor, JJ., concur. Concepcion, C. J., took no part. Dizon and Makasiar, JJ., are on leave.

Footnotes 1 2 RC Ledesma vs. PSC, L-26900, Feb. 27, 1970, 31 SCRA 805; and cases cited. Phil. Long Distance Telephone Company vs. City of Davao, L-23080, September 20, 1965.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-21061 June 27, 1968

FORTUNATO F. HALILI, petitioner, vs. RUPERTO CRUZ, respondent. Amado A. Amador for petitioner. Benjamin S. Somera for respondent. ZALDIVAR, J.: This is a petition for review of the decision of the Public Service Commission, in its Case No. 61-6113, granting to respondent-appellee Ruperto Cruz a certificate of public convenience to operate a transportation service for passengers and freight, with authority to operate ten units on the line he applied for. Herein respondent filed, on September 19, 1961, with the Public Service Commission an application, praying for the grant of a certificate of public convenience to operate, under PUB denomination, ten buses between Norzagaray (Bulacan) and Piers (Manila), via Novaliches Road, A. Bonifacio Road, Blumentritt Street, Rizal Avenue, MacArthur Bridge, Aduana and 13th Streets; and on the return trip, via Boston Street, MacArthur Bridge, Rizal Avenue, Blumentritt Street, A. Bonifacio Road, and Novaliches Road. The application was opposed by De Dios Transportation Co., Inc., Raymundo Transportation Co., Inc., PDP Transit Inc., Villa Rey Transit, Inc., and by herein petitioner-appellant Fortunato F. Halili who was the operator of the transportation service known as "Halili Transit." Petitioner, in his opposition alleged,

substantially, that he was an operator of a bus service on the line applied for, enumerating at the same time the other lines he operated which were traversed by the route mentioned in respondent's application; that his service, as well as that of other bus operators on the route, was more than adequate to meet the demands of the traveling public; that the grant of the application would merely result in wasteful and ruinous competition, and that the respondent was not financially capable of operating and maintaining the service proposed by him. After several hearings in which the parties presented their evidence, oral and documentary, the Public Service Commission rendered a decision, on February 13, 1963, granting a certificate of public convenience to respondent Ruperto Cruz to operate ten buses under PUB denomination on the line Norzagaray (Bulacan) Piers (Manila) passing through the routes applied for. The decision states, among others, as follows: After a careful study of the evidence presented by the contesting parties, we find the following facts established; that applicant is applying for a service from Norzagaray to Piers and vice-versa; that not one of the oppositors herein operate a service up to Piers most of them go up to Divisoria and the rest up to Folgueras; that there are commuters starting from Norzagaray up to Piers; that applicant has the experience in the operation of a PUB service and that applicant has the means with which to operate and maintain the service herein applied for. From the facts in evidence, this Commission is of the belief that the weight of evidence tips in favor of the applicant. It appearing, therefore, that applicant is a Filipino citizen, that he is financially capable to operate and maintain the service herein applied for, and that public convenience and necessity will be promoted by the approval of this application, and furthermore, that the oppositions of the oppositors herein are without merit, the same are overruled and the instant application APPROVED. It is the above-mentioned decision of the Public Service Commission that is now sought to be reviewed by this Court. Petitioner contends that: 1. "The finding of the Public Service Commission that there was a public need for the operation by respondent of ten buses on the line of Norzagaray (Bulacan) - Piers (Manila) is not supported by the evidence; 2. "The Public Service Commission erred when it did not recognize the fact that petitioner-appellant was rendering sufficient and adequate service on the line in question; and 3. "The Public Service Commission erred in failing to give petitioner-appellant the right of protection to investment to which petitioner-appellant is entitled." In support of his first two contentions petitioner argues that the 500 passengers found by the Commission as commuting daily from Norzagaray to Manila could easily be accommodated in the buses of existing operators; that the existing operators were authorized to operate 31 buses which made around 100 round trips a day; that since a bus could accommodate about 50 passengers, the existing authorized services could easily accommodate not only the 500 but even 5000 passengers a day. Petitioner also asserted that the Commission failed to consider that 200 of the 500 commuters worked in the Republic Cement Factory located at Norzagaray and so there were really only 300 commuters daily traveling on the Norzagaray Manila line. Petitioner further claimed that the new terminal proposed in the application was not based on actual need, because there were no importing firms, or business establishments, or manufacturing concerns, in Norzagaray, whose employees had to make trips to the piers at the south harbor in a Manila. On the question of public necessity, petitioner pointed out that the evidence presented by the respondent consisted only of the testimony of two witnesses who did not make any formal or systematic study of the movement and frequency of public utility buses, so that their testimonies were

based only on casual observations. On the other hand, as petitioner pointed out, the oppositors presented five witnesses, two of whom made meticulous, systematic and daily observations on the line applied for. Petitioner urged that according to Exhibits "1", "1-A" to "1-R", consisting of different pages of entries in a checkbook at the various PSC checkpoints in the proposed line, buses passing the checkpoints were carrying only from 1 to 5 passengers which fact proved that the existing operators more than adequately served the needs of the public. Petitioner likewise asserted that public necessity did not require the operation of the ten buses applied for by the respondent because of the fact that on December 20, 1961, the Public Service Commission granted to herein petitioner, in Case No. 61-5807, authority to operate only 10 buses on the line Norzagaray Manila, even if he had applied for 20 buses; and that out of the many application to operate buses from Paradise Farms (Bulacan) to Manila, only 10 buses were authorized. The first two contentions of petitioner raise questions of fact. This Court has repeatedly held that where the Public Service Commission has reached a finding, after weighing the conflicting evidence, that public necessity and convenience warrant the operation of additional public utility service, the finding must not be disturbed as long as there is evidence reasonably supporting such finding.1 In reviewing the decision of the Commission, this Court is not even required to examine the proof de novo and determine for itself whether or not the preponderance of evidence really justifies the decision. The only function of this Court is to determine whether or not there is evidence before the Commission upon which its decision might reasonably be based.2 The Commission stated in its decision that "after a careful study of the evidence presented by the contesting parties ... the Commission is of the belief that the weight of evidence tips in favor of the application." There is evidence on record that there are numerous students, professionals, merchants, and employees in both government and private concerns, that commute daily between Norzagaray and Manila and the intermediate points along the line;3 that along the same line have emerged numerous centers of population, residential subdivisions and housing projects, industrial projects like the Republic Cement Factory, Angat River Dam Hydro-electric Power Project, and hollow blocks manufacturing establishments;4 that commuters experienced difficulties in getting accommodated on buses traveling between Norzagaray and Manila; that the Villa Rey Transit used to make two trips from Angat to Manila via Norzagaray, the La Mallorca Pambusco also two trips from Norzagaray to Manila via Sta. Maria, and the Halili Transit likewise two trips from Norzagaray to Manila via the Novaliches Road; that said trips were fully loaded at Norzagaray such that many commuters from Norzagaray had to take jeeps which brought them only up to Sta. Maria and Bocaue and there waited for other means of transportation to bring them to Manila;5 and that commuters from Manila to Norzagaray also had to resort to broken trips for lack of direct trips.6 We are persuaded that the evidence in the record support the decision appealed from. Petitioner claims that the Public Service Commission did not consider the checker's reports (Exhs. 1, 1-A, to 1-R), on the face of which it appears that there was no overcrowding in the buses checked at the various checkpoints. The Commission, however, states in its decision that it had arrived at the finding "after a careful study of the evidence presented by the contesting parties," and necessarily the evidence thus studied included the checker's reports. But assuming, gratia argumenti, that said reports were not considered the failure of the Commission to consider the reports would not constitute a reversible error, because we find that the reports refer to trips of buses from Manila to Ipo, Sapang Palay, San Jose and back, and from upland to lowland and back, and none of the buses checked had trips along Norzagaray-Manila or Manila-Norzagaray line. The relative weight of these checker's reports as evidence must have been considered by the Commission before making its decision. As we have stated, the finding of fact of the Public Service Commission is conclusive on this Court. Thus, in a case, this Court said: It appearing that the main issues raised by petitioner merely affect questions of fact which by their very nature involve an evaluation of the relative weight of the evidence of both parties, or the credibility of witnesses who testified before the Commission, following the law and jurisprudence applicable to the matter in this jurisdiction, said questions are now conclusive upon this Court, and cannot be looked into, it

appearing that there is sufficient evidence to support its findings.7 The claim of petitioner, that he was rendering adequate services on the line in question as would preclude the necessity of another operator, is untenable. In the first place, as shown in the record, petitioner does not have a direct line from Norzagaray to the Piers the line that is applied for by respondent. In the second place, there is evidence to the effect that oppositor Halili was authorized 48 trips between Norzagaray and Folgueras,8 but it was making two trips only.9 This circumstance indicated that there was shortage of transportation units or facilities, and that the line was not adequately serviced by the petitioner. Thus, in a case concerning the non-operation of authorized units, this Court said: Apart from the existence of competent evidence in support of these findings, certain undisputed facts therein contained reveal that the assignment of error under consideration is manifestly untenable. We refer to the circumstance that, of the 75 buses that the Raytranco is authorized to operate in all its lines, its right with respect to 30 has been leased, 14 to Rizman and 16 to Laguna-Tayabas Bus Company. Again, though still entitled to operate 45 units in its remaining lines, the Raytranco has registered only 17 buses, aside from the circumstance that such buses are not in continuous operation. These facts lead to the conclusion that there must be a shortage of transportation facilities in the lines aforementioned and that the Raytranco is unable to meet fully the demands of public convenience therein.10 Petitioner claims, in his third contention, that the Public Service Commission failed to give him the protection that he is entitled to, being an old and established public service operator. As a general principle public utility operators must be protected from ruinous competition, such that before permitting a new operator to serve in a territory already served by another operator, the latter should first be given opportunity to improve his equipment and service. This principle, however, is subject to justifiable exceptions. The primary consideration in the grant of a certificate of public convenience must always be public convenience. Thus, this Court said: While it is the duty of the government as far as possible to protect public utility operators against unfair and unjustified competition, it is nevertheless obvious that public convenience must have the first consideration....11 The public convenience is properly served if passengers who take buses at points in one part of a line are able to proceed beyond those points without having to change buses. On this point this Court said: It is the convenience of the public that must be taken into account, other things being equal, and that convenience would be effectuated by passengers who take buses at points in one part of a line being able to proceed beyond those points without having to change buses and to wait the arrival of buses of a competitive operator. We can perceive how under such conditions one public utility could gain business at the expense of a rival.12 In the instant case, public convenience would be properly served if commuters from Norzagaray going to the Piers in Manila could go to their destination without the need of changing buses. Certainly the Public Service Commission has power to grant a certificate of public convenience to a new operator, and the old operator cannot with reason complain that it had not been given opportunity to improve its equipment and service, if it is shown that the old operator has not placed in the service all the units of equipment that it had been authorized to operate, and also when the old operator has violated, or has not complied with, important conditions in its certificate. 13 In the instant case, it has been shown that petitioner had not operated all the units that it was authorized to operate. IN VIEW OF THE FOREGOING, the decision of the Public Service Commission, sought to be reviewed, is affirmed; with costs against petitioner-appellant. It is so ordered.

Republic of the Philippines SUPREME COURT Manila

EN BANC G.R. No. L-64693 April 27, 1984

LITA ENTERPRISES, INC., petitioner, vs. SECOND CIVIL CASES DIVISION, INTERMEDIATE APPELLATE COURT, NICASIO M. OCAMPO and FRANCISCA P. GARCIA, respondents. Manuel A. Concordia for petitioner. Nicasio Ocampo for himself and on behalf of his correspondents.

ESCOLIN, J.:+.wph!1 "Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] is the tune-honored maxim that must be applied to the parties in the case at bar. Having entered into an illegal contract, neither can seek relief from the courts, and each must bear the consequences of his acts. The factual background of this case is undisputed. Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein private respondents, purchased in installment from the Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to be used as taxicabs. Since they had no franchise to operate taxicabs, they contracted with petitioner Lita Enterprises, Inc., through its representative, Manuel Concordia, for the use of the latter's certificate of public convenience in consideration of an initial payment of P1,000.00 and a monthly rental of P200.00 per taxicab unit. To effectuate Id agreement, the aforesaid cars were registered in the name of petitioner Lita Enterprises, Inc, Possession, however, remained with tile spouses Ocampo who operated and maintained the same under the name Acme Taxi, petitioner's trade name. About a year later, on March 18, 1967, one of said taxicabs driven by their employee, Emeterio Martin, collided with a motorcycle whose driver, one Florante Galvez, died from the head injuries sustained therefrom. A criminal case was eventually filed against the driver Emeterio Martin, while a civil case for damages was instituted by Rosita Sebastian Vda. de Galvez, heir of the victim, against Lita Enterprises, Inc., as registered owner of the taxicab in the latter case, Civil Case No. 72067 of the Court of First Instance of Manila, petitioner Lita Enterprises, Inc. was adjudged liable for damages in the amount of P25,000.00 and P7,000.00 for attorney's fees. This decision having become final, a writ of execution was issued. One of the vehicles of respondent spouses with Engine No. 2R-914472 was levied upon and sold at public auction for 12,150.00 to one Sonnie Cortez, the highest bidder. Another car with Engine No. 2R-915036 was likewise levied upon and sold at public auction for P8,000.00 to a certain Mr. Lopez. Thereafter, in March 1973, respondent Nicasio Ocampo decided to register his taxicabs in his name. He requested the manager of petitioner Lita Enterprises, Inc. to turn over the registration papers to him, but the latter allegedly refused. Hence, he and his wife filed a complaint against Lita Enterprises, Inc., Rosita Sebastian Vda. de Galvez, Visayan Surety & Insurance Co. and the Sheriff of Manila for reconveyance of motor vehicles with damages, docketed as Civil Case No. 90988 of the Court of First Instance of Manila. Trial on the merits ensued and on July 22, 1975, the said court rendered a decision, the dispositive portion of which reads: t.hqw WHEREFORE, the complaint is hereby dismissed as far as defendants Rosita Sebastian Vda. de Galvez, Visayan Surety & Insurance Company and the Sheriff of Manila are concerned.

Defendant Lita Enterprises, Inc., is ordered to transfer the registration certificate of the three Toyota cars not levied upon with Engine Nos. 2R-230026, 2R-688740 and 2R-585884 [Exhs. A, B, C and D] by executing a deed of conveyance in favor of the plaintiff. Plaintiff is, however, ordered to pay Lita Enterprises, Inc., the rentals in arrears for the certificate of convenience from March 1973 up to May 1973 at the rate of P200 a month per unit for the three cars. (Annex A, Record on Appeal, p. 102-103, Rollo) Petitioner Lita Enterprises, Inc. moved for reconsideration of the decision, but the same was denied by the court a quo on October 27, 1975. (p. 121, Ibid.) On appeal by petitioner, docketed as CA-G.R. No. 59157-R, the Intermediate Appellate Court modified the decision by including as part of its dispositive portion another paragraph, to wit: t.hqw In the event the condition of the three Toyota rears will no longer serve the purpose of the deed of conveyance because of their deterioration, or because they are no longer serviceable, or because they are no longer available, then Lita Enterprises, Inc. is ordered to pay the plaintiffs their fair market value as of July 22, 1975. (Annex "D", p. 167, Rollo.) Its first and second motions for reconsideration having been denied, petitioner came to Us, praying that: t.hqw 1. ...

2. ... after legal proceedings, decision be rendered or resolution be issued, reversing, annulling or amending the decision of public respondent so that: (a) the additional paragraph added by the public respondent to the DECISION of the lower court (CFI) be deleted; (b) that private respondents be declared liable to petitioner for whatever amount the latter has paid or was declared liable (in Civil Case No. 72067) of the Court of First Instance of Manila to Rosita Sebastian Vda. de Galvez, as heir of the victim Florante Galvez, who died as a result ot the gross negligence of private respondents' driver while driving one private respondents' taxicabs. (p. 39, Rollo.) Unquestionably, the parties herein operated under an arrangement, comonly known as the "kabit system", whereby a person who has been granted a certificate of convenience allows another person who owns motors vehicles to operate under such franchise for a fee. A certificate of public convenience is a special privilege conferred by the government . Abuse of this privilege by the grantees thereof cannot be countenanced. The "kabit system" has been Identified as one of the root causes of the prevalence of graft and corruption in the government transportation offices. In the words of Chief Justice Makalintal, 1 "this is a pernicious system that cannot be too severely condemned. It constitutes an imposition upon the goo faith of the government. Although not outrightly penalized as a criminal offense, the "kabit system" is invariably recognized as being contrary to public policy and, therefore, void and inexistent under Article 1409 of the Civil Code, It is a fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave them both where it finds them. Upon this premise, it was flagrant error on the part of both the trial and appellate courts to have accorded the parties relief from their predicament. Article 1412 of the Civil Code denies them such aid. It provides:t.hqw ART. 1412. if the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed; (1) when the fault, is on the part of both contracting parties, neither may recover what he has given

by virtue of the contract, or demand the performance of the other's undertaking. The defect of inexistence of a contract is permanent and incurable, and cannot be cured by ratification or by prescription. As this Court said in Eugenio v. Perdido, 2 "the mere lapse of time cannot give efficacy to contracts that are null void." The principle of in pari delicto is well known not only in this jurisdiction but also in the United States where common law prevails. Under American jurisdiction, the doctrine is stated thus: "The proposition is universal that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or damages for its property agreed to be sold or delivered, or damages for its violation. The rule has sometimes been laid down as though it was equally universal, that where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other." 3 Although certain exceptions to the rule are provided by law, We see no cogent reason why the full force of the rule should not be applied in the instant case. WHEREFORE, all proceedings had in Civil Case No. 90988 entitled "Nicasio Ocampo and Francisca P. Garcia, Plaintiffs, versus Lita Enterprises, Inc., et al., Defendants" of the Court of First Instance of Manila and CA-G.R. No. 59157-R entitled "Nicasio Ocampo and Francisca P. Garica, Plaintiffs-Appellees, versus Lita Enterprises, Inc., Defendant-Appellant," of the Intermediate Appellate Court, as well as the decisions rendered therein are hereby annuleled and set aside. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-14183 November 28, 1959

BENEDICTO DINGLASAN, petitioner, vs. NATIONAL LABOR UNION, respondent. Rafael Dinglasan for petitioner. Eulogio R. Lerum for respondent. BARRERA, J.: This is a petition to review the decision of the Court of Industrial Relations of February 27, 1958 (in Case No. 3ULP), finding the petitioner guilty of unfair labor practice under the Industrial Peace Act.1 On June 30, 1953, the respondent union filed with the above-mentioned court a complaint for alleged unfair labor practice committed by the petitioner, in that he locked out from employment 46 drivers, members of the respondent union, on June 27, 1953. Before filing his answer, the petitioner asked for the dismissal of the complaint on the grounds that the court had no jurisdiction over the person of the petitioner and the subject matter of the action, and the respondent union was not the real party in interest. The petitioner claimed that there existed no employer-employee relationship between the petitioner and the drivers, members of the respondent union, the relationship being one of lessor and lessee only, as the jeeps being used by the said drivers were rented out by the petitioner under the so-called "boundary system". The motion was denied by the court in its order of February 16, 1954, but on petitioner's motion for reconsideration, the court, en banc, in its resolution of June 23, 1954, unanimously reconsidered its first order and finally declared that there

was no employer-employee relationship between the parties. The respondent union appealed to this Court, and on March 23, 1956, we rendered a decision (in G. R. No. L-7945) * reversing the said resolution and holding that an employer-employee relationship existed between the parties. The said decision became final on May 29, 1956. In view of the decision of this Court, the petitioner, on June 4, 1957, filed in the court a quo his answer to the complaint of June 30, 1953, denying (1) the legitimacy of the respondent union, and (2) the charge unfair labor practice, claiming that he acted in good faith based on his honest belief that he was not an employer of the drivers, members of the respondent union, but only a lessor of his jeepneys. Thereafter, the case was heard, and on February 27, 1958, the court rendered a decision, as follows: It would appear that the main question at issue is whether the respondent has committed the charges alleged in the complaint. According to the complaint, the respondent had knowledge of the formation of a union on June 26, 1953 and respondent upon learning the same decided on dismissing all the driver members because he did not want to have a union within his company. This Particular union, it turned out, was a chapter or affiliate of the complainant union which was organized sometime on June 24, 1953. On June 27, 1953, the respondent dismissed the drivers appearing in the complaint by refusing them the use of the jeepneys regularly assigned to them. On the other hand, respondent claims otherwise. The respondent, it is alleged fearing that a strike might be called by the drivers decided on not renting out the jeepneys on said date, June 27, 1953. Based on the versions submitted in evidence by the parties, it is clear that the respondent engaged in the unfair labor practice charged in the complaint, amounting to a virtual lockout of his employee drivers, hence constituting discrimination under Republic Act No. 875. As the records of this case disclose, the act of locking out committed by respondent was made without the required notice and no collective bargaining negotiation were ever made. The mere suspicion by respondent, that a strike might be called by the union, is no justification for such an act. We hold therefore, the respondent guilty of the unfair labor practices in the complaint. However, there are certain aspects of this case which merit consideration. It has been contended by respondent, since the beginning of this case, that he is not the employer of the drivers listed in the complaint and had honestly acted under the such belief. This very Court itself, unanimously were of the same opinion that there was no employer-employee relationship. In the application of the affirmative reliefs granted by the law, this good faith the respondent must be taken into consideration in those portions where the law allows this Court to use it sound discretion and judgment. And the particular portion we have in mind in Section 5 of Republic Act No. 875. Furthermore, it appears that some of the drivers listed in the complaint have neither to returned to work or are already working elsewhere and there is a need for further proceedings in this respect. IN VIEW OF THE FOREGOING, this Court hereby orders the respondent: (1) (2) To cease and desist from further committing the unfair labor practices complained of; To reinstate the drivers listed in the complaint, except those who have been already reinstated;

(3) To pay back wages to all drivers listed in the complaint, but in the exercise of the Court's discretion said back wages shall commence only from May 29. 1956, based on the minimum daily wage of P4.00, deducting therefrom and from said date the period when said drivers have found substantially equivalent and regular employment for themselves, for which reason further hearings shall be had for the

sole purpose of determining the respective amount of back wages due each driver up to the time they are actually re-employed by respondent. SO ORDERED. On March 8, 1958, petitioner filed a motion for reconsidering which was denied by the court in its resolution en banc, of July 30, 1958. hence, this petition for review. It is the contention of responding union that petitioner, upon learning that his drivers had formed a labor union among themselves, refused on June 27, 1953, to let the muse and operate the jeepneys regularly assigned to them, which act, it is alleged, constitutes an unlawful lockout and an unfair labor practice. The petitioner, on the other hand, claims that he did not lock out his drivers, members of the respondent union, on June 27, 1953, as contended by them. Believing honestly that no employer-employee relationship existed between him and them, and fearing that the drivers were intending to declare a strike and might abandon his jeepneys in the streets of the city, he decided, as a precautionary measure to protect his interest, to suspend their operation temporarily and consult his attorney. Upon obtaining his counsel's advice, he immediately announced to the drivers the following morning, June 28, that they could then take out his jeepneys. While some four or five of them needed petitioner's request, the others refused to return to operate. Those who took advantage of petitioner's offer had, however, to come back after a few hours because some of the drivers on strike had admonished them to return the jeepneys and join the strike. For some days this situation continued until on October 8, 1953, when the case was first submitted for decision, thirty-four (34) of the forty six (46) drivers had already returned to work under the same conditions as before June 27, 1953. We have examined the record and we are satisfied that what occurred on June 26, 1953, and the days following was substantially as testified to by petitioner Benedicto Dinglasan and his witnesses, three of whom are among the drivers of his Jeepneys, two (Julio Ongpin and Francisco Leao) are completely disinterested persons, two are patrolmen, and the remaining two are his employees, as against the sole testimony of Juanito Cruz, President of the local group of the respondent labor union, and the essentially hear say declaration of Zosimo Yjares who claims to be the secretary of the drivers' association. While we agree with the lower court that the act of the petitioner in suspending the operation of his jeepneys on June 27, is legally and technically not in consonance with the industrial Peace Act (the court a quo termed it "a virtual lockout") so as to entitle the drivers to be reinstated nevertheless, as the trial court correctly stated in its decision,. there are certain aspects of this case which merit consideration. It has been contended by respondent, since the beginning of his case, that he is not the employer of the drivers listed in the complaint and has honestly noted under such belief. This very Court itself, unanimously were of the same opinion that there was no employer-employee relationship. In the application of the affirmative reliefs granted by law, this good faith of the respondent must be taken into consideration in those portions where the law allows this court or use its sound discretion and judgment. The particular portion we have in mind is Section 5 of Republic Act No. 875. In the exercise of this discretion, that is, whether the reinstatement will be with or without back pay, aside from the fact that there was no willful violation of the Industrial Peace Act, there is an additional circumstance that may be considered in favor of herein petitioner. As already mentioned above, petitioner, the day following his suspension of the operation of the jeepneys, urged the drivers to return and resume the work, notwithstanding which, the latter not only refused, but even compelled those who did, to joint the strike. It is clear therefrom that the cassation or stoppage of the operation after June 27, was not the direct consequence of petitioner's locking them up or of any willful unfair or discriminatory act of the former, but the result of their (the drivers) voluntary and deliberate refusal to return to work. Taking into account the foregoing circumstances and considering their similarity to those in the case of Philippines marine Radio Officers' Association vs. Court of Industrial Relation et al., 102 Phil., 373, wherein it was held that there is no reason for granting backpay if there is not been any willful unfair labor practice or refusal of the respondent companies to admit their laborers back to work, while the drivers

members of respondent union may, in this case, be entitled to reinstatement, we find no justification for their receiving back wage for the period that they themselves refused to return to work. Wherefore, the decision appealed from is accordingly modified in the sense that the reinstatement will be without back pay. In all other respects, the same is affirmed, without costs. So ordered.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-57298 September 7, 1984

MYC-AGRO-INDUSTRIAL CORPORATION, petitioner, vs. PURIFICACION CAMERINO VDA. DE CALDO, LEONILA, NEMENCIO, YOLANDA, EDNA, LORNA and GENY all surnamed CALDO and represented herein by PURIFICACION CAMERINO VDA. DE CALDO; PETRA SARDIDO DE ARO, TEODORA S. TABING, LUCILA RAMOS VDA. DE PAKINGAN, GERALDO, ROWENA, and ISIDRO, all surnamed PAKINGAN and represented herein by LUCILA RAMOS VDA. DE PAKINGAN; EMILIANO NAVARRETE, NEMENCIO NAVARRETE, RODOLFO NAVARRETE, EDUARDO NAVARRETE, MELANIO NAVARRETE, AIDA, LUALHATI and DOMINADOR, all surnamed NAVARRETE and represented herein by EMILIANO NAVARRETE; CONSTANCIA MANALAYSAY VDA. DE LACSON, ALMARIO, SOLEDAD, SUSAN, ELVIRA, CAROLINA, CECILIA and ARIEL, all surnamed LACSON and represented herein by CONSTANCIA MANALAYSAY VDA. DE LACSON; BELLA BALAJADIA, ERLINDA CANDADO, SOTERA RAMIREZ, ROGELIO and FELICITACION GONZAGA, RUBY GONZAGA, represented herein by ROGELIO GONZAGA; ALFREDO RODOLFO, ROSARIO GONZALES-ORDOEZ, HERMOGENA BAUTISTA, RODOLFO ALCARAZ, FELICIDAD ALCARAZ, LENIZA ALCARAZ, represented herein by RODOLFO ALCARAZ; ANIANO BAUTISTA, MAXIMINA BAUTISTA, EPIFANIA and CORNELIO BAUTISTA, represented herein by ANIANO BAUTISTA; AVELINO IGNACIO, NICANOR SILLA and ROSILA REYES; and BENEDICTO KALAW KATIGBAK in his capacity as the General Manager of the MYC Agro-Industrial Corporation; and CEFERINO AREVALO; and JAGUAR TRANSPORTATION CO., INC., FEDERAL INSURANCE CO., INC., F. E. ZUELLIG, and CASTO MADAMBA INSURANCE AGENCY; and HONORABLE COURT OF APPEALS, respondents. V.E. del Rosario & Associates for petitioner. Remulla, Estrella, Bihasa, Lata & Associates for respondents. Austria & Vargas for respondents Federal Ins., Castro Ins. Agency and F.E. Zuellig Inc. Rodolfo Ma. Acob for respondent Jaguar Transit Co., Inc. Pedro Magpayo, Jr. for respondent Federal Zuellig.

RELOVA, J.: This is a petition for review of the decision of the then Court of Appeals in CA. G. R. No. 56343-R, finding petitioner liable for damages. About 4:30 in the afternoon of March 21, 1971, a Toyota truck with Plate No. 12-90-4 CT '70 owned by petitioner and operated by Ceferino Arevalo hit the right center side of a jeepney with Plate No. 24-97-40-3 1970 owned by Nicanor Silla and operated by Alfredo Rodolfo. There were fifteen (15)

passengers of the jeepney, namely: (1) Laureano Lacson, (2) Salome Bautista, (3) Chona Alcaraz, (4) Ruby Gonzaga, (5) Felicitacion Gonzaga, (6) Epifania Bautista, (7) Avelino Ignacio, (8) Erlinda Candado, (9) Leniza Alcaraz, (10) Sotera Ramirez, (11) Rosario Ordoez, (12) Maximina Bautista, (13) Cornelio Bautista, (14) Hermogena Bautista and (15) Felicidad Alcaraz. The jeepney, at the time of the impact, was parked at Regiment Street, Anabu Imus, Cavite. As a consequence, said jeepney turned turtle and was pushed to a cemented fence owned by Lucila Reyes, pinning down to death Carlito Pakingan, Hipolito Caldo, Azucena Camaclang-Navarrete and Fortunato Bonifacio. Likewise, the passengers: Laureano Lacson, Salome Bautista and Chona Alcaraz died because of the injuries sustained in this incident; the other passengers suffered various injuries on the different parts of their bodies. The aforementioned jeepney and the wall fence were also damaged. Complaint for damages was filed by the owner of the wall fence, the aforementioned victims and the heirs of the deceased victims against petitioner MYC-AGRO-INDUSTRIAL CORPORATION, the registered owner of the Toyota truck; Ceferino Arevalo, the driver of said truck; and, Benedicto Kalaw-Katigbak, the general manager of petitioner corporation. In its responsive pleading, petitioner admitted ownership of the Toyota truck but alleged that the same, together with nine (9) other units were leased to the Jaguar Transportation, Inc. and that Ceferino Arevalo, as well as Benedicto Kalaw-Katigbak are not its (petitioner) employees. Thereafter, petitioner, defendant in the damage suit, filed a third-party complaint against Jaguar Transportation Company. Third-party Jaguar pleads that its liability is only secondary and that it had already complied with its obligation under its contract of lease with petitioner when it secured a third-party liability insurance from Federal Insurance Company, Inc. It then filed a fourth-party complaint against Federal Insurance Company, Inc., F. E. Zuellig, Inc. and Casto Madamba, claiming that Jaguar had obtained an insurance policy from Federal Insurance Company, Inc. of which F. E. Zuellig is its general manager, and fourth-party defendant Casto Madamba is the general agent of defendant Federal Insurance Company, Inc. In its answer to the fourth-party complaint, the fourth-party defendants alleged that Jaguar has no cause of action against them because F. E. Zuellig is only the general manager of Federal Insurance Company, Inc.; that Casto Madamba is only the general agent of Federal Insurance Company, Inc., and that the proper party in interest is herein petitioner, the registered owner of the Toyota truck. Ceferino Arevalo, driver of the truck in question was named defendant in Criminal Case No. 53-71 of the then Court of First Instance of Cavite, Branch V. Upon arraignment, he pleaded guilty to the crimes of multiple homicide, multiple serious physical injuries, multiple less serious physical injuries, slight physical injuries and damage to property thru reckless imprudence. Evidence is clear that the death of seven (7) persons and the injuries suffered by private respondents were due to the negligence and reckless operation of the Toyota truck, owned by herein petitioner and driven by Ceferino Arevalo. On March 21, 1971, when the accident happened, subject vehicle was registered in the name of petitioner which, however, would want to exculpate itself from liability because of the contract of lease with sale (Exhibit "1") allegedly executed on December 1, 1970 between it and Jaguar Transportation Company. Petitioner claims that because of the lease contract with sale to Jaguar it had no more control over the vehicle; that Ceferino Arevalo is not its employee but that of Jaguar. On this score, the trial court as well as the then Court of Appeals made the finding that ... A reading of said contract cannot but produce the conviction that the same was drawn up for no other purpose but to set up a buffer between MYC and the public. It is really nothing but a simulated contract, a subterfuge, intended to shift liability from MYC to Jaguar Transportation Company which appears to be nothing more than a conduit of MYC. The obvious purpose is to create an apparent relationship of employer-employee between Jaguar and the persons operating MYC's trucks. Thus, while the contract is denominated as one of lease with sale and the ten Toyota trucks were supposed to be leased to Jaguar; the right of Jaguar to use these trucks was subject to a hauling contract with defendant MYC. The

supposed lessee Jaguar may use these trucks only if the lessor shall have no more need for the trucks herein leased. (Par. 3 of Exhibit 1) Even if Jaguar should be able to lease these trucks to other parties because the lessor MYC has no more need for the same as the milling season is over, said contract executed by Jaguar with a third party shag be terminated as soon as the milling season is over, said contract executed by Jaguar with a third party shall be terminable as soon as the lessor shall have a need for the leased motor vehicle. Par. 2 of the lease contract exposes the true nature of this alleged contract of lease with sale as nothing more than a disguise effected by defendant MYC to relieve itself of the burdens and responsibilities of an employer with respect to these trucks. That the defendant MYC remained the true and real owner and possessor of these trucks is further indicated by the fact that those trucks, although purportedly sold to Jaguar on installment, were never mortgaged to MYC by way of security; the same trucks leased and sold to Jaguar were exclusively used for the business of MYC in the hauling of its agricultural products; said trucks may not be sold, leased, alienated or encumbered by Jaguar without MYC's written consent. During the 3 year period of the contract Exhibit I before full payment of the supposed installment price of P362,129.10 by Jaguar all these trucks continue to be under the effective dominion of MYC all the rights of ownership to use, enjoy and dispose of these remained with MYC. As a matter of fact, the ownership was not to be transferred until after three years. After the incident of March 21, 1971, the trucks were all "repossessed" by defendant MYC, a mere ceremony since MYC never lost possession. (pp. 175-177, Record on Appeal) After trial, the lower court rendered judgment ordering "defendants MYC Agro-Industrial Corporation and Ceferino Arevalo jointly and severally to pay to plaintiffs the following: P3,348.75 to Felicidad Alcaraz; P3,399.15 to Rodolfo, Felicidad and Leniza, all surnamed Alcaraz; P18,000.00 to Rodolfo and Felicidad Alcaraz; P4,689.80 for Sotera Ramirez; P20,300.00 for Teodora Sardido-Tabing and Petra de Aro; P45,485.00 for Constancia Manalaysay Vda. de Lacson, Almario, Solidad, Susan, Elvira, Carolina, Cecilia, and Ariel, all surnamed Lacson; P22,760.00 for Purificacion Camerino Vda. de Caldo, Leonila, Nemencia, Yolanda, Edna, Lorna and Genie all surnamed Caldo; P21,000.00 for Lucila Ramos Vda. de Pakingan, Geraldo, Rowena, and Isidro all surnamed Pakingan; P20,500.00 for plaintiff Bella Balajadia-Bonifacio; P1,989.49 for Erlinda Candado; P230.50 for Avelino Ignacio; P8,484.00 for Nicanor Silla P2,150.00 for Aniano Maximina, Epifania and Cornelio, all surnamed Bautista; P4,724.50 to plaintiffs Rogelio, Felicitacion and Ruby, all surnamed Gonzaga; P1,724.55 for the injuries sustained by Ruby Gonzaga; P850.00 for plaintiff Hermogena Bautista; P23,000.00 for plaintiffs Emiliano, Nemencio, Rodolfo, Eduardo, Melanio, Aida, Lualhati, and Dominador, all surnamed Navarrete; P221.10 for plaintiff Alfredo Rodolfo and P300.00 for plaintiff Rosila Reyes; by way of actual and compensatory damages; by way of exemplary damages, the amount of P50,000.00 likewise awarded to plaintiffs as exemplary damages to be divided among them in proportion of their share of actual and compensatory damages. Defendant is further ordered to pay to plaintiffs the amount of P20,000.00 as Attorney's fees and the costs of this suit. The Complaint against Benedicto Katigbak, the counterclaim, the third-party and fourth party complaint are dismissed." (pp. 181-182, Record on Appeal) From the foregoing judgment which was affirmed in toto by respondent Court of Appeals, petitioner went to this Court alleging in substance that the appellate court erred in holding that Jaguar Transportation Company was a mere dummy or conduit of petitioner which should be considered as the true owner of the vehicle. We cannot uphold the contention of petitioner. In the first place, Jaguar's answer to third party complaint tendered no genuine or real issue. Secondly, Jaguar's representative did not even appear in court after impleading fourth party defendants and its President, Benedicto Katigbak, did not adduce evidence in his behalf. Thirdly, the sign MYC which stands for petitioner still appears on subject vehicle and, as aptly observed by the appellate court the agreement which allegedly transferred the truck from MYC to Jaguar failed to provide for a chattel mortgage to secure said transfer. The well-known practice is that motor vehicles acquired through installment payments are secured by a chattel mortgage over the vehicle sold. None exists in the instant case (p. 51, Rollo)." Finally, it is undisputed that the registered owner of the Toyota truck is petitioner. As held in Vargas vs. Langcay, 6 SCRA 174, "[t]he registered owner/operator of a passenger vehicle is jointly and severally hable with the driver for damages incurred by passengers or third persons as a consequence of injuries (or death) sustained in the operation of said vehicles. ... Regardless of who the actual owner of a vehicle is, the operator of record continues to be the operator of

the vehicles as regards the public and third persons, and as such is directly and primarily responsible for the consequences incident to its operation, so that, in contemplation of law, such owner/operator of record is the employer of the driver, the actual operator and employer being considered merely as his agent." ACCORDINGLY, the petition is hereby DENIED for lack of merit. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-48747 September 30, 1982

ANGEL JEREOS, petitioner, vs. HON. COURT OF APPEALS, SOLEDAD RODRIGUEZ, FELICIA R. REYES, JOSE RODRIGUEZ, JESUS RODRIGUEZ, Jr., ROBERTO RODRIGUEZ, FRANCISCO RODRIGUEZ, TERESITA RODRIGUEZ, MANUEL RODRIGUEZ, ANTONIO RODRIGUEZ, DOMINGO PARDORLA, Jr., and NARCISO JARAVILLA, respondents.

CONCEPCION JR., J.: Review on certiorari of the decision rendered by the respondent Court of Appeals in case CA-G.R. & No. 60232-R, entitled: "Soledad Rodriguez, et al., plaintiffs-appellants, versus Narciso Jaravilla, et al., defendants; Narciso Jaravilla and Domingo Pardorla, Jr., defendants-appellants; Angel Jereos, defendant-appellee." Private respondent, Domingo Pardorla, Jr. is the holder of a certificate of public convenience for the operation of a jeepney line in Iloilo City. On February 23, 1971, one of his jeepneys, driven by Narciso Jaravilla, hit Judge Jesus S. Rodriguez and his wife, Soledad, while they were crossing Bonifacio Drive, Iloilo City, causing injuries to them, which resulted in the death of Judge Rodriguez. Narciso Jaravilla was prosecuted and, on his plea of guilty, was convicted of the crime of Homicide and Physical Injuries through Reckless Imprudence and sentenced accordingly. Thereafter, Soledad Rodriguez and her children filed with the Court of First Instance of Iloilo an action for damages against Narciso Jaravilla, Domingo Pardorla, Jr., and Angel Jereos, the actual owner of the jeepney. 1 Angel Jereos denied ownership of the jeepney in question and claimed that the plaintiffs have no cause of action against him. 2 Domingo Pardorla, Jr., upon the other hand, claimed that he was only the franchise owner and has nothing to do with the actual operation and supervision of the passenger jeepney in question which is under the actual control, operation and supervision of Angel Jereos who operates the same under the "kabit system." 3 After appropriate proceedings, the Court of First Instance of Iloilo rendered judgment on October 24, 1978, ordering Narciso Jaravilla and Doming Pardorla, Jr. to pay, jointly and severally, damages to the plaintiffs. Angel Jereos was exonerated for the reason that the Court found no credible evidence to support plaintiffs' as well as defendant Pardorla's contention that defendant Jereos was the operator of the passenger jeepney in question at the time of the accident which happened on February 3, 1971,

defendant Jereos sold on November 19, 1970 the said passenger jeepney to Flaviana Tanoy as shown in the notarized deed of sale (Exh. 1-Jereos) who later transferred ownership thereof to defendant Pardorla, Jr., whose registration certificate thereof is marked Exh. 3-B-Jereos was issued by the Land Transportation Commission on November 24, 1970. 4 Both plaintiffs and the defendants Narciso Jaravilla and Domingo Pardorla, Jr., appealed to the Court of Appeals. The plaintiffs contended that the trial court erred in not finding the defendant Angel Jereos jointly and severally liable with the their defendants for the damages incurred by them. The defendants Narciso Jaravilla and Domingo Pardorla, Jr., however, did not file their brief. On July 10, 1978, the Court of Appeals rendered a decision, modifying the decision of the trial court, and holding that Angel Jereos is jointly and severally liable with the other defendants for the damages awarded by the trial court to the plaintiffs, for the reason that the rule stated in the case of Vargas vs. Langcay (6 SCRA 174) that it is the registered owner of a passenger vehicle who is jointly and severally liable with the driver for damages incurred by passengers or third persons as a consequence of injuries or death sustained in the operation of said motor vehicle, which is invoked by Angel Jereos, cannot be applied in this case since the sale of the jeepney by Angel Jereos to his own sister-in-law, Flaviana Panoy, and its registration in the name of Domingo Pardorla, Jr., were simulated, fictitious transactions, parts and parcel of a strategem, to place Angel Jereos beyond the reach of his creditors past or future. 5 Angel Jereos appeals from this decision. He contends that the respondent Court, of Appeals erred in holding that the sale of the jeep to Flaviana Tanoy was simulated and fictitious and hence, it erred in finding him the actual or real owner of the illfated jeepney. The respondents claim, however, that the issue of whether or not the sale of the vehicle in question to Flaviana Tanoy and 'hereafter, to Domingo Pardorla, Jr. is simulated or fictitious, is one of fact and may not be reviewed by this Court on appeal. But, the petitioner counters that the findings of fact of the respondent appellate court is reviewable because the said findings are contrary to those of the trial court which were based upon an evaluation of the credibility of witnesses and should not have been disturbed by the appellate court, following the rule that trial courts are in a better position to judge and evaluate the evidence presented in the course of the trial. The established rule in this jurisdiction is that findings of fact of the Court of Appeals, when supported by substantial evidence, is not reviewable on appeal by certiorari. Said findings of the appellate court are final and cannot be disturbed by the Supreme Court. However, where the findings of the Court of Appeals are contrary to those of the trial court, a minute scrutiny by the Supreme Court is in order and resort to duly proven evidence becomes necessary. 6 In the instant case, the Court of Appeals found that the trial court, in exempting Angel Jereos from liability, "relied solely on the deed of sale (Exh. 1-Jereos)- ignoring altogether the testimony of Flora Jaravilla (wife of the driver) and of appellee Domingo Pardorla, Jr. " Hence, it had reason to exercise its appellate jurisdiction over the lower courts and modify the findings of fact of the trial court. The respondent Domingo Pardorla, Jr., in whose line the jeepney in question was registered under the "kabit system" declared that: ... this jeep was formerly attached to Imelda Mirasol then one of the units of Imelda Mirasol met an accident which cost many lives. Now, Angel Jereos was afraid that later on his jeep might be attached since there is a pending case against Mirasol. Now according to Angel Jereos he went to see Imelda Mirasol and asked her to execute a deed of sale in favor of Angel Jeroes. Now, when Angel Jereos came to me and asked if there is still vacancy in my line I told him there is. He told me that his jeep will be transferred under my line. I told him yes, prepare the papers. Now, after he has prepared the papers and he came back to me he told me he will just put it under the name of Flaviana Tanoy, his sister-in-law but I asked him that cannot be, what is your reason. According to him so that later on it can be hardly traced

when something wrong with the case of Imelda Mirasol comes, then I will just put it under the name of Flaviana Tanoy, my sister-in-law but the jeep is still mine that is why I am the one who is paying you. His testimony is corroborated by Adriano Saladero, an employee of Pardorla, Jr., to whom Angel Jereos pays the monthly dues for the registration of his jeepneys under the certificate of public convenience issued to Pardorla, Jr., and by Flora Jaravilla, the wife of the driver of the jeepney, who categorically stated that the jeepney driven by her husband, Narciso Jaravilla, was owned by Angel Jereos to whom they pay a daily "boundary" of P16.80; and that they park the said jeepney near the house of Angel Jereos after returning it at night. Finally, the petitioner, citing the case of Vargas vs. Langcay, 7 contends that it is the registered owner of the vehicle, rather than the actual owner, who must be jointly and severally liable with the driver of the passenger vehicle for damages incurred by third persons as a consequence of injuries or death sustained in the operation of said vehicle. The contention is devoid of merit. While the Court therein ruled that the registered owner or operator of a passenger vehicle is jointly and severally liable with the driver of the said vehicle for damages incurred by passengers or third persons as a consequence of injuries or death sustained in the operation of the said vehicle, the Court did so to correct the erroneous findings of the Court of Appeals that the liability of the registered owner or operator of a passenger vehicle is merely subsidiary, as contemplated in Art. 103 of the Revised Penal Code. In no case did the Court exempt the actual owner of the passenger vehicle from liability. On the contrary, it adhered to the rule followed in the cases of Erezo vs. Jepte, 8 Tamayo vs. Aquino, 9 and De Peralta vs. Mangusang, 10 among others, that the registered owner or operator has the right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused. The right to be indemnified being recognized, recovery by the registered owner or operator may be made in any form-either by a cross-claim, third-party complaint, or an independent action. The result is the same. WHEREFORE, the petition should be, as it is hereby, DENIED. With costs against the petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 131512 January 20, 2000

LAND TRANSPORTATION OFFICE [LTO], represented by Assistant Secretary Manuel F. Bruan, LTO Regional Office, Region X represented by its Regional Director, Timoteo A. Garcia; and LTO Butuan represented by Rosita G. Sadiaga, its Registrar, petitioners, vs. CITY OF BUTUAN, represented in this case by Democrito D. Plaza II, City Mayor, respondents. VITUG, J.: The 1987 Constitution enunciates the policy that the territorial and political subdivisions shall enjoy local autonomy.1 In obedience to that mandate of the fundamental law, Republic Act ("R.A.") No. 7160, otherwise known as the Local Government Code,2 expresses that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy in order to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment

of national goals, and that it is a basic aim of the State to provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities and resources. While the Constitution seeks to strengthen local units and ensure their viability, clearly, however, it has never been the intention of that organic law to create an imperuim in imperio and install an infra sovereign political subdivision independent of a single sovereign state. The Court is asked in this instance to resolve the issue of whether under the present set up the power of the Land Registration Office ("LTO") to register, tricycles in particular, as well as to issue licenses for the driving thereof, has likewise devolved to local government units. The Regional Trial Court (Branch 2) of Butuan City held3 that the authority to register tricycles, the grant of the corresponding franchise, the issuance of tricycle drivers' license, and the collection of fees therefor had all been vested in the Local Government Units ("LGUs"). Accordingly, it decreed the issuance of a permanent writ of injunction against LTO, prohibiting and enjoining LTO, as well as its employees and other persons acting in its behalf, from (a) registering tricycles and (b) issuing licenses to drivers of tricycles. The Court of Appeals, on appeal to it, sustained the trial court.1wphi1.nt The adverse rulings of both the court a quo and the appellate court prompted the LTO to file the instant petition for review on certiorari to annul and set aside the decision,4 dated 17 November 1997, of the Court of Appeals affirming the permanent injunctive writ order of the Regional Trial Court (Branch 2) of Butuan City. Respondent City of Butuan asserts that one of the salient provisions introduced by the Local Government Code is in the area of local taxation which allows LGUs to collect registration fees or charges along with, in its view, the corresponding issuance of all kinds of licenses or permits for the driving of tricycles. The 1987 Constitution provides: Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.5 Sec. 129 and Section 133 of the Local Government Code read: Sec. 129. Power to Create Sources or Revenue. Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units. Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: xxx xxx xxx

(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles. Relying on the foregoing provisions of the law, the Sangguniang Panglungsod ("SP") of Butuan, on 16 August 1992, passed SP Ordinance No. 916-92 entitled "An Ordinance Regulating the Operation of Tricycles-for-Hire, providing mechanism for the issuance of Franchise, Registration and Permit, and imposing Penalties for Violations thereof and for other Purposes." The ordinance provided for, among other things, the payment of franchise fees for the grant of the franchise of tricycles-for-hire, fees for the

registration of the vehicle, and fees for the issuance of a permit for the driving thereof. Petitioner LTO explains that one of the functions of the national government that, indeed, has been transferred to local government units is the franchising authority over tricycles-for-hire of the Land Transportation Franchising and Regulatory Board ("LTFRB") but not, it asseverates, the authority of LTO to register all motor vehicles and to issue to qualified persons of licenses to drive such vehicles. In order to settle the variant positions of the parties, the City of Butuan, represented by its City Mayor Democrito D. Plaza, filed on 28 June 1994 with the trial court a petition for "prohibition, mandamus, injunction with a prayer for preliminary restraining order ex-parte" seeking the declaration of the validity of SP Ordinance No. 962-93 and the prohibition of the registration of tricycles-for-hire and the issuance of licenses for the driving thereof by the LTO. LTO opposed the prayer in the petition. On 20 March 1995, the trial court rendered a resolution; the dispositive portion read: In view of the foregoing, let a permanent injunctive writ be issued against the respondent Land Transportation Office and the other respondents, prohibiting and enjoining them, their employees, officers, attorney's or other persons acting in their behalf from forcing or compelling Tricycles to be registered with, and drivers to secure their licenses from respondent LTO or secure franchise from LTFRB and from collecting fees thereon. It should be understood that the registration, franchise of tricycles and driver's license/permit granted or issued by the City of Butuan are valid only within the territorial limits of Butuan City. No pronouncement as to costs.6 Petitioners timely moved for a reconsideration of the above resolution but it was to no avail. Petitioners then appealed to the Court of Appeals. In its now assailed decision, the appellate court, on 17 November 1997, sustained the trial court. It ruled: WHEREFORE, the petition is hereby DISMISSED and the questioned permanent injunctive writ issued by the court a quo dated March 20, 1995 AFFIRMED.7 Coming up to this Court, petitioners raise this sole assignment of error, to wit: The Court of Appeals [has] erred in sustaining the validity of the writ of injunction issued by the trial court which enjoined LTO from (1) registering tricycles-for-hire and (2) issuing licenses for the driving thereof since the Local Government Code devolved only the franchising authority of the LTFRB. Functions of the LTO were not devolved to the LGU's.8 The petition is impressed with merit. The Department of Transportation and Communications9 ("DOTC"), through the LTO and the LTFRB, has since been tasked with implementing laws pertaining to land transportation. The LTO is a line agency under the DOTC whose powers and functions, pursuant to Article III, Section 4 (d) [1],10 of R.A. No. 4136, otherwise known as Land Transportation and Traffic Code, as amended, deal primarily with the registration of all motor vehicles and the licensing of drivers thereof. The LTFRB, upon the other hand, is the governing body tasked by E.O. No. 202, dated 19 June 1987, to regulate the operation of public utility or "for hire" vehicles and to grant franchises or certificates of public convenience ("CPC").11 Finely put, registration and licensing functions are vested in the LTO while franchising and regulatory responsibilities had been vested in the LTFRB. Under the Local Government Code, certain functions of the DOTC were transferred to the LGUs, thusly: Sec. 458. Powers, Duties, Functions and Compensation.

xxx

xxx

xxx

(3) Subject to the provisions of Book II of this Code, enact ordinances granting franchises and authorizing the issuance of permits or licenses, upon such conditions and for such purposes intended to promote the general welfare of the inhabitants of the city and pursuant to this legislative authority shall: xxx xxx xxx

(VI) Subject to the guidelines prescribed by the Department of Transportation and Communications, regulate the operation of tricycles and grant franchises for the operation thereof within the territorial jurisdiction of the city. (Emphasis supplied). LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the operation thereof. "To regulate" means to fix, establish, or control; to adjust by rule, method, or established mode; to direct by rule or restriction; or to subject to governing principles or laws.12 A franchise is defined to be a special privilege to do certain things conferred by government on an individual or corporation, and which does not belong to citizens generally of common right.13 On the other hand, "to register" means to record formally and exactly, to enroll, or to enter precisely in a list or the like,14 and a "driver's license" is the certificate or license issued by the government which authorizes a person to operate a motor vehicle.15 The devolution of the functions of the DOTC, performed by the LTFRB, to the LGUs, as so aptly observed by the Solicitor General, is aimed at curbing the alarming increase of accidents in national highways involving tricycles. It has been the perception that local governments are in good position to achieve the end desired by the law-making body because of their proximity to the situation that can enable them to address that serious concern better than the national government. It may not be amiss to state, nevertheless, that under Article 458 (a)[3-VI] of the Local Government Code, the power of LGUs to regulate the operation of tricycles and to grant franchises for the operation thereof is still subject to the guidelines prescribed by the DOTC. In compliance therewith, the Department of Transportation and Communications ("DOTC") issued "Guidelines to Implement the Devolution of LTFRBs Franchising Authority over Tricycles-For-Hire to Local Government units pursuant to the Local Government Code." Pertinent provisions of the guidelines state: In lieu of the Land Transportation Franchising and Regulatory Board (LTFRB) in the DOTC, the Sangguniang Bayan/Sangguniang Panglungsod (SB/SP) shall perform the following: (a) Issue, amend, revise, renew, suspend, or cancel MTOP and prescribe the appropriate terms and conditions therefor; xxx xxx xxx

Operating Conditions: 1. For safety reasons, no tricycles should operate on national highways utilized by 4 wheel vehicles greater than 4 tons and where normal speed exceed 40 KPH. However, the SB/SP may provide exceptions if there is no alternative route. 2. Zones must be within the boundaries of the municipality/city. However, existing zones within more than one municipality/city shall be maintained, provided that operators serving said zone shall secure MTOP's from each of the municipalities/cities having jurisdiction over the areas covered by the zone. 3. A common color for tricycles-for-hire operating in the same zone may be imposed. Each unit shall be assigned and bear an identification number, aside from its LTO license plate number. 4. An operator wishing to stop service completely, or to suspend service for more than one month, should

report in writing such termination or suspension to the SB/SP which originally granted the MTOP prior thereto. Transfer to another zone may be permitted upon application. 5. The MTOP shall be valid for three (3) years, renewable for the same period. Transfer to another zone, change of ownership of unit or transfer of MTOP shall be construed as an amendment to an MTOP and shall require appropriate approval of the SB/SP. 6. Operators shall employ only drivers duly licensed by LTO for tricycles-for-hire. 7. No tricycle-for-hire shall be allowed to carry more passengers and/or goods than it is designed for. 8. A tricycle-for-hire shall be allowed to operate like a taxi service, i.e., service is rendered upon demand and without a fixed route within a zone.16 Such as can be gleaned from the explicit language of the statute, as well as the corresponding guidelines issued by DOTC, the newly delegated powers pertain to the franchising and regulatory powers theretofore exercised by the LTFRB and not to the functions of the LTO relative to the registration of motor vehicles and issuance of licenses for the driving thereof. Clearly unaffected by the Local Government Code are the powers of LTO under R.A. No. 4136 requiring the registration of all kinds of motor vehicles "used or operated on or upon any public highway" in the country. Thus Sec. 5. All motor vehicles and other vehicles must be registered. (a) No motor vehicle shall be used or operated on or upon any public highway of the Philippines unless the same is properly registered for the current year in accordance with the provisions of this Act (Article 1, Chapter II, R.A. No. 4136). The Commissioner of Land Transportation and his deputies are empowered at anytime to examine and inspect such motor vehicles to determine whether said vehicles are registered, or are unsightly, unsafe, improperly marked or equipped, or otherwise unfit to be operated on because of possible excessive damage to highways, bridges and other infrastructures.17 The LTO is additionally charged with being the central repository and custodian of all records of all motor vehicles.18 The Court shares the apprehension of the Solicitor General if the above functions were to likewise devolve to local government units; he states: If the tricycle registration function of respondent LTO is decentralized, the incidence of theft of tricycles will most certainly go up, and stolen tricycles registered in one local government could be registered in another with ease. The determination of ownership thereof will also become very difficult. Fake driver's licenses will likewise proliferate. This likely scenario unfolds where a tricycle driver, not qualified by petitioner LTO's testing, could secure a license from one municipality, and when the same is confiscated, could just go another municipality to secure another license. Devolution will entail the hiring of additional personnel charged with inspecting tricycles for road worthiness, testing drivers, and documentation. Revenues raised from tricycle registration may not be enough to meet salaries of additional personnel and incidental costs for tools and equipment.19 The reliance made by respondents on the broad taxing power of local government units, specifically under Section 133 of the Local Government Code, is tangential. Police power and taxation, along with eminent domain, are inherent powers of sovereignty which the State might share with local government units by delegation given under a constitutional or a statutory fiat. All these inherent powers are for a public purpose and legislative in nature but the similarities just about end there. The basic aim of police power is public good and welfare. Taxation, in its case, focuses an the power of government to raise revenue in order to support its existence and carry out its legitimate objectives. Although correlative to each other in many respects, the grant of one does not necessarily carry with it the grant of the other. The two powers are, by tradition and jurisprudence, separate and distinct powers, varying in their respective concepts, character, scopes and limitations. To construe the tax provisions of Section 133(1)

indistinctively would result in the repeal to that extent of LTO's regulatory power which evidently has not been intended. If it were otherwise, the law could have just said so in Section 447 and 458 of Book III of the Local Government Code in the same manner that the specific devolution of LTFRB's power on franchising of tricycles has been provided. Repeal by implication is not favored.20 The power over tricycles granted under Section 458(8)(3)(VI) of the Local Government Code to LGUs is the power to regulate their operation and to grant franchises for the operation thereof. The exclusionary clause contained in the tax provisions of Section 133(1) of the Local Government Code must not be held to have had the effect of withdrawing the express power of LTO to cause the registration of all motor vehicles and the issuance of licenses for the driving thereof. These functions of the LTO are essentially regulatory in nature, exercised pursuant to the police power of the State, whose basic objectives are to achieve road safety by insuring the road worthiness of these motor vehicles and the competence of drivers prescribed by R.A. 4136. Not insignificant is the rule that a statute must not be construed in isolation but must be taken in harmony with the extant body of laws.21 The Court cannot end this decision without expressing its own serious concern over the seeming laxity in the grant of franchises for the operation of tricycles-for-hire and in allowing the indiscriminate use by such vehicles on public highways and principal thoroughfares. Senator Aquilino C. Pimentel, Jr., the principal author and sponsor of the bill that eventually has become to be known as the Local Government Code, has aptly remarked: Tricycles are a popular means of transportation, specially in the countryside. They are, unfortunately, being allowed to drive along highways and principal thoroughfares where they pose hazards to their passengers arising from potential collisions with buses, cars and jeepneys. The operation of tricycles within a municipality may be regulated by the Sangguniang Bayan. In this connection, the Sangguniang concerned would do well to consider prohibiting the operation of tricycles along or across highways invite collisions with faster and bigger vehicles and impede the flow of traffic.22 The need for ensuring public safety and convenience to commuters and pedestrians alike is paramount. It might be well, indeed, for public officials concerned to pay heed to a number of provisions in our laws that can warrant in appropriate cases an incurrence of criminal and civil liabilities. Thus The Revised Penal Code Art. 208. Prosecution of offenses; negligence and tolerance. The penalty of prision correccional in its minimum period and suspension shall be imposed upon any public officer, or officer of the law, who, in dereliction of the duties of his office, shall maliciously refrain from instituting prosecution for the punishment of violators of the law, or shall tolerate the commission of offenses. The Civil Code Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken.1wphi1.nt Art. 34. When a member of a city or municipal police force refuses or fails to render aid or protection to any person in case of danger to life or property, such peace officer shall be primarily liable for damages, and the city or municipality shall be subsidiarily responsible therefor. The civil action herein recognized shall be independent of any criminal proceedings, and a preponderance of evidence shall suffice to support such action. Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision.

The Local Government Code Sec. 24. Liability for Damages. Local government units and their officials are not exempt from liability for death or injury to persons or damage to property. WHEREFORE, the assailed decision which enjoins the Land Transportation Office from requiring the due registration of tricycles and a license for the driving thereof is REVERSED and SET ASIDE. No pronouncements on costs. Let copies of this decision be likewise furnished the Department of Interior and Local Governments, the Department of Public Works and Highways and the Department of Transportation and Communication. SO ORDERED.