Torres v. Ona
REITERATIONFacts
The Antecedents: Plaintiff-appellee Indalecio de Torres sold a Chevrolet truck (plate No. TH-1795) to defendant-appellant Vicente Ona for P550. The payment was to be made in installments, with a balance of P450 to be paid over nine months. The contract also stipulated that if the balance was not paid by June 30, 1934, the seller could take possession of the buyer's house and lot as payment. Procedural History: The defendant-appellant appealed the decision of the Court of First Instance of Batangas, which ordered him to pay P100 plus legal interest to the plaintiff. The defendant argued that the deed of sale was null and void because the transfer of the truck, a public service property, was not approved by the Public Service Commission, and that the plaintiff's action was premature. The Appeal: The defendant-appellant argued that the lower court erred in sustaining the validity of the deed of sale despite the lack of approval from the Public Service Commission, in not holding the action premature, and in ordering him to pay the sum of P100 with interest and costs. The parties submitted an agreed statement of facts, and no other evidence was presented.
Issue(s)
Whether the deed of sale for a truck used for public transportation is valid without the approval of the Public Service Commission. Whether the plaintiff's action to collect payment was premature.
Ruling
The Supreme Court reversed the appealed judgment. It held that the deed of sale was ineffectual and could not bind the defendant because the transfer of the truck, being public service property, was not approved by the Public Service Commission as required by Act No. 3108. Consequently, the action based on the contract was premature.
Ratio Decidendi
On Issue 1: The Court ruled that the deed of sale is ineffectual and cannot bind the defendant. Under Act No. 3108, specifically Section 16(h), public utilities cannot sell, alienate, mortgage, encumber, or lease their property, franchises, privileges, or rights, or any part thereof, without the prior approval of the Public Utility Commission. A TH truck, used for transporting freight for hire, is considered public service property. Therefore, its sale requires the approval of the Public Service Commission. The exception for property of little importance to public interest is only applicable if the Commission itself makes such a determination, which was not done in this case. Since the contract was not approved, it is considered ineffectual. On Issue 2: The Court held that the plaintiff's action to collect payment was premature. Because the contract of sale for the public service property was not approved by the Public Service Commission, it was ineffectual and could not legally bind the defendant. An action based on an ineffectual contract cannot prosper. Therefore, the plaintiff could not legally demand payment under the terms of the unapproved sale. The Court concluded that under the circumstances, the appealed judgment ordering payment should be reversed.
Main Doctrine
The Supreme Court held that a contract for the sale of a truck used for public transportation (a TH truck) is void and ineffectual if it has not been approved by the Public Service Commission, as mandated by Act No. 3108. The Court emphasized that such vehicles are considered public service property, and any alienation thereof requires prior authorization from the Commission. Consequently, an action based on such an unapproved contract is premature and cannot bind the parties.