G.R. No. L-11940 - Dagdag, Jr. vs. Public Service Commission

On May 9, 1953, Corazon de Castro, filing on her own behalf and that of her two minor children, initiated a complaint for damages in the Court of First Instance of Ilocos Norte (C.C. No. 1734) against Alfredo Formoso, Santiago Sambrano, and Virginia Sambrano. The action arose from the death of her husband, engineer Jose Castro, who was fatally involved in an accident while riding in a bus owned by the defendants.
On October 12, 1953, the Court of First Instance of Ilocos Norte rendered judgment condemning the defendants (except Alfredo Formoso, who had transferred his interest) to pay damages, attorney's fees, and costs to the plaintiffs.
On October 31, 1953, following the judgment, the trial court issued a writ of execution pending appeal. Consequently, the sheriff conducted a public auction and sold the certificate of public convenience at the highest bid to Corazon de Castro.

After acquiring the certificate, Corazon de Castro sold her rights over it to the Estate of Florencio P. Buan. The Estate then filed an application for approval of this sale with the Public Service Commission (PSC) in Commission Case No. 79980.
Defendants Virginia and Santiago Sambrano, contesting the execution sale, later filed a petition for certiorari (G.R. No. L-7868) seeking annulment of the sheriff’s sale, arguing that the certificate should have been attached rather than sold.
Although the Court set aside the sale in the petition, it allowed execution to proceed upon the petitioners’ filing of a supersedeas bond, thereby permitting the trial court to continue with remedial measures.

In Civil Case No. 1734, the sheriff re-advertised the certificate for sale on July 30, 1956; however, a third party claim by attorney Severino Dagdag, Jr. led to the postponement of the sale to August 8, 1956.
Simultaneously, in another litigation (Civil Case No. 1377 in the Court of First Instance of Ilocos Sur), the defendants, in a settlement with the plaintiffs (Miguela Quirit, et al.), agreed to transfer the same certificate of public convenience subject to PSC’s approval.
The Quirits, in turn, assigned their rights over the certificate to attorney Severino Dagdag, Jr., whose claim became the basis for his third-party contention in Civil Case No. 1734. To prevent the execution sale under his claim, Dagdag filed Civil Case No. 1668 in Ilocos Sur and secured a preliminary injunction, which was later dismissed by that court.
On November 12, 1956, the sheriff executed a second sale in Civil Case No. 1734, selling the certificate at public auction to the Estate of Florencio P. Buan. The Estate then filed an application with the PSC (Comm. Case No. 101776) for approval of this execution sale.

The PSC held a hearing on December 20, 1956, where petitioners—represented by attorney Severino Dagdag, Jr. on behalf of the United Northern Transit Co.—opposed respondent Estate of Buan’s application. Their primary argument was that the Commission lacked jurisdiction to approve the sale until the pending judicial case (G.R. Nos. L-11554 and L-11767) on the validity of the sale was resolved.
At the hearing, the Commission announced that petitioners would be given fifteen days to secure a temporary restraining order from the Court. Failing that, the PSC would provisionally approve the sale.
On January 24, 1957, after petitioners were unable to secure the restraining order, the PSC issued an order provisionally approving the sheriff’s sale of the certificate to the Estate of Buan and authorized the Estate to operate the service temporarily, subject to future judicial action in G.R. No. L-11554.
Unwilling to accept this order, petitioners filed a petition for certiorari (G.R. No. L-11554) challenging the PSC’s decision, and an urgent motion for a writ of preliminary injunction was also denied on February 26, 1957.

Whether the PSC had the requisite jurisdiction to act upon the application for transfer and approve the execution sale of the certificate of public convenience despite pending challenges in other judicial cases.
Whether the petitioners were afforded due process since they were allegedly not granted a full day in court or a substantive hearing before the PSC resolved the matter provisionally.

Whether the provisional approval of the certificate sale to the Estate of Buan meets the statutory requirement that the transfer be based on just and reasonable grounds and not be detrimental to the public interest.
Whether the PSC erred in not considering petitioners' claim of priority, their extensive investments, and operational achievements when granting provisional approval to a more experienced party.

Whether the provisional nature of the PSC approval prejudices or preempts the eventual judicial determination regarding the validity of the execution sale.
How the propriety of continuing the operation of the service under provisional authority aligns with established precedents that prioritize public interest over pending judicial disputes.