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TRANSPORTATION VII: APPROVAL OF SALE, ENCUMBRANCE, OR LEASE, (h) To sell…

- - - - GRANTEE STILL LIABLE FOR CONSEQUENCES INCIDENT TO THE OPERATION OF THE VEHICLE
        “Since a franchise is personal in nature…transfer or lease thereof should be submitted for approval of the Public Service Commission…[I]f the property covered by the franchise is transferred or leased to another without obtaining the requisite approval,…the grantee continues to be responsible under the franchise in relation to the Commission and to the public for the consequences incident to the operation of the vehicle, one of them being the collision under consideration.” (Peralta v Mangusang)
        (Perez v. Gutierrez, G.R. No. L-30115, 28 September 1973)
        
        REGISTERED OWNER OF COMMON CARRIER IS ANSWERABLE TO PUBLIC FOR NEGLIGENCE CAUSING INJURIES TO PASSENGERS/THIRD PERSONS
        “The registered owner of a common carrier [is] answerable to the public for negligence injuries to its passengers or third persons, even though the vehicle had already been transferred to another” (Erezo v Jepte)
    - - APPROVAL IS ONLY NECESSARY TO PROTECT PUBLIC INTEREST
        The approval is only necessary to protect public interest.
  - - - PERSONAL IN NATURE:
        FRANCHISE IS PERSONAL IN NATURE
        Since a franchise is personal in nature any transfer or lease thereof should be notified to the PSC so it may take proper safeguards to protect public interest.
        
        RIGHTS AND PRIVILEGES UNDER A FRANCHISE MAY BE ASSIGNED IF AUTHORIZED BY A STATUTE
        As the Court stressed in Kilosbayan v. Guingona, Jr., 81 the rights and privileges conferred under a franchise may be assigned if authorized by a statute, subject to such restrictions as may be provided by law, such as the prior approval of the grantor or a government agency.
        Francisco v. Toll Regulatory Board, G.R. No. 166910, October 19, 2010 (supra)
        
        SUBJECT TO RESTRICTIONS BY LAW
        
        TRANSFER
        OF SHARES vs OF FRANCHISE
        TRANSFER OF SHARES! OF A PUBLIC UTILITY CORPORATION ONLY NEED NTC APPROVAL
        Transfers of shares of a public utility corporation need only NTC approval, not Congressional authorization.
        A distinction should be made between shares of stock, which are owned by stockholders, the sale of which requires only NTC approval,
        TRANSFER OF FRANCHISE! REQUIRES CONGRESSIONAL SANCTION
        The franchise itself which is owned by the corporation as the grantee thereof, the sale or transfer of which requires Congressional sanction.
        PLDT v NTC, G.R. 88404, 18 October 1990
        
        FRANCHISE EXISTS SO LONG AS THE CORPORATION EXISTS
        NOTWITHSTANDING TRANSFER OF SHARES BY THE ORIGINAL STOCKHOLDERS
        o Since stockholders own the shares of stock, they may dispose of the same as they see fit.
        o They may not, however, transfer or assign the property of a corporation, like its franchise.
        o In other words, even if the original stockholders had transferred their shares to another group of shareholders, the franchise granted to the corporation subsists as long as the corporation, as an entity, continues to exist
        The franchise is not thereby invalidated by the transfer of the shares.
        A corporation has a personality separate and distinct from that of each stockholder. It has the right of continuity or perpetual succession.
        
        BEFORE APPROVAL, THERE SHOULD BE A PUBLIC HEARING
        ○ In fact, before approval is granted, there should be a public hearing with notice to all interested parties in order that the commission may determine if:
        
        PURPOSE OF PUBLIC HEARING IS TO DETERMINE:
        
        GOOD & REASONABLE GROUNDS
        ■ There are good and reasonable grounds justifying the transfer or lease; or
        
        IF THE SALE IS DETRIMENTAL TO PUBLIC INTEREST
        ■ If the sale or lease is detrimental to public interest
        
        ○ Based on this, it follows that if such property is transferred, or leased to another without obtaining the requisite approval, the transfer is not binding against PSC.
        ■ The grantee continues to be responsible under the franchise in relation to PSC and the public.
- - - - NOTHING HEREIN SHALL PREVENT:
        
        TRANSACTION FROM BEING NEGOTIATED/ COMPLETED BEFORE APPROVAL
        
        SALE, ALIENATION, LEASE BY ANY PUBLIC SERVICE OF ANY OF ITS PROPERTY IN THE ORDINARY COURSE OF ITS BUSINESS
        Provided, however, that nothing herein contained shall be construed to prevent the transaction from being negotiated or completed before its approval or to prevent the sale, alienation, or lease by any public service of any of its property in the ordinary course of its business.