G.R. No.

242860, March 11, 2019

THE LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD (LTFRB) AND THE
DEPARTMENT OF TRANSPORTATION (DOTR), PETITIONERS, v. HON. CARLOS A.
VALENZUELA, IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF
MANDALUYONG CITY, BRANCH 213 AND DBDOYC, INC., RESPONDENTS.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for certiorari1 is the Order2 dated August 20, 2018 (Assailed Order) rendered
by public respondent Judge Carlos A. Valenzuela of the Regional Trial Court of Mandaluyong City,
Branch 213 (RTC) in R-MND-18-01453-SC which directed the issuance of a writ of preliminary
injunction in favor of private respondent DBDOYC, Inc. (DBDOYC) essentially enjoining petitioners
the Land Transportation Franchising and Regulatory Board (LTFRB) and the Department of
Transportation (DOTr; collectively, petitioners) from regulating DBDOYC's business operations
conducted through the Angkas mobile application.

The Facts

On May 8, 2015, the Department of Transportation and Communications (DOTC), the predecessor of
DOTr, issued Department Order No. (DO) 2015-11,3 amending DO 97-1097,4 which set the standard
classifications for public transport conveyances to be used as basis for the issuance of a Certificate of
Public Convenience (CPC)5 for public utility vehicles (PUVs). In recognition of technological
innovations which allowed for the proliferation of new ways of delivering and offering public
transportation, the DOTC, through DO 2015-11, created two (2) new classifications,
namely, Transportation Network Companies (TNC) and Transportation Network Vehicle
Service (TNVS).6

Under DO 2015-11, a TNC is defined as an "organization whether a corporation, partnership,

sole proprietor, or other form, that provides pre-arranged transportation services for
compensation using an online-enabled application or platform technology to connect
passengers with drivers using their personal vehicles."7 Although DO 2015-11 made mention
of TNVS, the term was not clearly defined until June 19, 2017, when the DOTr issued DO 2017-
118 which set the rules and procedures on the issuance of franchises for public transport routes and
services,9 including TNCs and TNVS. Under DO 2017-11, TNVS is defined as "a [PUV] accredited
with a [TNC], which is granted authority or franchise by the LTFRB to run a public
transport service."10 DO 2017-11 further provided in Item 2.2 thereof that "[m]otorcycles x x x
are likewise not allowed as public transport conveyance."11

Consequently, the LTFRB issued various memorandum circulars 12 to govern the issuance of the
necessary CPC for a TNVS and the accreditation of a TNC. In its issuances, the LTFRB declared that
a TNC is treated as a transport provider.13 whose accountability commences from the acceptance by
its TNVS while online.14 On the other hand, the accountability of the TNVS, as a common carrier,
attaches from the time the TNVS is online and offers its services to the riding public. 15

Meanwhile, on May 26, 2016, DBDOYC registered its business with the Securities and Exchange
Commission (SEC), and subsequently, in December 2016, launched "Angkas," an online and on-
demand motorcycle-hailing mobile application (Angkas or Angkas app) that pairs drivers of
motorcycles with potential passengers without, however, obtaining the mandatory certificate of TNC
accreditation from the LTFRB. In this regard, DBDOYC accredited Angkas drivers and allowed them to
offer their transport services to the public despite the absence of CPCs.16

Cognizant of the foregoing, the LTFRB issued a press release on January 27, 2017 informing the
riding public that DBDOYC, which is considered as a TNC, cannot legally operate. 17 Despite such
warning, however, DBDOYC continued to operate and offer its services to the riding public sans any
effort to obtain a certificate of TNC accreditation. 18

In response, DBDOYC, on July 4, 2018, filed a Petition for Declaratory Relief with Application for
Temporary Restraining Order/Writ of Preliminary Injunction 19 against petitioners before the RTC
alleging that:

(a) it is not a public transportation provider since Angkas app is a mere tool that connects the
passenger and the motorcycle driver; (b) Angkas and its drivers are not engaged in the delivery of a
public service; (c) alternatively, should it be determined that it is performing a public service that
requires the issuance of a certificate of accreditation and/or CPC, then DO 2017-11 should be
declared invalid because it violates Section 7 of Republic Act No. (RA) 4136 or the "Land and
Transportation Traffic Code,"20 which does not prohibit motorcycles from being used as a PUV; and
(d) neither the LTFRB nor the DOTr has jurisdiction to regulate motorcycles for hire. 21

The RTC Proceedings and The Assailed Order

In an Order22 dated July 13, 2018, the RTC issued a Temporary Restraining Order (TRO) finding
DBDOYC's business not subject to any regulation nor prohibited under existing law. It added that
since the use of DBDOYC's internet-based mobile application is not contrary to law, morals, good
customs, public order, or public policy,23 a clear and unmistakable right has been established in favor
of DBDOYC such that if petitioners prohibit the operation of Angkas, the same would cause
irreparable injury to the company.24

Proceedings were thereafter conducted relative to the application for a writ of preliminary injunction.
Eventually, through the Assailed Order,25 the RTC issued the said writ to enjoin petitioners and
anyone acting on their behalf: (a) from interfering, whether directly or indirectly, with DBDOYC's
operations; (b) from apprehending Angkas bikers who are in lawful pursuit of their trade or
occupation based on Angkas mobile application; and (c) from performing any act/acts that will
impede, obstruct, frustrate, or defeat DBDOYC's pursuit of its lawful business or trade as owner and
operator of Angkas.26

In so ruling, the RTC found that DBDOYC has a clear and unmistakable right "to conduct its business
based on its constitutional right to liberty," which includes "the right of an individual to x x x earn his
livelihood by any lawful calling; [and] to pursue any [vocation] and essentially to do and perform
anything unless otherwise prohibited by law."27 In this light, the RTC concluded that DBDOYC has a
right to enter into an independent contract with its Angkas riders as an application provider, further
reiterating that DBDOYC's business is not yet subject to any regulation nor prohibited by any existing
law, and that the Angkas biker's offer of transportation services to a potential passenger is a purely
private arrangement using DBDOYC's application. 28 Thus, should petitioners prohibit DBDOYC from
operating Angkas, an irreparable injury will result, thereby entitling it to the issuance of the
injunctive relief prayed for.29

Aggrieved, petitioners are now before the Court ascribing grave abuse of discretion on the part of the
RTC in issuing the writ of preliminary injunction through the Assailed Order. Notably, in the present
petition, petitioners sought the issuance of a TRO to enjoin the RTC from enforcing its injunctive writ,
which the Court granted in a Resolution30 dated December 5, 2018.

The Issue Before the Court

The core issue for the Court's resolution is whether or not the RTC committed grave abuse of
discretion amounting to lack or in excess of jurisdiction in issuing a writ of preliminary injunction in
favor of DBDOYC and against petitioners.

The Court's Ruling

Preliminarily, despite the absence of the required prior motion for reconsideration, 31 the Court finds it
proper to give due course to the petition in view of the public interest involved, and further, the
urgent necessity of resolving this case so as not to prejudice the interests of the government. 32

The petition is meritorious.

Case law states that "grave abuse of discretion arises when a lower court or tribunal patently violates
the Constitution, the law or existing jurisprudence."33 According to its classic formulation:
By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent
to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion as
when the power is exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a
virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 34
In ruling on whether or not the RTC gravely abused its discretion in this case, the Court turns to the
basic principles governing the issuance of preliminary injunctive writs.

The first and foremost requisite in the issuance of a writ of preliminary injunction is the existence of
a clear legal right. The rationale therefor hews with the nature of these writs being mere
provisional reliefs. In Department of Public Works and Highways v. City Advertising Ventures
Corporation,35 the Court explained that a writ of preliminary injunction is issued to:
[P]revent threatened or continuous irremediable injury to some of the parties before their claims can
be thoroughly studied and adjudicated. Its sole aim is to preserve the status quo until the merits of
the case can be heard fully[.] Thus, it will be issued only upon a showing of a clear and
unmistakable right that is violated. Moreover, an urgent necessity for its issuance must be shown
by the applicant.36 (Emphasis and underscoring supplied)
In Spouses Nisce v. Equitable PCI Bank, Inc.,37 the Court held that "[t]he plaintiff praying for a writ of
preliminary injunction must x x x establish[, inter alia,] that he or she has a present and
unmistakable right to be protected; x x x [t]hus, where the plaintiffs right is doubtful or
disputed, a preliminary injunction is not proper. The possibility of irreparable damage without
proof of an actual existing right is not a ground for a preliminary injunction." 38

In this case, the RTC premised its issuance of the assailed injunctive writ on DBDOYC's purported
clear and unmistakable legal right "to conduct its business based on its constitutional right to
liberty."39 Prescinding therefrom, the RTC concludes that DBDOYC has "the right to enter into an
independent contract with its Angkas bikers as an [application] provider [without] initially requiring it
to secure [a CPC]."40

As in all fundamental rights, the State has a legitimate interest in regulating these rights when their
exercise clearly affects the public. To recount, "[p]olice power is the inherent power of the State to
regulate or to restrain the use of liberty and property for public welfare." 41 Accordingly, the State
"may interfere with personal liberty, property, lawful businesses and occupations to promote the
general welfare [as long as] the interference [is] reasonable and not arbitrary." 42

Here, it is petitioners' position that  DBDOYC is a transportation provider  and its accredited

drivers are common carriers engaged in rendering public service which is subject to their
regulation.43 The regulatory measures against DBDOYC, as mentioned above, pertain to DOs 2015-11
and 2017-11, which have created new classifications of transportation services, namely TNC and
TNVS, in light of modern innovations. These issuances may be traced to Commonwealth Act No.
146,44 otherwise known as the "Public Service Act," as amended.45 Under Section 13 (b) thereof, a
"public service" is defined as follows:
(b) The term "public service" includes every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle,
either for freight or passenger, or both with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service, steamboat or steamship line,
pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both,
shipyard, marine railway, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system, gas electric light, heat and power, water supply and power, petroleum, sewerage
system, wire or wireless communications system, wire or wireless broadcasting stations and other
similar public services; Provided, however, That a person engaged in agriculture, not otherwise a
public service, who owns a motor vehicle and uses it personally and/or enters into a special contract
whereby said motor vehicle is offered for hire or compensation to a third party or third [parties]
engaged in agriculture, not itself or themselves a public service, for operation by the latter for a
limited time and for a specific purpose directly connected with the cultivation of his or their farm, the
transportation, processing, and marketing of agricultural products of such third party or third parties
shall not be considered as operating a public service for the purposes of this Act. (Emphases and
underscoring supplied).
Section 15 of the same law requires that, except for certain exemptions, no public service shall
operate in the Philippines without possessing a CPC. 46 In turn, the then DOTC (which had supervision
and control over the LTFRB that had assumed certain powers of the old Public Service Commission 47 )
issued DO 97-1097 providing for the standard classifications of all PUVs before they can be issued a
CPC. This department order was later amended by the above-stated DOs 2015-11 and 2017-11 and
thereafter, the LTFRB issued various memorandum circulars governing the rules for TNC and TNVS
accreditation, which rules DBDOYC purportedly failed to comply.

As stated in the Public Service Act, the term "public service" covers any person who owns, operates,
manages, or controls in the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business purposes, any common
carrier.48 The Civil Code defines "common earners" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public. (Emphases supplied)
For its part, DBDOYC claims reprieve from the above-stated regulatory measures, claiming that it
and its accredited drivers are not common carriers or transportation providers.49 It argues that "[its]
technology [only] allows a biker willing to give a ride and a passenger willing to pay the set price to
meet and contract with each other. Under this set-up, an Angkas biker does not offer his/her service
to an indefinite public."50 Since the application "merely pairs an Angkas biker with a potential
passenger under a fare scheme which [DBDOYC] fixes for both, [DBDOYC] may not compel
an Angkas driver to pick up a potential passenger even after the latter confirms a booking because as
between the biker and the passenger, there is but a purely private contractual arrangement."51

However, it seems that DBDOYC's proffered operations is not enough to extricate its business from
the definition of common carriers, which, as mentioned, fall under the scope of the term "public
service." As the DBDOYC itself describes, Angkas is a mobile application which seeks to "pair an
available and willing Angkas biker with a potential passenger, who requested for a motorcycle ride,
relying on geo-location technology."52 Accordingly, it appears that it is practically functioning as a
booking agent, or at the very least, acts as a third-party liaison for its accredited bikers. Irrespective
of the application's limited market scope, i.e., Angkas users, it remains that, on the one hand, these
bikers offer transportation services to wiling public consumers, and on the other hand, these services
may be readily accessed by anyone who chooses to download the Angkas app.

In De Guzman v. Court of Appeals,53 the Court discussed the relation between Article 1732 of the
Civil Code and Section 13 (b) of the Public Service Act, explaining that Article 1732 of the Civil Code
does not distinguish between a carrier who offers its services to the general public and one who
offers services or solicits business only from a narrow segment of the general population:
The above article makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity (in local
idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services to the "general public," i.e.,
the general community or population, and one who offers services or solicits business only
from a narrow segment of the general population. We think that Article [1732] deliberately
refrained from making such distinctions.

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide
neatly with the notion of "public service," under the Public Service Act (Commonwealth Act No.
1416, as amended) which at least partially supplements the law on common carriers set forth in the
Civil Code. x x x.54 (Emphases and underscoring supplied)
In this relation, DBDOYC posits that its accredited bikers are private carriers as they do not hold out
their services generally to the public because they cannot just be hailed on the street as they only
contract via the Angkas online front. However, the Court is hard-pressed to rule - at least at this
point, and for the purpose of determining the validity of the writ of preliminary injunction - that these
bikers are only private carriers who may publicly ply their trade without any regulation. As the Court
observes, the genius behind the Angkas app is that it removes the inconvenience of having to
physically hail for public transportation by creating a virtual system wherein practically the same
activity may now be done at the tip of one's fingers. As it is the trend of modern technology,
previously cumbersome mundane activities, such as paying bills, ordering food, or reserving
accommodations, can now be accomplished through a variety of online platforms. By DBDOYC's own
description,55 it seems to be that Angkas app is one of such platforms. As such, the fact that its
drivers are not physically hailed on the street does not automatically render Angkas-accredited
drivers as private carriers.

While DBDOYC further claims that another distinguishing factor of its business is that "[its] drivers
may refuse at any time any legitimate demand for service by simply not going online or not logging
in to the online platform,"56 still when they do so log-in, they make their services publicly
available. In other words, when they put themselves online, their services are bound for
indiscriminate public consumption. Again, as also-mentioned above, Article 1732 defining a common
carrier "[c]arefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis."57 This doctrinal statement seems to be the apt response to DBDOYC's
assertion.

Moreover, based on the way the app works, it appears that there is really no contractual
discretion between the Angkas bikers and would-be passengers because the app automatically
pairs them up based on algorithmic procedures. Whether or not the parties once paired with each
other have the choice to freely accept, reject, or modify the terms of their engagement based solely
on their discretion is a matter which appears to have not yet been traversed in the proceedings
below. Verily, the absence of any true choice on these material contractual points apparently
contradicts the postulation that the Angkas app merely facilitates a purely private arrangement
between the biker and his passenger.

At any rate, even if it is assumed that Angkas-accredited bikers are not treated as common carriers
and hence, would not make DBDOYC fall under the "public service" definition, it does not necessarily
mean that the business of holding out private motorcycles for hire is a legitimate commercial
venture. Section 7 of RA 4136 states that:
Section 7. Registration Classification. - Every motor vehicle shall be registered under one of the
following described classifications:

(a) private passenger automobiles; (b) private trucks; and (c) private motorcycles, scooters, or
motor wheel attachments. Motor vehicles registered under these classifications shall not be used
for hire under any circumstances and shall not be used to solicit, accept, or be used to
transport passengers or freight for pay.

x x x x (Emphases and underscoring supplied)

That being said, the Court therefore concludes that no clear and unmistakable right exists in
DBDOYC's favor; hence, the RTC gravely abused its discretion in issuing the assailed injunctive writ.
In the final analysis, the business of holding one's self out as a transportation service provider,
whether done through online platforms or not, appears to be one which is imbued with public interest
and thus, deserves appropriate regulations. With the safety of the public further in mind, and given
that, at any rate, the above-said administrative issuances are presumed to be valid until and unless
they are set aside,58 the nullification of the assailed injunctive writ on the ground of grave abuse of
discretion is in order.

Lest it be misunderstood, the pronounced grave abuse of discretion of the RTC exists only with
respect to its issuance of the assailed injunctive writ. It is fundamental that preliminary injunction
proceedings are separate and distinct from the main case. In Buyco v. Baraquia,59 the Court
discussed the ancillary and provisional nature of these writs:
A writ of preliminary injunction is an order granted at any stage of an action or proceeding prior to
the judgment or final order, requiring a party or a court, agency or a person to refrain from a
particular act or acts. It is merely a provisional remedy, adjunct to the main case subject to the
latter's outcome. It is not a cause of action in itself. Being an ancillary or auxiliary remedy, it is
available during the pendency of the action which may be resorted to by a litigant to preserve and
protect certain rights and interests therein pending rendition, and for purposes of the ultimate
effects, of a final judgment in the case.

The writ is provisional because it constitutes a temporary measure availed of during the pendency of
the action and it is ancillary because it is a mere incident in and is dependent upon the result of the
main action.60
Under this limited scope, it is thus beyond the power of the Court to determine the ultimate rights
and obligations of the parties, else it unduly prejudges the main case for declaratory relief which is
still pending before the court a quo. While the Court acknowledges the contemporary relevance of
the topic at hand, it remains self-aware of this case's procedural and jurisdictional parameters.
Accordingly, the definitive resolution of the issue of regulating ride-booking or ride-sharing
applications must await the proper case therefor.

As a final word, "[e]very court should remember that an injunction should not be granted lightly or
precipitately because it is a limitation upon the freedom of the defendant's action. It should be
granted only when the court is fully satisfied that the law permits it and the emergency demands it,
for no power exists whose exercise is more delicate, which requires greater caution and deliberation,
or is more dangerous in a doubtful case, than the issuance of an injunction." 61

WHEREFORE, the petition is GRANTED. The Order dated August 20, 2018 issued by the Regional
Trial Court of Mandaluyong City, Branch 213 (RTC) directing the issuance of a writ of preliminary
injunction in R-MND-18-01453-SC is ANNULLED and SET ASIDE. The RTC is hereby ORDERED to
conduct further proceedings, and thereafter, resolve R-MND-18-01453-SC with utmost dispatch.

SO ORDERED.