165. Gr_l-64693.docx

G.R. No. L-64693

LITA ENTERPRISES, INC., petitioner, -versusSECOND CIVIL CASES DIVISION, INTERMEDIATE APPELLATE COURT, NICASIO M. OCAMPO and FRANCISCA P. GARCIA, respondent.

Art. 1409. Void contracts. April 27, 1984

FACTS OF THE CASE: Ocampo and Garcia purchased in installment from the Delta Motor Sales Corporation five Toyota Corona Standard cars to be used as taxicabs. They had no franchise to operate taxicabs, so they contracted with Lita Enterprises for the use of the latter’s certificate of public convenience in consideration of an initial payment of P1,000 and a monthly rental of P200 per taxicab unit. The aforesaid cars were then registered in the name of Lita Enterprises. One of the taxicabs driven by Ocampo and Garcia’s employee, Emeterio Martin collided with a motorcycle whose driver, Florante Galvez died from the head injuries sustained. A criminal case was filed against the driver Martin, while a civil case for damages was constituted by an heir of the victim against Lita Enterprises.

ISSUE/S: Whether or not Lita Enterprises is liable to the heir of the victim who died as a result of the gross negligence of Ocampo and Garcia’s driver while driving one of the private respondents’ taxicabs.

CONCLUSION: Yes, a “kabit system” whereby a person who has been granted a certificate of convenience allows another person who owns motor vehicles to operate under such franchise for a fee is contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil Code. As a result, the Court will not aid either part to enforce an illegal contract but will leave them both where it finds them (in pari delicto).