DOMINADOR RAYMUNDO, PETITIONER AND APPELLANT, VS. LUNETA MOTOR CO., ET AL., RESPONDENTS AND APPELLEES.

The
question squarely raised in these two cases concerns the forced sales
of certificates of public convenience held by public service operators
and the liability to execution of such certificates.

Breaking into the narration of the facts at the proper point, we find
Nicanor de Guzman, signing as Guzco Transit, purchasing trucks from the
Luneta Motor Co. and to pay for them executing a series of promissory
notes guaranteed by a chattel mortgage on several trucks. On failure of
De Guzman or Guzco Transit to pay the promissory notes, suit was
brought in the Court of First Instance of Manila for the collection of
the amount outstanding and unpaid. When the complaint was presented, a
writ of attachment was obtained against the properties of the Guzco
Transit, and as a consequence garnishment was served on the Secretary
of the Public Service Commission attaching the right, title, and
participation of the Guzco Transit in the certificates of public
convenience issued in cases Nos. 25635, 23914, and 24255 covering the
bus transportation lines between Manila and Cardona, Rizal, and between
Manila and Pililla, Rizal. These certificates were ordered sold by the
Court of First Instance of Manila, and in fact the certificates of
public convenience Nos. 25635 and 23914 were sold to the Luneta Motor
Co. as the highest bidder. The approval of the sheriff’s sale was
prayed for before the Public Service Commission, and is one of the
cases under review.

Going back a moment, it is necessary to
insert in the statement of facts1 that on July 16, 1932, or nine days
after the certificates were attached by the Luneta Motor Co., the same
certificates, together with certificate No. 25951 and several trucks,
were sold by De Guzman for the Guzco Transit to Dominador Raymundo. The
approval of this sale was sought from the Public Service Commission,
and is the other case now under review. On the two cases being heard
together, the commission in its decision approved the sale at public
auction in favor of the Luneta Motor Co., and disapproved the sale made
to Dominador Raymundo, reserving to Raymundo the right to present
another petition for the approval of the sale of certificate of public
convenience No. 25951 which was not included in the sale in favor of
the Luneta Motor Co.

Sweeping incidental matters to one
side, the prime question need not be complicated by determining if a
sale of a certificate of public convenience without any equipment may
be the object of execution and garnishment sale, for this is a matter
of policy to be determined by the Public Service Commission, and it
appears that sales of certificates of public convenience without
equipment have been approved by the commission. Also it is evident that
the articles of incorporation of the Luneta Motor Co. are broad enough
in scope to authorize the company, if it so desires, to engage in the
autotruck business, and if not, there would be nothing to preclude the
company from transferring the certificates to a third party with the
approval of the Public Service Commission. Further, the nature of the
partnership which may have been entered into by Nicanor de Guzman and
Agapito C. Correa cannot now be discussed, considering that the
promissory notes were signed Guzco Transit, by Nicanor de Guzman, and
considering that the judgment against Guzco Transit in the Court of
First Instance of Manila has become final. Finally, the dismissal in
case No. 33033 pertaining to certificate No. 25951 was without
prejudice, and the appellees disclaim any interest in this certificate.
Therefore, the question to be decided on this appeal is, which of the
two sales, the one at public auction by virtue of an attachment, or the
voluntary sale made after the property had been levied upon, should
prevail, and a decision on this question is dependent on a decision
relative to the liability to execution of certificates of public
convenience.

The Public Service Law, Act No. 3108, as
amended, authorizes certificates of public convenience to be secured by
public service operators from the Public Service Commission. (Sec. 15
[i].) A certificate of public convenience granted to the owner or
operator of public service motor vehicles, it has been held, grants a
right in the nature of a limited franchise. (Public Utilities
Commission vs. Garviloch [1919], 54 Utah, 406.)

The
Code of Civil Procedure establishes the general rule that “property,
both real and personal, or any interest therein of the judgment debtor,
not exempt by law, and all property and rights of property seized and
held under attachment in the action, shall be liable to execution.”
(Sec. 450.) The statutory exemptions do not include franchises or
certificates of public convenience. (Sec. 452.) The word “property” as
used in section 450 of the Code of Civil Procedure comprehends every
species of title, inchoate or complete, legal or equitable. The test by
which to determine whether or not property can be attached and sold
upon execution is whether the judgment debtor has such a beneficial
interest therein that he can sell or otherwise dispose of it for value.
(Reyes vs. Grey [1911], 21 Phil., 73.)

It will be
noted that the Public Service Law and the Code of Civil Procedure are
silent on the question at issue, that is, silent in the sense of not
containing specific provisions on the right to attach certificates of
public convenience. The same attitude was not assumed in the enactment
of Act No. 667, section 10, as amended, which gave authority for the
mortgage and sale under foreclosure proceedings of franchises granted
by provincial and municipal governments. A similar tendency was evident
in the Corporation Law, for in section 56 and following thereof express
provisions were made for the sale on execution of franchises of the
designated classes and of the property used in connection with them.
Should the legislative intention thus evidenced be taken as meaning
that the generality of the language used by the Code of Civil Procedure
was too vague to permit of forced sales of franchises and certificates
of public convenience, or notwithstanding the provisions to be found in
these special laws, is the language of the Code of Civil Procedure
broad enough to include certificates of public convenience? We lean to
the latter proposition, and will now proceed to elucidate our viewpoint.

The test to be applied was announced by our Supreme Court in Reyes vs. Grey, supra, and there is nothing in Tufexis vs.
Olaguera and Municipal Council of Guinobatan ([1915], 32 Phil., 654),
cited by appellant, which sanctions a contrary test. That rule it will
be recalled tested the liability of property to execution by
determining if the interest of the judgment debtor in the same can be
sold or conveyed to another in any way. Now the Public Service Law
permits the Public Service Commission to approve the sale, alienation,
mortgaging, encumbering, or leasing of property, franchises,
privileges, or rights or any part thereof (sec. 16 [h]), and
in practice the purchase and sale of certificates of public convenience
has been permitted by the Public Service Commission. If the holder of a
certificate of public convenience can sell it voluntarily, there is no
valid reason why the same certificate cannot be taken and sold
involuntarily pursuant to court process.

If this was all
that there was to the case, we might hesitate to approve attachments of
certificates of public convenience. But there is more. Certificates of
public convenience have come to have considerable material value. They
are valuable assets. In many cases the certificates are the
cornerstones on which are builded the business of bus transportation.
The United States Supreme Court considers a franchise granted in
consideration of the performance of public service as constituting
property within the protection of the Fourteenth Amendment to the
United States Constitution. (Frost vs. Corporation Commission
of Oklahoma [1929], 278 U. S., 515.) If the holder of the certificate
of public convenience can thus be protected in his constitutional
rights, we see no reason why the certificate of public convenience
should not assume corresponding responsibilities and be susceptible as
property or an interest therein of being liable to execution. In at
least one State, the certificate of the railroad commission permitting
the operation of a bus line has been held to be included in the term
“property” in the broad sense of the term. If this is true, the
certificate under our law, considered as a species of property, would
be liable to execution. (Willis vs. Buck [1928], 81 Mont., 472.)

As has been intimated herein before, a practice has grown up in the
Public Service Commission of permitting the alienation of certificates
of public convenience and in so doing approval has been given to the
sale through foreclosure proceedings of the certificates of public
convenience to third parties. The very decision in the two cases before
us is an illustration of this practice. The same tendency is to be
noted in the lower courts. As an example in the instant record, there
is a previous foreclosure of a mortgage apparently uncontested. Not
only this, but tacit approval to the attachment of certificates of
public convenience either through chattel mortgages or court writs has
been given by this court. (Orlanes & Banaag Transportation Co. vs. Public Service Commission [1932], 57 Phil., 634; Manila Electric Company vs. Orlanes & Banaag Transportation Co. [1933], 57 Phil., 805; Nos. 39525 and 39531, Red Line Transportation Co. vs. Rural Transit Co. and Bachrach Motor Co., November 17, 1933.^[1])

When the motion of the plaintiff praying that the certificates of
public convenience granted by the Public Service Commission which were
attached be sold at public auction and the answer opposing the granting
of the motion on the ground that franchises can not be the subject of
attachment and sale by garnishment came before the Court of First
Instance of Manila, the presiding Judge, Anacleto Diaz, promulgated an
order which sustained the right of the plaintiff to attachment and
garnishment. That order gains particular force because a later judgment
by consent was taken and no appeal was attempted to this court. It is
true that the sale further required the approval of the Public Service
Commission, but the Public Service Commission respected the decision of
the court and so we have the concurrence of the court and the
commission on this question. In the order in first instance appears the
following well considered language:

“It
remains to be determined whether, under the law, certificates of public
convenience are liable to attachment and seizure by legal process. The
law is silent as to this matter. It can not be denied that such
franchises are valuable. They are subject to being sold for a
consideration as much as any other property. They are even more
valuable than ordinary properties, taking into consideration that they
are not granted to every one who applies for them but only to those who
undertake to furnish satisfactory and convenient service to the public.
It may also be said that dealers in motor vehicles even extend credit
to owners of such certificates or franchises. The law permits the
seizure by means of a writ of attachment not only of chattels but also
of shares and credits. While these franchises may be said to be of
intangible character, they are however of value and are considered
properties which can be seized through legal process.

“For
all the foregoing, the court is of the opinion that the plaintiff is
entitled to the remedy it prays for in its motion which is hereby
granted.”

The ruling of the Supreme Court
on the question raised by the record and the assignments of error is
this: Certificates of public convenience secured by public service
operators are liable to execution, and the Public Service Commission is
authorized to approve the transfer of the certificates of public
convenience to the execution creditor. As a consequence, the decision
brought on review will be affirmed, with costs against the appellant.

Avanceña, C. J., Villa-Real, Hull, and Imperial, JJ., concur.

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