LUNETA MOTOR COMPANY, PETITIONER, VS. A. D. SANTOS, INC., ET AL., RESPONDENTS.

Appeal from the decision of the Public Service Commission in case
No. 123401 dismissing petitioner’s application for the approval of the
sale in its favor, made by the Sheriff of the City of Manila, of the
certificate of public convenience granted before the war to Nicolas
Concepcion (Commission Cases Nos. 60604 and 60605, reconstituted after
the war in Commission Case No. 1470) to operate a taxicab service of 27
units in the City of Manila and therefrom to any point in Luzon.

It appears that on December 31, 1941, to secure payment of a loan
evidenced by a promissory note executed by Nicolas Concepcion and
guaranteed by one Placido Esteban in favor of petitioner, Concepcion
executed a chattel mortgage covering the above mentioned certificate in
favor of petitioner.

To secure payment of a subsequent loan obtained by Concepcion from
the Rehabilitation Finance Corporation (now Development Bank of the
Philippines) he constituted a second mortgage on the same certificate.
This second mortgage was approved by the respondent Commission, subject
to the mortgage lien in favor of petitioner.

The certificate was later sold to Francisco Benitez, Jr., who
resold it to Redi Taxicab Company. Both sales were made with assumption
of the mortgage in favor of the RFC, and were also approved
provisionally by the Commission, subject to petitioner’s lien.

On October 10, 1953 petitioner filed an action to foreclose the
chattel mortgage executed in its favor by Concepcion (Civil Case No.
20853 of the Court of First Instance of Manila) in view of the failure
of the latter and his guarantor, Placido Esteban, to pay their overdue
account.

While the above case was pending, the RFC also instituted
foreclosure proceedings on its second chattel mortgage and, as a result
of the decision in its favor therein rendered, the certificate of
public convenience was sold at public auction in favor of Amador D.
Santos for P24,010.00 on August 31, 1956. Santos immediately applied
with the Commission for the approval of the sale, and the same was
approved on January 26, 1957, subject to the mortgage lien in favor of
petitioner.

On June 9, 1958 the Court of First Instance of Manila rendered
judgment in Civil Case No. 20853, amended on August 1, 1958, adjudging
Concepcion indebted to petitioner in the sum of P15,197.84, with 12%
interest thereon from December 2, 1941 until full payment, plus other
assessments, and ordered that the certificate of public convenience
subject matter of the chattel mortgage be sold at public auction in
accordance with law. Accordingly, on March 3, 1959 said certificate was
sold at public auction to petitioner, and six days thereafter the
Sheriff of the City of Manila issued in its favor the corresponding
certificate of sale. Thereupon petitioner filed the application
mentioned heretofore for the approval of the sale. In the meantime and
before his death, Amador D. Santos sold and transferred (Commission
Case No. 1272231) all his rights and interests in the certificate of
public convenience in question in favor of the now respondent A. D.
Santos, Inc., who opposed petitioner’s application.

The record discloses that in the course of the hearing on said
application and after petitioner had rested its case, the respondent A.
D. Santos, Inc., with leave of court, filed a motion to dismiss based
on the following grounds:

On October 18, 1960 the respondent Commission, after considering the
memoranda submitted by the parties, rendered the appealed decision
sustaining the first ground relied upon in support thereof, namely,
that under petitioner’s articles of incorporation it had no authority
to engage in the taxicab business or operate as a common carrier, and
that, as a result, it could not acquire by purchase the certificate of
public convenience referred to above. Hence the present appeal
interposed by petitioner who claims that, in accordance with the
Corporation Law and its articles of incorporation, it can acquire by
purchase the certificate of public convenience in question, maintaining
inferentially that, after acquiring said certificate, it could make use
of it by operating a taxicab business or operate as a common carrier by
land.

There is no question that a certificate of public convenience granted to a public operator is liable to execution (Raymundo vs.
Luneta Motor Co., 58 Phil. 889) and may be acquired by purchase. The
question involved in the present appeal, however, is not only whether,
under the Corporation Law and petitioner’s articles of incorporation,
it may acquire by purchase a certificate of public convenience, such as
the one in question, but also whether, after its acquisition,
petitioner may hold the certificate and thereunder operate as a common
carrier by land.

It is not denied that under Section 13(5) of the Corporation Law, a
corporation created thereunder may purchase, hold, etc., and otherwise
deal in such real and personal property as the purpose for which the
corporation was formed may permit, and the transaction of its lawful
business may reasonably and. necessarily require. The issue here is
precisely whether the purpose for which petitioner was organized and
the transaction of its lawful business reasonably and necessarily
require the purchase and holding by it of a certificate of public
convenience like the one in question and thus give it additional
authority to operate thereunder as a common carrier by land.

Petitioner claims in this regard that its corporate purposes are to
carry on a general mercantile and commercial business, etc., and that
it is authorized in its articles of incorporation to operate and
otherwise deal in and concerning automobiles and automobile
accessories’ business in all its multifarious ramification
(petitioner’s brief, p. 7) and to operate, etc. and otherwise dispose
of vessels and boats, etc, and to own and operate steamship and sailing
ships and other floating craft and deal in the same and engage in the
Philippine Islands and elsewhere in the transportation of persons,
merchandise and chattels by water; all this incidental to the transportation of automobiles (id. pp. 7-8 and Exhibit B).

We find nothing in the legal provision and the provisions of
petitioner’s articles of incorporation relied upon that could justify
petitioner’s contention in this case. To the contrary, they are
precisely the best evidence that it has no authority at all to engage
in the business of land transportation and operate a taxicab service.
That it may operate and otherwise deal in automobiles and automobile
accessories; that it may engage in the transportation of persons by
water does not mean that it may engage in the business of land
transportation—an entirely different line of business. If it could not
thus engage in this line of business, it follows that it may not
acquire any certificate of public convenience to operate a taxicab
service, such as the one in question, because such acquisition would be
without purpose and would have no necessary connection with
petitioner’s legitimate business.

In view of the conclusion we have arrived at on the decisive issue
involved in this appeal, we deem it unnecessary to resolve the other
incidental questions raised by petitioner.

Wherefore, the appealed decision is affirmed, with costs.

Bengzon, C.J., Padilla, Concepcion, Barrera, Paredes and Makatintal, JJ., concur.