July 1962 - Philippine Supreme Court Decisions/Resolutions
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G.R. No. L-17716 July 31, 1962 - LUNETA MOTOR COMPANY v. A. D. SANTOS, INC., ET AL. :
EN BANC
[G.R. No. L-17716. July 31, 1962.]
LUNETA MOTOR COMPANY, Petitioner, v. A. D. SANTOS, INC., ET AL., Respondents.
Jose Agbulos for Petitioner.
Graciano C. Regala and Angel A. Sison for Respondents.
SYLLABUS
1. CORPORATIONS; POWER TO PURCHASE AND DEAL WITH PERSONAL OR REAL PROPERTY; PURPOSE OF THE CORPORATION TO BE CONSIDERED. — Under Section 13(5) of the Corporation Law, a corporation created thereunder may purchase, hold 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. A corporation authorized under its articles of incorporation to operate and otherwise deal in automobiles and automobile accessories and to engage in the transportation of persons by water, may not engage in the business of land transportation, which is an entirely different line of business, and, for this reason, may not acquire any certificate of public convenience to operate a taxicab service, because such acquisition would be without purpose and would have no necessary connection with the corporation’s legitimate business.
D E C I S I O N
DIZON, J.:
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 Concepción (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 Concepción 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 Concepción 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 Concepción (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:jgc:chanrobles.com.ph
"a) under the petitioner’s Articles of Incorporation, it was not authorized to engage in the taxicab business or operate as a common carrier;
"b) the decision in Civil Case No. 20853 of the Court of First Instance of Manila did not affect the oppositor nor its predecessor Amador D. Santos inasmuch as neither of them had been impleaded into the case;
"c) that what was sold to the petitioner were only the ‘rights, interest and participation’ of Nicolas Concepcion in the certificate that had been granted to him which were no longer existing at the time of the sale."cralaw virtua1aw library
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 v. 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, Concepción, Barrera, Paredes and Makalintal, JJ., concur.
Regala, J., did not took on part.
It appears that on December 31, 1941, to secure payment of a loan evidenced by a promissory note executed by Nicolas Concepción 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 Concepción 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 Concepción (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:jgc:chanrobles.com.ph
"a) under the petitioner’s Articles of Incorporation, it was not authorized to engage in the taxicab business or operate as a common carrier;
"b) the decision in Civil Case No. 20853 of the Court of First Instance of Manila did not affect the oppositor nor its predecessor Amador D. Santos inasmuch as neither of them had been impleaded into the case;
"c) that what was sold to the petitioner were only the ‘rights, interest and participation’ of Nicolas Concepcion in the certificate that had been granted to him which were no longer existing at the time of the sale."cralaw virtua1aw library
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 v. 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, Concepción, Barrera, Paredes and Makalintal, JJ., concur.
Regala, J., did not took on part.
