GR L 17716; (July, 1962) (Digest)
G.R. No. L-17716. July 31, 1962. LUNETA MOTOR COMPANY, petitioner, vs. A.D. SANTOS, INC., ET AL., respondents.
FACTS
Luneta Motor Company sought Public Service Commission (PSC) approval for its acquisition of a taxicab certificate of public convenience. The certificate, originally granted to Nicolas Concepcion, was mortgaged to Luneta in 1941. A subsequent second mortgage was constituted in favor of the Rehabilitation Finance Corporation (RFC). After a series of approved sales subject to Luneta’s lien, the RFC foreclosed, and the certificate was sold at auction to Amador D. Santos, with PSC approval subject to Luneta’s mortgage. Luneta later foreclosed its own mortgage, obtained a judgment against Concepcion, and purchased the certificate at a sheriff’s sale in 1959. It then applied for PSC approval of this sale.
A.D. Santos, Inc., the successor-in-interest of Amador D. Santos, opposed the application. The PSC dismissed Luneta’s application, primarily on the ground that Luneta’s corporate articles of incorporation did not authorize it to engage in the taxicab business or operate as a common carrier by land. Luneta appealed, arguing its corporate powers allowed the acquisition and subsequent operation under the certificate.
ISSUE
Whether Luneta Motor Company, under the Corporation Law and its articles of incorporation, could validly acquire by purchase the certificate of public convenience and operate a taxicab service thereunder.
RULING
The Supreme Court affirmed the PSC’s decision, ruling that Luneta could not acquire the certificate for the purpose of operating a taxicab service. The legal logic centered on the principle of corporate authority under Section 13(5) of the Corporation Law, which permits a corporation to deal in property only as its corporate purpose and lawful business may reasonably and necessarily require. While a certificate of public convenience is property subject to execution and purchase, the acquirer must have the legal capacity to utilize it for its intended purpose.
The Court examined Luneta’s articles of incorporation, which authorized a general mercantile business, dealing in automobiles and accessories, and engaging in water transportation incidental to automobile transport. The Court held these provisions did not grant authority to engage in land transportation or operate a taxicab service, which is a distinct line of business. Consequently, acquiring the certificate would serve no legitimate corporate purpose connected to Luneta’s lawful business. The acquisition would be ultra vires—beyond its corporate powers. Since the company could not legally operate the taxicab service, it followed that it could not acquire the certificate meant solely for that operation. The Court thus found no error in the PSC’s dismissal of the application.