BUENAFLORvs.

CAMARINES SUR INDUSTRY CORPORATION

(G.R. Nos. L-14991-94; May 30, 1960)

FACTS: In Aug. and Sept. 1957, Jaime Buenaflor filed applications before the Public Service
Commission for the construction of a 5-ton ice plant and to establish a cold storage and refrigeration
service of about 6,000 cubic feet capacity in Sabang, respectively. After being served a copy of the
application of petitioner, respondent corporation also filed the same applications on Oct.
1957.Counsel for Buenaflor presented a motion to dismiss on the ground that the corporate life of
respondent already expired in Nov. 1953. Respondent Corporation then registered on Oct. 1957, a
new AOI and transferred all assets of the old corporation together with existing certificate of public
convenience to the new corporation.The PSC provisionally approved the transfer of the assets, as
well as the certificate of public convenience to the new corporation.On Nov. 1957, the new
corporation answered the motion to dismiss by alleging its recent incorporation.

ISSUE: WON Buenaflor’s application should be approved?

RULING: Yes. Since 1953, the old Corporation had been illegally plying its business of selling ice in
Sabang because, under the Corporation Law, Sec. 77, after November 1953, it could not lawfully
continue the business for which it had been established (operate ice plant, sell ice, etc). After
November 1953, it could only continue to exist for three years for the purpose of prosecuting and
defending suits by or against it, and of enabling itgradually to settle and close its affairs, to dispose
and convey its property and to divide its capital stock. It could not, without violating the law,
continue to sell ice. And yet, the Commission awarded the certificate on the basis of such serve and
distribution of ice — applying the "prior operator" rule. In other words, the new Camarines
Corporation is rewarded, precisely because the old corporation, its predecessor, had violated the law
during that period (1953-1957). We cannot, and should not countenance such anomalous result.

On the other hand, when the old Camarines Corporation docketed its application October 1, 1957, it
had no juridical personality, it had ceased to exist as a corporation and could not sue nor apply for
certificate, for it was incapable of receiving a grant. It was not even a corporation de facto. And then,
there is no application subscribed by the new Camarines Corporation. Far from being mere
technicality, these point support a conclusion which appears to be just and equitable, not only for
the reasons already indicated, but also to compensate Buenaflor's diligence and courage in exposing
the irregular practice of a "ghost" corporation foisting its services upon the unsuspecting public of
Sabang and neighboring territory —enjoying a franchise without paying, perhaps, the corporate
income tax andother burdens attached to corporate existence.

Remembering the Camarines Corporation's automatic cessation in November 1956 (three years after
November 1953) we must decline to regard the new Camarines Corporation (formed October 30,
1957) as a continuation of the old. At most, it is the transferee of the properties of the old
corporation (or more properly, the assets of the stockholders) plus the certificate of public
convenience to operate the ice plant in Naga and Magarao. And yet, as stated, the new corporation
has not filed any application for certificate of public convenience in Sabang, and has not published
such application.