FACTS nor operate as a common carrier.

As such, it could not acquire by purchase

the CPC in question.
On December 31 1941, Nicolas Concepcion executed a chattel mortgage to
secure payment of a loan, evidence by a promissory note; guaranteed by ISSUE: WON Luneta Motor Co. may acquire the CPC
one Placido Esteban in favor of Luneta Motors.
RULING
To secure payment of a subsequent loan obtained by Concepcion from the
No. Petitioner claims in this regard that its corporate purposes are to
Rehabilitation Finance Corporation (RFC, now Development Bank of the
carry on a general mercantile and commercial business, etc., and that it is
Philippines), he constituted a 2 nd mortgage on the same certificate, which
authorized in its articles of incorporation to operate and otherwise deal in
was approved by the Public Service Commission, subject to the mortgage
and concerning automobiles and automobile accessories' business in all its
lien in favor of Luneta Motors. The certificate was later sold to Benitez,
multifarious ramification (petitioner's brief p. 7) and to operate, etc., and
who resold it to Rodi Taxicab Company. Both sales were made with
otherwise dispose of vessels and boats, etc., and to own and operate
assumption of the mortgage in favor of RFC, and were also approved
steamship and sailing ships and other floating craft and deal in the same
provisionally by the PSC, subject to Luneta Motors’ lien.
and engage in the Philippine Islands and elsewhere in the transportation of
On October 10 1953, Luneta Motors filed an action to foreclose the chattel persons, merchandise and chattels by water; all this incidental to the
mortgage executed in its favor, in view of the failure of Concepcion and his transportation of automobiles.
guarantor Esteban, to pay their overdue account.
We find nothing in the legal provision and the provisions of petitioner's
While the case was pending, RFC also instituted foreclosure proceedings on articles of incorporation relied upon that could justify petitioner's
the 2nd chattel mortgage, and as a result of the decision in its favor therein, contention in this case. To the contrary, they are precisely the best
the CPC was sold at a public auction in favor of Santos for P24,100 on evidence that it has no authority at all to engage in the business of land
August 31 1956. The sale was approved by the PSC on January 26 1957, transportation and operate a taxicab service. That it may operate and
subject to the mortgage lien in favor of Luneta Motors. otherwise deal in automobiles and automobile accessories; that it may
engage in the transportation of persons by water does not mean that it
On June 9 1958, the CFI of Manila rendered judgment against Concepcion,
may engage in the business of land transportation — an entirely different
ruling he is indebted to Luneta Motors in the sum of P15,197.84, with
line of business. If it could not thus engage in the line of business, it
interest and other assessments, and ordered that the CPC subject matter
follows that it may not acquire a certificate of public convenience to
of the chattel mortgage be sold at public auction. The CPC was sold to
operate a taxicab service, such as the one in question, because such
Luneta Motors on March 3 1959, and 6 days after the Sheriff issued the
acquisition would be without purpose and would have no necessary
corresponding certificate of sale in Petitioner’s favor. Petitioner filed an
connection with petitioner's legitimate business. PETITION DENIED.
application for the approval of the sale. In the meantime and prior to his
death, Santos sold and transferred all his rights and interests in the CPC in
question in favor of Respondent AD Santos, Inc., who opposed the
application.

The PSC dismissed the application of Luneta Motors, ruling that under the
Petitioner’s AOI, it was not authorized to engage in the taxicab business