November 29, 1933

DOMINADOR RAYMUNDO, petitioner-appellant,

vs.
LUNETA MOTOR CO., et. al., respondents-appellees.
Malcolm, J.
NATURE: Appeal from a decision of the Public Service Commission
SUMMARY: De Guzman bought trucks on credit from Luneta Motor. The sale was backed by a
chattel mortgage on the trucks and 3 CPCs. Upon default, Luneta Motor had the CPCs attached
and were able to buy them on execution sale; but De Guzman had already sold the CPCs to
Raymundo. The two buyers of the CPCs now sought to have their sales approved by the
PSC. The PSC and the SC sided with Luneta Motor, holding that CPCs may be attached and
sold on execution.
DOCTRINE: Certificates of public convenience (CPC), being a form of limited franchise, are
considered as property which may be sold even on execution. CPCs have become valuable as
they are essential to the operation of transportation businesses and have come to be sold,
mortgaged and levied upon on execution. The Court sanctions these practices as they are not
prohibited under pertinent laws.
FACTS
Nicanor DE GUZMAN, as proprietor of GUZCO Transit, bought trucks from LUNETA
Motor Company.
o The purchase was made with promissory notes backed by a chattel mortgage on
the trucks.
De Guzman failed to pay, hence Luneta sued him before the Manila CFI.
The Manila CFI issued a writ of attachment against the properties of Guzco, including its
rights in 3 certificates of public convenience (CPC) covering the Manila-Cardona and
Manila-Pililla routes.
Nine days after the attachment, or on July 16, 1932, De Guzman sold the 3 attached
CPCs plus another CPC and several trucks to Dominador Raymundo.
The attached CPCs were sold on auction, with Luneta emerging the highest bidder.
Raymundo and Luneta applied for approval of the respective sales to them of the CPCs
before the Public Service Commission (PSC). The two cases were consolidated, and the
PSC upheld the sale in favor of Luneta. Raymundo was allowed to file a new petition for
the fourth unattached CPC he bought from Guzco.
Raymundo now appeals the PSC decision. The SC now had to choose which sale to
uphold the execution sale in favor of Luneta or the voluntary fire sale in favor of
Raymundo which was made after the property had been levied upon.
ISSUE (HELD)
W/N a Certificate of Public Convenience may be attached and sold on execution (YES)
RATIO

The Court decided the case on this sole issue and brushed the other matters aside,
especially considering that the CFI decision with respect to the attachment had become
final.
The SC also brushed aside Raymundos contention that CPCs may not be sold
separately from motor vehicles, giving respect to the policy decision of the PSC allowing
sales of CPCs without motor vehicles.
Pertinent laws and decisions do not prohibit the sale of CPCs. This may be held to
extend to involuntary sales.
Act 3108, as amended (the Public Service Law) is the legal basis for the issuance of
CPCs. A CPC granted to an operator of public utility vehicles grants a right in the nature
of a limited franchise (Public Utilities Commission v. Garviloch).
CPCs are not included in the Code of Civil Procedure exceptions to what properties may
be attached. Moreover, under the Code, property as defined includes every species of
legal title, inchoate, complete, or even equitable.
Reyes v. Gray The test by which to determine whether or not property can be
attached and sold upon execution is whether the judgment debtor has such a beneficial
interest therein that he can sell or otherwise dispose of it for value.
While the Public Service Law and the Code of Civil Procedure do not explicitly provide
for the attachability of CPCs, Act 667, Sec. 10 and Sec. 56 of the Corporation Law
expressly allow for the sale on execution of franchises.
The language of the Code of Civil Procedure is broad enough to include CPCs and
franchises as attachable property which may be sold on execution.
Sec. 16 of the Public Service Law allows the PSC to approve the sale, alienation,
mortgaging, encumbering, or leasing of property, franchises, privileges, or rights or any
part thereof. If a CPC may be sold voluntarily, then there is no reason to hold that it may
be sold involuntarily through a court process.
CPCs have acquired considerable material value.
In many cases, CPCs have become the cornerstone for the business of bus
transportation.
The US SC has held that franchises are property within the protection of the 14th
Amendment of the US Constitution. If the holder of a franchise is guaranteed
constitutional rights of property, there should be no reason for such holder to assume the
corresponding responsibilities or duties of holding such property.
In practice, the PSC has approved foreclosure sales of CPCs to 3rd parties. The
Philippine Supreme Court has approved attachment of CPCs due to chattel mortgage or
court writs.
The decision of Judge (later Justice) Anacleto Diaz upholding the attachment of the 3
CPCs has become final, no appeal having been taken. While the sale had to be
approved by the PSC, it nevertheless respected the CFI decision as well.
SC, quoting Judge Diaz: "It remains to be determined whether, under the law,
certificates of public convenience are liable to attachment and seizure by legal process.
The law is silent as to this matter. It can not be denied that such franchises are
valuable. They are subject to being sold for a consideration as much as any other
property. They are even more valuable than ordinary properties, taking into
consideration that they are not granted to every one who applies for them but only
to those who undertake to furnish satisfactory and convenient service to the
public. It may also be said that dealers in motor vehicles even extend credit to
owners of such certificates or franchises. The law permits the seizure by means of a
writ of attachment not only of chattels but also of shares and credits. While these

franchises may be said to be of intangible character, they are however of value and are
considered properties which can be seized through legal process.
The result therefore, is that CPCs may be sold on execution sale, and the PSC is authorized to
approve the transfer of the CPC to the execution creditor.
DISPOSITION: Decision affirmed.