EMBEE TRANSPORTATION CORPORATION, PLAINTIFF-APPELLANT, VS. HOSPICIO CAMACHO, JAIME DE LA FUENTE AND HERMINIO REYES, DEFENDANTS-APPELLEES.

This is an appeal^[1]
from the decision of the Court of First Instance of Manila, Branch X,^[2]
in Civil Case No. 83693 dismissing the complaint of plaintiff-appellant for the
collection of the unpaid balance of the purchase price of a certificate of
public convenience to operate a taxicab service of 15 units which the
plaintiff-appellant sold to the defendants-appellees
for P82,500.00.  In dismissing the
plaintiff-appellant’s complaint, the trial court took cognizance of a
preliminary injunction issued by this Court in Case No. L-145-47 restraining
the Public Service Commission from approving the sale and transfer of the
aforementioned certificate of public convenience to operate the taxicab service
of 15 units in Public Service Commission Case No. 69-6073.

At the pre-trial held on February
14, 1972 the following stipulation of facts was agreed upon by the
parties:

Plaintiff-appellant Embee
Transportation Corporation was the holder of a certificate of public
convenience to operate 30 units of taxicabs within the City of Manila.  In September 1969 it sold 15 of these units
to the defendants-appellees Hospicio
Camacho, Jaime de la Fuente and Herminio
Reyes.  At the time of the sale the
plaintiff-appellant showed to them its certificate of public convenience to
operate the 30 units of taxicabs within the City of Manila.  Upon the execution of the deed of sale over
the 15 units, the defendants-appellees paid to
plaintiff-appellant the amount of P41,250.00 and agreed to pay the balance upon
approval of the sale and transfer of the corresponding certificate of public
convenience to operate the 15 units to them by the Public Service Commission.

On October 29, 1969, the Public Service Commission in its
decision in Case No. 69-6073 approved the sale and transfer of the certificate
of public convenience to operate the 15 units of taxicabs to the defendants-appellees^[3]
and authorized them to operate the 15 units of taxicabs within the City of
Manila and to any place within the Island of Luzon.

On November 14, 1969,
the Supreme Court issued a writ of preliminary injunction in Civil Case No.
L-31145-47, entitled Miguel Mendoza vs. Public Service Commission, et al.,
enjoining certain persons named therein as well as the Public Service
Commission from further approving any application for the sale of provincial
taxis.^[4]
Although said writ, of preliminary injunction includes the plaintiff-appellant,
it does not, however, make mention of the defendants?appellees.  Because of the aforesaid preliminary writ of
injunction issued in Civil Case No. L-31145-47 in which plaintiff-appellant is
allegedly included, they refused to pay their balance of the purchase price of
the 15 units of taxicabs due to plaintiff-appellant.

On January
8, 1970, the Public
Service Commission issued a certification that the defendants-appellees are not among those listed in the writ of
preliminary injunction issued by the Supreme Court in Civil Case No.
L-31145-47, entitled Miguel Mendoza vs. Public Service Commission, et al.  In fact, they were even issued Manila
stickers to operate their taxicabs within the City both by the Public Service
Commission and the Manila Police Department^[5] and even with the issuance of said writ of
preliminary injunction, the defendants-appellees have
made further payments on the balance of their obligation to plaintiff-appellant,
the last payment being on May 8, 1970 in the amount of P1,000.00.

The main issue in this
appeal is whether or not the defendants-appellees
are still bound to pay the plaintiff-appellant the unpaid balance of the
purchase price of the cer­tificate of public convenience to operate the fifteen
units of taxicabs sold to them by plaintiff-appellant.  We hold, they are.  An examination of the deed of sale of the
certificate of public convenience to operate the 15 units of taxicabs shows
that it is a perfected contract; there is consent of the parties; there is the
consideration in the amount of P82,500.00 of which P41,250.00 was paid to
plaintiff-appellant (vendor at the time the contract was signed) the balance of
P41,250.00 “payable upon final approval of the contract by the Public
Service Com­mission.” It appears in the contract that the payment of the
balance of P41,250.00 is subject to the condition that the contract of sale is
finally approved by the Public Service Commission.  In refusing to pay the balance of P41,250.00
defendants-appellees claim that they are not bound to
pay the amount because the deed of sale in question has not been approved yet
by the Public Service Commission because the latter has been allegedly en­joined
by the Supreme Court in Civil Case No. L-31145-47, entitled Miguel Mendoza vs.
Public Service Commission, et al. to further approve any application for the
sale of provincial taxis.  A careful
examination of the records, however, show that as of October 29, 1969, the sale
and transfer of the cer­tificate of public convenience of the 15 units of
taxicabs to defendants-appellees was duly approved by
the Public Service Commission in Case No. 69-6073.  The decision itself authorized the
defendants-appellees to operate the 15 units of
taxicabs within the City of Manila.  The Public Service Commission issued on January 8, 1970 a certification to the
effect that the defendants-appellees are not among
those included among those persons listed in the restraining order of the Supreme
Court in Civil Case No. L-31145-47.  In
fact the defendants-appellees were issued Manila
stickers by the Public Service Commission and the Manila Police Department to
operate the aforesaid taxicabs within the City of Manila
and suburbs.  The defendants-appellees never paid attention to the supposed writ of
preliminary injunction in Civil Case No. L-31145-47 as shown by the fact that
they even made pay­ments on the balance of their obligation to
plaintiff-appellant even after the issuance of said injunction, the last
payment being made on May 8, 1970 in the amount of P1,000.00.  A close look into the writ of preliminary
injunction issued by this Court in Case No. L-31145-47, which is an action
filed by Miguel Mendoza against the Public Service Commission and other
respondents including the plaintiff-appellant for the reversion of all
provincial taxis which were converted into taxis for city operation, enjoins
the Public Service Commission from enforcing its decision in Case No. 69-2926
entitled Sil­verio vs. Mendoza, as amended by its
order of August 6, 1969, as well as its decision dated July 24, 1969 in Case
No. 69-4072, entitled Zafra vs. Mendoza, and from
approving transfers as well as sales of rights emanating from said decisions
and furthermore enjoining the other respondents and their successors, agents or
representatives from operating their taxicabs in Manila and suburbs pursuant to
the decisions.  It can easily be noted
that the aforesaid writ of preliminary injunction applies to the enforcement of
the Public Service Commission’s decision in Case No. 69-2926 and Case No.
69-4072, and to all other restrained acts emanating from those aforecited decisions but not to the decision of the Public
Service Commission in Case No. 69-6073, dated October 29, 1969 which approved
the sale and transfer of certificate of public convenience to operate the 15
units of taxicabs in favor of defendants-appellees
for the simple reason that the latter have not even been named as defendants in
said Civil Case No. L-31145-47; much less have they been served with copies of
this Court’s injunction in said case.  We
agree with plaintiff-appellant’s argument that the Court’s injunction of
November 14, 1969 enjoining the Public Service Commission from approving
transfers as well as sales of rights intended to convert provincial taxis into
taxis for city operation should be prospective and not retroactive in effect
and therefore, the same could not
affect the Public Service Commission’s decision in Case No. 69-6073, which was
promulgated as early as October 29, 1969. 
If the defendants-appellees believed that
there was a vice or flaw in their contract with the plaintiff-appellant because
of the non-approval of the sale by the Public Service Commission, then the
proper thing for them to do would be to ask for a rescission of the sale under
Art. 1599 (4), Civil Code.^[6] Defendants-appellees
did not do this.  They did not return or
offer to return the subject matter of the sale to the plaintiff-appellant and
recover the price or any part thereof which they had paid.  Their refusal to pay the remaining balance of
the agreed consideration (P41,250.00) on the alleged ground of vice or defect
in the subject matter in the contract while at the same time possessing and
enjoying the same is untenable both on the grounds of law and equity.  From all indications it would appear to Us,
that defendants-appellees made use of this Court’s
injunction in Civil Case No. L-31145-47 as a lame excuse either to escape
liability or to delay the enforcement of a lawful and valid obligation of
paying the balance to plaintiff-appellant. 
This can be deduced from the fact that they continued enjoying the use
of the aforementioned certificate of public convenience without paying the
balance of the agreed consideration.  The
taint of bad faith on defendants-appellees‘ acts
cannot just be disregarded.

WHEREFORE, the decision of the trial court dated May
5, 1972 is hereby reversed and set aside; and a new judgment entered based on
the agreed stipulation of facts between the parties; ordering defendants-appellees to pay the balance of the agreed consideration in
the amount of P27,500.00, with legal interest from October 29, 1969, when the
sale was approved by the Public Service Commission until the said amount is
fully paid; to pay attorney’s fees equivalent to 10% of the recoverable amount
plus costs.

SO ORDERED.

Makasiar, Muñoz
Palma, Fernandez, and Guerrero, JJ., concur.

Teehankee, (Chairman), J., took no part.

^[1]
Certified to this Court by the Court of Appeals, Fifth Division, Associate
Justices Ramon C. Fernandez, Ricardo Puno and Delfin Batacan in its Resolution
dated April 30, 1976,
forwarded to Us CA-G.R. No. 51554-R, entitled “Embee
Transportation Corporation vs. Hospicio
Camacho, et al.”

^[2]
Presided over by Judge Jose L. Moya.

^[3]
Exhibit A.

^[4]
Exhibit B.

^[5]
Exhibit C.

^[6]
ART. 1599.  When there is a breach of warranty the
seller, the buyer may, at his election:

 x         x          x          x          x

(4) Rescind the
contract of sale and refuse to receive the goods or if the goods have already
been received, return them or offer to return them to the seller and recover
the price or any part thereof which has been paid.

x          x          x          x          x