G.R. No. 172896 - Seguritan y Jara vs. People

Prior to 1959, Jose M. Villarama operated a bus service under Villa Rey Transit (a sole proprietorship) with two certificates of public convenience (PSC Case Nos. 44213 and 104651), authorizing 32 units on Pangasinan–Manila routes.
On January 8, 1959, Villarama sold those two certificates to Pangasinan Transportation Co., Inc. (Pantranco) for ₱350,000, stipulating that he “shall not for a period of 10 years from the date of this sale, apply for any TPU service identical or competing with the buyer.”

On March 6, 1959, Villa Rey Transit, Inc. (the Corporation) was organized with authorized capital of ₱500,000 (₱200,000 subscribed, ₱105,000 paid). Key incorporators included Natividad R. Villarama (treasurer) and relatives of Jose M. Villarama.
On April 7, 1959, the Corporation bought five other certificates of public convenience and 49 buses from Valentin Fernando for ₱249,000, paying ₱100,000 upon contract signing and the balance in staggered installments, subject to PSC approval.

On July 7, 1959, under a writ of execution from the CFI of Pangasinan favoring Eusebio E. Ferrer (judgment creditor) against Fernando, the sheriff levied two of the five certificates (PSC Cases Nos. 59494 and 63780).
On July 16, 1959, a public auction was held; Ferrer was the highest bidder and acquired the two certificates. He then sold them to Pantranco and jointly sought PSC approval.

On July 22, 1959, PSC provisionally authorized Pantranco to operate the two certificates pending final approval of both Fernando–Corporation (Case No. 124057) and Ferrer–Pantranco (Case No. 126278) applications.
The Supreme Court, on petition by the Corporation, ordered that pending final resolution of ownership, the Corporation should provisionally operate the lines.

On November 4, 1959, the Corporation filed a complaint in the CFI of Manila to annul the sheriff’s sale to Ferrer and the subsequent transfer to Pantranco, naming Ferrer, Pantranco, and PSC as defendants.
In defense, Ferrer and Pantranco argued the Corporation’s purchase from Fernando was conditional on PSC approval (suspensive condition) and thus title had not vested when the sheriff levied. Pantranco filed a third-party complaint against Villarama, alleging the Corporation was his alter ego and bound by the non-compete clause.
The trial court declared the sheriff’s sale void, held the Corporation as owner of the two certificates, enjoined Ferrer and Pantranco from interference, and awarded the Corporation ₱5,000 attorney’s fees. All parties appealed.

Does the ten-year restriction “not to apply for any TPU service identical or competing with the buyer” cover existing lines as well as new ones?
If it applies to existing lines, is the stipulation valid and enforceable under law?

Is Villa Rey Transit, Inc. bound by the non-compete clause made by Villarama?
Can the corporate veil be pierced to treat the Corporation as the alter ego of Villarama?

Was the sale of the two certificates by Fernando to the Corporation consummated despite pending PSC approval?
Did the sheriff’s levy and sale to Ferrer transfer valid title, or did the Corporation’s prior purchase prevail?

Are Ferrer or Pantranco entitled to damages or attorney’s fees for having operated or acquired the certificates?
Is the Corporation entitled to attorney’s fees or exemplary damages for the forced litigation?