G.R. No. L-26815 - Santos vs. Sibug

Petitioner Adolfo L. Santos was the owner of a passenger jeep; however, he lacked a Certificate of Public Convenience for operating the jeep as a public vehicle.
Prior to April 26, 1963 (the accident date), Vicente U. Vidad was a duly authorized passenger jeepney operator holding a valid certificate.
To enable operation under a legitimate certificate, Santos transferred his jeep to Vidad, making him the registered operator despite Santos’s actual ownership—a practice popularly termed as operating as a "kabit."
For safeguarding Santos’s proprietary interest, Vidad executed a re-transfer document in favor of Santos. This document was intended to be private and possibly registered should the kabit arrangement be terminated.

On April 26, 1963, a vehicular accident occurred when a jeepney operated by Vidad (driven by Severo Gragas) collided with Abraham Sibug.
As a result, Sibu g, representing a private party injured in the accident, filed a complaint for damages in Civil Case No. Branch XVII in the Court of First Instance of Manila.
The Branch XVII case ended with a judgment on December 5, 1963, ordering Vidad and Gragas to jointly and severally pay Sibu g actual damages, moral damages, attorney’s fees, and costs.

On April 10, 1964, the Sheriff of Manila levied on a jeep with Plate No. PUJ-343-64 registered in Vidad’s name, scheduling its public auction on May 8, 1964.
On April 11, 1964, Santos filed a third-party claim with the Sheriff, asserting his actual ownership and alleging that the registration in Vidad’s name was solely for operating purposes under the kabit arrangement.
Sibug subsequently submitted an insurance bond to the Sheriff to protect him from liability, should the third-party claim prove valid.

On April 22, 1964, Santos instituted a separate action (Civil Case No. 56842, Branch X, Court of First Instance of Manila) for damages and injunction. The complaint sought:

A preliminary mandatory injunction requiring the Sheriff to restore the jeepney to Santos and to enjoin further public sale actions.
A declaration that the Deed of Sale transferring title to Vidad was fictitious and void.
Damages for loss of daily income and other legal expenses.

The complaint was later amended to include the bonding company, even though its bond had not yet become effective.
On May 11, 1964, Branch X issued a restraining order enjoining the Sheriff from conducting the public auction, despite arguments that such intervention might exceed the Sheriff’s discretionary powers under Section 17, Rule 39.

The restraining order from Branch X was considered unlawful, based on the principle that one court (or branch) does not have jurisdiction to interfere by injunction with the proceedings or judgments of another court of concurrent or coordinate jurisdiction.
On October 14, 1965, Branch X affirmed Santos’s claim by declaring him as the owner of the jeepney, enjoining the defendants from proceeding with the sale and awarding daily damages as well as attorney’s fees.
Upon motion for reconsideration by Santos, the decision was amended on December 5, 1965, further including the bonding company as jointly and severally liable, though criticisms arose regarding this incorporation due to the non-effectiveness of the bond.
It was noted that the complaint against Vidad was dismissed and that Santos’s participation in the illegal kabit scheme rendered his claim legally unpalatable, especially under Sec. 20 (g) of the Public Service Act.
Notwithstanding the secret actual ownership by Santos, the vehicle’s registration in Vidad’s name bestowed upon Vidad the responsibility as operator and operator of record, which included liability for damages resulting from the accident.
The controversy extended as Sibug opposed Santos’s move for immediate execution, arguing jurisdictional conflicts between Branch XVII (which rendered the original damage judgment) and Branch X (which issued the injunction).
Subsequently, the Court of Appeals intervened:

It enjoined the enforcement of Branch X’s decision and the execution order.
On September 28, 1966, the Court of Appeals declared the judgment of Branch X null and void, permanently restraining that branch from handling the case.
The appellate court emphasized that the public has the right to rely on the vehicle’s registration in Vidad’s name and that a third party’s separate action to vindicate ownership should not override the registration record.

Branch X lacked jurisdiction to restrain an auction sale executed under a judgment rendered by Branch XVII.
As the actual owner, he should be allowed to prove his ownership in a separate suit despite the vehicle being registered in Vidad’s name.
The nullification by the Court of Appeals of the Branch X decision was erroneous.

The case was eventually submitted for review on certiorari, and the Supreme Court considered issues relating to the interference between courts of concurrent jurisdiction and the rights of third-party claimants under Section 17 of Rule 39.

Whether a Court of First Instance, such as Branch X, has the jurisdiction to issue a writ of preliminary mandatory injunction restraining the execution sale initiated by another branch (Branch XVII) acting on a judgment creditor’s authority.
Whether a third-party claimant (Santos), asserting actual ownership despite a vehicle’s registration under another person’s name (Vidad), may vindicate his proprietary claim through a separate suit without interfering with the judgment of the court that levied the property.
Whether the intervention by Branch X, in issuing an injunction to halt the public auction, constituted improper interference with the powers and processes of another court (Branch XVII) having concurrent or coordinate jurisdiction.
Whether the reliance of the public on the declaration of ownership as evidenced by the registration in Vidad’s name should preclude Santos’s ability to prove actual ownership and thereby avoid liabilities arising from the kabit arrangement.