Santos vs. Sibug

Facts:

Vicente Vidad was a duly authorized passenger jeepney operator. Petitioner Adolfo Santos was the owner of a passenger jeep without a certificate of public convenience. Santos transferred his jeepney to Vidad in an agreement called the “kabit system”, and Vidad executed a re-transfer document presumably to be registered when they decide that the jeepney be withdrawn from the arrangement. On April 26, 1963, private respondent Abraham Sibug was bumped by the jeepney driven by Severo Gragas. Sibug filed a complaint against Vidad and Gragas with Branch XVII of the Court of First Instance in Manila. Judgment was rendered sentencing the defendants to pay P506.20 as actual damages, P3,000 as moral damages, and P500 as attorney’s fees and costs. On April 10, 1964, the sheriff levied on the motor vehicle and scheduled an auction sale. On April 11, petitioner submitted a third-party complaint, alleging that he was the real owner of the jeepney. Sibug submitted a bond to the sheriff to save the latter from liability if he were to proceed with the sale and the third-party complaint would be ultimately upheld. On April 22, petitioner instituted with CFI Branch X an action for Damages and Injunction, with Preliminary Mandatory Injunction against Sibug, Vidad and the sheriff. The complaint was amended to include the bonding company. On May 11, Branch X issued a restraining order enjoining the sheriff from conducting the auction sale. On October 14, 1965, Branch X upheld petitioner’s ownership. Sibug appealed from the decision of Branch X. The Court of Appeals nullified the appealed decision.

Issues:

(1) Whether the CFI has jurisdiction to issue an injunction restraining the execution sale of the jeepney levied upon by a judgment creditor in another CFI

(2) Whether the third-party claimant has a right to vindicate his claim to the vehicle levied upon through a separate action

Held:

In asserting his rights of ownership to the vehicle in question, SANTOS candidly admitted his participation in the illegal and pernicious practice in the transportation business known as the kabit system. Although SANTOS, as the kabit, was the true owner as against VIDAD, the latter, as the registered owner/operator and grantee of the franchise, is directly and primarily responsible and liable for the damages caused to SIBUG, the injured party, as a consequence of the negligent or careless operation of the vehicle. This ruling is based on the principle that the operator of record is considered the operator of the vehicle in contemplation of law as regards the public and third persons even if the vehicle involved in the accident had been sold to another where such sale had not been approved by the then Public Service Commission.

The levy on execution against said vehicle should be enforced so that the judgment in the BRANCH XVII CASE may be satisfied, notwithstanding the fact that the secret ownership of the vehicle belonged to another. SANTOS, as the kabit, should not be allowed to defeat the levy on his vehicle and to avoid his responsibilities as a kabit owner for he had led the public to believe that the vehicle belonged to VIDAD. This is one way of curbing the pernicious kabit system that facilitates the commission of fraud against the travelling public. SANTOS' remedy, as the real owner of the vehicle, is to go against VIDAD, the actual operator who was responsible for the accident, for the recovery of whatever damages SANTOS may suffer by reason of the execution. In fact, if SANTOS, as the kabit, had been impleaded as a party defendant in the BRANCH XVII CASE, he should be held jointly and severally liable with VIDAD and the driver for damages suffered by SIBUG, as well as for exemplary damages.

Contrary to the rationale in the Decision of respondent Court, it was appropriate, as a matter of procedure, for SANTOS, as an ordinary third-party claimant, to vindicate his claim of ownership in a separate action under Section 17 of Rule 39. And the judgment rendered in his favor by Branch X, declaring him to be the owner of the property, did not as a basic proposition, constitute interference with the powers or processes of Branch XVII which rendered the judgment, to enforce which the jeepney was levied upon. And this is so because property belonging to a stranger is not ordinarily subject to levy. While it is true that the vehicle in question was in custodia legis, and should not be interfered with without the permission of the proper Court, the property must be one in which the defendant has proprietary interest. Where the Sheriff seizes a stranger's property, the rule does not apply and interference with his custody is not interference with another Court's Order of attachment.

However, as a matter of substance and on the merits, the ultimate conclusion of respondent Court nullifying the Decision of Branch X permanently enjoining the auction sale, should be upheld. Legally speaking, it was not a "stranger's property" that was levied upon by the Sheriff pursuant to the judgment rendered by Branch XVII. The vehicle was, in fact, registered in the name of VIDAD, one of the judgment debtors. And what is more, the aspect of public service, with its effects on the riding public, is involved. Whatever legal technicalities may be invoked, we find the judgment of respondent Court of Appeals to be in consonance with justice.