Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 106194 January 28, 1997
SANTIAGO LAND DEVELOPMENT CORPORATION, petitioner,
vs.
The HONORABLE COURT OF APPEALS and the HEIRS OF NORBERTO J. QUISUMBING, respondents.
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals, annulling certain orders issued by the Regional Trial Court of Makati, Branch 62 in Civil Case No. 10513, entitled Norberto J. Quisumbing v. Philippine National Bank, to wit:
(1) Order, dated March 30, 1990, granting petitioner Santiago Land Development Corporation's motion for intervention and order admitting its answer in intervention;
(2) Order, dated March 21, 199l, denying private respondent Quisumbing's motion to quash or disallow interrogatories and
(3) Order, dated July 30, 1991, denying Quisumbing's motion for reconsideration.
The facts are as follows:
Norberto J. Quisumbing brought an action against the Philippine National Bank to enforce an alleged right to redeem certain real properties foreclosed by the Philippine National Bank. Quisumbing brought the suit as assignee of the mortgagor, Komatsu Industries (Phils.), Incorporated.
On November 21, 1989, with notice of the pending civil action, 1 petitioner Santiago Land Development Corporation purchased from PNB one of the properties subject of the litigation, situated along Pasong Tamo Extension in Makati, for P90 Million. 2
On December 11, 1989, petitioner SLDC filed a motion to intervene, with its answer in intervention attached, alleging that it was the transferee pendente lite of the property and that any adverse ruling or decision which might be rendered against PNB would necessarily affect it (petitioner). 3 In its attached answer, SLDC, aside from adopting the answer filed by PNB, raised as affirmative defenses the trial court's lack of jurisdiction based on the alleged failure of plaintiff Quisumbing to pay the docket fee and Quisumbing's alleged lack of cause of action against the PNB due to the invalidity of the deed of assignment to him. 4
On February 7, 1990, Quisumbing opposed SLDC's motion for intervention. He argued that SLDC's interest in the subject property was a mere contingency or expectancy, which was dependent on any judgment which might be rendered for or against PNB as transferor. He further argued that the allowance of SLDC's motion would only make the proceedings complicated, expensive and interminable. 5
On March 30, 1990, the lower court issued an order granting petitioner's motion for intervention and admitting its answer in intervention. The court also directed the substitution of heirs in view of Norberto J. Quisumbing's demise and submitted for resolution PNB's motion to dismiss. 6
Petitioner SLDC, as intervenor, then served interrogatories upon private respondents and moved for the production, inspection and copying of certain documents. 7 SLDC wanted to know whether there were documents to show that a consideration had been paid for the assignment of the right of redemption; if so, whether payment was made in cash or by check; and, if it was by check, in what banks the checking accounts were kept and whether the checks were still in its custody or possession.
Private respondents filed a motion to quash or disallow the interrogatories, which petitioner opposed. Subsequently, private respondents filed a reply to which petitioner SLDC responded by filing a rejoinder. 8
On March 21, 1991, the trial court denied private respondents' motion to quash or disallow interrogatories and instead granted petitioner SLDC's motion for the production, inspection and copying of certain documents. 9 Private respondents moved for a reconsideration, but their motion was denied by the lower court in its order of July 30, 1991. Private respondents therefore filed a petition for certiorari with the Court of Appeals which rendered the decision, now the subject of this review, setting aside the orders dated March 30, 1990, March 21, 1991, and July 30, 1991 of the trial court.
In its petition before the Court, SLDC contends that the Court of Appeals erred thus:
[1] THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION, EXCEEDED ITS JURISDICTION AND/OR WAS PATENTLY IN ERROR IN TAKING COGNIZANCE OF AND RULING UPON THE FIRST ISSUE RAISED BY PRIVATE RESPONDENTS IN CA-G.R. SP NO. 25826 WHEN THIS ISSUE WAS NOT EVEN RAISED BY THEM BEFORE THE TRIAL COURT.
[2] THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION. EXCEEDED ITS JURISDICTION AND/OR WAS PATENTLY ERROR IN TAKING COGNIZANCE OF THE PETITION RAISED BY PRIVATE RESPONDENTS IN CA-G.R. SP NO. 25826 SINCE THEY DID NOT RAISE ANY JURISDICTIONAL ERROR THEREIN BUT ONLY RAISED QUESTIONS AS TO PROCEDURAL ORDERS ISSUED BY THE TRIAL COURT IN THE RIGHTFUL EXERCISE OF ITS JURISDICTION AND DISCRETION.
[3] EVEN IF THE COURT OF APPEALS WAS AUTHORIZED TO PASS UPON THE PROCEDURAL QUESTION RAISED BY PRIVATE RESPONDENTS IN CA-G.R. SP NO. 25826, IT ERRED IN BARRING THE TRIAL COURT, IN THE SOUND EXERCISE OF ITS SOUND DISCRETION, FROM ALLOWING PETITIONER TO INTERVENE - IN ONE OF THE CLASSIC OR RECOGNIZED INSTANCES OF INTERVENTION - IN THE CIVIL ACTION UNDER SECTION 2 OF RULE 12 OF THE RULES OF COURT DESPITE COMPLIANCE WITH THE STANDARDS FOR INTERVENTION PRESCRIBED THEREIN.
[4] THE COURT OF APPEALS DENIED PETITIONER OF THE RIGHT TO GENUINELY OR EFFECTIVELY DEFEND ITSELF IN THE CIVIL ACTION DESPITE ITS HAVING ACQUIRED A REAL AND SUBSTANTIVE INTEREST IN THE SUBJECT MATTER OF THE CIVIL ACTION.
[5] PRIVATE RESPONDENTS FAILED TO OBJECT TO THE INTERROGATORIES IN THE MANNER PRESCRIBED BY THE RULES OF COURT AND THEY WERE THEREFORE BARRED FROM RAISING THEIR OBJECTIONS TO THE INTERROGATORIES.
[6] THE TRIAL COURT CORRECTLY DENIED PRIVATE RESPONDENTS' MOTION TO QUASH PETITIONER'S INTERROGATORIES. 10
Petitioner's contentions are without merit.
Petitioner's first contention is without basis in fact. The fact is that the issue regarding the propriety of petitioner's motion for intervention was raised by private respondents before the trial court in their opposition to said motion. 11 Moreover, petitioner SLDC is estopped from questioning the appellate court's ruling on this issue since petitioner did not object to its consideration by the court in its comment on the petition filed in that court. 12
Nor is it true that private respondents' petition for certiorari in the Court of Appeals did not raise a jurisdictional question. The petition specifically charged the RTC with gravely abusing its discretion in issuing its questioned orders, in granting petitioner's motion for intervention and in denying private respondents' motion to quash or disallow interrogatories. Clearly, the Court of Appeals correctly took cognizance of the issue regarding the propriety of petitioner SLDC's motion for intervention.
This brings us to the main question raised in the third and fourth assignments of errors, namely, whether petitioner, as transferee pendente lite of the property in litigation has a right to intervene.
Rule 12, § 2 of the Rules of Court provides:
Sec. 2. Intervention. — A person may, before or during a trial be permitted by the court, in its discretion, to intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof.
The question is whether this provision applies to petitioner in view of Rule 3, §20 governing transfers of interest pendente lite such as was alleged in the trial court by petitioner. This provision reads:
Sec. 20. Transfer of interest. — In case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party.
In applying the rule on transfer of interest pendente lite (Rule 3, §20) rather than the rule on intervention (Rule 12, §2), the Court of Appeals stated:
While it may be that respondent SLDC has a legal interest in the subject matter of the litigation, its interest as transferee pendente lite is different from that of an intervenor. Section 2 of Rule 12 refers to all other persons or entities whose legal interests stand to be affected by a litigation, but it does not cover a transferee pendente lite because such transferee is already specifically governed by Section 20 of Rule 3. Otherwise, Section 20 of Rule 3 on transferees pendente lite would be rendered ineffectual and useless. Since it specifically covers transferees pendente lite, any such transferee cannot just disregard said provision and instead, opt to participate as an intervenor when it is more convenient for it to do so. Indeed, there has never been a rule, authority or decision holding that a transferee pendente lite has the option to avail of either Rule 3, Section 20 or Rule 12, Section 2.
. . . It has been consistently held that a transferee pendente lite stands in exactly the same position as its predecessor-in-interest, that is, the original defendant. . . . However, should the transferee pendente lite choose to participate in the proceedings, it can only do so as a substituted defendant or as a joint party-defendant. The transferee pendente lite is a proper but not an indispensable party as it would in any event be bound by the judgment against his predecessor-in-interest. This would be true even if respondent SLDC is not formally included as a party-defendant through an amendment of the complaint. As such, the transferee pendente lite is bound by the proceedings already had in the case before the property was transferred to it (Jocson vs. CA, 183 SCRA 589, citing Felalino vs. Sanz, 44 Phil. 691; Associacion de Agricultores de Talisay Silay, Inc. vs. Talisay Silay Milling Co., Inc., 88 SCRA 294)
Petitioner asserts that Rule 12, §2 and Rule 3, §20 can be applied interchangeably and that the Court of Appeals is in error in its insistence on the application of Rule 3, §20 solely. Petitioner thus overlooks a substantial difference in the nature and consequences of the two rules. The purpose of Rule 12, §2 on intervention is to enable a stranger to an action to become a party to protect his interest and the court incidentally to settle all conflicting claims. 13 On the other hand, the purpose of Rule 3, §20 is to provide for the substitution of the transferee pendente lite precisely because he is not a stranger but a successor-in-interest of the transferor, who is a party to the action. As such, a transferee's title to the property is subject to the incidents and results of the pending litigation and is in no better position than the vendor in whose shoes he now stands. 14 As held in Fetalino v. Sanz: 15
As such, he stands exactly in the shoes of his predecessor in interest, the original defendant, and is bound by the proceedings had in the case before the property was transferred to him. He is a proper, but not an indispensable, party as he would, in any event, have been bound by the judgment against his predecessor.
How then can it legally be possible for a transferee pendente lite to still intervene when, for all intents and purposes, the law already considers him joined or substituted in the pending action, commencing at the exact moment when the transfer of interest is perfected between the original party-transferor and the transferee pendente lite? And this even if the transferree is not formally joined as a party in the action.ℒαwρhi৷ On the other hand, one who intervenes has a choice not to intervene and thus not to be concluded by any judgment that may be rendered between the original parties to the action.
Because the transferee pendente lite simply takes the place of the transferor, he is barred from presenting a new or different claim. The appellate court therefore properly refused to pass upon petitioner's attempt to inquire into the consideration paid for the assignment of the right of redemption to the late Norberto J. Quisumbing, as well as petitioner's claim that the transfer of interest to Quisumbing was made in violation of Art. 1491(5) of the Civil Code, prohibiting attorneys from acquiring property or interest which is the object of the litigation in which they take part as such. This matter was never alleged by PNB in its answer to Quisumbing's complaint.
Since petitioner is a transferee pendente lite with notice of the pending litigation between Quisumbing and PNB, petitioner stands exactly in the shoes of defendant PNB and is bound by any judgment or decree which may be rendered for or against PNB. 16 Under Rule 3, §20, the action may be continued against PNB, the original defendant. In the alternative — although it was not essential that the transferee be substituted and the latter insist on such substitution - the trial court could have directed that petitioner be either substituted as party-defendant or joined with defendant PNB. 17
But petitioner could not be allowed to intervene for the reason already stated that the conditions under which one may be allowed to intervene are significantly far different from the conditions under which a transferee pendente lite is substituted in place of the original party.ℒαwρhi৷ For the fact is that an intervenor can withdraw and refuse to be bound by any decision that may be rendered in the case but the fortunes of a transferee pendente lite, although not formally impleaded as a party, are bound up with those of his transferor.
With respect to the fifth and sixth assignments of errors, suffice it to say that because petitioner did not have a right to intervene, it did not have the right to file interrogatories or seek the production of documents by private respondents, either.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Regalado, Romero, Puno and Torres, Jr., JJ., concur.
Footnotes
1 Rollo, p. 61.
2 Id., pp. 51-52.
3 Id., p. 61.
4 Id., p. 65.
5 Id., pp. 67-72.
6 Id., p. 58.
7 Id., pp. 74-77.
8 Id., pp. 91-109.
9 Id., pp. 53-54.
10 Id., pp. 10-11.
11 Id., pp. 67-72.
12 CA Rollo, pp. 77-85.
13 Garcia v. David, 67 Phil. 279 (1939); First Philippine Holdings Corporation v. Sandiganbayan, G.R. No. 88345, February 1, 1996, Gutierrez v. Villegas, 5 SCRA 313 (1962). See 1 VICENTE J. FRANCISCO, REVISED RULES OF COURT 719 (1973), citing 2 MOORE'S FEDERAL PRACTICE, §2307.
14 Tuason v. Reyes, 48 Phil. 844 (1926).
15 44 Phil. 691 (1923).
16 Director of Lands v. Martin, 84 Phil. 140 (1949).
17 Galace v. Bagtas, 120 Phil. 657 (1964).
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