Substitution of Parties

[G.R. No. 106795. November 16, 1999.] STATE INVESTMENT HOUSE, INC., petitioner, vs. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; SUBSTITUTION OF PARTIES; ACTION MAY CONTINUE FOR OR AGAINST THE ORIGINAL PARTY OR THE TRANSFEROR AND STILL BE BINDING ON THE TRANSFEREE. The rule on substitution of parties in case of transfer of interest is found in Section 19, Rule 3, which states: "Section 19. 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." It has been held that a transferee pendente lite does not have to be included or impleaded by name in order to be bound by the judgment because the action or suit may be continued for or against the original party or the transferor and still be binding on the transferee. More specifically, this Court has ruled that a transferee pendente lite is a proper party in the case but it is not an indispensable party.

[G.R. No. L-28256. March 17, 1982.] SEVERO DEL CASTILLO, plaintiff-appellant, vs. LORENZO JAYMALIN, MANUEL SABIT, and BITRANCO and A.L. AMMEN TRANS. CO., INC., defendants-appellees.

REMEDIAL LAW; CIVIL PROCEDURE; SUBSTITUTION OF PARTIES; EFFECT OF ASSIGNMENT OF RIGHTS BEFORE THE DEATH OF A PARTY. Where plaintiff, while alive, had assigned his rights to another, the proper procedure would be for the transferee to be substituted for the transferor as plaintiff (Section 20, Rule 3, rules of Court). In the case at bar, the rights of Severo to claim damages for his son were transferable. Severo has transferred his rights as plaintiff to Wenceslao Haloc but after the assignment, the case continued in Severo's name and there was no immediate and formal substitution of party plaintiff. This is but a formality, however, and the fact remains that, after the assignment, the substantial plaintiff and real party in interest became Haloc, with Severo as a sort of trustee of whatever fruits the litigation would bring. 2. ID.; ID.; ID.; TRANSFER OF RIGHT OF ACTION TO ASSIGNEE; SETTLED RULE. In Oria Hermanos y Compania vs. Gutierrez Hermanos, 52 Phil. 156 (1928), the Court ruled: ". . . where an assignable right had been transferred before action brought, the proceeding ought to be instituted in the name of the assignee; and where an assignment is effected pendente lite, it is proper

to have the assignee substituted for the original plaintiff. If such substitution should not be effected and the transfer of the right of action should not be brought to the attention of the court, the original plaintiff, if successful in the litigation, would hold the fruits of the action as a sort of trustee for the use and benefit of the assignee. . . ."