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 Facts: 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. With notice of pending civil action, Santiago Land Devt Corp purchased from PNB one of the properties subject to litigation for 90 million. 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). 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. 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. The court then granted petitioners motion for intervention and directed the substitution of heirs in view of Norberto Quisumbings demise and submitted for resolution PNBs motion to dismiss. SLDC then served interrogatories upon respondents and moved for the production, inspection and copying of certain documents. Private respondents filed a motion to quash or disallow the interrogatories but it was denied by the court.

Issue: WON petitioner, as transferee pendente lite of the property in litigation has a right to intervene. Held: No. 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 predecessorin-interest. This would be true even if respondent SLDC is not formally included as a partydefendant 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

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. 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.