ASSOCIATED BANK V. SPOUSES PRONSTROLLER, G.R. NO. 148444, SEPTEMBER 3, 2009

FACTS:

The controversy stems from the Motion for Leave to Intervene filed by Spouses Eduardo and Ma. Pilar Vaca who owned a foreclosed property and the bidding of which was subsequently won by the Associated Bank. The latter then sold the property to spouses Rafael and Monaliza Pronstroller for P7.5M with 10% as downpayment. Associated Bank, through Atty Soluta then executed a letter-agreement setting forth the terms and conditions of the sale.

Prior to the expiration of the 90-day period within which to make the escrow deposit, in view of the pendency of the case filed by spouses Vaca who commenced an action for the nullification of the real estate mortgage and the foreclosure sale, the Pronstrollers requested that the balance be payable upon service on them of a final decision affirming Associated's right to possess the property. Respondents’ proposal was referred to petitioner’s Asset Recovery and Remedial Management Committee (ARRMC). Because the Board of Directors deferred action on the respondent’s request, a month after the request was made and after the payment deadline had lapsed, respondents and Atty. Soluta, acting for the petitioner, executed another Letter-Agreement allowing the former to pay the balance of the purchase price upon receipt of a final order. However, after one year and after the bank’s reorganization, the board rejected respondents’ request and respondents were asked to submit their new proposal if they were still interested. The Pronstrollers showed the letter-agreement which granted them an extension but they were informed that Atty. Soluta was not authorized to give such extension. The proposal that the Pronstrollers also submitted was disapproved by the Asssociated Bank’s President. After the Associated Bank’s right to posses the subject property was upheld by the court in the case commenced by the spouses Vaca, the Pronstrollers filed a Complaint for Specific Performance before the RTC and they likewise caused the annotation of a notice of lis pendens in the petitioner’s title. While the case was pending, the Associated Bank sold the subject property back to the spouses Vaca. Both the RTC and the CA ruled in favor of the Pronstrollers. Hence, this petition for Reconsideration by the Associated Bank and Motion for Leave to Intervene by the spouses Vaca who alleged that they are the registered owners of the subject property and are thus real parties-in-interest.

ISSUE:

Whether or not the spouses Vaca be allowed to intervene.

HELD:

No, because to allow the intervention would unduly delay and prejudice the rights especially of respondents who have been deprived of the subject property for so long. Furthermore, the motion for leave to intervene before this Court was belatedly filed in view of Section 2, Rule 19 of the Rules of Court which provides;

SEC. 2. Time to intervene. – The motion to intervene may be filed at any time before rendition of judgment by the trial court. A copy of the pleading-in-intervention shall be attached to the motion and served on the original parties.

The court also stressed that the purpose of 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. The spouses Vaca are not strangers to the action. Their legal interest in the litigation springs from the sale of the subject property by petitioner in their favor during the pendency of this case. As transferee pendente lite, the spouses Vaca are

the successors-in-interest of the transferor, the petitioner, who is already a party to the action. Thus, the applicable provision is Section 19, Rule 3 of the Rules of Court, governing transfers of interest pendente lite. It provides:

SEC. 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.

The SC then reiterated the ruling in Santiago Land Development Corporation v. Court of Appeals, as cited in Natalia Realty, Inc. v. Court of Appeals case which ruled that:

A transferee pendente lite of the property in litigation does not have a right to intervene. We held that a transferee stands exactly in the shoes of his predecessor-in-interest, bound by the proceedings and judgment in the case before the rights were assigned to him. It is not legally tenable for a transferee pendente lite to still intervene. Essentially, the law already considers the transferee 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.

Lastly, it is noteworthy that a notice of lis pendens was timely annotated on petitioner’s title. This was done prior to the sale of the property to the spouses Vaca, the cancellation of petitioner’s title, and the issuance of the new Transfer Certificate of Title in the name of the spouses. By virtue of the notice of lis pendens, the spouses Vaca are bound by the outcome of the litigation subject of the lis pendens. Their interest is subject to the incidents or results of the pending suit, and their Certificate of Title will afford them no special protection

With regards to the MR, it was denied and the court affirmed the factual findings of the CA because they were amply supported by the evidence on record. Well-established is the rule that if there is no showing of error in the appreciation of facts by the CA, the Supreme Court treats them as conclusive.