Insular Life Assurance Co. v. Varela Calderon
REITERATIONFacts
The Antecedents: The Insular Life Assurance Co., Ltd. filed an action for foreclosure of a mortgage constituted by Miguel Varela Calderon on certain properties. Angel Varela Calderon and Paula Varela Calderon were included as co-defendants, being subsequent lienholders. Procedural History: During the pendency of the foreclosure suit, the Insular Life Assurance Co., Ltd. transferred its credit, including the mortgage and right of action, to Angel Varela Calderon and Paula Varela Calderon. The transferees were substituted as plaintiffs. They filed a supplementary complaint for land taxes paid by them on the mortgaged properties after the original action was filed, which should have been paid by the defendant-appellant under the mortgage terms. The Court of First Instance of Manila rendered judgment against the defendant-appellant, ordering him to pay the debt and decreeing foreclosure upon failure to satisfy the judgment within three months. The Petition: The defendant-appellant appealed to the Supreme Court, assigning as errors the allowance of the substitution of plaintiffs and the admission of the supplementary complaint without dismissing the original complaint.
Issue(s)
Whether the lower court erred in allowing the substitution of Angel Varela Calderon and Paula Varela Calderon as party plaintiffs. Whether the lower court erred in not dismissing the original complaint before proceeding with the trial and in admitting the supplementary complaint filed by the co-defendants who became transferees.
Ruling
The judgment appealed from is affirmed.
Ratio Decidendi
On the first issue (substitution of plaintiffs): The Court held that the lower court did not err in allowing the substitution. The principle is that litigation should be conducted in the name of the real party in interest. While proceedings ought to be instituted in the name of the assignee if the assignment is made before action is brought, it is proper to substitute the assignee for the original plaintiff when the assignment is effected pendente lite (during the pendency of the suit). This ensures that the party who has the legal right to enforce the claim is the one prosecuting the case. On the second issue (admission of supplementary complaint): The Court also found no error in admitting the supplementary complaint. This complaint was filed to recover the amount of land taxes paid by the plaintiffs-appellees on the mortgaged properties after the institution of the original action. Under the terms and conditions of the mortgage, these taxes should have been paid by the defendant-appellant. Allowing the supplementary complaint was necessary to fully adjudicate the rights and obligations arising from the mortgage contract and to prevent multiplicity of suits.
Main Doctrine
Where an assignment of credit and the corresponding right of action is effected pendente lite, it is proper to have the assignee substituted for the original plaintiff, and the assignee may file a supplementary complaint for expenses incurred after the institution of the original action that should have been paid by the defendant under the mortgage terms.