FIRST DIVISION

[G.R. No. 191170. September 14, 2016.]

CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC. , petitioner, vs.

FIDEL O. CHUA and FILIDEN REALTY AND DEVELOPMENT CORP. ,
respondents.

DECISION

SERENO , C.J : p

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking to nullify the Court of Appeals (CA) Decision 1 and Resolution 2 in CA-G.R. SP
No. 103809. The CA Decision annulled the Orders 3 of the Regional Trial Court of
Paraaque City, Branch 258 (RTC Branch 258), which joined petitioner as party-
defendant in Civil Case No. 01-0207. The CA Resolution denied petitioner's motion for
reconsideration.
FACTS
In 1988, respondents obtained an initial loan of P4 million from the Metropolitan
Bank and Trust Co. (Metrobank). The loan was secured by a real estate mortgage
constituted over three parcels of land located in Paraaque City (subject property). 4
The real estate mortgage was amended several times to accommodate additional
loans they incurred over the years. 5 On 13 January 2000, respondents and Metrobank
restructured the obligation through a Debt Settlement Agreement over the outstanding
obligation of P88,101,093.98. 6
For failure of respondents to pay, Metrobank sought the extrajudicial foreclosure
of the real estate mortgage over the subject property. On 4 May 2001, it sent them a
Notice of Sale 7 setting the public auction on 31 May 2001. Seeking to stop the
intended public auction, respondents led a Complaint 8 docketed as Civil Case No. 01-
0207 for injunction with prayer for the issuance of a temporary restraining order (TRO),
preliminary injunction and damages.
The Regional Trial Court of Paraaque City, Branch 257 (RTC Branch 257), issued
a TRO. 9 However, upon the expiration of the TRO, Metrobank scheduled another public
auction on 8 November 2001. On the morning of that day, RTC Branch 257 issued an
Order directing Metrobank to reschedule the intended sale to a date after the resolution
of the application for preliminary injunction. 10 However, the latter allegedly received the
Order only on 12 November 2001 and pushed through with the scheduled public
auction on 8 November 2001. A Certi cate of Sale 11 was thereafter issued in its favor
on 9 November 2001.
In an Order dated 6 March 2002, 12 the application for preliminary injunction led
by respondents was denied by RTC Branch 257 for mootness in view of the
consummated public auction sale. When their motion for reconsideration was denied,
13 respondents filed a petition for certiorari before the CA. The appellate court reversed
and set aside the Order dated 6 March 2002 issued by RTC Branch 257 and remanded
Civil Case No. 01-0207 for further proceedings. 14
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 Upon motion of respondents, the presiding judge of RTC Branch 257 inhibited
from further hearing the case. 15 The case was later re-raffled to RTC Branch 258. 16
Meanwhile, respondents led a Motion to Admit Amended Complaint 17 with
attached Amended Veri ed Complaint 18 for annulment of foreclosure of mortgage,
declaration of nullity of certificate of sale, and injunction.
On 17 October 2007, petitioner led a Motion for Joinder of Party and/or
Substitution. 19 It alleged that by virtue of a Deed of Absolute Sale dated 17 September
2 0 0 3 , 20 Metrobank sold to Asia Recovery Corporation (ARC) its credit against
respondents including all rights, interests, claims and causes of action arising out of
the loan and mortgage agreements between Metrobank and respondents. ARC, in turn,
speci cally assigned the credit to petitioner through a Deed of Assignment dated 31
March 2006. 21 Petitioner prayed that it be substituted in lieu of Metrobank in the
proceedings before RTC Branch 258.
Aside from its conforme to the motion led by petitioner, Metrobank also led a
Comment 22 stating that the bank had no objection to its substitution by petitioner.
Metrobank explained that the account of respondents had been declared a
nonperforming loan pursuant to Republic Act No. 9182 (Special Purpose Vehicle Act of
2002 or SPV Act) and, as such, had been included among the other accounts sold to
ARC by virtue of the Deed of Absolute Sale. 23 HESIcT

The motion of petitioner was, however, vigorously opposed by respondents. 24

They alleged that they were entitled to a full disclosure of the details of the sale, as well
as of the transfer and assignment of their debt pursuant to their right of redemption
under the SPV Act and Article 1634 25 of the Civil Code.
RULING OF THE RTC
In an Order dated 28 December 2007, 26 RTC Branch 258 granted the motion and
ordered petitioner to be joined as party-defendant, but without dropping Metrobank as
defendant.
In the Order dated 9 April 2008, 27 RTC Branch 258 denied respondents' motion
for reconsideration. It ruled that petitioner was a necessary party to the nal
determination of the case.
Aggrieved, petitioners filed a special civil action for certiorari under Rule 65 of the
Rules of Court before the CA.
RULING OF THE CA
In the assailed Decision dated 26 August 2009, 28 the CA granted the petition
and annulled the Orders of RTC Branch 258.
The CA ruled that if it was true that Metrobank had divested itself of any interest
in respondents' debt, then the trial court should have forthwith ordered the bank's
exclusion from the proceedings. 29 According to the CA, the trial court provided for a
provisional joinder/substitution of parties a practice that cannot be countenanced
due to the basic rule that every action must be prosecuted or defended in the name of
the real party in interest. 30
The appellate court also doubted whether substitution was proper, because the
Deed of Absolute Sale between Metrobank and ARC did not specify whether
respondents' debt was included in the portfolio of nonperforming loans sold. 31
At bottom, the CA ruled that petitioner could not substitute for Metrobank in the
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 proceedings before the trial court without rst disclosing the consideration paid by
petitioner for the transfer of interest. 32
Petitioner led a motion for reconsideration, which the CA denied in the
challenged Resolution dated 11 February 2010. 33
ISSUE
The issue to be resolved in this case is simple: whether petitioner may be joined
as party-defendant in Civil Case No. 01-0207.
OUR RULING
We grant the petition.
As stated at the outset, the instant petition seeks a Rule 45 review of a Rule 65
decision of the CA. We stated in Montoya v. Transmed Manila Corp . 34 that our task in
these cases is not to determine the correctness of the ruling of the trial court, but to
examine whether the CA correctly determined the existence of grave abuse of
discretion in the Orders of RTC Branch 258 allowing the joinder of petitioner in Civil
Case No. 01-0207.
Section 6, Rule 3 of the Rules of Court, provides the rule on the joinder of parties:
Section 6. Permissive joinder of parties. All persons in whom or against
whom any right to relief in respect to or arising out of the same transaction or
series of transactions is alleged to exist, whether jointly, severally, or in the
alternative, may, except as otherwise provided in these Rules, join as plaintiffs
or be joined as defendants in one complaint, where any question of law or fact
common to all such plaintiffs or to all such defendants may arise in the action;
but the court may make such orders as may be just to prevent any plaintiff or
defendant from being embarrassed or put to expense in connection with any
proceedings in which he may have no interest.
The rationale for allowing parties to join in a proceeding that delves on a
common question of law or fact concerning them is trial convenience; i.e., to save the
parties unnecessary work, trouble and expense. 35 In order to meet the requirements of
justice and convenience, the rule on the joinder of parties is construed with
considerable exibility. 36 Hence, courts are given broad discretion in determining who
may properly be joined in a proceeding. 37
The rules also provide that in case of a transfer of interest, the court, upon
motion, may direct the person to whom the interest is transferred to be substituted in
the action or joined with the original party. 38 caITAC

Indeed, a transferee pendente lite is a proper party that stands exactly in the
shoes of the transferor, the original party. 39 Transferees are bound by the proceedings
and judgment in the case, such that there is no need for them to be included or
impleaded by name. 40 We have even gone further and said that the transferee is joined
or substituted in the pending action by operation of law from the exact moment when
the transfer of interest is perfected between the original party and the transferee. 41
Nevertheless, "[w]hether or not the transferee should be substituted for, or
should be joined with, the original party is largely a matter of discretion." 42 That
discretion is exercised in pursuance of the paramount consideration that must be
afforded for the protection of the parties' interests and right to due process. 43
Notably, unless the exercise of that discretion is shown to be arbitrary, this Court
is not inclined to review acts committed by the courts a quo. 44
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 In this case, part of the reason why the CA ascribed grave abuse of discretion to
the trial court was the latter's statement in the Order dated 28 December 2007 as
follows:
Thus, the Court hereby grants that [petitioner] be joined as party defendant in
this case without dropping Metrobank at this stage conditioned, however, that if
in the course of the trial, the Court nds that based on the testimonial and
documentary evidence to be presented by Metrobank that it can be dropped, the
same shall be effected pursuant to Section 11, Rule 3 of the 1997 Rules of Civil
Procedure. 45
According to the CA, this statement allowed for a "provisional"
joinder/substitution of parties. It is dif cult to fathom how the above statement of the
trial court could have constituted grave abuse of discretion when the ruling was in
accordance with Section 11, Rule 3 of the Rules of Court. The rule provides that parties
may be dropped or added by order of the court on motion of any party or on the court's
own initiative at any stage of the action and on such terms as are just. For the CA to say
that, as between Metrobank and petitioner, "only one of them is clothed with the
personality to actively participate in the proceedings below" 46 is to show a regrettable
lack of understanding of the rules and an unwarranted restriction of the trial court's
discretion.
Contrary to the nding of the CA, there is enough evidence in the records to
support the fact of the transfer of interest between Metrobank and petitioner. The CA
highlights only that it was not clear whether respondents' debt was included in the
portfolio of nonperforming loans sold to ARC. The appellate court then turned a blind
eye to the representations of Metrobank before the trial court confirming the fact of the
transfer of interest to ARC and then later to petitioner. The admission by Metrobank
suf ciently supplied whatever was omitted by the non-presentation of the entire
portfolio of nonperforming loans. The non-presentation may be understandable in view
of the sensitive nature of the portfolio and its contents. At any rate, the Deed of
Assignment clearly spelled out that all of the rights, title, and interest over respondents'
loan, which had an outstanding principal balance of P88,101,093.98, had been
transferred by ARC to petitioner.
We observe that the CA effectively ruled that the disclosure of the consideration
for the transfer of rights was a condition precedent for the joinder of petitioner in the
proceedings.
In order not to preempt judgment or make a pronouncement as to any matter
other than the pertinent issue before it, this Court will simply remind the CA and the
parties that a disclosure of the consideration for the transfer of interest is not among
the following requirements for a party to be joined in a proceeding: (1) the right to relief
arises out of the same transaction or series of transactions; (2) there is a question of
law or fact common to all the parties; and (3) the joinder is not otherwise prohibited by
the rules on jurisdiction and venue. 47
In ne, we nd that the CA erred in ruling that RTC Branch 258 committed grave
abuse of discretion when the latter allowed the joinder of petitioner as party-defendant
in Civil Case No. 01-0207. Under the rules, the trial court is given wide discretion and
enough leeway to determine who may be joined in a proceeding, or whether a party may
properly be substituted by another due to a transfer of interest. Within the premises,
the trial court's grant of the joinder cannot be seriously assailed.
WHEREFORE , the petition is GRANTED . The Court of Appeals Decision dated
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 26 August 2009 and Resolution dated 11 February 2010 in CA-G.R. SP No. 103809 are
REVERSED and SET ASIDE .
The Orders dated 28 December 2007 and 9 April 2008 issued by the Regional
Trial Court of Paraaque City, Branch 258, are REINSTATED .
SO ORDERED . ICHDca

Leonardo-de Castro, Perlas-Bernabe and Caguioa, JJ., concur.

Bersamin, * J., is on official leave.
Footnotes
* On official leave.
1. Rollo, pp. 69-83. The Decision dated 26 August 2009 issued by the Court of Appeals
Special Third Division was penned by Associate Justice Ricardo R. Rosario, with
Associate Justices Martin S. Villarama (a retired Member of this Court) and Pampio
A. Abarintos concurring.
2. Id. at 66-67. The Resolution dated 11 February 2010 issued by the Court of Appeals Special
Former Special Third Division was penned by Associate Justice Ricardo R. Rosario,
with Associate Justices Pampio A. Abarintos and Mari or Punzalan-Castillo (in lieu
of J. Villarama, Jr. per Raffle dated 24 November 2009) concurring.

3. Id. at 85-87. The Orders dated 28 December 2007 and 9 April 2008 issued by the Regional
Trial Court of Paraaque City, Branch 258, in Civil Case No. 01-0207 were penned by
Judge Raul E. de Leon.
4. Id. at 89.

5. Id. at 89-90.
6. Id. at 111-114.
7. Id. at 116-117.

8. Id. at 88-98.
9. Id. at 127, 131.

10. Id. at 185.

11. Id. at 235-237.

12. Id. at 292-295.

13. Id. at 319.
14. Id. at 386-397; Decision dated 26 July 2002 in CA-G.R. SP No. 70208. On 9 April 2003, this
Court found no reversible error in the CA ruling, and entry of judgment was made on
28 July 2003.

15. Id. at 443.

16. Id. at 445.

17. Id. at 244-245.

18. Id. at 246-260.

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 19. Id. at 465-469.

20. Id. at 470-474.

21. Id. at 475-476.
22. Id. at 478-479.

23. Id. at 507-509.

24. Id. at 480-484.

25. CIVIL CODE, Article 1634:

Article 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall
have a right to extinguish it by reimbursing the assignee for the price the latter paid
therefor, the judicial costs incurred by him, and the interest on the price from the day
on which the same was paid.
A credit or other incorporeal right shall be considered in litigation from the time the
complaint concerning the same is answered.
The debtor may exercise his right within thirty days from the date the assignee demands
payment from him.
26. Rollo, p. 85.

27. Id. at 86-87.

28. Supra note 1.
29. Id. at 75.
30. Id. at 76.
31. Id. at 76-78.

32. Id. at 78-81.

33. Supra note 2.
34. 613 Phil. 696 (2009).
35. Prudential Bank v. Intermediate Appellate Court , G.R. No. 74886, 8 December 1992, 216
SCRA 257.
36. Balbastro v. CA, 150-C Phil. 462 (1972).
37. Id.

38. Rules of Court, Rule 3, Section 19.

39. Fetalino v. Sanz, 44 Phil. 691 (1923).
40. Id.
41. Natalia Realty, Inc. v. CA, 440 Phil. 1 (2002).
42. Galace v. Bagtas, 120 Phil. 657, 663 (1964).

43. Heirs of Medrano v. De Vera, 641 Phil. 228 (2010).

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 44. Galace v. Bagtas, supra.

45. Rollo, p. 85.

46. Id. at 76.
47. Pantranco North Express, Inc. v. Standard Insurance Co., Inc., 493 Phil. 616 (2005).

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