G.R. No. 225309 & 225546. March 06, 2018.
ROSARIO ENRIQUEZ VDA. DE SANTIAGO, PETITIONER, VS. ANTONIO T. VILAR, RESPONDENT. [G.R. No. 225546] GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), PETITIONER, VS. ANTONIO T. VILAR, RESPONDENT.

FACTS

Spouses Jose and Soledad Zulueta obtained loans from GSIS, secured by mortgages on several parcels of land. The mortgage contract expressly excluded 78 specific lots from its coverage. Upon the spouses’ default, GSIS extrajudicially foreclosed the mortgages in 1974. However, GSIS wrongfully consolidated its title over all properties, including the 78 excluded lots. The Zuluetas’ successor-in-interest, Antonio Zulueta, transferred his rights to Eduardo Santiago. After Eduardo’s death, he was substituted by his widow, petitioner Rosario Enriquez Vda. de Santiago. Rosario successfully pursued an action for reconveyance. The RTC, in a 1997 decision affirmed with finality by the Supreme Court in 2003, ordered GSIS to reconvey the excluded lots or pay their fair market value.
During execution proceedings, respondent Antonio Vilar filed a Verified Omnibus Motion, claiming he had purchased Rosario’s rights and interests over the judgment award from her attorney-in-fact, Atty. Renato G. Enriquez. Vilar sought to be substituted as party-plaintiff. The RTC denied this motion, finding the supporting documents dubious. The Court of Appeals reversed, granting substitution. This prompted consolidated petitions from Rosario and GSIS.

ISSUE

Whether the Court of Appeals erred in granting Antonio Vilar’s motion for substitution as party-plaintiff in place of Rosario Enriquez Vda. de Santiago.

RULING

Yes, the Court of Appeals erred. The Supreme Court reinstated the RTC order denying substitution. The legal logic hinges on the proper application of the rules for substitution of a party. Under Rule 3, Section 7 of the Rules of Court, substitution is allowed only in cases of transfer of interest, where the transfer is admitted by the parties or proved to the court’s satisfaction. Here, the purported Deed of Assignment and Special Power of Attorney presented by Vilar were highly questionable. Rosario vehemently denied authorizing any such sale of her rights. The documents were notarized without Rosario’s personal appearance, and the signatures were disputed. The Court emphasized that for substitution based on a transfer of interest, the evidence of the transfer must be clear, convincing, and free from doubt. Vilar failed to meet this burden. Allowing substitution based on infirm documents would unjustly deprive Rosario of a final and executory judgment in her favor after decades of litigation. The Court nullified Vilar’s substitution and reinstated the RTC’s order.