G.R. No. L-47677. April 22, 1941.
THE INSULAR LIFE ASSURANCE CO., LTD., plaintiff, vs. MIGUEL VARELA CALDERON, defendant-appellant; ANGEL VARELA CALDERON and PAULA VARELA CALDERON, appellees.

FACTS

On April 22, 1938, the Insular Life Assurance Co., Ltd. filed a foreclosure of mortgage action in the Court of First Instance of Manila against Miguel Varela Calderon (the mortgagor). The co-defendants named in the complaint were Angel Varela Calderon and Paula Varela Calderon, who held subsequent liens on the mortgaged properties. During the pendency of this suit, on August 5, 1938, Insular Life transferred its credit, including the mortgage and the right of action against Miguel, to the co-defendants, Angel and Paula. On September 19, 1938, upon their own motion, the court allowed Angel and Paula to substitute as plaintiffs in place of Insular Life. Subsequently, on September 26, 1938, the substitute plaintiffs filed a supplementary complaint, which the court admitted on October 18, 1938. After hearing, the trial court rendered judgment condemning Miguel to pay the amount due and decreeing the foreclosure of the mortgage. Miguel appealed.

ISSUE

Whether the trial court erred: (1) in allowing the substitution of Angel and Paula as party plaintiffs, and (2) in not dismissing the original complaint and in admitting the supplementary complaint filed by the substitute plaintiffs.

RULING

The Supreme Court affirmed the trial court’s judgment. On the first issue, the Court held that litigation must be conducted in the name of the real party in interest. While an assignee should institute proceedings if an assignable right is transferred before an action is brought, if the assignment occurs pendente lite (during the pendency of the suit), it is proper for the assignee to be substituted for the original plaintiff. Since the assignment in this case occurred during the pendency of the foreclosure suit, the substitution was correct. On the second issue, the Court found no error in admitting the supplementary complaint, as it sought to recover land taxes paid by the appellees on the mortgaged properties after the original action was filed—taxes which the appellant was obligated to pay under the mortgage terms. The appealed judgment was affirmed without costs.