“The law says the transferee’s interest is deemed by law as adequately represented and protected by the participation of his transferors in the case”
“[A] transferee pendente lite… need not be a party to the main case. Rule 3, Section 19 of the 1997 Rules of [Civil] Procedure, 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 above provision gives the trial court discretion to allow or disallow the substitution or joinder by the transferee. Discretion is permitted because, in general, the transferee’s interest is deemed by law as adequately represented and protected by the participation of his transferors in the case.” (G.R. 235279, March 2, 2020).
“There may be no need for the transferee pendente lite to be substituted or joined in the case because, in legal contemplation, he is not really denied protection as his interest is one and the same as his transferors, who are already parties to the case… [A] transferee stands exactly in the shoes of his predecessor-in-interest… before the rights were assigned to him” (op. cit.)
For this reason, “[i]t 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” (op. cit.).
In the case of Sunfire Trading, Inc. v. Geraldine Guy, Northern Islands Company Inc. (NICI) filed an action against 3D Industries, Inc. (3D) for breach of contract, trademark infringement, and unfair competition. After trial, the court rendered a judgment in favor of NICI which became final and executory (op. cit.).
Thereafter, “3D assigned the trademark subject [of the dispute] to… Sunfire Tradings[,] Inc.”
“[E]xecution proceedings [later] ensued to satisfy the judgment award in favor of NICI. In the public auction of the trademark, Geraldine Guy [Geraldine Guy] emerged as the highest bidder… in the amount of P500,000.00…”
As a result, “the [lower] court ordered the Intellectual Property Office (IPO) to cause registration of the trademark in the name of [Geraldine] Guy. However, the IPO failed to comply because based on the IPO record, the trademark had already been transferred by 3D to [Sunfire Trading, Inc.].”
“[Geraldine Guy] claimed that [Sunfire Trading, Inc.] should be treated as identical with 3D since it was owned and controlled by the same individual, and that the transfer was done to impede execution over the trademark.”
Subsequently, “[Geraldine Guy] filed an “Omnibus Motion… to nullify/set aside the assignment of trademark made by 3D to [Sunfire Trading, Inc.], and to direct the IPO to issue a Certificate of Registration in her name. [Sunfire Trading, Inc.], which was not a party to [the case], entered its special appearance to oppose the Motion, and filed its Comment and Opposition.”
The trial court “granted the Omnibus Motion of [Geraldine Guy]… during which occasion the IPO was directed to cancel the Certificate of Registration in favor of [Sunfire Trading, Inc.] with a concomitant instruction to issue a new Certificate of Registration in favor of [Geraldine Guy].”
On appeal, the Court of Appeals agreed “with the trial court that [Sunfire Trading, Inc.] became transferee pendente lite, the CA found that the case was still in the execution stage and regarded as still pending when the assignment of trademark was made in favor of [Sunfire Trading, Inc.].”
“The CA also took note that 3D and [Sunfire Trading, Inc.] are owned and controlled by Mr. Gilbert Guy, thus, it cannot be denied that Mr. Guy knew of the adverse judgment against 3D. The appellate court observed that 3D was mum all throughout the execution stage that it had already assigned the trademark to [Sunfire Trading, Inc.]…”
The Supreme Court, in affirming the findings of the trial court and the Court of Appeals, held that Sunfire Trading, Inc. is a transferee pendente lite which need not be a party to the main case.
“In Vda. de Paman v. Judge Señeris, the Court held that a case in which an execution has been issued is regarded as still pending so that all proceedings on the execution are proceedings in the suit” (cited in Sunfire Trading, Inc. v. Geraldine Guy, (op. cit.)
“There is no question that the court which rendered the judgment has a general supervisory control over its process of execution…”
There is “no need for the transferee pendente lite to be substituted or joined in the case because…he is not really denied protection as his interest is one and the same as his transferors…” (op. cit.).
