E.B. MARCHA TRANSPORT CO., INC. AND EPIFANIO B. MARCHA, PETITIONERS, VS. THE HON. INTERMEDIATE APPELLATE COURT AND REPUBLIC OF THE PHILIPPINES, RESPONDENTS.

There is no need to resolve all the issues raised in this petition for review by certiorari of
the decision of the respondent court.  The only question we have to
decide is whether or not the Republic of the
Philippines was
the proper party to sue the petitioner for recovery of possession of the
property occupied by them and for back rentals
thereon.

The said property is indisputably public land which petitioner
Epifanio B. Marcha entered
in 1949 without any previous authorization from the government.^[1] It is located in Tondo,
Manila,
within the customs zone.  On May 11, 1977, the Republic of the
Philippines
sued for its recovery and rentals.^[2] It
was sustained by the Court of First Instance of Manila in a decision rendered on
July 31,
1980,^[3] which
was affirmed in toto by the Court of Appeals.^[4] That decision is now before
us.

The consistent stance of the petitioners, both in the trial court
and in the Intermediate Appellate Court, was that the Republic of the
Philippines had
no capacity to file the complaint in the court a quo because the real
owner of the disputed property at that time was no longer the national
government but the Philippine Ports Authority.  The basis of this
argument is P.D. No. 857 which, on December 23, 1975, transferred inter alia all
port areas (including the land in question) from the Bureau of Customs to the
Philippine Ports Authority, which has a separate juridical personality.^[5]

The respondent court held that the petitioners were estopped from raising this argument because of their act in
applying for the lease of the land with the Bureau of Customs and not the
Philippine Ports Authority.^[6] By doing
so, they have come under the provisions of Article 1431 of the Civil Code
declaring as follows:

“Art. 1431.  Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as
against the person relying thereon.”

Amplifying this point, the Solicitor General stresses that the
petitioners’ lease application was filed with the Bureau of Customs and
disapproved on July 22,
1974.  Their motion for reconsideration was denied, and
on September 17, 1974, they
filed an appeal with the Secretary of Finance, who dismissed it on March 13, 1975.  All the
while, the Philippine Ports Authority had already been operating, having come
into existence on July 11,
1974.^[7] By ignoring its
authority over the land in dispute, the petitioners are now estopped from challenging the personality of the respondent
Republic of the
Philippines in
this action.^[8]

We agree, although this is not really the crucial
issue.

More importantly, as we see it, dismissing the complaint on the
ground that the Republic of the
Philippines
is not the proper party would result in needless delay in the settlement of this
matter and also in derogation of the policy against multiplicity of
suits.  Such a decision would require the Philippine Ports
Authority to refile the very same complaint already
proved by the Republic of the
Philippines
and bring back the parties as it were to square one.

It can be said that in suing for the recovery of the rentals, the
Republic of the
Philippines
acted as principal of the Philippine Ports Authority, directly exercising the
commission it had earlier conferred on the latter as its agent.  We
may presume that, by doing so, the Republic of the Philippines did not intend to
retain the said rentals for its own use, considering that by its voluntary act
it had transferred the land in question to the Philippine Ports Authority
effective July 11, 1974.  The Republic of the
Philippines
had simply sought to assist, not supplant, the Philippine Ports Authority, whose
title to the disputed property it continues to recognize.  We may
expect then that the said rentals, once collected by the Republic of the
Philippines,
shall be turned over by it to the Philippine Ports Authority conformably to the
purposes of P.D. No. 857.

Although it is not exactly applicable, we cite the following
enlightening lesson from Justice
Street in the case of Orio Hermanos v. Gutierrez Hermanos,^[9] decided almost sixty years ago:

“Upon stripping the case of its embellishments, the plaintiff’s
contention in the end comes to this, that, under
section 114 of our Code of Civil Procedure, litigation should be conducted in
the name of the real party in interest.  This means of course that
where an assignable right has been transferred before action brought, the
proceeding ought to be instituted in the name of the assignee; and where an
assignment is effected pendente lite, it is proper to have the assignee substituted
for the original plaintiff.  If such substitution should not be
effected and the transfer of the right of action should not be brought to the
attention of the court, the original plaintiff, if successful in the litigation,
would hold the fruits of the action as a sort of trustee for the use and benefit
of his assignee.  But it would be surprising doctrine to hold that
where the assignee has assented to the continued prosecution of the action by
the original plaintiff, the defendant can nullify the judgment, after litigation
has been concluded, on the ground that the interest in litigation had been
transferred.  When this feat is attempted, the defendant can be
properly met by the proposition that if any irregularity was committed in the
prosecution of the case, it was, as to him, error without injury. 
Certainly it cannot be contended that the transfer of a right of action
pendente lite affects the jurisdiction of the
court.”

We affirm the findings of the court a quo and the
Intermediate Appellate Court that as a mere squatter in the disputed land, the
petitioners had not acquired a vested right to lease or buy the
property under the laws cited by them.

WHEREFORE, the decision of the Intermediate Appellate Court
dated October 26, 1984, is
hereby affirmed in toto.

SO
ORDERED.

Yap, (Chairman), Narvasa, Melencio-Herrera,
Feliciano, and Gancayco, JJ., concur.

^[2] Ibid., pp. 5-7.

^[3] Id., pp. 45-69.

^[4] Rollo, pp. 22-35.

^[5] P.D. No. 857, Sec. 4.

^[6] Rollo, p. 33.

^[7] P.D. 505.

^[8] Id., pp. 60-61.

^[9] 52 Phil. 156.