ALFREDO N. AGUILA v. CA, GR No.

127347, 1999-11-25
Facts:
Petitioner is the manager of A.C. Aguila & Sons, Co., a partnership engaged in lending activities. Private
respondent and her late husband, Ruben M. Abrogar, were the registered owners of a house and lot...
private respondent, with the consent of her late husband, and A.C. Aguila & Sons, Co., represented by
petitioner, entered into a Memorandum of Agreement
A.C. Aguila & Sons, Co.] shall buy the above-described property from the FIRST PARTY
Deed of Absolute Sale shall be executed by the FIRST PARTY conveying the property to... the SECOND
PARTY for and in consideration of the sum of Two Hundred Thousand Pesos
FIRST PARTY is hereby given by the SECOND PARTY the option to repurchase the said property within a
period of ninety (90) days from the execution of this memorandum of agreement effective April 18,
1991, for the amount of TWO HUNDRED THIRTY THOUSAND PESOS
In the event that the FIRST PARTY fail to exercise her option to repurchase the said property within a
period of ninety (90) days, the FIRST PARTY is obliged to deliver peacefully the possession of the
property to the SECOND PARTY within fifteen (15) days after the... expiration of the said 90 day grace
perio
During the said grace period, the FIRST PARTY obliges herself not to file any lis pendens or whatever
claims on the property nor shall be cause the annotation of say claim at the back of the title
FIRST PARTY warrants her ownership of the property and shall defend the rights of the SECOND PARTY
against any party whom may have any interests over the property
Should the FIRST PARTY fail to deliver peaceful possession of the property to the SECOND PARTY after
the expiration of the 15-day grace period given in paragraph 3 above, the FIRST PARTY shall pay an
amount equivalent to Five Percent of the principal amount of TWO HUNDRED
PESOS (P200.00) or P10,000.00 per month of delay... hould the FIRST PARTY fail to exercise her option to
repurchase the property within ninety (90) days period above-mentioned, this memorandum of
agreement shall be deemed cancelled and the Deed of Absolute Sale, executed by the parties shall be
the final contract considered... as entered between the parties and the SECOND PARTY... parties likewise
executed a deed of absolute sale,[3] dated June 11, 1991, wherein private respondent, with the consent
of her late husband, sold the subject property to A.C. Aguila & Sons... private respondent authorized
petitioner to cause the cancellation of TCT No. 195101 and the issuance of a new certificate of title in
the name of A.C. Aguila and Sons... in the... event she failed to redeem the subject property as provided
in the Memorandum of Agreement.
Private respondent failed to redeem the property... petitioner caused the cancellation of TCT No.
195101 and the issuance of a new certificate of... title in the name of A.C. Aguila and Sons, Co
Upon the refusal of private respondent to vacate the subject premises, A.C. Aguila & Sons, Co. filed an
ejectment case against her
Metropolitan Trial Court ruled in... favor of A.C. Aguila & Sons, Co. on the ground that private
respondent did not redeem the subject property before the expiration
Private respondent appealed first to the Regional Trial Court, Branch 163, Pasig,... Metro Manila, then to
the Court of Appeals, and later to this Court, but she lost in all the cases
Private respondent then filed a petition for declaration of nullity of a deed of sale
She alleged that the signature of her husband on the deed of sale was a forgery because he was
already... dead when the deed was supposed to have been executed on June 11, 1991.
private respondent had filed a criminal complaint for falsification against petitioner... which was
dismissed
Court is convinced that the three required documents, to... wit: the Memorandum of Agreement, the
Special Power of Attorney, and the Deed of Absolute Sale were all signed by the parties on the same
date on April 18, 1991. It is a common and accepted business practice of those engaged in money
lending to prepare an undated absolute deed... of sale in loans of money secured by real estate for
various reasons, foremost of which is the evasion of taxes and surcharges. The plaintiff never questioned
receiving the sum of P200,000.00 representing her loan from the defendant. Common sense dictates
that an established... lending and realty firm like the Aguila & Sons, Co. would not part with P200,000.00
to the Abrogar spouses, who are virtual strangers to it, without the simultaneous accomplishment and
signing of all the required documents, more particularly the Deed of Absolute Sale, to... protect its
interest... facts and evidence show that the transaction between plaintiff-appellant and defendant-
appellee is indubitably an equitable mortgage. Article 1602 of the New Civil Code finds strong
application in the case at bar
It is well-settled that the presence of even one of the circumstances in Article 1602 of the New Civil
Code is sufficient to declare a contract of sale with right to repurchase an equitable mortgage.
plaintiff-appellant, as vendor, was paid a price which is unusually inadequate, has retained possession of
the subject property and has continued paying the realty taxes over the subject property,
(circumstances mentioned in par. (1) (2) and (5) of Article 1602... of the New Civil Code), it must be
conclusively presumed that the transaction the parties actually entered into is an equitable mortgage,
not a sale with right to repurchase.
Being a mortgage, the transaction entered into by the parties is in the nature of a pactum commissorium
which is clearly prohibited by Article 2088 of the New Civil Code. Article 2088 of the New Civil Code
reads:
ART. 2088. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of
them. Any stipulation to the contrary is null and void.
Clearly, the agreement entered into by the parties is in the nature of pactum commissorium. Therefore,
the deed of sale should be declared void as we hereby so declare to be invalid, for being violative of law.
appealed decision is hereby REVERSED and SET ASIDE.
The loan in the amount of P230,000.00 shall be paid within ninety (90) days from the... finality of this
decision. In case of failure to pay the amount of P230,000.00 from the period therein stated, the
property shall be sold at public auction to satisfy the mortgage debt and costs and if there is an excess
Issues:
Petitioner now contends that: (1) he is not the real party in interest but A.C. Aguila & Co., against which
this case should have been brought; (2) the judgment in the ejectment case is a bar to the filing of the
complaint for declaration of nullity of a deed of sale in this... case; and (3) the contract between A.C.
Aguila & Sons, Co. and private respondent is a pacto de retro sale and not an equitable mortgage as held
by the appellate court.
Ruling:
Under Art. 1768 of the Civil Code, a partnership "has a juridical personality separate and distinct from
that of each of the partners." The partners cannot be held liable for the obligations of the partnership
unless it is shown that the legal fiction of a different juridical... personality is being used for fraudulent,
unfair, or illegal purposes.
private respondent has not shown that A.C. Aguila & Sons, Co., as a separate juridical entity, is being
used for fraudulent, unfair, or illegal purposes. Moreover,... the title to the subject property is in the
name of A.C. Aguila & Sons, Co. and the Memorandum of Agreement was executed between private
respondent, with the consent of her late husband, and A. C. Aguila & Sons, Co., represented by
petitioner. Hence, it is the... partnership, not its officers or agents, which should be impleaded in any
litigation involving property registered in its name. A violation of this rule will result in the dismissal of
the complaint.
We cannot understand why both the Regional Trial
Court and the Court of Appeals sidestepped this issue when it was squarely raised before them by
petitioner.
Our conclusion that petitioner is not the real party in interest against whom this action should be
prosecuted makes it unnecessary to discuss the other issues raised by him in this appeal.
REVERSED