Aguila Jr.
v CA (1999)
Topic: Legal Personality of Partnership
SUMMARY: Felicidad and her husband obtained a loan from ACASC, which was represented by its
manager Aguila Jr. Afterwards, they executed a Memorandum of Agreement, which stated that ACASC
shall buy the spouses’ house and lot in Marikina for 200k, and Felicidad would have a right to repurchase
for P230k. It also stated that if Felicidad fails to do so within 90 days, the property will automatically be
transferred to ACASC. Felicidad failed to repurchase and redeem the property so a new title was issued
in the name of ACASC. Felicidad was asked to vacate the property but she refused so ACASC filed an
ejectment case against her. She lost, and her appeals were denied. So she filed a petition for nullification
of the deed of sale, which the RTC dismissed. CA reversed and held that the transaction was an
equitable mortgage and was in the nature of a pactum commissorium, and is therefore void. Hence this
petition for review filed by Aguila Jr, wherein he argued that he was not the real party in interest. SC held
that Aguila Jr is not the real party in interest, but ACASC, so the complaint against him must be
dismissed.
DOCTRINE: A1768 NCC: 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.
Aguila: manager of A.C. Aguila & Sons, Co., a partnership engaged in lending activities
Felicidad & her late husband, Ruben Abrogar: registered owners of a house and lot in Marikina
Felicidad, with the consent of Ruben, obtained a loan from ACASC and entered into a
Memorandum of Agreement with ACASC (as represented by Aguila)
o That ACASC shall buy the property for P200k
o That Felicidad shall have an option the repurchase the property within 90 days from the
execution of this MOA for P230k
So they executed a deed of absolute sale, where Felicidad sold the property for P200k.
Felicidad also executed an SPA authorizing Aguila Jr to cause the cancellation of the TCT in her
name and issuance of a new one in the name of ACASC if she fails to redeem the property.
Felicidad failed to redeem the property within the 90-day period.
So Aguila Jr caused the cancellation of TCT and issuance of a new on in the name of ACASC.
ACASC sent Felicidad a letter, demanding that she vacate the premises.
However, Felicidad refused.
So ACASC filed an ejectment case against her in the MeTC
MeTC ruled in favor of ACASC. Felicidad appealed to the RTC, then the CA, and lost.
So she filed a petition for declaration of nullity of a deed of sale with the RTC, alleging the
signature of her husband on the deed of sale was forged (was already dead when the deed was
executed)
RTC dismissed.
CA reversed since it found that the transaction was an equitable mortgage – NOT a sale with
right of repurchase—and is subject to prohibition against pactum commissorium in A2088 NCC.
o Why is it an equitable mortgage?
Requisites of A1602 were met:
The purchase price was unusually inadequate. (Considering it is a 240
sqm lot + residential house on it + inside a subdivision + within MM)
Property remained in the actual possession of Felicidad even after sale.
Felicidad continued to pay taxes on the property sold.
Besides, it was meant to secure the payment of a debt.
o In this case, the transaction was in the nature of a pactum comissorium = VOID
Hence this petition for review on certiorari! Aguila Jr’s arguments:
o He is not the real party in interest—ACASC is!
o The judgment in the ejectment case bars the filing of the complaint for declaration of
nullity of the deed of sale.
o The contract between Felicidad and ACASC is a pacto de retro sale—NOT an equitable
mortgage
ISSUE: WoN Aguila Jr is a real party in interest – NO
Rule 3, S2 of the Revised Rules of Civil Procedure: Every action must be prosecuted and
defended in the name of the real party in interest. A real party in interest is one who would be
benefited or injured by the judgment, or who is entitled to the avails of the suit.
Any decision rendered against a person who is not a real party in interest in the case cannot be
executed. Hence, a complaint filed against such a person should be dismissed for failure to state
a cause of action.
A1768 NCC: 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.
In this case, Felicidad has not shown that ACASC, 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 ACASC and the MOA was executed
between Felicidad, with the consent of her late husband, and ACASC, as represented by AGuila
Jr. 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.
Because Aguila Jr is not the real party in interest, no need to discuss the other issues.
WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and the complaint against
petitioner is DISMISSED.
