Case Summary (G.R. No. 148325)
Failure to Redeem and Title Cancellation
Private respondent did not exercise the repurchase option within 90 days. Pursuant to the special power, petitioner caused cancellation of TCT No. 195101 and secured a new certificate in A.C. Aguila & Sons, Co.’s name. A demand letter followed, and ejectment proceedings were initiated when private respondent refused to vacate.
Ejectment Proceedings and Prior Appeals
The Metropolitan Trial Court ruled for A.C. Aguila & Sons, Co. on April 3, 1992, finding non-redemption within the option period. Private respondent’s appeals to the Regional Trial Court and the Court of Appeals, and a petition to the Supreme Court, were all denied in the ejectment case.
Petition for Nullity of Deed of Sale
On December 4, 1993, private respondent filed in RTC-Marikina a petition to declare the deed of sale null, alleging forgery of her husband’s signature—he had died on May 8, 1991, before the June 11 date. The RTC found that all three documents were signed on April 18, 1991, as common lending practice to evade taxes, and dismissed the nullity petition on April 11, 1995.
Court of Appeals’ Equitable Mortgage Ruling
The appellate court reversed, treating the transaction as an equitable mortgage under Civil Code Art. 1602. It cited inadequate purchase price, retention of possession by vendor, and continued tax payments as indicators of security rather than sale. It held the contract to be a pactum commissorium (Art. 2088), void for automatic appropriation, annulled the deed, reinstated TCT No. 195101, and ordered private respondent to pay ₱230,000 within 90 days or face public auction.
Issue of Real Party in Interest
The Supreme Court observed that the action was prosecuted against petitioner, not the true party in interest—A.C. Aguila & Sons, Co., a separate juridical entity under Civil Code Art. 1768. Under Rule 3
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Procedural History
- Petition for review on certiorari filed before the Supreme Court under G.R. No. 127347, assailing the November 29, 1990 decision of the Court of Appeals.
- The Court of Appeals reversed the Regional Trial Court, Branch 273, Marikina’s April 11, 1995 dismissal of private respondent’s petition for declaration of nullity of a deed of sale.
- The Supreme Court granted certiorari to resolve: (1) whether petitioner is the real party in interest; (2) the preclusive effect of the ejectment judgment; and (3) the true nature of the contract (pacto de retro sale vs. equitable mortgage).
Facts
- Alfredo N. Aguila, Jr., manager of A.C. Aguila & Sons, Co., engaged in lending, negotiated with Felicidad S. Vda. de Abrogar and her late husband, Ruben M. Abrogar, owners of a Marikina house and lot (TCT No. 195101).
- On April 18, 1991, parties executed:
• A Memorandum of Agreement providing for an absolute sale at ₱200,000 with a 90-day repurchase option at ₱230,000 and conditions on possession, costs, damages, and finality of sale if not redeemed.
• A contemporaneous Deed of Absolute Sale (dated June 11, 1991) conveying the property for ₱200,000.
• A Special Power of Attorney authorizing petitioner to cancel TCT No. 195101 and secure a new title if private respondent failed to redeem.
Memorandum of Agreement: Key Terms
- Purchase price set at ₱200,000; repurchase price at ₱230,000 within 90 days.
- Obligation to deliver peaceful possession within 15 days after grace period.
- Prohibition on lis pendens or title annotations during grace period.
- Warranty of ownership and defense against third-party claims.
- Buyer-paid documentation expenses to be bo