Saludo v. Philippine National Bank, G.R. No. 194642
### Facts:
**Step-by-Step Sequence of Events:**
1. **Contract of Lease:** On June 11, 1998, the Saludo Agpalo Fernandez and Aquino Law Office (SAFA Law Office) entered into a three-year lease agreement with the Philippine National Bank (PNB) for 632 square meters of space in the PNB Financial Center Building in Quezon City. The lease included a monthly rental fee of P189,600.00 with a yearly escalation rate of 10%.
2. **Expiry and Continued Occupation:** The Contract of Lease expired on August 1, 2001; however, SAFA Law Office continued occupying the premises until February 2005. They ceased paying rent after December 2002.
3. **Demand Letters by PNB:** PNB sent demand letters on July 17, 2003, and November 10, 2003, seeking unpaid rents amounting to P4,648,086.34 and P5,856,803.53, respectively.
4. **Settlement Attempts and Vacating Premises:** In a letter dated June 9, 2004, SAFA Law Office attempted to negotiate settlement terms. The firm vacated the premises in February 2005. PNB’s final demand for payment dated July 7, 2005, required a total amount of P10,951,948.32.
5. **Rejection of Settlement Proposal:** SAFA Law Office’s settlement proposal on June 8, 2006, was declined by PNB on July 17, 2006, leading to a final demand for P25,587,838.09.
6. **Filing of Amended Complaint:** On September 1, 2006, Aniceto G. Saludo, Jr., managing partner of SAFA Law Office, filed an amended complaint for accounting and/or recomputation of unpaid rentals and damages against PNB.
7. **PNB’s Motion and Counterclaim:** PNB filed a motion on October 4, 2006, to include SAFA Law Office as a plaintiff and, on October 13, filed a counterclaim for overdue rentals amounting to P25,587,838.09.
8. **Dismissal of Counterclaims:** Saludo filed a motion to dismiss PNB’s counterclaims on October 23, 2006. The RTC granted this motion on January 11, 2007, ruling SAFA Law Office as a non-legal entity.
9. **PNB’s Certiorari:** The CA, through a petition filed by PNB, ruled in favor of reinstating its counterclaims on February 8, 2010, and denied further motions for reconsideration on August 2, 2010.
10. **Petition for Review:** Saludo filed a petition for review on certiorari before the Supreme Court.
### Issues:
1. **Legal Status of SAFA Law Office:** Whether SAFA Law Office is a partnership or a sole proprietorship.
2. **Juridical Personality:** Whether SAFA Law Office, as a partnership for the practice of law, has juridical personality.
3. **Indispensable Party:** Whether SAFA Law Office is an indispensable party in the complaint filed by Saludo.
4. **Proper Party to the Case:** Whether Saludo or SAFA Law Office should be the plaintiff in the case against PNB.
5. **Interlocutory Nature:** Whether the CA erred in including SAFA Law Office in PNB’s counterclaim despite it not being a party initially.
### Court’s Decision:
1. **Partnership, Not Sole Proprietorship:** The Supreme Court ruled that SAFA Law Office is a partnership, not a sole proprietorship, based on the Articles of Partnership signed and registered with the SEC.
2. **Juridical Personality:** The Court held that SAFA Law Office, as a partnership, has a separate juridical personality allowed to enter into business transactions including the Contract of Lease with PNB.
3. **Real Party-in-Interest:** Since SAFA Law Office signed the contract and would be directly affected by the dispute, it was declared as the real party-in-interest and an indispensable party to the case.
4. **Participation of SAFA Law Office as Plaintiff:** It was ordered that Saludo should amend his complaint to include SAFA Law Office as a plaintiff.
5. **Compulsory Counterclaims:** The court found that PNB’s counterclaims against SAFA Law Office should be reinstated as essential to obtain complete relief, considering the possibility of pro rata liability among partners.
### Doctrine:
1. **Juridical Personality of Partnerships:** A partnership, including those formed for the practice of law, enjoys a juridical personality separate and distinct from that of its partners.
2. **Real Party-in-Interest:** The entity that has the primary interest in the subject of the litigation (here the partnership) must be included in the lawsuit.
### Class Notes:
– **Partnership:** Defined by Civil Code Art. 1767; juridical personality distinct from partners (Art. 1768 and Art. 44, Civil Code).
– **Real Party-in-Interest:** Rule 3, Section 2 of the Rules of Court.
– **Compulsory Counterclaim:** Must be related to the same transaction as the opposing party’s claim and necessary for complete relief (Rule 6, Section 12 of the Rules of Court).
– **Liability of Partners:** Partners are liable pro rata with their property after partnership assets have been exhausted (Art. 1816, Civil Code).
### Historical Background:
The case exemplifies the judicial discourse on the nature and legal status of professional partnerships in the Philippines, testing the boundaries of juridical personality under the Civil Code. It also highlights procedural aspects regarding the inclusion of indispensable parties and the necessity of filing counterclaims within the original suit, creating precedent for future adjudications involving partnerships and their legal capacities.
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