Facts
- Rosita Ku and her father, Ku Giok Heng, mortgaged a residential house and lot in La Vista, Quezon City to Equitable Banking Corporation to secure a loan. (4 February 1982. The loan was not their own: Rosita signed as treasurer and her father as Vice-President/General Manager of Noddy Dairy Products, Inc., whose borrowing the mortgage secured, though the property was registered in Rosita's name.)
- Upon default the property was foreclosed and title consolidated in the bank, which then obtained a writ of possession and later prevailed in an ejectment case before the Metropolitan Trial Court. (Rosita never redeemed; her title was cancelled on 10 December 1984. The ejectment suit, filed 10 May 1989, was brought against her father alone — Rosita was never made a party — and the MeTC ordered him to vacate on 8 December 1994.)
- Regional Trial Court — the Kus' annulment suit dismissed. Rosita and her father sought to nullify the MeTC decision before the Regional Trial Court, which dismissed the complaint and ordered execution. (Ku Giok Heng did not appeal the ejectment judgment; he and Rosita filed the annulment suit instead on 20 December 1994, and the RTC dismissed it on 13 September 1999.)
- Court of Appeals — for Rosita. The Court of Appeals thereafter ruled in Rosita's favour. (31 March 2000, on certiorari, enjoining her eviction because she had not been made a party to the ejectment suit and so was denied due process.)
- The bank petitions the Supreme Court — and runs into a deadline question. The bank sought review before the Supreme Court. The threshold question was timeliness.
- A copy of the Court of Appeals decision had been delivered on a particular date to one Joel Rosales, a person working in the building where the bank's counsel held office. (Rosales was an employee of Unique Industrial & Allied Services, Inc. assigned to the bank's own Mail and Courier Department. The post office certified delivery on 24 April 2000; Rosales' logbook said 25 April, and the letter reached the law office only on 27 April — the whole quarrel being which of those dates started the clock.)
- Rosales was not an employee of the law firm; he explained, however, that he occasionally received mail matters for the law office in order to help them receive their letters promptly, and that he had done so on this occasion as well. (In an affidavit of 27 October 2000 he swore he was "not the constituted agent" of the law office and that his 25 April entry was "an honest mistake.")
- The bank argued that service on Rosales was invalid because he was not its counsel's employee, so that the reglementary period should be counted from the later date its counsel actually received the copy — which would make the petition timely.
Issue
Whether service of the Court of Appeals decision upon Joel Rosales, who was not an employee of the law firm but who customarily received its mail, was valid service upon the bank's counsel.
Ruling
Yes. Rosales was the counsel's implied agent for the receipt of mail. Service on him was valid, and the bank's petition was filed out of time. (The Court nevertheless proceeded to resolve the merits in the bank's favour on other grounds.)
Ratio
1. Agency May Be Implied
- The Court applied Article 1869 of the Civil Code:
Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.
- An agency need not be created by an express appointment.
- It arises equally from a course of conduct that shows the principal's assent.
2. The Counsel's Tolerance Supplied the Consent
- Rosales' own statement was that he received mail for the law office "to help them receive their letters promptly" and had been doing so occasionally.
- That practice could not have gone on without the firm's knowledge.
- By allowing the practice to continue — receiving, without protest, the mail Rosales handed over — counsel manifested consent to Rosales acting on its behalf.
- Having failed to repudiate the arrangement, counsel could not later disclaim it merely because the consequence had become inconvenient.
3. Consequence for the Reglementary Period
- Service upon an agent authorized to receive it is service upon the principal.
- The period to appeal therefore ran from the date Rosales received the copy, and the bank's petition was filed beyond it.
Doctrine
- Article 1869 — implied agency. Agency may be implied from (a) the acts of the principal, (b) his silence or lack of action, or (c) his failure to repudiate the agency knowing another is acting on his behalf. No written or express appointment is required.
- Tolerated practice creates authority. Where a principal knowingly permits another to perform acts for him over time, the law supplies the consent that makes that person his agent, and the principal is bound by acts done within that tolerated scope.
- Practical application. Receipt of judicial notices by a person whom counsel has habitually allowed to accept his mail binds counsel, and the reglementary periods run from that receipt.
Full Digest — Recitation Format
Full-length digest in the format required by the course digest prompt.
Classification: INCIDENTAL · Ponente: Kapunan, J. (First Division) · G.R. No. 142950, 26 March 2001
TOPIC/SUBTOPIC FOCUS: Week 2 — Formalities of Agency: (a) How agency is constituted (Article 1869–Article 1872; cf. Article 1317).
TOPIC DOCTRINE CAPSULE. Under Article 1869, agency may be express, or implied from the acts of the principal, from his silence or lack of action, or from his failure to repudiate the agency knowing that another person is acting on his behalf without authority; under Article 1870, acceptance by the agent may likewise be express or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. The Week 2 emphasis is therefore on mode of constitution rather than on proof of the elements: an agency need not be documented, declared, or even spoken, because the principal's toleration of another's representative acts can itself supply his consent. The decision is to be checked against this capsule and followed where it differs.
I. Gist and Central Doctrine
This case is INCIDENTAL as to the assigned Topic/Subtopic: the Court invoked and applied Article 1869 and Article 1870 on the implied constitution of agency, but the conclusion it drew did not carry the disposition, because the Court granted the petition on an independent ground — suspension of the rules on reglementary periods — after expressly assuming that the pleading was late. The controversy arose from an extrajudicial foreclosure of a La Vista, Quezon City residential house and lot registered in respondent Rosita Ku's name, followed by an ejectment suit that the bank filed against her father alone; when the bank sought to evict her on the strength of that judgment, she assailed it for want of due process, and the Court of Appeals enjoined her eviction. The Supreme Court GAVE DUE COURSE to and GRANTED the petition and REVERSED the Court of Appeals. The doctrine most relevant to the Topic/Subtopic is the codal proposition, quoted by the Court from Article 1869 and Article 1870, that an agency and its acceptance may both arise by implication — from the principal's silence, lack of action, or failure to repudiate, and from the agent's acts carrying out the agency or his silence or inaction — so that a mail clerk's habitual, unobjected-to receipt of a law office's correspondence was enough to defeat the bank's claim that he was "not the constituted agent" of its counsel. The doctrine dominant to the case as a whole — that a judgment in ejectment binds members of the family, relatives and other privies of the defendant — is treated below as secondary, since it is not the assigned topic.
II. Chronological Narration of Material Facts and Procedural Events
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On 4 February 1982, respondent Rosita Ku, as treasurer of Noddy Dairy Products, Inc., and Ku Giok Heng, as Vice-President/General Manager of the same corporation, mortgaged the subject property to Equitable Banking Corporation, now Equitable PCI Bank, to secure Noddy, Inc.'s loan. The property, a residential house and lot located in La Vista, Quezon City, was registered in respondent's name.
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Noddy, Inc. subsequently failed to pay the loan secured by the mortgage, prompting petitioner to foreclose the property extrajudicially. Petitioner was the winning bidder at the foreclosure sale and was issued a certificate of sale. Respondent failed to redeem the property.
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On 10 December 1984, the Register of Deeds cancelled the Transfer Certificate of Title in respondent's name and a new one was issued in petitioner's name.
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On 10 May 1989, petitioner instituted an action for ejectment before the Quezon City Metropolitan Trial Court against respondent's father, Ku Giok Heng, alleging that it had allowed him to remain in the property on condition that he pay rent, and that his failure to pay prompted the suit. Ku Giok Heng denied that there was any lease agreement over the property.
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On 8 December 1994, the MeTC rendered a decision in favor of petitioner and ordered Ku Giok Heng, among other things, to vacate the premises, holding that "for his failure or refusal to pay rentals despite proper demands, the defendant had not established his right for his continued possession of or stay in the premises acquired by the plaintiff thru foreclosure, the title of which had been duly transferred in the name of the plaintiff," and that "[t]he absence of lease agreement or agreement for the payment of rentals is of no moment" given the settled rule that a buyer in a foreclosure sale becomes the absolute owner if the property is not redeemed within one year from registration of the sale.
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Ku Giok Heng did not appeal the MeTC decision. Instead, on 20 December 1994, he and his daughter, respondent Rosita Ku, filed an action before the Regional Trial Court of Quezon City to nullify that decision.
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On 13 September 1999, the RTC, finding no merit in the complaint, dismissed the same and ordered the execution of the MeTC decision.
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Respondent filed in the Court of Appeals a special civil action for certiorari assailing the RTC decision, contending that she was not made a party to the ejectment suit and was therefore deprived of due process.
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On 31 March 2000, the Court of Appeals agreed with respondent and rendered a decision enjoining her eviction from the premises.
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On 24 April 2000, a registered letter from the Court of Appeals, covered by Registry Receipt No. 125234 and Delivery No. 4880, was received by Joel Rosales — an employee of Unique Industrial & Allied Services, Inc. assigned to the Equitable PCI Bank Mail and Courier Department — together with other mail matters, and brought by him to that Department.
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On 25 April 2000, after sorting the mail matters, Joel Rosales recorded them on page 422 of his logbook as having been received by him on 25 April 2000.
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On 27 April 2000, the letter was sent by the Mail and Courier Department to the law office of Curato Divina Mabilog Nedo Magturo Pagaduan, whose receiving clerk Darwin Bawar opened it and stamped on the "Notice of Judgment" the actual date of receipt, 27 April 2000.
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On 8 May 2000, Atty. Roland A. Niedo of that law office inquired from Rosales as to his actual date of receipt of the letter, and Rosales informed him that, based on his logbook, he received it on 25 April 2000.
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On 10 May 2000, Equitable PCI Bank filed in the Supreme Court a motion for an extension of 30 days from 10 May 2000, or until 9 June 2000, to file its petition for review of the CA decision, alleging that the Bank received the CA decision on 25 April 2000. The Court granted the motion for a 30-day extension "counted from the expiration of the reglementary period" and "conditioned upon the timeliness of the filing of [the] motion [for extension]."
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On 6 June 2000, the Manila Central Post Office issued a Certification stating that the copy of the decision "was duly delivered to and received by Joel Rosales (Authorized Representative) on April 24, 2000."
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On 13 June 2000, Equitable Bank filed its petition, contending that there was no need to name respondent Rosita Ku as a party in the ejectment action since she was not a resident of the premises nor in possession of the property. (The decision notes that the last day to file was 9 June 2000, but that business transactions were suspended on that date on account of the Court's 99th Anniversary Celebration per Memorandum Circular No. 03-2000.)
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On 6 September 2000, Rosales was informed by Atty. Niedo of the Postmaster's certification that he had received the mail on 24 April 2000, and thereby discovered his logbook error.
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On 27 October 2000, Joel Rosales executed an Affidavit — appended as Annex "A" to petitioner's Reply — stating, among others, that he is "not the constituted agent of 'Curato Divina Mabilog Niedo Magturo Pagaduan Law Office'" nor of the various other tenants of the building; that "[o]n occasions when I receive mail matters for said law office, it is only to help them receive their letters promptly"; that he received the registered letter on 24 April 2000; that he "erroneously recorded" it on 25 April 2000; and that "this error was caused by an honest mistake."
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On 26 March 2001, the Supreme Court rendered its Decision, giving due course to and granting the petition and reversing the Court of Appeals.
III. Arguments of the Parties
A. Petitioner (Equitable PCI Bank)
On the matter tied to the Topic/Subtopic, petitioner maintained "its honest representation of having received [a copy of the decision] on April 25, 2000," and argued that receipt by Joel Rosales — who, it asserted on the strength of his own Affidavit, "was not an agent of its counsel's law office" — did not constitute notice to its counsel, as required by Sections 2 and 10, Rule 13 of the Rules of Court. It relied on Philippine Long Distance Telephone Co. v. NLRC, where service of an NLRC decision at the ground floor of the petitioner's building rather than at counsel's ninth-floor office of record was held not to be valid service, proper and valid service being deemed made only when the Legal Services Division actually received a copy. Applying that ruling, petitioner submitted that actual receipt by its counsel was on 27 April 2000, not 25 April 2000, with the consequence that its motion for extension was filed two days before the lapse of the 15-day reglementary period; petitioner explained that counsel had treated 25 April 2000 rather than 27 April 2000 as the date of receipt precisely to obviate respondent's possible argument that the period had to be counted from 25 April 2000.
Assuming the motion for extension was indeed one day late, petitioner urged the Court in any event to suspend its rules and admit the petition in the interest of justice, invoking Philippine National Bank v. Court of Appeals, where a petition filed three days late was admitted.
On the merits, petitioner contended that there was no need to name respondent Rosita Ku as a party in the action for ejectment since she was not a resident of the premises nor was she in possession of the property.
B. Respondent (Rosita Ku)
Respondent contended in the Court of Appeals that she was not made a party to the ejectment suit and was therefore deprived of due process, so that she could not be evicted by virtue of a decision rendered in a case to which she was not joined.
Before the Supreme Court, respondent claimed that the petition was defective, pointing to the Manila Central Post Office Certification dated 6 June 2000 showing that the copy of the CA decision was duly delivered to and received by Joel Rosales, described therein as "Authorized Representative," on 24 April 2000 — with the consequence that petitioner's motion for extension, filed on 10 May 2000, was filed sixteen days from petitioner's receipt of the CA decision and one day beyond the reglementary period, which expired on 9 May 2000.
C. Common Ground / Stipulations
The decision expressly notes that whether respondent was a resident of the property was "a point disputed by the parties." It likewise treats as established, from petitioner's own annexed Affidavit, that Joel Rosales physically received the registered letter on 24 April 2000 and that his logbook entry of 25 April 2000 was erroneous.
IV. Issues
A. Main Issue (Topic/Subtopic-Centered)
Because this case is classified INCIDENTAL, a MAIN ISSUE tied to the Topic/Subtopic cannot honestly be forced: the Court did not resolve, as a controlling question, how an agency is constituted. The closest SECONDARY issue in which the topic's doctrine was actually deployed is this: whether or not petitioner may be heard to say that Joel Rosales, the bank's mail clerk who habitually received its counsel's correspondence, was "not the constituted agent" of that law office — such that his receipt on 24 April 2000 did not constitute notice to counsel and the fifteen-day period ran instead from counsel's actual receipt on 27 April 2000.
B. Secondary Issues
- Whether or not the facts established an implied agency between petitioner's counsel and Joel Rosales for the receipt of mail, so as to render the motion for extension one day late — the issue in which Article 1869 and Article 1870 were applied.
- Whether or not the Court should suspend its own rules on the reglementary period and admit the petition in the interest of justice.
- Whether or not a judgment in an ejectment suit binds a person not made a party thereto, where that person is the daughter of the defendant.
C. Ancillary / Incidental Issues
Whether or not respondent's residence in the property is material to her being bound by the ejectment judgment. The Court resolved this by holding the point immaterial: "even if respondent were a resident of the property, a point disputed by the parties, she is nevertheless bound by the judgment."
V. Ruling / Disposition (Categorical, Issue-Mapped)
On the Topic/Subtopic-related (closest secondary) issue — NOT MERITORIOUS as to petitioner. The Court was "not wholly convinced" by petitioner's argument that Rosales was not counsel's agent; because agency and its acceptance may both be implied, and because counsel neither objected to nor took steps to stop Rosales's practice of receiving its mail, "[t]he facts are, therefore, inadequate for the Court to make a ruling in petitioner's favor." The Court did not categorically declare that an agency existed; it held only that petitioner had failed to establish the contrary.
On Secondary Issue 2 — MERITORIOUS. Assuming the motion for extension was one day late, the Court found petitioner's arguments for suspension of the rules "persuasive, especially in light of the merits of the petition."
On Secondary Issue 3 — YES, she is bound. Verbatim: "Thus, even if respondent were a resident of the property, a point disputed by the parties, she is nevertheless bound by the judgment of the MeTC in the action for ejectment despite her being a non-party thereto. Respondent is the daughter of Ku Giok Heng, the defendant in the action for ejectment."
Dispositive portion, verbatim:
"WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The decision of the Court of Appeals is REVERSED.SO ORDERED."
VI. Ratio Decidendi and Doctrines (Topic-Focused)
A. Ratio Decidendi (Decisive Reasoning)
- Because the classification is INCIDENTAL, the reasoning touching the Topic/Subtopic and the reasoning that actually carried the disposition must be kept visibly distinct.
- Steps 1 to 5 are the former; Steps 6 and 7 the latter.
- Step 1 — The premise supplied by petitioner's own evidence. Petitioner's Affidavit of Joel Rosales asserted that he is "not the constituted agent of 'Curato Divina Mabilog Nedo Magturo Pagaduan Law Office.'"
- The Court took the affidavit as it stood, including its admission that "[o]n occasions when I receive mail matters for said law office, it is only to help them receive their letters promptly."
- Step 2 — The codal standard for the constitution of agency (Article 1869). The Court answered the affiant's self-characterization with the mode-of-constitution rule, stated in the body of the decision: "An agency may be express but it may also be implied from the acts of the principal, from his silence, or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority."
- Footnote 13 of the decision anchors this sentence expressly to "Civil Code, Art. 1869."
- Step 3 — The codal standard for acceptance by the agent (Article 1870). "Likewise, acceptance by the agent may also be express, although it may also be implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances."
- Footnote 14 anchors this to "Id., Art. 1870."
- Step 4 — Application, element by element. As to the principal's side under Article 1869: Rosales's own averment that he received the law office's mail "to help them receive their letters promptly" implied "that counsel had allowed the practice of Rosales receiving mail in behalf of the former," and — decisively — "[t]here is no showing that counsel had objected to this practice or took steps to put a stop to it."
- That is precisely the silence, lack of action, or failure to repudiate contemplated by the article.
- As to the agent's side under Article 1870: Rosales's repeated acts of actually receiving and forwarding the mail are acts "which carry out the agency."
- Step 5 — The consequence the Court drew, and its limit. The Court's conclusion was evidentiary and negative in form: "The facts are, therefore, inadequate for the Court to make a ruling in petitioner's favor."
- It did not declare an agency established; it held that petitioner had not shown its absence, so that the reckoning date of 24 April 2000 stood and the motion for extension appeared one day beyond the reglementary period.
- Step 6 — The reasoning that actually carried the disposition. The Court then proceeded on the express assumption that the motion was one day late and granted relief on a wholly different footing, quoting Philippine National Bank v. Court of Appeals: "It has been said time and again that the perfection of an appeal within the period fixed by the rules is mandatory and jurisdictional. But, it is always in the power of this Court to suspend its own rules, or to except a particular case from its operation, whenever the purposes of justice require it. Strong compelling reasons such as serving the ends of justice and preventing a grave miscarriage thereof warrant the suspension of the rules."
- The Court enumerated precedents involving delays of six days (Republic v. Court of Appeals), thirteen days (Siguenza v. Court of Appeals), one day (Pacific Asia Overseas Shipping Corporation v. NLRC), seven days (Cortes v. Court of Appeals), two days (Olacao v. NLRC), and two days (Legasto v. Court of Appeals), together with City Fair Corporation v. NLRC, and found petitioner's arguments "persuasive, especially in light of the merits of the petition."
- Step 7 — The merits. On the substantive question the Court began from the general rule that "no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by judgment rendered by the court," then applied the exception that a judgment in an ejectment suit is binding not only upon the defendants but also against those not made parties thereto if they are: (a) trespassers, squatters or agents of the defendant fraudulently occupying the property to frustrate the judgment.
- (B) guests or other occupants of the premises with the permission of the defendant; (c) transferees pendente lite; (d) sub-lessees; (e) co-lessees.
- Or (f) members of the family, relatives and other privies of the defendant.
- Respondent falls under (f), being the defendant's daughter.
B. Doctrines / Rules / Principles Laid Down
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Implied constitution of agency (Article 1869) — the doctrinal takeaway for this Topic/Subtopic. Verbatim:"An agency may be express but it may also be implied from the acts of the principal, from his silence, or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority."
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Implied acceptance by the agent (Article 1870). Verbatim:"Likewise, acceptance by the agent may also be express, although it may also be implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances."
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A supposed agent's self-serving denial does not control where the principal's non-repudiation appears on the face of the same affidavit. Verbatim application:"In this case, Joel Rosales averred that '[o]n occasions when I receive mail matters for said law office, it is only to help them receive their letters promptly,' implying that counsel had allowed the practice of Rosales receiving mail in behalf of the former. There is no showing that counsel had objected to this practice or took steps to put a stop to it. The facts are, therefore, inadequate for the Court to make a ruling in petitioner's favor."
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Power of the Court to suspend its own rules. Verbatim, as quoted by the Court from Philippine National Bank v. Court of Appeals: "But, it is always in the power of this Court to suspend its own rules, or to except a particular case from its operation, whenever the purposes of justice require it. Strong compelling reasons such as serving the ends of justice and preventing a grave miscarriage thereof warrant the suspension of the rules."
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Persons bound by a judgment in ejectment though not parties. The six-fold enumeration set out in Step 7, anchored by the Court on Oro Cam Enterprises, Inc. v. Court of Appeals, against the general rule drawn from Matuguina Integrated Wood Products, Inc. v. Court of Appeals.
C. Distinctions / Limitations / Qualifications
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This is an INCIDENTAL case and must be recited as such. The Court's agency discussion resolved a procedural sub-question about the reckoning of the reglementary period; it did not carry the disposition, which rested on the Court's power to suspend its own rules. A recitation that presents Equitable PCI Bank v. Ku as a holding on the constitution of agency overstates it.
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The Court made no categorical finding of agency. Its language is deliberately withheld: the facts were "inadequate for the Court to make a ruling in petitioner's favor." The case therefore illustrates the burden consequence of Article 1869 — a party who asserts that no agency exists, in the face of an unrepudiated practice of representation, does not discharge that burden by the supposed agent's bare denial.
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The agency discussed is a limited, single-purpose one — receipt of mail matter for a law office — not a general agency. Its constitution turned on repetition plus toleration, with no writing, appointment, or spoken authorization whatsoever. That total absence of formality is the Week 2 point.
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The rule-suspension holding is fact-bound. The Court tied it expressly to "the merits of the petition"; it is not authority for routine relief from late filing.
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Article 1911 and apparent authority are not the Court's line of analysis here. The reasoning is squarely one of implied actual agency under Article 1869 and Article 1870 — the principal's own conduct — and not one of estoppel operating in favor of a third person.
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The Court did not pass upon whether the PLDT v. NLRC rule on service at counsel's address of record would otherwise have availed petitioner; it disposed of the argument on the agency ground and then rendered the entire timeliness question academic by suspending the rules.
D. Topic/Subtopic Integration (Mandatory)
- The classification is INCIDENTAL.
- The case is nonetheless worth reciting under Week 2(a), for a reason its incidental character sharpens rather than weakens.
- Week 2 is about form, and the standard trap is to reason that because the law prescribes formalities for certain agencies (Article 1874, Article 1878), agency in general must be formally constituted.
- Equitable PCI Bank v. Ku is the Court's most economical refutation of that assumption: the "agency" it discussed was never appointed, never written, never even spoken of between the supposed principal and the supposed agent — it arose entirely from a mail clerk's habit and a law office's failure to object, and the Court treated that as legally sufficient to defeat the party denying it.
- The case thus supplies the two operative codal texts for subtopic (a) verbatim — Article 1869 on the principal's side, Article 1870 on the agent's side — and demonstrates the outer informality of the general rule, against which Article 1874 and Article 1878 stand as express statutory exceptions studied later in the same week.
- What the case does not supply is a holding.
- It stops at "the facts are inadequate," and the professor is entitled to be told exactly that.
VII. Separate Opinions
None. The Decision was penned by Kapunan, J., with Davide, Jr., C.J., Puno, Pardo, and Ynares-Santiago, JJ., concurring. No separate concurring or dissenting opinion appears in the record.