Equitable PCI Bank v. Ku
REITERATIONFacts
The Antecedents: On February 4, 1982, Rosita Ku, as treasurer of Noddy Dairy Products, Inc., mortgaged a residential property registered in her name to Equitable Banking Corporation (now Equitable PCI Bank) to secure a corporate loan. Noddy, Inc. defaulted on the loan, leading Equitable to extrajudicially foreclose the property. Equitable emerged as the winning bidder in the foreclosure sale and subsequently obtained a new Transfer Certificate of Title in its name after respondent failed to redeem the property. Procedural History: Equitable PCI Bank initiated an ejectment case against Ku Giok Heng, respondent Rosita Ku's father, before the Quezon City Metropolitan Trial Court (MeTC) on May 10, 1989, alleging non-payment of rent. The MeTC ruled in favor of Equitable on December 8, 1994, ordering Ku Giok Heng to vacate the premises. Ku Giok Heng did not appeal. Instead, he and Rosita Ku filed a complaint to nullify the MeTC decision before the Regional Trial Court (RTC), which dismissed their complaint and ordered the execution of the MeTC decision on September 13, 1999. Rosita Ku then filed a special civil action for certiorari with the Court of Appeals (CA), arguing she was not a party to the ejectment suit and was thus deprived of due process. The CA agreed and enjoined her eviction on March 31, 2000. The Petition: Equitable PCI Bank filed a petition for review with the Supreme Court, seeking to reverse the CA decision. The Bank argued that Rosita Ku, not being a resident nor in possession of the property, need not have been impleaded in the ejectment suit, as a judgment in such cases binds not only the named defendants but also their privies, including family members. The Bank also addressed a procedural issue regarding the timeliness of its petition, asserting that its counsel's actual receipt of the CA decision was April 27, 2000, not April 25, 2000 as initially stated, making its motion for extension and subsequent petition timely. Alternatively, the Bank requested the suspension of the rules in the interest of justice due to the merits of the case.
Issue(s)
Whether the petition for review was filed within the reglementary period; and whether the service of the Court of Appeals' decision upon an employee of a third-party service provider, who was not an authorized agent of the counsel, constitutes valid notice to the counsel. Whether a judgment in an ejectment case is binding on a party who was not formally impleaded as a defendant therein, but is a member of the defendant's family and privy to the property's occupation.
Ruling
The petition is meritorious. The Supreme Court reversed the Court of Appeals decision, holding that the judgment in the ejectment case is binding on Rosita Ku. The Court also found the petition to be filed within the reglementary period, or in the alternative, granted suspension of rules in the interest of justice. The dispositive portion states: "WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The decision of the Court of Appeals is REVERSED."
Ratio Decidendi
On the timeliness of the petition and service of judgment: The Court acknowledged the discrepancy in the date of receipt of the CA decision (April 24, 2000, per Post Office Certification, versus April 25, 2000, per petitioner's initial claim). However, the Court considered the Affidavit of Joel Rosales, who received the mail, explaining his honest mistake in recording the date. The Court noted that Rosales's receipt of mail for the law office on previous occasions implied an agency, even if not express, which the counsel had not repudiated. Despite finding the argument on agency not wholly convincing, the Court ultimately found the petition meritorious on its substantive aspects. Alternatively, the Court considered suspending its rules in the interest of justice, citing jurisprudence where late petitions were admitted due to compelling reasons, and found the arguments persuasive in light of the merits of the petition. The Court stated that it has the power to suspend its own rules when the purposes of justice require it, especially when preventing a grave miscarriage of justice. On the binding effect of the ejectment judgment on a non-party: The Court held that while generally, no man shall be affected by proceedings to which he is a stranger, a judgment in an ejectment suit is binding not only on the defendants but also on those not made parties if they are members of the family, relatives, or other privies of the defendant. The Court reasoned that Rosita Ku, being the daughter of Ku Giok Heng (the defendant in the ejectment suit), falls under this category. Therefore, even if she were a resident of the property, she is bound by the MeTC's judgment. The Court cited the principle that possession of the land becomes an absolute right of the purchaser as a confirmed owner upon consolidation of ownership and issuance of a new certificate of title, and that the buyer can demand possession.
Main Doctrine
A judgment in an ejectment suit is binding not only upon the defendants but also upon those not made parties thereto if they are members of the family, relatives, or other privies of the defendant, even if they are not in actual possession of the property.