Alma Jose v. Intra Strata Assurance Corporation
REITERATIONFacts
1. The Antecedents: Anhui-Alma Jose Hydrogeologic and Well Drilling Co., Inc. (ANHUI), with petitioners Porthos P. Alma Jose and Ma. Theresa D. Alma Jose as its President and Treasurer, respectively, executed an Ordinary Re-Export Bond with respondent Intra Strata Assurance Corporation as surety in favor of the Bureau of Customs. This bond guaranteed the re-export of drilling tools and equipment and the payment of duties and taxes. Subsequently, petitioners, along with other individuals and ANHUI, signed an Indemnity Agreement with respondent, jointly and severally agreeing to indemnify respondent for any losses or expenses incurred in connection with the surety bond. The petitioners listed their address as 48 Guijo Street, Town and Country Executive Village, Antipolo, Rizal. 2. Procedural History: Respondent filed a collection case against ANHUI and the signatories of the Indemnity Agreement before the Regional Trial Court (RTC) of Makati, alleging failure to re-export the goods or pay taxes. Summons were allegedly served via substituted service, with the process server leaving the summons at the defendants' office. The RTC later noted that summons were served through Atty. Leonides Bernabe, who filed a motion for extension to file an answer for all defendants. Despite a motion to dismiss by Atty. Edgardo Alzate, which was denied, the remaining defendants, including petitioners, were declared in default for failure to file an answer. The RTC rendered judgment in favor of the respondent, ordering the defendants to pay the bond amount plus attorney's fees. This judgment became final and executory. Petitioners, claiming they only learned of the case upon receiving a notice of sheriff's sale, filed a Petition for Relief from Judgment, which the RTC denied. They then filed a Petition for Certiorari with the Court of Appeals (CA), which was also dismissed. Subsequently, they filed a Petition for Annulment of Judgment, Annulment of Sale and Damages with the CA, arguing lack of jurisdiction due to improper service of summons and unauthorized representation by Atty. Bernabe. The CA denied this petition, holding that they could no longer file for annulment after availing of the remedy of petition for relief and that the judgment had become final and executory. 3. The Petition: Petitioners seek review of the Court of Appeals' dismissal of their Petition for Annulment of Judgment. They contend that the RTC lacked jurisdiction over their persons due to improper service of summons, rendering the default judgment void and non-executory. They argue that the action was in personam, requiring personal service of summons. Furthermore, they assert that Atty. Leonides Bernabe was not their counsel and did not inform them of the case. They also claim a valid defense and that holding them liable would lead to unjust enrichment as the basis of the alleged liability was already cancelled. Petitioners argue that the CA erred in affirming the RTC's decision and in dismissing their petition for annulment, as the grounds of lack of jurisdiction are not barred by prior remedies, and a void judgment never becomes final.
Issue(s)
Whether the Court of Appeals erred in dismissing the petition for annulment of judgment. Whether the Regional Trial Court acquired jurisdiction over the persons of the petitioners and whether the service of summons was proper and valid. Whether the default judgment is void and can be declared null and void. Whether Atty. Leonides Bernabe was the authorized counsel for the petitioners.
Ruling
The Supreme Court granted the petition, set aside the assailed Resolutions of the Court of Appeals, and remanded the case to the Court of Appeals for appropriate action. The Court ruled that the petition for annulment of judgment was not barred and that the Court of Appeals erred in dismissing it on procedural grounds.
Ratio Decidendi
On the propriety of the Petition for Annulment of Judgment: The Court held that Rule 47 of the Revised Rules on Civil Procedure provides for the remedy of annulment of judgments or final orders. The grounds for annulment are extrinsic fraud and lack of jurisdiction. The CA dismissed the petition for annulment on the ground that petitioners had already availed of the remedy of petition for relief from judgment. However, the Court clarified that Section 2, Rule 47 explicitly states that extrinsic fraud is the ground that is excluded if it was availed of or could have been availed of in a motion for new trial or petition for relief. Lack of jurisdiction, on the other hand, is not subject to this exclusion. Therefore, petitioners were not barred from filing a petition for annulment of judgment based on lack of jurisdiction over their persons, even after their petition for relief was denied. The Court emphasized that the remedy of annulment of judgment is available when ordinary remedies are no longer available through no fault of the petitioner. On the issue of jurisdiction and service of summons: The Court stated that if petitioners could prove that they were not duly served with summons, the trial court never acquired jurisdiction over them. A judgment rendered without jurisdiction over the person is void and cannot become final and executory. The CA's application of the doctrine of finality of judgment to bar the annulment was deemed incorrect in this context. The validity of the substituted service of summons was implicitly questioned by the petitioners' claim of lack of proper service. The Court's remand to the CA indicates that the issue of whether jurisdiction was acquired through the substituted service needs further examination. The Court stressed that personal service of summons is necessary to confer jurisdiction in actions in personam, and the enforcement of an indemnity agreement falls under this category. On the validity of the default judgment: The Court reiterated that a void judgment, such as one rendered without jurisdiction, is a nullity and can never become final and executory. Therefore, any action to declare its nullity does not prescribe. The petitioners' argument that the default judgment was void due to improper service of summons, and thus never became final and executory, was given weight by the Supreme Court's decision to remand the case. This implies that the RTC's declaration of default and subsequent judgment may be invalidated if the lack of jurisdiction is proven. On the unauthorized representation by Atty. Leonides Bernabe: The petitioners claimed that Atty. Bernabe's appearance on their behalf was without their consent or knowledge. The RTC had presumed their knowledge and authorization due to their positions as officers of ANHUI. However, the Supreme Court's decision to remand the case suggests that this presumption might be re-examined, or that the core issue of jurisdiction due to service of summons takes precedence. The Court's focus on the procedural remedies available to the petitioners indicates that the validity of the proceedings hinges on whether jurisdiction was properly acquired in the first place, which includes the proper notification of the parties involved, either directly or through authorized representation.
Main Doctrine
A petition for annulment of judgment based on lack of jurisdiction over the person is not barred by the prior denial of a petition for relief from judgment, as the latter is a remedy distinct from the former, and a judgment rendered without jurisdiction is void and cannot become final and executory.