Alma Jose vs. Intra Strata Assurance Corporation

A petition for annulment of judgment based on lack of jurisdiction is not barred by a prior petition for relief from judgment that raised the same ground, because Section 2, Rule 47 of the Revised Rules on Civil Procedure excludes only extrinsic fraud, not lack of jurisdiction, as a ground that may no longer be availed of in an annulment proceeding. A judgment rendered without jurisdiction over the person of the defendant is void and never becomes final and executory.

Petitioners Porthos P. Alma Jose and Ma. Theresa D. Alma Jose were the President and Treasurer, respectively, of Anhui-Alma Jose Hydrogeologic and Well Drilling Co., Inc. (ANHUI). ANHUI, as principal, and respondent Intra Strata Assurance Corporation, as surety, executed an Ordinary Re-Export Bond in favor of the Bureau of Customs to guaranty the re-export of drilling tools and equipment. On the same date, the petitioners, together with other individuals and ANHUI, executed an Indemnity Agreement in favor of respondent, jointly and severally agreeing to indemnify respondent against any damages or expenses incurred as a consequence of having become surety on the bond.

On October 5, 1993, Anhui-Alma Jose Hydrogeologic and Well Drilling Co., Inc. (ANHUI), as principal, and respondent Intra Strata Assurance Corporation, as surety, executed an "Ordinary Re-Export Bond" in the amount of ₱3,010,758.00 in favor of the Bureau of Customs, guarantying the re-export of 68 pieces of tools and equipment for drilling and the payment of corresponding duties, taxes, and charges. Porthos P. Alma Jose signed on behalf of ANHUI, of which he was President. On the same date, petitioners Porthos P. Alma Jose and his wife Ma. Theresa D. Alma Jose, ANHUI's Treasurer, together with Atty. Leonides Bernabe, Atty. Edgardo Alzate, Celia M. Bernabe, and Juliet Alzate, all in their personal capacity, and ANHUI, executed an Indemnity Agreement in favor of respondent, agreeing to jointly and severally indemnify respondent against any damages, losses, costs, taxes, penalties, charges, and expenses incurred as a consequence of having become surety upon the bond. In the Indemnity Agreement, petitioners indicated their address as "48 Guijo Street, TCEV, Antipolo, Rizal."

Claiming that petitioners and the other signatories failed to comply with their obligations to re-export the goods or pay taxes, duties, and penalties despite demands, respondent filed on September 25, 1997 a complaint for collection of sum of money before the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 97-2200. The complaint alleged that the defendants may be served with summons at the following addresses: ANHUI, Porthos P. Alma Jose, and Ma. Theresa D. Alma Jose at Rm. 304 Maligaya Bldg., 111 430 E. Rodriguez Avenue, Quezon City.

Based on the Return dated November 12, 1997 accomplished by Process Server Delfin P. Manga, Jr., substituted service was resorted to for the summons of ANHUI and the spouses Alma Jose. The Return stated that on October 29, 1997, the process server went to the office and place of business of the defendants at no. 348 M.F. Jocson St., Sampaloc, Manila, to serve them personally the summons, complaint, and annexes but failed because they were not there. On November 4, 1997, he tried again but was informed that they were out of the office. On November 5, 1997, he went back a third time but the defendants were again not around. Considering the three failed attempts and the uncertainty of whether the defendants, who were also officers of the corporation, would report to their office, he left the summons with the copies of the complaint and annexes at their office and place of business through Shirley Cabangon, a competent person in charge thereof, who affixed her signature for receipt.

From the July 3, 2000 Resolution of Branch 141 of the Makati RTC, the record indicated that summons upon the defendants were served through Atty. Leonides Bernabe, who was the Corporate Secretary of ANHUI. Atty. Bernabe filed a motion for extension of time to file answer for all the defendants on December 9, 1997, which was granted. Atty. Edgardo Alzate, one of the defendants, by way of special appearance, moved to dismiss the complaint on grounds of lack of jurisdiction over his person, lack of cause of action, lack of jurisdiction over the proceedings, and lack of condition precedent; the motion was denied on January 26, 1998, but the case against him was eventually dismissed on motion of the plaintiff. For failure to file answer within the period specified, the defendants, with the exception of Atty. Alzate, were declared in default on March 6, 1998, and respondent was allowed to present evidence ex parte.

By Decision dated June 15, 1998, the trial court rendered judgment in favor of respondent, ordering the remaining defendants to jointly and severally pay respondent the sum of ₱3,010,758.00 plus attorney's fees equivalent to 25% of the amount due and the costs. No appeal was taken, and the decision became final and executory. On respondent's motion, a Writ of Execution was issued on October 13, 1998. Petitioners claimed that they received a copy of a Notice of the Sheriff's Sale of their conjugal property covered by Transfer Certificate of Title (TCT) No. N-66602 located at their residential address at 48 Guijo St., Town and Country Executive Village, Antipolo City on September 23, 1999, and that it was only then that they were apprised of the complaint filed against them. They filed before the trial court on September 30, 1999 a "Petition for Relief from Judgment with a Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order," alleging that Atty. Bernabe's appearance in their behalf was without their consent and knowledge, that they were not properly served with summons, and that the trial court did not acquire jurisdiction over their persons.

The trial court denied the petition for relief from judgment by Resolution of July 3, 2000, noting that it was filed out of time, that the supporting affidavit did not state a valid defense, and discrediting the claim that Atty. Bernabe's appearance was unauthorized. The trial court reasoned that petitioners could not feign ignorance of the case because Atty. Bernabe, who lawyered for them and the corporation, was the corporate secretary of the corporation where petitioners were President and Treasurer, respectively, and that as key officers, they were presumed to have authorized Atty. Bernabe to represent the corporation and to have gained actual knowledge of the case. Petitioners' motion for reconsideration was denied on December 4, 2000. They then filed a "Petition for Certiorari with Prayer for a Restraining Order and/or Preliminary Injunction" with the Court of Appeals (CA), docketed as CA-G.R. SP No. 62789, which the CA dismissed on July 31, 2001, holding that certiorari was not the proper remedy and that petitioners were not deprived of a remedy.

On February 4, 2002, petitioners filed with the CA a "Petition for Annulment of Judgment, Annulment of Sale and Damages with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction," anchored on lack of jurisdiction over their persons, the alleged unauthorized appearance of Atty. Bernabe, and the existence of good and valid defenses. By Resolution of February 11, 2002, the CA dismissed the petition, holding that since petitioners had already availed of the remedy of petition for relief from judgment which was denied, and since the judgment had long become final and executory, they could no longer institute a petition for annulment of judgment. Petitioners' motion for reconsideration was denied, prompting them to lodge the present Petition for Review.

• Lack of Jurisdiction over Persons: Petitioners argued that the RTC had no jurisdiction over their persons since they were not properly served with summons in accordance with the Rules of Court, and that the enforcement of the indemnity agreement is an action in personam requiring personal service of summons to confer jurisdiction on the court.
• Void Default Judgment: Petitioners maintained that the impropriety of the service of summons voided the default judgment, and that such a judgment is not a judgment in contemplation of law, never becomes final and executory, and any action to declare its nullity does not prescribe.
• Unauthorized Counsel: Petitioners argued that Atty. Leonides Bernabe was not their counsel, as he was never hired nor contracted to represent them, and that he did not inform them of the pendency of the case against them.
• Unjust Enrichment: Petitioners contended that holding them liable to respondent would result in undue enrichment to respondent's benefit because the basis of their alleged liability was already cancelled.

N/A — The decision does not recount the respondent's arguments in detail.

• Bar to Annulment: Whether the Court of Appeals erred in dismissing the petition for annulment of judgment on the ground that petitioners had previously availed of the remedy of petition for relief from judgment.
• Finality of Judgment: Whether the doctrine of finality of judgment bars the annulment of a judgment allegedly rendered without jurisdiction over the persons of the petitioners.

• Bar to Annulment: No. Under Section 2, Rule 47 of the Revised Rules on Civil Procedure, only extrinsic fraud is excluded as a valid ground for annulment if it was availed of, or could have been availed of, in a motion for new trial or petition for relief; lack of jurisdiction is not similarly barred. Since petitioners anchored their petition for relief on lack of jurisdiction, they are not barred from filing a petition for annulment of judgment before the Court of Appeals.
• Finality of Judgment: No. If petitioners can prove that they were not duly served with summons, the trial court never acquired jurisdiction over them, and the decision against them is not a decision in contemplation of law and could never become final and executory.

• Bar to Annulment: The Court examined Section 2, Rule 47 of the Revised Rules on Civil Procedure, which provides that annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction, and that extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief. The Court emphasized that the rule's second paragraph explicitly excludes only extrinsic fraud, not lack of jurisdiction, as a ground barred by prior availment of other remedies. Because the petitioners' petition for relief from judgment before the trial court was anchored on lack of jurisdiction over their persons, they were not barred from subsequently filing a petition for annulment of judgment on the same ground before the Court of Appeals. The CA's dismissal on this ground was therefore erroneous.
• Finality of Judgment: The Court rejected the CA's application of the doctrine of finality of judgment. The Court reasoned that if the petitioners can prove that they were indeed not duly served with summons, the trial court never acquired jurisdiction over them, and the decision against them is not "a decision" in contemplation of law and could never become final and executory. The Court cited Arcelona vs. Court of Appeals, 280 SCRA 20, 37 (1997), in support of this proposition. Thus, the finality of the judgment does not bar an annulment proceeding where lack of jurisdiction is properly alleged.

• Annulment of Judgment — Grounds (Rule 47, Section 2) — Annulment of judgment may be based only on the grounds of extrinsic fraud and lack of jurisdiction. Extrinsic fraud is not a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief; lack of jurisdiction is not subject to this exclusion. The Court applied this rule to hold that a prior petition for relief based on lack of jurisdiction does not bar a subsequent petition for annulment on the same ground.
• Void Judgment Never Becomes Final — A judgment rendered without jurisdiction over the person of the defendant is not a judgment in contemplation of law and can never become final and executory. The Court applied this principle to hold that if the petitioners can prove lack of due service of summons, the default judgment against them is void and subject to annulment notwithstanding its apparent finality.

• "As the 2nd paragraph of the above-quoted rule clearly provides, it is only extrinsic fraud, not lack of jurisdiction, which is excluded as a valid ground for annulment 'if it was availed of, or could not have been availed of, in a motion for new trial or petition for relief.'" — This passage articulates the Court's interpretation of Section 2, Rule 47, distinguishing the treatment of extrinsic fraud from lack of jurisdiction as grounds for annulment.
• "If petitioners can prove that they were indeed not duly served with summons, the trial court never acquired jurisdiction over them, hence, the decision against them is not 'a decision' in contemplation of law and could never become final and executory." — This passage states the controlling principle that a judgment rendered without jurisdiction over the person is void and cannot attain finality.

• Arcelona vs. Court of Appeals, 280 SCRA 20, 37 (1997) — Cited as controlling authority for the proposition that a judgment rendered without jurisdiction over the person of the defendant is not a decision in contemplation of law and can never become final and executory.

• Section 2, Rule 47, Revised Rules on Civil Procedure — Provides the grounds for annulment of judgments or final orders and resolutions: extrinsic fraud and lack of jurisdiction. The Court applied this provision to hold that only extrinsic fraud is barred as a ground if previously availed of in a motion for new trial or petition for relief, while lack of jurisdiction is not similarly barred.
• Rule 47, Revised Rules on Civil Procedure — Provides for the remedy of annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies are no longer available through no fault of the petitioner. The Court applied this rule to determine the availability of the annulment remedy to the petitioners.

Panganiban (Chairman), Sandoval-Gutierrez, Corona, and Garcia, JJ., concurred.

N/A — No dissenting opinions are noted in the provided text.