FACTS:

On June 12, 2003, Vivian Ancheta obtained a loan from Mary Cambay in the amount of P25,000.00 with a 10% monthly interest payable within two months from even date. As security for the loan, Vivian executed a Real Estate Mortgage in favor of Cambay over a parcel of land which was registered under the names of petitioner Marylou Ancheta (Ancheta) and her former common-law-spouse Ricardo Dionila. 

Ancheta and Dionila allegedly executed on June 10, 2003 a Special Power of Attorney in favor of Vivian authorizing her to use the land as collateral for her loan with Cambay. 

On June 16, 2003, Vivian obtained another loan from Cambay in the amount of P25,000.00 evidenced by a Promissory Note. Alleging that Vivian failed to settle her obligation upon maturity despite repeated demands, Cambay filed a Complaint for Judicial Foreclosure of Mortgage against Vivian, Ancheta, and Dionila before the RTC. 

Ancheta alleged that no summons ever reached her  and/or Dionila. 

However, neither Vivian, Ancheta, nor Dionila filed an Answer to Cambay’s Complaint. 

The RTC scheduled a pre-trial Conference but it was later reset to May 18, 2005 in an Order dated March 16, 2005. A copy of the March 16, 2005 Order of the RTC  was supposedly received by  Ancheta and Dionila’s son, Ricmar John A. Dionila. 

After trial on the merits, the RTC rendered a Decision by default against Vivian, Ancheta, and Dionila, directing defendants to pay the amount of P50,000.00 plus interest at the rate of 24% per annum starting one year after June 16, 2003 until fully paid to the plaintiff within 120 days from entry of judgment and in default of such payment the property shall be sold at public auction. 

The said Decision of the RTC became final and executory, and entered in the book of entries of judgment.

Subsequently, by virtue of an Absolute Deed of Sale, the parcel of land was sold to Cambay. 

TCT No. T-145718 was later issued in her favor by the Register of Deeds.

Ancheta filed with the RTC a Petition for Relief from Judgment arguing, among others, that:

(1) Ancheta came to know of the case  only sometime in February 2006, and

(2) no summons was personally served on her and/or Dionila.

The RTC dismissed Ancheta’s Petition for Relief of Judgment.

Ancheta filed a Petition for Annulment of Judgment with the CA under Rule 47 of the Rules of Court on the ground of lack of jurisdiction over the persons of Ancheta and Dionila.

The CA rendered its assailed Decision, dismissing Ancheta’s Petition.

The CA denied Ancheta’s Motion for Reconsideration. 

Hence, the instant petition.

ISSUE:

Whether a named defendant in a judicial foreclosure case who was not served with summons may file an action for annulment of judgment which was rendered by default.

RULING:

Ancheta is not precluded from filing a petition for annulment of judgment with the CA. 

Rule 47 of the Rules of Court provides for the remedy of annulment of judgment with the appellate court of the judgments, final orders, and resolutions of the RTCs in civil actions 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.

Significantly, Section 2, Rule 47 of the Rules limits the ground for the action of annulment of judgment to either extrinsic fraud or lack of jurisdiction, viz.:

Section 2. Grounds for annulment. — The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction. 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. 

“Lack of jurisdiction on the part of the trial court in rendering the judgment or final order is either lack of jurisdiction over the subject matter or nature of the action, or lack of jurisdiction over the person of the petitioner.” 

On the other hand, “[t]he overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented the petitioner from having his day in court. At this juncture, worth reiterating is the rule 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. 

This means that the remedy of annulment of judgment, albeit a “last remedy,” is not an alternative remedy to the ordinary remedies of new trial, appeal, or a petition for relief. It must show or allege that the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of petitioner. 

It was held in Jose v. Intra Strata Assurance Corporation that “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 is because a judgment rendered without jurisdiction by the trial court is fundamentally void or non­existent, and therefore, can be “assailed at any time either collaterally or by direct action or by resisting such judgment or final order in any action or proceeding whenever it is invoked.”

Accordingly, we hold that while Ancheta had previously availed of the remedy of a petition for relief with the RTC, she is not precluded from filing with the CA a petition for annulment of judgment – one that is essentially anchored on the ground of lack of jurisdiction.

If she can prove that she and Dionila were indeed not duly served with summons, the RTC never acquired jurisdiction over them, hence, its Judgment would be void ab initio, and the CA would thus be duty-bound to strike it down.

We have observed, however, that instead of fully addressing the issue of lack of jurisdiction raised before it, the CA opted to dismiss the case outright based on a mere technical, albeit erroneous, interpretation of the rules. This the Court cannot countenance.

Lack of jurisdiction being a valid ground for annulment of a judgment, and one which may negate the court’s acquisition of jurisdiction, including defective service of summons, it is a well-founded cause for an action for annulment of a judgment. 

The Petition for Review on Certiorari is GRANTED. The assailed Decision and Resolution of the Court of Appeals are SET ASIDE. Let the case be REMANDED forthwith to the Court of Appeals for further proceedings in accordance with our pronouncement herein.