G.R. No. 161417; February 8, 2007
MA. TERESA CHAVES BIACO, Petitioner, vs. PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.

FACTS

Petitioner Ma. Teresa Chaves Biaco and her husband, Ernesto Biaco, obtained loans from respondent Philippine Countryside Rural Bank (PCRB). As security, they executed a real estate mortgage over a parcel of land. Upon default, PCRB filed a complaint for judicial foreclosure. Summons was served only on Ernesto at his office. He received it but failed to file an answer, leading the trial court to declare both spouses in default. After ex parte proceedings, the court rendered a judgment of foreclosure.
The judgment ordered the spouses to pay the loan and, in case of insufficiency of the foreclosure sale proceeds, to pay the deficiency. The mortgaged property was subsequently auctioned. The proceeds were insufficient, prompting PCRB to secure a writ of execution against the spouses’ other properties to satisfy the deficiency. Petitioner then filed a petition for annulment of judgment before the Court of Appeals, claiming extrinsic fraud and lack of jurisdiction. The CA denied her petition.

ISSUE

Whether the Regional Trial Court’s decision is void for lack of jurisdiction over the person of the petitioner, warranting annulment of judgment.

RULING

Yes, the decision is void and subject to annulment. The Supreme Court held that the trial court did not acquire jurisdiction over the person of the petitioner. Summons was served only on her husband, Ernesto, at his office. There was no valid substituted service on the petitioner herself, as the return did not indicate that earnest efforts were made to personally serve her or explain why such service could not be effected. Jurisdiction over the defendant in a personal action is acquired only by valid service of summons or voluntary appearance; neither occurred here.
Consequently, the trial court’s jurisdiction was limited to a judgment in rem—the foreclosure of the mortgaged property. It could validly order the sale of the property to satisfy the debt. However, the portion of the judgment holding the petitioner personally liable for the deficiency constitutes a judgment in personam. Rendering such a personal money judgment without having acquired jurisdiction over her person is a violation of due process, rendering that part of the decision void. A void judgment can be assailed at any time through an action for annulment. Therefore, the Supreme Court granted the petition and set aside the challenged decision and resolutions.