G.R. No. L-61289 October 27, 1983
FIRST INTEGRATED BONDING & INSURANCE CO., INC., petitioner, vs. JUDGE MARIO M. DIZON, Court of First Instance of Cebu, Cebu City Branch IV, JAIME L. GO and PROVINCIAL SHERIFF of Cebu, respondents.

FACTS

Petitioner First Integrated Bonding & Insurance Co., Inc., a firm domiciled in Manila, was one of nine insurance companies sued by Jaime L. Go for recovery of a fire insurance claim. The complaint was filed in Cebu. The insurance policy indicated the company’s Manila address. However, the summons and subsequent order of default were served upon Atty. Renato Villanueva in Cebu City, who had issued the policy on the company’s behalf. The petitioner firm alleged that Villanueva was not its authorized representative to receive such judicial processes.
A partial judgment by default was rendered against the petitioner, ordering it to pay Go P63,000 plus damages. This decision was served directly on the firm’s branch secretary in Cebu on June 2, 1982. The firm promptly filed a motion for reconsideration and new trial, supported by an affidavit of merits, arguing it was denied due process as Villanueva was unauthorized and had betrayed its interests by not answering the complaint. The trial court, presided by respondent Judge Dizon, denied the motion and issued a writ of execution, leading to the levy of the firm’s properties and garnishment of its bank deposit.

ISSUE

Whether the trial court committed grave abuse of discretion in refusing to set aside the judgment by default, thereby depriving the petitioner insurance company of due process.

RULING

Yes. The Supreme Court granted the petition for certiorari, ruling that the respondent judge acted with grave abuse of discretion amounting to lack of jurisdiction in not vacating the default judgment. The legal logic centers on the fundamental right to due process. Service of summons upon a person not authorized to receive it is invalid and does not confer jurisdiction over the defendant. The Court found that Villanueva, despite being the agent who issued the policy, was not the firm’s authorized representative for receiving judicial summons. His failure to answer the complaint and his allowing a default order constituted negligence, if not collateral fraud, which deprived the petitioner of its substantial right to be heard.
The Court emphasized that valid service of summons at the firm’s Manila office, as indicated in the policy, would have prevented this deprivation. The subsequent service of the default judgment directly on the firm’s branch secretary, which prompted its immediate motion for relief, confirmed that the earlier service on Villanueva was defective and that the firm had a meritorious defense warranting a trial on the merits. Consequently, the Court reversed the challenged orders, set aside the judgment and execution, and directed the trial court to conduct further proceedings, ensuring the petitioner was restored to its standing in court to answer the complaint.