HEIRS OF THE LATE EXEQUIEL B. GARCIA PETITIONERS, VS. THE HON. ARMANDO A. YANGA AS JUDGE, RTC OF MANILA, BRANCH 55 AND THE THE REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE BOA…

Heirs of the Late Exequiel B. Garcia versus Judge Armando A. Yanga and the Republic of the Philippines

The Case

This is a petition for annulment of judgment filed by the heirs of the late Exequiel B. Garcia against Judge Armando A. Yanga, in his capacity as presiding judge of Branch 55 of the Regional Trial Court of Manila, and against the Republic of the Philippines, represented by the Bureau of Customs. The heirs ask the Supreme Court to annul a judgment of the trial court that held their deceased father liable, on the ground that the trial court never acquired jurisdiction over them as heirs and that they were denied due process. The case matters because it fixes the boundaries of the extraordinary remedy of annulment of judgment, and because it teaches how the rules on parties, default, and substitution operate when a defendant dies while the case is pending.

Procedural History

The Republic filed a civil case for collection before the Regional Trial Court of Manila, Branch 55. The defendant, Exequiel Garcia, could not be found, so summons was served on him by publication. He was later declared in default. The trial court then rendered judgment against him. His heirs, claiming they were never substituted and never notified, filed a petition for annulment of judgment directly with the Supreme Court. The Supreme Court dismissed the petition outright for lack of substance and prima facie merit. The heirs moved for reconsideration and later filed an urgent motion to set the incident for oral argument. The Court directed the parties to submit proof of notices served on Garcia after he was declared in default, and required the heirs to state their defenses. After both sides complied, the Court resolved the motion for reconsideration.

Facts

The Republic sued Exequiel Garcia in the Regional Trial Court of Manila. His whereabouts were unknown, so the trial court ordered service of summons by publication under the Rules of Court. On July 9, 2008, the trial court declared Garcia in default. Unknown to the court, Garcia had already died on April 19, 2008, more than two months before the order of default. No one informed the trial court of his death, and no counsel or representative made a manifestation to that effect.

The trial court continued the proceedings and rendered its decision on August 31, 2010, holding Garcia liable. The decision was served by publication. The heirs, however, did not file an appeal, a motion for new trial, or a petition for relief.

Instead, the heirs filed a petition for annulment of judgment before the Supreme Court, insisting that the judgment was a patent nullity because the trial court never acquired jurisdiction over them and never ordered their substitution for the deceased. They also raised extrinsic fraud. The Republic answered that Garcia had been served with the subsequent processes at his old address, and that his death was unknown to it until the petition was filed.

Issues

• Whether or not the trial court's judgment is a nullity for lack of jurisdiction, considering that the defendant died before he was declared in default and before judgment was rendered.
• Whether or not the failure of the trial court to order the substitution of the deceased defendant by his heirs amounted to a denial of due process.
• Whether or not the heirs' failure to substitute the deceased and the alleged inadmissibility of the Republic's evidence constitute extrinsic fraud, as a ground for annulment of judgment.

Applicable Provisions

Section 20, Rule 3 of the Rules of Court provides:

When the action is for recovery of money arising from contract, express or implied, and the defendant dies before entry of final judgment in the court in which the action was pending at the time of such death, it shall not be dismissed but shall instead be allowed to continue until entry of final judgment. A favorable judgment obtained by the plaintiff therein shall be enforced in the manner especially provided in these Rules for prosecuting claims against the estate of a deceased person.

This is the provision the Court invokes to hold that the trial court had jurisdiction to continue hearing the civil case even after Garcia's death.

Section 16, Rule 3 of the Rules of Court, paragraph 4, provides:

If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the apposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased.

The Court holds that this provision does not apply, because the trial court had no way of knowing about Garcia's death.

Ruling

On the first issue, the Court holds that the judgment is not a nullity. The trial court had jurisdiction to proceed even after Garcia's death, pursuant to Section 20, Rule 3 of the Rules of Court, because the action was one for recovery of money arising from contract and it survives the defendant's death. Summons by publication had already been completed when Garcia died, so jurisdiction over his person had already been acquired. A party declared in default is entitled only to notice of subsequent proceedings, not to take part in the trial. Since Garcia's whereabouts were unknown, notice could not be sent to him, and the law does not require that the impossible be done. In any event, the decision itself was served by publication, and from that service the heirs could have filed an appeal, a motion for new trial, or a petition for relief. They availed of none of these remedies, so their defenses can no longer be ventilated.

On the second issue, the Court holds that there was no denial of due process. The trial court was never informed of Garcia's death and could not be expected to take judicial notice of it without a proper manifestation from counsel or from the heirs. Jurisdiction had already been conferred on the trial court, and it validly proceeded with the trial before rendering judgment.

On the third issue, the Court holds that there was no extrinsic fraud. Fraud is extrinsic when it is employed to deprive a party of his day in court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured. The failure of the heirs to substitute the deceased defendant, and the alleged inadmissibility of the Republic's evidence, do not come within that ambit. The Court stresses that annulment of judgment is an extraordinary remedy, restricted to lack of jurisdiction and extrinsic fraud, and that the petitioner must show not merely an abuse of jurisdictional discretion but an absolute lack of jurisdiction. None of the grounds exists here.

Doctrine

First, when the defendant in an action for recovery of money arising from contract dies before final judgment, the action is not dismissed but continues until final judgment, and the judgment is enforced against the estate. Second, a party declared in default is entitled only to notice of subsequent proceedings, not to take part in the trial; and where his whereabouts are unknown, the law does not require that the impossible be done. Third, the trial court does not lose jurisdiction over the person of a defendant already served by publication simply because he later dies, especially where his death was never brought to the court's attention. Fourth, annulment of judgment lies only on the grounds of lack of jurisdiction and extrinsic fraud, and lack of jurisdiction must be absolute, not a mere abuse of jurisdictional discretion.

Disposition

The motion for reconsideration was denied for lack of merit, and the earlier resolution dismissing the petition for annulment of judgment stood.

Remember This

Memorize this line: a party declared in default is entitled only to notice of subsequent proceedings, not to take part in the trial, and the law obliges no one to perform an impossibility. Examiners use this case to test annulment of judgment, the survival of money actions after the defendant's death, and the effect of a defendant's death on a default order.