Case Citation: Rene H. Imperial and Nidsland Resources AND Development Corporation vs. Hon.
Edgar L. Armes, Presiding Judge of Branch 4, Regional Trial Court, 5th Judicial
Region, Legazpi City and Alfonso B. Cruz, Jr./ ALFONSO B. CRUZ vs.Rene
Imperial and Nidsland Resources and Development Corporation, G.R. Nos. 178842
& 195509, January 30, 2017
Petitioners: Rene H. Imperial (Imperial) and NIDSLAND Resources and Development
Corporation (NIDSLAND)
Respondents: Alfonso B. Cruz, Jr.
Syllabus Topic: Grounds for Annulment of judgment
Doctrine: An action for the annulment of a void judgment, like the remedy of appeal, is a
statutory right. No party may invoke it unless a law expressly grants the right and
identifies the tribunal which has jurisdiction over this action. While a void judgment
is no judgment at all in legal contemplation, any action to challenge it must be done
through the correct remedy and filed before the appropriate tribunal. Procedural
remedies and rules of jurisdiction are in place in order to ensure that litigants are able
to employ the proper legal tools to obtain complete relief from the tribunal fully
equipped to grant it.
Case Summary
SEC issued an order declaring that the Deed of Absolute Sale between Napal and Cruz void ab initio and
ordered the cancellation of the TCT in the name of Cruz. Cruz assailed the decision in the RTC but the RTC
dismissed the Petition motu proprio on the ground that regional trial courts have no jurisdiction. The Supreme
Court ruled that the RTC petition should have been dismissed for lack of jurisdiction since the remedy called
annulment of judgment on the ground of extrinsic fraud and lack of jurisdiction was not yet in place at that time.
Facts ● Julian Napal and Rene Imperial entered into a Memorandum of Agreement1 to
organize a domestic corporation to be named NIDSLAND which would engage in
the real estate business. For his capital contribution to the corporation, Napal
undertook to convey to NIDSLAND his property. Napal and Imperial intended to
develop the property into a subdivision.
● Imperial, on the other hand, as his contribution to NIDSLAND, committed to
perform the following obligations: to settle Napal's obligation to the Rural Bank
of Ligao, Inc., which was about to foreclose its mortgage on the Property; pay
Napal's tax liabilities to the Bureau of Internal Revenue (BIR) which encumbered
with a tax lien the largest portion of the Property; fund NIDSLAND's initial
operating capital; and provide for Napal's personal drawings in an amount not
exceeding P1,200,000.
● Napal failed to convey to NIDSLAND a certain portion of the Property. Insted,
Napal sold the Subject Property to Alfonso Cruz as evidenced by a Deed of
Absolute Sale.
● As Napal continued to refuse to convey the Subject Property to NIDSLAND
under the Memorandum of Agreement, Imperial filed for himself and in
representation of NIDSLAND, a derivative suit before the SEC. This was filed
after the sale to Cruz but before its registration. Imperial also caused the TCT to
be annotated with lis pendens.
● Since the annotation of the lis pendens occurred after the sale of the Subject
Property to Cruz but before its registration with the Registry of Deeds, the notice
of lis pendens was carried over to the new TCT issued in Cruz's name.
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Meanwhile, the SEC Case proceeded without the participation of Cruz who had
possession of the new TCT covering the Subject Property during the continuation
of the hearings.
● During the pendency of the SEC Case, Imperial and NIDSLAND filed an action
for annulment of sale against Cruz before the RTC which was dismissed. The
RTC held that it should have been filed in the original case where the decree of
registration was entered. The decision was affirmed by RTC.
● SEC eventually rendered a Decision in favor of Imperial and NIDSLAND. The
Decision declared the Deed of Absolute Sale between Napal and Cruz void ab
initio after finding that the sale was simulated and was intentionally made to
appear to have been perfected prior to the filing of the notice of lis pendens. The
SEC ordered the cancellation of the TCT in the name of Cruz.
● The Decision became final and executory, and the TCT of Cruz was canceled and
a new TCT was issued in the name of NIDSLAND.
● Thereafter, Napal filed with the CA a Petition for Annulment of Judgment under
Rule 47 of the Rules of Court (Annulment of Judgment Action) praying for the
nullification of the SEC Decision as well as the orders and writs issued pursuant
to it. Napal argued that the SEC has no jurisdiction over the case as it did not
involve any intra-corporate controversy. Cruz joined as party.
● The CA dismissed the Petition for Annulment of Judgment and explained that
Rule 47 of the Rules of Court is not available to annul the judgment of the SEC.
According to the CA, the proper remedy in this case is a special civil action for
certiorari and prohibition.
● Cruz subsequently filed a pleading before the RTC which sought to nullify the
SEC Decision but the RTC dismissed the Petition motu proprio on the ground that
regional trial courts have no jurisdiction over the SEC but the CA held that RTC
Legazpi City acted with grave abuse of discretion in dismissing the Petition, and
therefore ordered that the case be remanded to RTC.
● Imperial and NIDSLAND filed an Omnibus Motion praying for the dismissal of
the RTC Petition on various grounds but the motion and the subsequent motion
for reconsideration were denied.
● Hence this petition.
Issue: The core issue is whether RTC Legazpi City has jurisdiction to declare the nullity of
the Decision of the SEC. (YES)
SC Ruling: The Court ruled that the RTC Petition should have been dismissed for lack of
jurisdiction. We likewise rule that the SEC Decision was issued with grave abuse of
discretion amounting to an excess of jurisdiction.
A void judgment is no judgment at all in legal contemplation. A judgment rendered
without jurisdiction is a void judgment. This want of jurisdiction may pertain to lack
of jurisdiction over the subject matter or over the person of one of the parties. A void
judgment may also arise from the tribunal's act constituting grave abuse of discretion
amounting to lack or excess of jurisdiction. Void judgments may also be collaterally
attacked. A collateral attack is done through an action which asks for a relief other
than the declaration of the nullity of the judgment but requires such a determination
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if the issues raised are to be definitively settled.
The RTC Petition filed by Cruz has been treated by the CA and the parties as a
special civil action for certiorari. The RTC Petition, however, prays for the
nullification of the SEC Decision and thus purports to be an action for the annulment
of a void judgment. Ascertaining the true nature of the RTC Petition is crucial as it
determines whether Cruz properly invoked the correct remedy in assailing the SEC
Decision.
The nature of an action is determined by the material allegations in the complaint and
the type of relief prayed for. We have examined the RTC Petition, and we rule that
contrary to the findings of the lower courts, it is an action for the annulment of
judgment on the ground of lack of jurisdiction. The meat of the RTC Petition's
allegation is that the SEC declared as void ab initio the sale between Napal and Cruz
without impleading Cruz in the proceedings. The SEC also had no power to order the
transfer of title over the Subject Property from Cruz to NIDSLAND because Cruz
was never heard in these proceedings. Cruz asserts that the SEC never acquired
jurisdiction over his person. Cruz thus prayed in the RTC Petition that the SEC
Decision be declared null and void.
The RTC Petition clearly captures the material allegations in a petition for annulment
of judgment on the ground of lack of jurisdiction over the person of one of the parties
under Rule 47 of the Rules of Court. In sharp contrast, the RTC Petition makes no
allegations that the SEC Decision was rendered with grave abuse of discretion. It
cannot be treated as a special civil action for certiorari under Rule 65.
In 1997, the new rules of civil procedure took effect. These rules provided, for the
first time, a remedy called annulment of judgment on the ground of extrinsic fraud
and lack of jurisdiction. Rule 47, however, limits its application to regional trial
courts and municipal trial courts.
In this case, the Court ruled that there is no law at the time pertinent to this case,
which allows the filing of a petition for annulment of judgment before the regional
trial courts and the CA to set aside a void judgment of the SEC on the basis of lack of
jurisdiction. We hasten to emphasize, however, that this pertains only to cases filed
prior to RA 8799 which transferred the jurisdiction over intra-corporate disputes to
regional trial courts designated as commercial courts. As to the latter, Rule 47 clearly
applies.
This leads to the conclusion that the RTC Petition is not the proper remedy to assail
the SEC Decision. Since it is an action for the annulment of judgment, the RTC
Petition cannot prosper as we have already ruled that this remedy is not available in
this particular case.
However, the error in Cruz's RTC Petition does not automatically warrant a dismissal
of these proceedings. We rule that the SEC, in nullifying the sale between Napal and
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Cruz and in ordering the cancellation of Cruz's TCTs in favor of NIDSLAND,
overstepped its jurisdiction. The SEC Decision was rendered with grave abuse of
discretion.
Dispositive Portion The two consolidated petitions were both REVERSED and SET ASIDE.
Other/Notes:
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