EL BANCO ESPANOL-FILIPINO v. VICENTE PALANCA (Ram)
As the original defendant was a nonresident at the time of the foreclosure, it
March 26, 1918 | STREET, J. | Requirements of Procedural Process in Courts
PETITIONER: EL Banco Espanol-Filipino
RESPONDENTS: Vicente Palanca (Administrator of Engracio Palanca
Tanquinyeng y Limquingco)
SUMMARY: Engarcio Palanca loaned from El-Banco and used his parcels of
real property as security. After the execution of this instrument by the mortgagor,
defendant returned to China and died there without returning to the Philippines.
When the debt became due, the original defendant was a nonresident at the time
of the foreclosure, it was necessary for the petitioner in the foreclosure
proceeding to give notice to the defendant by publication pursuant to Section
399 of the Code of Civil Procedure. His non-apperance declared him in default
and the mortgages real property were sold. Seven years later, his administrator,
Vicente Palanca requested the court to set aside the order putting forward that the
court did not acquire jurisdiction over the defendant and that there was a denial
of due process of law. It was held that the court had jurisdiction over the
property for personal jurisdiction over the nonresident defendant is nonessential
and in fact cannot be acquired. Moreover, there was due process of law for the
defendant was given the opportunity to be heard as shown by the mailing of
notice to the nonresident owner. Actual notice to the defendant in cases of this
kind is NOT considered absolutely necessary under the law
DOCTRINE: The requirement of due process is satisfied if the following
conditions are present: (1) There must be a court or tribunal clothed with judicial
power to hear and determine the matter before it; (2) jurisdiction must be
lawfully acquired over the person of the defendant or over the property which is
the subject of the proceeding; (3) the defendant must be given an opportunity to
be heard; and (4) judgment must be rendered upon lawful hearing.
FACTS:
1. This action was instituted by El-Banco to foreclose a mortgage upon
various parcels of real property situated in Manila.
2. June 16, 1906 Engracio Palanca Tanquinyeng y Limquingco applied for a
loan with El-Banco Espanol Filipino and mortgaged, as security, his parcels
of real property.
3. March 31, 1906 The debt amounted to P218,294.10 with interest of 8%
payable at the end of each quarter.
4. After the execution of this instrument by the mortgagor, defendant returned
to China and died there without returning to the Philippines.
5.
was necessary for the petitioner in the foreclosure proceeding to give notice
to the defendant by publication pursuant to Section 399 of the Code of Civil
Procedure
Made in the form of a newspaper of general circulation in the City
of Manila
Court also ordered the clerk of court to deposit in the post office in
a stamped envelope a copy of the summons and complaint directed
to the defendant at his last place of residence, the city of Amoy in
China
6. July 2, 1908 Engracio Palanca did not appear in CFI, so judgment was
taken against him by default
7. July 3, 1908 A decision was rendered in favor of El Banco. Ordered
defendant to deliver the indebted amount to the clerk of the court, and
failure to do so within the specified period in the judgment would lead to
the public sale of the mortgage property located in Manila
Accordingly, it was declared that publication had been properly
made in a periodical, but nothing was said about this notice being
mailed to the original defendant
8. The payment was never made; and the court ordered the sale of the
property.
July 30, 1908: the sale took place
August 7, 1908: the court confirmed the sale.
9. June 25, 1915 Seven years after, Vicente Palanca, administrator of the
estate of the original defendant, Engracio Palanca Tanquinyeng y
Limquingco requested the court to set aside the order of default of July 2,
1908 and all judgment subsequent to it.
The order and judgment of the CFI are void because the court had
never acquired jurisdiction over the defendant or over the subject
of the action.
The irregularity in the proceedings, i.e., the mailing of the notice of
the foreclosure proceeding, amounted to a denial of "due process
of law"
ISSUES:
WoN the court acquired necessary jurisdiction to enable it to procees with the
foreclosure of the mortgage? YES.
WoN the proceedings were conducted in such manner as to constitute due process of
law YES.
RULING:
The conclusions stated in this opinion indicate that the judgment appealed from is
without error, and the same is accordingly affirmed, with costs. So ordered.
RATIO:
1. The requirement of due process in judicial proceedings is satisfied if the
following conditions are present:
a. There must be a court or tribunal clothed with judicial power to
hear and determine the matter before it
b. Jurisdiction must be lawfully acquired over the person of the
defendant or over the property which is the subject of the
proceeding
c. The defendant must be given an opportunity to be heard
d. Judgment must be rendered upon lawful hearing.
2. FIRST ISSUE (Second condition for due process) YES
Where the defendant in a mortgage foreclosure lives out of the Islands and
refuses to appear or otherwise submit himself to the authority of the court,
the jurisdiction of the latter is limited to the mortgaged property.
a. The jurisdiction of the court over the property is based upon:
i. That the property is located within the district
ii. That the purpose of the litigation is to subject the propery
by sale to an obligation fixed upon it by the mortgages
iii. That the court at a proper stage of the proceedings takes
the property into its custody, if necessary, and exposes it
to sale for satisfying the mortgage debt.
b. In such case, personal jurisdiction over the nonresident defendant
is nonessential and in fact cannot be acquired.
3. SECOND ISSUE (Second condition for due process) YES
a. In a foreclosure case, notification of the proceedings to the
nonresident owner, prescribing the time within which appearance
must be made, is recognized as essential
i. As such, statutes generally provide for publication, and
usually, in addition, for the mailing of notice to the
defendant, if his residence is known
ii. Actual notice to the defendant in cases of this kind is
NOT considered absolutely necessary under the law
iii. Property is always assumed to be in the possession of its
owner, in person or by agent; and it may be assumed that
he has knowledge of any proceedings that are instituted
for its condemnation or sale
b. The failure of the clerk to mail the notice, if in fact did happen, is
NOT such an irregularity that amounts to a denial of due process of
law
i. Notice was given by publication in a newspaper, and this
is the only form of notice which the law unconditionally
requires
ADDITIONAL NOTES
Issue not related to due process*
WoN a motion to set aside is the proper remedy as a proceeding to obtain relief in the
case at bar? NO.
The merit of this motion is adversely affected by the delay in asking for
relief.
The remedy prescribed in Sec. 113 of the Code of Civil Procedure state that
to set aside a final judgment and permit a renewal of the litigation in the
same cause that the application therefor be made within a reasonable time,
but in no case exceeding six months agter such judgment, order, or
proceeding was taken.
Moreover, in Sec. 513 of the same code it states that the party may present
his petition to the SC within 60 days after he first learns of the rendition of
such judgment.
The proper remedy in such case, after the time for appeal or review has
passed, is for the aggrieved party to file by an original proceeding and not
by motion in the cause.