15.BancoEspanolvs.

Palanca

Facts:
ThisactionwasinstituteduponMarch31,1908,by"ElBancoEspanolFilipino"
toforecloseamortgageuponvariousparcelsofrealpropertysituatedinthecityof
Manila.ThemortgageinquestionisdatedJune16,1906,andwasexecutedbythe
originaldefendantherein,EngracioPalancaTanquinyengyLimquingco,assecurityfora
debtowingbyhimtothebank.UponMarch31,1906,thedebtamountedtoP218,294.10
andwasdrawinginterestattherateof8percentumperannum,payableattheendof
eachquarter.Itappearsthatthepartiestothismortgageatthattimeestimatedthevalue
ofthepropertyinquestionatP292,558,whichwasaboutP75,000inexcessofthe
indebtedness.Aftertheexecutionofthisinstrumentbythemortgagor,hereturnedto
Chinawhichappearstohavebeenhisnativecountry;andhetheredied,uponJanuary29,
1810,withoutagainreturningtothePhilippineIslands.

Asthedefendantwasanonresidentatthetimeoftheinstitutionofthepresent
action,itwasnecessaryfortheplaintiffintheforeclosureproceedingtogivenoticetothe
defendantbypublicationpursuanttosection399oftheCodeofCivilProcedure.An
orderforpublicationwasaccordinglyobtainedfromthecourt,andpublicationwasmade
indueforminanewspaperofthecityofManila.Atthesametimethattheorderofthe
courtshoulddepositinthepostofficeinastampedenvelopeacopyofthesummonsand
complaintdirectedtothedefendantathislastplaceofresidence,towit,thecityof
Amoy,intheEmpireofChina.

ThecauseproceededinusualcourseintheCourtofFirstInstance;andthe
defendantnothavingappeared,judgmentwas,uponJuly2,1908,takenagainsthimby
default.UponJuly3,1908,adecisionwasrenderedinfavoroftheplaintiff.Inthis
decisionitwasrecitedthatpublicationhadbeenproperlymadeinaperiodical,but
nothingwassaidaboutthisnoticehavingbeengivenmail.Thecourt,uponthisoccasion,
foundthattheindebtednessofthedefendantamountedtoP249,355.32,withinterest
fromMarch31,1908.Accordinglyitwasorderedthatthedefendantshould,onorbefore
July6,1908,deliversaidamounttotheclerkofthecourttobeappliedtothesatisfaction
ofthejudgment,anditwasdeclaredthatincaseofthefailureofthedefendanttosatisfy
thejudgmentwithinsuchperiod,themortgagepropertylocatedinthecityofManila
shouldbeexposedtopublicsale.Thepaymentcontemplatedinsaidorderwasnever
made;anduponJuly8,1908,thecourtorderedthesaleoftheproperty.Thesaletook
placeuponJuly30,1908,andthepropertywasboughtinbythebankforthesumof
P110,200.UponAugust7,1908,thissalewasconfirmedbythecourt.

Aboutsevenyearsaftertheconfirmationofthissale,ortotheprecise,uponJune
25,1915,amotionwasmadeinthiscausebyVicentePalanca,asadministratorofthe
estateoftheoriginaldefendant,EngracioPalancaTanquinyengyLimquingco,wherein
theapplicantrequestedthecourttosetasidetheorderofdefaultofJuly2,1908,andthe
judgmentrendereduponJuly3,1908,andtovacatealltheproceedingssubsequent
thereto.Thebasisofthisapplication,assetforthinthemotionitself,wasthattheorderof
defaultandthejudgmentrenderedthereonwerevoidbecausethecourthadnever
acquiredjurisdictionoverthedefendantoroverthesubjectoftheaction.

Issue:Whetherornotthecourthadacquiredjurisdictionoverthedefendantoroverthe
subjectoftheaction.

Ruling:
Yes,thecourtjurisdictionovertheresintheactiontoforecloseamortgage.

Jurisdictionoverthepersonisacquiredbythevoluntaryappearanceofapartyin
courtandhissubmissiontoitsauthority,oritisacquiredbythecoercivepoweroflegal
processexertedovertheperson.

Jurisdictionoverthepropertywhichisthesubjectofthelitigationmayresult
eitherfromaseizureofthepropertyunderlegalprocess,wherebyitisbroughtintothe
actualcustodyofthelaw,oritmayresultfromtheinstitutionoflegalproceedings
wherein,underspecialprovisionsoflaw,thepowerofthecourtoverthepropertyis
recognizedandmadeeffective.Inthelattercasetheproperty,thoughatalltimeswithin
thepotentialpowerofthecourt,mayneverbetakenintoactualcustodyatall.An
illustrationofthejurisdictionacquiredbyactualseizureisfoundinattachment
proceedings,wherethepropertyisseizedatthebeginningoftheaction,orsome
subsequentstageofitsprogress,andheldtoabidethefinaleventofthelitigation.An
illustrationofwhatwetermpotentialjurisdictionovertheres,isfoundintheproceeding
toregisterthetitleoflandunderoursystemfortheregistrationofland.Herethecourt,
withouttakingactualphysicalcontroloverthepropertyassumes,attheinstanceofsome
personclaimingtobeowner,toexerciseajurisdictioninremoverthepropertyandto
adjudicatethetitleinfavorofthepetitioneragainstalltheworld.

IntheterminologyofAmericanlawtheactiontoforecloseamortgageissaidto
beaproceedingquasiinrem,bywhichisexpressedtheideathatwhileitisnotstrictly
speakinganactioninremyetitpartakesofthatnatureandissubstantiallysuch.The
expression"actioninrem"is,initsnarrowapplication,usedonlywithreferenceto
certainproceedingsincourtsofadmiraltywhereinthepropertyaloneistreatedas
responsiblefortheclaimorobligationuponwhichtheproceedingsarebased.Theaction
quasiremdiffersfromthetrueactioninreminthecircumstancethatintheformeran
individualisnamedasdefendant,andthepurposeoftheproceedingistosubjecthis
interestthereintotheobligationorlienburdeningtheproperty.Allproceedingshaving
fortheirsoleobjectthesaleorotherdispositionofthepropertyofthedefendant,whether
byattachment,foreclosure,orotherformofremedy,areinageneralwaythus
designated.Thejudgmententeredintheseproceedingsisconclusiveonlybetweenthe
parties.

Inanordinaryattachmentproceeding,ifthedefendantisnotpersonallyserved,
thepreliminaryseizureisto,beconsiderednecessaryinordertoconferjurisdictionupon
thecourt.Inthiscasethelienonthepropertyisacquiredbytheseizure;andthepurpose
oftheproceedingsistosubjectthepropertytothatlien.Ifalienalreadyexists,whether
createdbymortgage,contract,orstatute,thepreliminaryseizureisnotnecessary;andthe
courtproceedstoenforcesuchlieninthemannerprovidedbylawpreciselyasthoughthe
propertyhadbeenseizeduponattachment.(Rollervs.Holly,176U.S.,398,405;44L.
ed.,520.)Itresultsthatthemerecircumstancethatinanattachmentthepropertymaybe
seizedattheinceptionoftheproceedings,whileintheforeclosuresuititisnottakeninto
legalcustodyuntilthetimecomesforthesale,doesnotmateriallyaffectthefundamental
principleinvolvedinbothcases,whichisthatthecourtishereexercisingajurisdiction
overthepropertyinaproceedingdirectedessentiallyinrem.

PassingnowtoaconsiderationofthejurisdictionoftheCourtofFirstInstancein
amortgageforeclosure,itisevidentthatthecourtderivesitsauthoritytoentertainthe
actionprimarilyfromthestatutesorganizingthecourt.Thejurisdictionofthecourt,in
thismostgeneralsense,overthecauseofactionisobviousandrequiresnocomment.
Jurisdictionoverthepersonofthedefendant,ifacquiredatallinsuchanaction,is
obtainedbythevoluntarysubmissionofthedefendantorbythepersonalserviceof
processuponhimwithintheterritorywheretheprocessisvalid.If,however,the
defendantisanonresidentand,remainingbeyondtherangeofthepersonalprocessofthe
court,refusestocomeinvoluntarily,thecourtneveracquiresjurisdictionovertheperson
atall.Herethepropertyitselfisinfactthesolethingwhichisimpleadedandisthe
responsibleobjectwhichisthesubjectoftheexerciseofjudicialpower.Itfollowsthat
thejurisdictionofthecourtinsuchcaseisbasedexclusivelyonthepowerwhich,under
thelaw,itpossessesovertheproperty;andanydiscussionrelativetothejurisdictionof
thecourtoverthepersonofthedefendantisentirelyapartfromthecase.Thejurisdiction
ofthecourtovertheproperty,consideredastheexclusiveobjectofsuchaction,is
evidentlybaseduponthefollowingconditionsandconsiderations,namely:(1)thatthe
propertyislocatedwithinthedistrict;(2)thatthepurposeofthelitigationistosubjectthe
propertybysaletoanobligationfixeduponitbythemortgage;and(3)thatthecourtata
properstageoftheproceedingstakesthepropertyintocustody,ifnecessary,andexpose
ittosaleforthepurposeofsatisfyingthemortgagedebt.Anobviouscorollaryisthatno
otherreliefcanbegrantedinthisproceedingthansuchascanbeenforcedagainstthe
property.

Thecourtmaythen,fromwhathasbeenstated,formulatedthefollowing
propositionrelativetotheforeclosureproceedingagainstthepropertyofa
nonresidentmortgagorwhofailstocomeinandsubmithimselfpersonallytothe
jurisdictionofthecourt:(I)Thatthejurisdictionofthecourtisderivedfromthe
powerwhichitpossessesovertheproperty;(II)thatjurisdictionoverthepersonis
notacquiredandisnonessential;(III)thatthereliefgrantedbythecourtmustbe
limitedtosuchascanbeenforcedagainstthepropertyitself.