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Friday, December 10, 2010

El Banco Espanol-Filipino vs. Vicente Palanca G.R. No. L-11390,

March 26, 1918
El Banco Espanol-Filipino vs. Palanca
G.R. No. L-11390, March 26, 1918

* JURISDICTION, HOW ACQUIRED: Jurisdiction over the property which is the subject of the litigation
may result either from a seizure of the property under legal process, whereby it is brought into the
actual custody of the law, or it may result from the institution of legal proceedings wherein, under
special provisions of law, the power of the court over the property is recognized and made effective.
* The action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is expressed
the idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is
substantially such.
* DUE PROCESS IN FORECLOSURE PROCEEDINGS: Property is always assumed to be in the
possession of its owner, in person or by agent; and he may be safely held, under certain conditions,
to be affected with knowledge that proceedings have been instituted for its condemnation and sale.

FACTS:

Engracio Palanca Tanquinyeng y Limquingco mortgaged various parcels of real property in Manila to
El Banco Espanol-Filipino. Afterwards, Engracio returned to China and there he died on January 29,
1810 without returning again to the Philippines. The mortgagor then instituted foreclosure
proceeding but since defendant is a non-resident, it was necessary to give notice by publication. The
Clerk of Court was also directed to send copy of the summons to the defendants last known
address, which is in Amoy, China. It is not shown whether the Clerk complied with this requirement.
Nevertheless, after publication in a newspaper of the City of Manila, the cause proceeded and
judgment by default was rendered. The decision was likewise published and afterwards sale by
public auction was held with the bank as the highest bidder. On August 7, 1908, this sale was
confirmed by the court. However, about seven years after the confirmation of this sale, a motion was
made by Vicente Palanca, as administrator of the estate of the original defendant, wherein the
applicant requested the court to set aside the order of default and the judgment, and to vacate all the
proceedings subsequent thereto. The basis of this application was that the order of default and the
judgment rendered thereon were void because the court had never acquired jurisdiction over the
defendant or over the subject of the action.

ISSUE:

* Whether or not the lower court acquired jurisdiction over the defendant and the subject matter of
the action
* Whether or not due process of law was observed

RULING:

On Jurisdiction

The word jurisdiction is used in several different, though related, senses since it may have
reference (1) to the authority of the court to entertain a particular kind of action or to administer a
particular kind of relief, or it may refer to the power of the court over the parties, or (2) over the
property which is the subject to the litigation.

The sovereign authority which organizes a court determines the nature and extent of its powers in
general and thus fixes its competency or jurisdiction with reference to the actions which it may
entertain and the relief it may grant.

How Jurisdiction is Acquired

Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his
submission to its authority, or it is acquired by the coercive power of legal process exerted over the
person.

Jurisdiction over the property which is the subject of the litigation may result either from a seizure of
the property under legal process, whereby it is brought into the actual custody of the law, or it may
result from the institution of legal proceedings wherein, under special provisions of law, the power of
the court over the property is recognized and made effective. In the latter case the property, though
at all times within the potential power of the court, may never be taken into actual custody at all. An
illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where
the property is seized at the beginning of the action, or some subsequent stage of its progress, and
held to abide the final event of the litigation. An illustration of what we term potential jurisdiction
over the res, is found in the proceeding to register the title of land under our system for the
registration of land. Here the court, without taking actual physical control over the property assumes,
at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the
property and to adjudicate the title in favor of the petitioner against all the world.

In the terminology of American law the action to foreclose a mortgage is said to be a proceeding
quasi in rem, by which is expressed the idea that while it is not strictly speaking an action in rem yet
it partakes of that nature and is substantially such. The expression "action in rem" is, in its narrow
application, used only with reference to certain proceedings in courts of admiralty wherein the
property alone is treated as responsible for the claim or obligation upon which the proceedings are
based. The action quasi rem differs from the true action in rem in the circumstance that in the
former an individual is named as defendant, and the purpose of the proceeding is to subject his
interest therein to the obligation or lien burdening the property. All proceedings having for their sole
object the sale or other disposition of the property of the defendant, whether by attachment,
foreclosure, or other form of remedy, are in a general way thus designated. The judgment entered in
these proceedings is conclusive only between the parties.
It is true that in proceedings of this character, if the defendant for whom publication is made
appears, the action becomes as to him a personal action and is conducted as such. This, however,
does not affect the proposition that where the defendant fails to appear the action is quasi in rem;
and it should therefore be considered with reference to the principles governing actions in rem.

Lex at 7:35 AM

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