El Banco Espanol-Filipino vs. PalancaG.R. No.

L-11390, March 26, 191

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:
YES. 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. 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.
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.
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. In an
action quasi rem, 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.
If the defendant appears, the cause becomes mainly a suit in personam, with
the added incident, that the property attached remains liable, under the control of
the court, to answer to any demand which may be established against the defendant
by the final judgment of the court. But, if there is no appearance of the
defendant, and no service of process on him, the case becomes, in its essential
nature, a proceeding in rem, the only effect of which is to subject the property
attached to the payment of the defendant which the court may find to be due to the
plaintiff. (Cooper vs. Reynolds, 10 Wall., 308.)
Passing now to a consideration of the jurisdiction of the Court of First Instance in a
mortgage foreclosure, it is evident that the court derives its authority to entertain the action
primarily from the statutes organizing the court. The jurisdiction of the court, in this most
general sense, over the cause of action is obvious and requires no comment. Jurisdiction
over the person of the defendant, if acquired at all in such an action, is obtained by the
voluntary submission of the defendant or by the personal service of process upon him within
the territory where the process is valid. If, however, the defendant is a nonresident and,
remaining beyond the range of the personal process of the court, refuses to come in
voluntarily, the court never acquires jurisdiction over the person at all.
Here the property itself is in fact the sole thing which is impleaded and is the responsible
object which is the subject of the exercise of judicial power. It follows that the jurisdiction of
the court in such case is based exclusively on the power which, under the law, it possesses
over the property; and any discussion relative to the jurisdiction of the court over the person
of the defendant is entirely apart from the case. The jurisdiction of the court over the
property, considered as the exclusive object of such action, is evidently based
upon the following conditions and considerations, namely: (1) that the property is
located within the district; (2) that the purpose of the litigation is to subject the property by
sale to an obligation fixed upon it by the mortgage; and (3) that the court at a proper stage
of the proceedings takes the property into custody, if necessary, and expose it to sale for the
purpose of satisfying the mortgage debt. An obvious corollary is that no other relief can be
granted in this proceeding than such as can be enforced against the property.
We may then, from what has been stated, formulated the following proposition relative to
the foreclosure proceeding against the property of a nonresident mortgagor who
fails to come in and submit himself personally to the jurisdiction of the court: (I) That
the jurisdiction of the court is derived from the power which it possesses over the property;
(II) that jurisdiction over the person is not acquired and is nonessential; (III) that the relief
granted by the court must be limited to such as can be enforced against the property itself.
Involved in this decision is the principle that in proceedings in rem or quasi in rem against a
nonresident who is not served personally within the state, and who does not appear, the
relief must be confined to the res, and the court cannot lawfully render a personal judgment
against him. Therefore in an action to foreclose a mortgage against a nonresident, upon
whom service has been effected exclusively by publication, no personal judgment for the
deficiency can be entered.
In a foreclosure proceeding against a nonresident owner it is necessary for the court,
as in all cases of foreclosure, to ascertain the amount due, as prescribed in section 256 of
the Code of Civil Procedure, and to make an order requiring the defendant to pay the money
into court. This step is a necessary precursor of the order of sale. In the present case the
judgment which was entered contains the following words:
Because it is declared that the said defendant Engracio Palanca Tanquinyeng y
Limquingco, is indebted in the amount of P249,355.32, plus the interest, to the
'Banco Espanol-Filipino' . . . therefore said appellant is ordered to deliver the above

amount etc., etc.

This is not the language of a personal judgment. Instead it is clearly intended merely as a
compliance with the requirement that the amount due shall be ascertained and that the
evidence of this it may be observed that according to the Code of Civil Procedure a personal
judgment against the debtor for the deficiency is not to be rendered until after the property
has been sold and the proceeds applied to the mortgage debt. (sec. 260).
The conclusion upon this phase of the case is that whatever may be the effect in other
respects of the failure of the clerk of the Court of First Instance to mail the proper
papers to the defendant in Amoy, China, such irregularity could in no wise impair or defeat
the jurisdiction of the court, for in our opinion that jurisdiction rest upon a basis much more
secure than would be supplied by any form of notice that could be given to a resident of a
foreign country.
Before leaving this branch of the case, we wish to observe that we are fully aware that many
reported cases can be cited in which it is assumed that the question of the sufficiency of
publication or notice in a case of this kind is a question affecting the jurisdiction of the court,
and the court is sometimes said to acquire jurisdiction by virtue of the publication.
This phraseology was undoubtedly originally adopted by the court because of the analogy
between service by the publication and personal service of process upon the defendant;
and, as has already been suggested, prior to the decision of Pennoyer vs. Neff (supra) the
difference between the legal effects of the two forms of service was obscure. It is
accordingly not surprising that the modes of expression which had already been molded into
legal tradition before that case was decided have been brought down to the present day. But
it is clear that the legal principle here involved is not effected by the peculiar language in
which the courts have expounded their ideas.
Jurisdiction
Caluag v. Pecson 82 Phil. 8
FACTS:
On August 10, 1937, Fortunato Alejo filed a complaint against the spouses Caluag
for the redemption of one-half pro indiviso of a parcel of land in Guiguinto, Bulacan.
After trial, the CFI of Bulacan rendered judgment on June 23, 1941, ordering
petitioners to execute a deed of sale in favor of Fortunato Alejo, upon payment by plaintiff,
as purchase price, of the amount of P2,551.
CA of Central Luzon on May 30, 1944 - affirmed.
A petition for review on certiorari was denied by the SC on July 28, 1944. Petitioners'
counsel alleges, under oath, that he was not notified of said denial. The record of the case
was lost or burned during the liberation of Manila. Fortunato Alejo died on December 10,
1944, petitioners made aware of the fact only on December 1, 1946. The record, upon
petition, was duly reconstituted on August 30, 1946, a resolution to said effect having been
issued by this Court.
On October 21, 1946, respondent Leon Alejo, judicial administrator of the estate of
Fortunato Alejo, filed a motion for the execution of the judgment but was
indefinitely postponed prompting him to file another motion for the execution of the
judgment, which was granted on January 7, 1947, Judge Potenciano Pecson ordering
defendants "to execute the deed of sale in favor of the plaintiff for the sum of P2,551 over
one-half of the land pro indiviso described in transfer certificate of title No. 19178 within ten
days from the receipt of a copy of this order; upon failure to do so the said defendants
will be dealt with for contempt of court:"
On February 3, 1947, Leon Alejo filed a petition praying that defendants be
punished for contempt for having failed to comply with the order of January 7. On
February 19, defendants filed a petition seeking reconsidering of the order of January 7, and
dismissal of the complaint for contempt, upon three grounds: (a) That the judgment of the

Court of Appeals of Central Luzon, has not become final and executory; (b) That the
plaintiff's action was abated or extinguished upon Fortunato Alejo's death, his right to legal
redemption being personal; and (c) That his successors cannot ask for the execution of the
judgment because they failed to secure the reglementary substitution of parties and
amendment of the judgment.
On March 3, Judge Pecson denied defendants' petition and granted them five days
within which to comply with the order of January 7, otherwise they would be held in
contempt of court. On March 17, defendants filed another petition for reconsideration. On
March 21, Leon Alejo moved again that defendants be punished for contempt. On April 1,
Judge Angel H. Mojica issued a resolution denying the second petition for reconsideration,
finding defendants guilty of contempt of court and ordering their confinement in the
provincial jail of Bulacan until they have complied with the order of January 7, directing
further that warrant of arrest be issued to said effect. On April 1, 1947, Leon Alejodeposited
with the court of first instance the amount of P2,261.63, evidenced by provincial receipt No.
211013.
Hence, a petition for certiorari and prohibition filed by the petitioners on the ground
that the respondent judge acted without or in excess of the jurisdiction of the court in
rendering the resolution dated April 1, 1947, which declares the petitioners guilty of
contempt of court for not complying or performing the order of the court of January 7, 1947,
in case No. 5486 of the Court of First Instance of Bulacan, requiring the petitioners to
execute a deed of sale in favor of plaintiff over one-half of the land pro indiviso in question,
within ten days from the receipt of copy of said resolution, and which orders that the
petitioners be imprisoned until they perform the said act.
ISSUE/S: Whether or not respondent Judges acted without jurisdiction in proceeding against
and declaring the petitioners guilty of contempt of court?
RULING: YES, the contempt supposed to have been committed by the petitioners is not a
direct contempt under section 1, Rule 64, for it is not a misbehavior in the presence of or so
near a court or judge as to interrupt the administration of justice.
It is an indirect contempt or disobedience of a lawful order of the court, under
section 3, Rule 64, of the Rules of Court. According to sections 4 and 5 of said rule, where a
contempt under section 3 has been committed against a superior court or judge the
charge may be filed with such superior court, and the accused put under custody; but if the
hearing is ordered to be had forthwith, the accused may be released from custody upon
filing a bond in an amount to be fixed by the court for his appearance to answer the charge.
From the record it appears that no charge for contempt was filed against the
petitioners nor was a trial held. The only proceeding had in this case which led to the
conviction of the defendants are: the order of January 7, 1947, issued by the lower court
requiring the defendants to execute the deed of conveyance as direct in the judgment within
ten days from the receipt of the copy of said order, with the admonition that upon failure to
do so said petitioners will be dealt with for contempt of court; the motion of March 21, 1947,
filed by the attorney for the respondent Leon Alejo, administrator of the estate of Fortunato
Alejo, that the petitioners be punished for contempt; and the resolution of the court of April
1, 1947, denying the second motion for reconsideration of March 17, 1947, of the order of
January 7, 1947, filed by the petitioners, and ordering the petitioners to be imprisoned in the
provincial jail until they have complied with the order of the court above mentioned.
It is well settled that jurisdiction of the subject matter of a particular case is
something more than the general power conferred by law upon a court to take cognizance of
cases of the general class to which the particular case belongs. It is not enough that a court
has power in abstract to try and decide the class of litigations to which a case belongs; it is
necessary that said power be properly invoked, or called into activity, by the filing of a
petition, complaint or other appropriate pleading.