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

Hernandez & Atienza vs. Rural Bank of Lucena, Central Bank & MartinezFacts:Petitioners obtained from Rural Bank of Lucena a loan secured by a mortgage on their two lots. About three months after the loan was obtained, the Lucena Bank became a distress bank. Before the expiration of the one-year term of the loan, Hernandez went to the bank and offered to pay the loan but was refused reasoning that the operations of the Lucena Bank were suspended. Instead of filing a consignation complaint, Hernandez enclosed the check with his letter to the clerk of court of the CFI of Lipa City. Later on, petitioners filed an action in the CFI of Lipa City to compel the respondents to accept the check and to execute the cancellation of the real estate mortgage. Central Bank filed a motion to dismiss alleging that the venue was improperly laid because the action of the petitioners is a real action affecting title to rel property which should have been filed in the CFI of Rizal at QC where the mortgaged lots are situated. The motion was denied.Issue:WON the action of the petitioners to compel the bank to honor the check and to cancel the mortgage on their two lots is a real action.Held: NO, it is not a real action, it is a personal action.Section 2(a), Rule 4 of the Rules of Court provides that actions affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property, shall be commenced and tried in the province where the property or any part thereof lies.Note that the rule mentions an action for foreclosure of a real estate mortgage but does not mention an action for the cancellation of a real mortgage.In the instant case, the action is primarily to compel the mortgagee to accept payment of the mortgage debt and to release the mortgage.That action, which is not expressive included in the enumeration found in section 2(a) of Rule 4, does not involve the title to the mortgage lots. It is a personal action and not a real action.The mortgagee has, not foreclosure the mortgage, Plaintiffs title is not in question. They are in possession of the mortgaged lots.Hence, the venue of plaintiffs personal action is the place where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.* * * * * *A real action is not the same as an action in rem and a personal action is not the same as an action in personam.In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real property. or, as indicated in section 2(a) of Rule 4, a real action Is an action affecting tithe to real property or for the recovery of possession or for partition or condemnation of, or foreclosure of a mortage on, real property.An action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action against the thing itself, instead of against the person (1 C. J. S. 943-4), Hence, a real action may at the same time be an action in personam and not necessary an action in rem.

Rayray vs. Chae Kyung LeeFacts:Lorenzo Rayray seeks the annulment of his marriage to Chae Kyung Lee. Defendants whereabouts being unknown, summons was served by publication. Not having filed an answer, Rayray moved that defendant be declared in default, which was granted after finding that there was no collusion between the parties. The trial court dismissed the complaint ruling that it had no jurisdiction to pass upon the validity of Rayrays marriage to defendant, it having been solemnized in Seoul, Korea.Issue:WON the trial courts dismissal of the complaint is correct; or, WON the trial court has jurisdiction to pass upon the validity of the marriage though such was solemnized in Korea.Held: No, the dismissal is not correct, thus, it could validly inquire into the validity of the marriage.1.In order that a given case could be validly decided by a court of justice, it must have jurisdiction over (1) the subject-matter of the litigation; (2) the person of the parties therein; and (3) in actions in rem or quasi-in-rem, the res.The subject-matter of the present case is the annulment of plaintiffs marriage to the defendant, which is within the jurisdiction of our courts of first instance,and, in Manila, of its Court of Juvenile and Domestic Relations.2. The courtacquiredjurisdiction over plaintiffherein by his submission thereto in consequence of the filing of the complaint.Defendant was placed under the jurisdiction of said court, upon the service of summons by publication.3. This is anaction in rem, for itconcerns the status of the partiesherein, and status affects or binds the whole word.The res in the present case is the relation between said parties, or their marriage tie.Jurisdiction over the same depends upon the nationality or domicile of the parties, not the place of celebration of marriage, or the locus celebrationis.* * * * * *The prevailing rule is, accordingly, that a court has jurisdiction over the res, in an action for annulment of marriage, provided, at least,one of the parties is domiciled in, or a national of, the forum.Since plaintiff is a Filipino, domiciled in the Philippines, it follows that the lower court had jurisdiction over the res, in addition to its jurisdiction over the subject-matter and the parties. In other words, it could validly inquire into the legality of the marriage between the parties herein.

II. JURISDICTIONArmoganda (lessees) vs. CA & Saycon (lessors)Facts:Sps. Saycon leased to Sps. Armoganda a fishpond. The rentals for the entire leased period were duly paid. Later on, the lessors, allegedly with the aid of armed men, forcibly entered the leased fishpond and prevented the lessees and their workmen from entering the premises since, according them, the fishpond had been forfeited in favour of the govt and thus the rights of the lessees over the fishpond were not anymore existing. The lessees filed a complaint against the lessors to compel them to return the leased premises and prayed for a writ of preliminary injunction which was granted by the RTC. On appeal, the IAC ruled that the trial court has no jurisdiction over the case since the complaint filed is in the nature ofrecovery of possession(forcible entry) and thus should have been filed in the MTC.Issue:WON the RTC has jurisdiction over the case.Held: YES.The action is, in reality, one for specific performance,i.e., to compel the private respondents, as lessors, to comply with their obligations under the lease contract and return the possession of the leased premises to them, and for damages due to their (private respondents) unjust occupation of the land.Such action is one not capable of pecuniary estimation and comes within the exclusive original jurisdiction of regional trial courts.A review of the jurisprudence of this Court indicates that in determining whether anaction is one not capable of peculliary estimation, this Court has adopted the criterion offirst ascertaining the nature of the principal action or remedy sought.If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right torecover a sum of money, orwhere the money claim is purely incidental to,or a consequence of,the principal relief sought like in the suits to have the defendant perform his paint of the contract(specific performance) and inactions for support, or forannulment of a judgmentorto foreclose a mortgage, this Court has considered suchactions as cases where the subject of the litigation may not be estimated in terms of money, and arecognizable exclusively by courts of firstinstance. Since the present action is to compel the private respondents to perform their part of the contract of lease to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract, the action is within the exclusive original jurisdiction of the regional trial court.

Good Devt Corporation vs. Hon. Tutaan, Delos Reyes & MarceloFacts:Good Devt Corp filed in the CFI a complaint against Delos Reyes & Marcelo for the collection of a sum of money (P1,520.00) plus interest, and the sum equivalent to 25% of the total amount due as attys fees, and in default thereof to order the foreclosure of the chattel mortgage covering personal properties valued at P15,340.00. Subsequently, private respondents filed a motion to dismiss the complaint for lack of jurisdiction for the reason that, among others, the petitioner in its complaint prays for a sum of money amounting to P1,520.00 under the municipal court. The trial court dismissed the complaint on the ground thatthe case being one for a sum of money, the cause of action must be governed by the law on jurisdiction. Assuming the validity of plaintiffs principal claim the total thereof cannot and will not reach P10,000.00. It then becomes clear that this case must fall within the exclusive original jurisdiction of the city court.Issue:WON the CFI was correct in dismissing the complaint; or WON the CFI has jurisdiction over the case.Held:The CFI should not have dismissed the complaint for such has jurisdiction over the case.Based on jurisprudence,although the purpose of an action is to recover an amount plus interest which comes within the original jurisdiction of the Justice of the Peace Court, yet when said actioninvolves the foreclosure of a chattel mortgage covering personal properties valued at more than P2,000, (now P10,000.00) the action should be instituted before the Court of First Instance.In the instant case, the action is to recover the amount of P1,520.00 plus interest and costs, and involves the foreclosure of a chattel mortgage of personal properties valued at P15,340.00, so thatit is clearly within the competence of the respondent court to try and resolve.