BANCO ESPANOL-FILIPINO V.
PALANCA court had never acquired jurisdiction over defendant or over the subject of the
March 26, 1918 | Street, J. | Procedural Due Process
PLAINTIFF-APPELLANT: El Banco Espanol-Filipino
DEFENDANT-APPELLANT: Vicente Palanca, administrator of the estate of
Engracio Palanca Tanguinyeng,
DOCTRINE:
The requirement of due process is satisfied if the following conditions are present,
namely;
(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:
● Engracio Palanca mortgaged various parcels of real property in Manila as a security
for a debt owing by him to the El Banco Espanol-Filipino (Petitioner Bank) Upon
March 31, 1906, the debt amounted to P218,294.10 and was drawing interest at the
rate of 8 per centum per annum, payable at the end of each quarter. It appears that
the parties to this mortgage at that time estimated the value of the property in
question at P292,558, which was about P75,000 in excess of the indebtedness. After
the execution of this instrument by the mortgagor, he returned to China which
appears his native country; and he there died without returning to the Philippine.
● Hence this action was instituted by the bank to foreclose the mortgage
● Since the defendant was a nonresident at the time of the institution of the action,
pursuant to Sec. 399 of the Code of Civil Procedure, the bank must give notice
regarding the foreclosure proceeding to defendant by publication. An order for
publication was then obtained and publication was made in due form in a newspaper
of Manila. At the same time, the order of the court should 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, China.
● A decision in the trial court (TC) was rendered in favor of the plaintiff and found
that Engracio’s indebtedness amounted to P249,355.32 with interest. TC then
ordered that defendant should deliver said amount for failure to do so would expose
the mortgage property to public sale.
● Unfortunately, said payment was not made, so the court ordered the sale of the
property. Petitioner Bank bought the property as the highest bidder for the sum of
P110,200 which was later on confirmed by the court.
● After 7 years, a motion was made by Vicente Palanca, administrator of Engracio’s
estates, wherein applicant requested the court to set aside the order of default and
judgement rendered last 1908, and to vacate all the proceedings subsequent thereto.
The basis of the motion was that the order and judgement were void because the
action.
● Application to vacate the judgement was denied, hence this appeal.
ISSUE: WON due process was not observed
HELD: 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:
● The Court observe that in a foreclosure case some notification of the proceedings to
the nonresident owner, prescribing the time within which appearance must be made,
is everywhere recognized as essential. To answer this necessity the statutes
generally provide for publication, and usually in addition thereto, for the mailing of
notice to the defendant, if his residence is known. It is merely a means provided by
law whereby the owner may be admonished that his property is the subject of
judicial proceedings and that it is incumbent upon him to take such steps as he sees
fit to protect it.
● It will be observed that this mode of notification does not involve any absolute
assurance that the absent owner shall thereby receive actual notice.
● The provision of our law relative to the mailing of notice does not absolutely require
the mailing of notice unconditionally. In the light of all these facts, it is evident
that actual notice to the defendant in cases of this kind is not, under the law, to
be considered absolutely necessary.
● It is the duty of the owner of real estate, who is a nonresident, to take measures that
in some way he shall be represented when his property is called into requisition, and
if he fails to do this, and fails to get notice by the ordinary publications which have
usually been required in such cases, it is his misfortune, and he must abide the
consequences.
● SC: “The observations which have just been made lead to the conclusion that the
failure of the clerk to mail the notice, if in fact he did so fail in his duty, is not such
an irregularity, as amounts to a denial of due process of law; and hence in our
opinion that irregularity, if proved, would not avoid the judgment in this case.
Notice was given by publication in a newspaper and this is the only form of notice
which the law unconditionally requires. This in our opinion is all that was absolutely
necessary to sustain the proceedings.”