(case no.

6)

BANCO ESPAÑOL-FILIPINO v. PALANCA

G.R. No. 11390
March 26, 1918
Art III – Judicial Proceedings

FACTS:
Engracio Palanca mortgaged various parcels of real property in Manila as security for a
debt he owed to El Banco Español-Filipino. After the execution of this instrument in 1906,
Engracio Palanca returned to China, which appears to have been his native country, and died there
on January 29, 1910. On March 31, 1908, Banco Español-Filipino instituted an action to foreclose
the mortgage. However, since Palanca was a nonresident at the time of the action, Banco Español-
Filipino needed to give notice to Palanca about the foreclosure proceedings by publication
(pursuant to section 399 of the Code of Civil Procedure). Publication was made in due form in a
newspaper in the City of Manila. The court, at the same time the order of publication was made,
also ordered the clerk of court to deposit in the post office a stamped envelope containing the
summons and a copy of the complaint to be sent to Palanca’s last known address (also pursuant to
section 399 of the Code of Civil Procedure), which was the City of Amoy, in the Empire of China.
However in an affidavit dated April 4, 1908, signed by an employee of the attorneys for the bank,
stated that the envelope was addressed to Engracio Palanca in Manila. On July 2, 1908, judgment
was taken against Palanca by default for not having appeared in court and on July 3, 1908, a
decision was made in favor of Banco Español-Filipino. In the decision, the court found that Palanca
still owed the bank P249,355.32 with interest and ordered him to deliver the payment on or before
July 6, 1908 to the clerk of court. The payment contemplated was never made; and upon July 8,
1908, the court ordered the sale of property. The sale was made on July 30,1908 and the property
was bought in for a sum of P110,200. On August 7, 1908, the court confirmed the sale. Seven
years later, on June 25, 1915, Vicente Palanca, administrator of Engracio Palanca’s estate, filed a
motion that requested the court to set aside the order of default on July 2, 1908, and the judgment
on July 3, 1908 and to vacate all proceedings subsequent thereto. The lower court denied the
application to set aside the judgment.

ISSUES:
1. Whether or not the court acquired the necessary jurisdiction to enable it to proceed with the
foreclosure of the mortgage.
2. Whether or not those proceedings were conducted in such a manner as to constitute due process
of law.

HELD:
1. Yes.

Digest prepared by: Marivir G. Abata

(case no. 6)

Assuming in this case that the clerk of court failed to follow the order of the judge to send the
envelope to Palanca in Amoy, China, this mere irregularity will not impair the jurisdiction of the
court because it is in the court’s opinion that jurisdiction rests upon a basis more secure than would
be supplied by any form of notice that could be given to a nonresident.
2. Yes.
Due process is satisfied if the following conditions are present, namely; (a) There must be a court
or tribunal clothed with judicial power to hear and determine the matter before it; (b)
jurisdiction must be lawfully acquired over the person of the defendant or over the property
which is the subject of the proceeding; (c) the defendant must be given an opportunity to be
heard; and (d) judgment must be heard upon lawful hearing. Notification of foreclosure
proceedings to the defendant is a necessity. The law recognizes this and requires the publication
of the proceedings in a newspaper and, usually in addition to this, the mailing of the notice to the
defendant, if his residence is known. There is, however, no assurance that the absent owner will
receive the notification. It should be noted that the law does not absolutely require the notice be
sent by mail in every event, but only when the address is known. The irregularity that the clerk of
court failed to send the envelope to the correct address does not equate to denial of due process of
law. Notice was given by publication in a newspaper and this is the only form of notice, which the
law unconditionally requires. It would be highly unreasonable to hold that the failure to mail the
notice was fatal. It is in the opinion of the court the provision of the Act of Congress declaring no
person shall be deprived of his property without due process of law has not been infringed.

Digest prepared by: Marivir G. Abata