CITIZENS’ SURETY & INSURANCE COMPANY, INC., PETITIONER, VS. HON. JUDGE A. MELENCIO-HERRERA, SANTIAGO DACANAY, AND JOSEFINA DACANAY, RESPONDENTS.

Petitioner Citizens’ Surety & Insurance Company, Inc, seeks
review of an order of respondent Judge in Civil Case No. 77134 of the Court of
First Instance of Manila, Branch XVII, entitled “Citizens’ Surety  & Ins­urance
Co., Inc. vs. Santiago Dacanay and Josefina Dacanay“, dismissing the complaint for lack of proper
service of summons upon defendants.

The record is to the effect that petitioner had filed its
complaint in the Court below, alleging that at request of defendant Santiago Dacanay, the plaintiff Surety Company had issued its Surety
Bonds Nos. 4942 and 4944, the first, in favor of Gregorio Fajardo
to guarantee payment of a P5,000-promissory note executed by said Dacanay, and
the second, in favor of Manufacturers Bank & Trust Co., to guarantee
payment of another promissory note in like amount; that in consideration of
said bonds, Santiago and Josefina Dacanay executed
Indemnity Agreements, binding themselves jointly and severally to indemnify
plaintiff for any losses, costs and expenses which it might sustain in
connection with the issuance of the bonds aforesaid, with interest at 12% per
annum; that as additional security, the Dacanays
mortgaged to plaintiff a parcel of land in Baguio
City, covered by Certificate of Title No. T-8116, the mortgage having been duly
recorded; that the promissory notes were not paid and as a result, plaintiff
Surety was compelled to pay P5,000.00 to Gregorio Fajardo
and P4,081.69 to the Manufacturers’ Bank; that the Dacanays
failed to reimburse the Surety for such payments, whereupon the Surety caused the
extra­judicial foreclosure of
the mortgage to pay its claim of P12,491.69 representing its payments, interest
and stipulated liquidated damages; that at the foreclosure sale, the land
mortgaged was sold to plaintiff, as highest bidder, for the sum of P2,000.00 –
leaving an unsatisfied balance of P10,491.69, that plaintiff sought to recover
from defendants Dacanay, plus 10% thereof as attorneys’ fees, and the costs.

At petitioner’s request, respondent Judge caused summons to be
made by publication in the newspaper Philippines Herald.  But despite the pub­lication
and deposit of a prepaid copy of the complaint at the Manila
post office, defendants did not appear within the period of 60 days from last
publication, as required by the summons.

Plaintiff then asked that defendants be declared in default; but
instead, the Judge, by order of May
16, 1970, asked it to show cause why the action should not be
dismissed, the suit being in personam
and defen­dants not having appeared. 
Then, on May 29, 1970,
respondent Judge dis­missed the case, despite plaintiff Surety’s argument that
the summons by publication was
sufficient and valid under section 16 of Rule 14 of the Revised Rules of Court.

We agree with respondent Judge that the action of plaintiff peti­tioner,
being in personam, the Court could not
validly acquire jurisdiction on a non-appearing defendant, absent a personal
service of summons within the forum. 
We have explicitly so ruled in Pantaleon
vs. Asuncioin, 105 Phil. 765, pointing out
without such personal service, any judgment on a non-appearing defendant would
be violative of due process.  In the aforecited
case this Court, through Justice Roberto Concepcion,
now Chief Justice, ruled as follows:

“Apart from the foregoing, it is a well-settled prin­ciple of
Constitutional Law that, in an action strictly in personam,
like the one at bar, personal service of summons, within the
forum, is essential to the acquisition of jurisdiction over the person of the
defendant, who does not voluntarily submit himself to the authority of the
court.  In other words, summons by
publication cannot consistently with the due process clause in the Bill of
Rights – confer upon the court jurisdiction over said defendants.

‘Due process of law requires personal
service to support a personal judgment, and, when the proceeding is
strictly in personam brought to
determine the personal rights and obligations of the parties, personal
service within the state or a voluntary appearance in the case is essential
to the acquisition of jurisdiction so as to constitute compliance with the cons­titutional
requirement of due process.  * * *.

‘Although a state legislature has more
control over the form of service on its own residents than nonresidents, it has
been held that in actions in personam * * * service
by publication on resident defendants, who are personally within the state
and can be found therein is not “due process of law“, and a statute
allowing it is unconstitutional.’ (16A C.J.S., pp. 786,
789; Italics ours.)”

The proper recourse for a creditor in the same situation as
petitioner is to locate properties, real or personal, of the resident defendant
debtor with unknown address and cause them to be attached under Rule 57,
section 1(f), in which case, the attachment converts the action into a
proceeding in rem or quasi in
rem and the summons by publication may then
accordingly be deemed valid and effective.

But because debtors who abscond and conceal themselves are also
quite adept at concealing their properties, the dismissal of the case below by
respondent Judge should be set aside and the case held pending in the court’s
archives, until petitioner as plaintiff succeeds in deter­mining the
whereabouts of the defendants’ person or properties and causes valid summons to
be served personally or by publication as the case may be.  In this manner, the tolling of the period of
prescription for as long as the debtor remains in hiding would properly be a
matter of court record, and he can not emerge after a sufficient lapse of time
from the dismissal of the case to profit from his own misdeed and claim
prescription of his just debt.

WHEREFORE, the order of dismissal of the case issued by
the Court below is hereby set
aside, and in the interest of justice, the proceedings are ordered suspended,
to be held pending until the plaintiff peti­tioner succeeds in ascertaining the
whereabouts of the defendants and/or locating properties of the same, to enable
proper summons to be issued conformably to this Opinion.  No costs.

Concepcion, C.J., Makalintal,
Zaldivar, Fernando, Teehankee,
Barredo, Villamor, and Makasiar, JJ., concur.

Dizon and
Ruiz Castro, JJ., reserve
their vote.