MAGDALENA ESTATE, INC., PLAINTIFF-APPELLEE, VS. RENE NIETO AND HELEN GARCIA, DEFENDANTS-APPELLANTS.

Appeal from the judgment of the then Court of First Instance of Rizal
in Quezon City, ordering defendants-appellants Rene Nieto and Helen Garcia to
pay plaintiff-appellee:

“1)    the sum of P11,999.00, with interest thereon
at the rate of 7% per annum, beginning April 21, 1970, the date of the letter
of demand, until the same shall have been fully paid;

“2)    the sum of P2,000.00 as and for attorney’s
fees; and

“3)    the costs of the suit.” (p. 41, Record on Appeal)

The facts which led to the above judgment are summarized by the
trial court as follows:

“The evidence shows that the defendants herein bought from the
plaintiff a parcel of land located at New Manila Subdivision, Quezon City. Even if defendants had not fully paid the consideration for the
said lot, by special arrangement with
the plaintiff, the former were able to have the title to said lot transferred in their names. They had made partial payments only and the
balance of their account in the amount of P12,000.00 was secured by a
promissory note which they executed on November 3, 1960, under the following
terms and conditions to wit: (a) the
defendants shall pay plaintiff the sum of P12,000.00, with interest thereon at
the rate of 7% per annum, said amount
to be payable without demand in consecutive monthly installments of not less
than P500.00 per month, beginning December 3, 1960, and on the third day of
each month thereafter, until fully paid; (b) in case of failure to pay any
monthly installment due, the total obligation, or the balance thereof, shall
automatically become due and immediately payable; (c) that the plaintiff
shall have the right to enforce payment
of the obligation, together with the corresponding interest, including
attorney’s fees and the costs of suit in case of litigation to enforce
collection of the said obligation (Exhibit ‘C’). Out of the aforesaid amount of P12,000.00, defendants paid only
P100.00 in two installments of P50.00 each. The first payment was made on January 29, 1963 and the second payment
was made on March 14, 1963, leaving a balance of P11,999.90, exclusive of
interests. Plaintiff wrote defendants a
letter of demand calling the attention of the latter about the installments in
arrears under the terms and conditions of the promissory notes; but in spite of
the said letter, de­fendants did not comply with their obli­gation. Plaintiff referred the matter to its legal
counsel, who, in turn, sent defendants a letter of demand dated April 21, 1970
which letter was received by the defendants (Exhibits ‘D’, ‘D-1’ &
‘D-2’). Despite receipt of said letter,
defendants did not comply and even failed to make a reply. Plaintiff
presented further a statement of account stating therein that the amount still
owing to it, inclusive of interest up to September 19, 1972 is P21,876.44;
P11,999.00, the amount of the principal and P9,976.44 the amount of interest
from November 3, 1960 up to September 19, 1972 (Exhibit ‘E’).” (pp. 33-34,
Rollo)

There was an ex-parte
reception of evidence because the defendants-appellants had been declared in
default, plaintiff having complied with the court’s order allowing service of
summons and copy of the complaint upon the defendants-appellants through
publication of the same in a newspaper of general circulation (Daily Mirror),
pursuant to Section 16, Rule 14 of the Rules of Court.

Plaintiff claims that
summons could not be served personally upon the defendants because they
concealed themselves to avoid service upon them; and, that when the sheriff
went to the Jai-Alai Corporation of the Philippines at Cebu City where
defendant-appellant Rene Nieto holds office, as manager, he could not be found
thereat but, when the decision was served at the same address, the
defendants-appellants were able to receive it.

In this appeal, defendants-appellants contend
that the lower court erred: (1) in
allowing service of summons by publication, and consequently, the trial court
did not acquire jurisdiction over the defendants-appellants, and the decision
is therefore void; (2) in granting relief to plaintiff-appellee when its cause
of action is barred by laches; (3) in lifting its orders dismissing the
complaint for failure to prosecute; and (4) in granting interests from November
3, 1960.

There is merit in this
appeal. It is true that in Fontanilla
vs. Dominguez, 73 Phil. 579, it was held that service of summons by publication
is proper in all actions without distinction, provided the defendant is
residing in the Philippines but his identity is unknown or his address cannot
be ascertained. However, in a later
case, Pantaleon vs. Asuncion, 105 Phil. 765, the Court, speaking through then
Justice Roberto Concepcion, ruled that “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 defendant.” And, quoting 16A C.J.S., pp. 786, 789,
as follows: “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.”

The action of herein
plaintiff-appellee, being in personam, the doctrine laid down in Pantaleon vs.
Asuncion (supra) finds application. And, the latest expression of such a doctrine comes from Justice J. B.
L. Reyes in the case of Citizens’ Surety and Insurance Company, Inc. vs.
Melencio-Herrera, 38 SCRA 369, in these words: “x x x the Court could not validly acquire
jurisdiction on a non-appearing defendant, absent a personal service of
summons within the forum. x x x
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.”

Inasmuch as in the case
at bar the lower court did not acquire jurisdiction over the person of the
defendants-­appellants, We find it unnecessary to discuss the other
assigned errors raised by them.

WHEREFORE, the decision, dated October 5, 1972 of the
court a quo, is
hereby SET ASIDE and the case is
remanded to the trial court for proper service of summons and trial.

SO ORDERED.

Teehankee, (Chairman), Melencio-Herrera, Plana, and Gutierrez, Jr., JJ., concur.