FACTS:

On May 27, 1978, Jose Lara hired a passenger jeepney owned and operated by Willy Garcia, and driven by Emilio Macasieb, to transport his family, relatives, and friends. While on their way, a Ford truck driven by Willy Manuel hit and sideswept the jeepney, causing injuries to Lara and Arsenio Paed. The truck was insured by Paramount Surety and Insurance Co. Inc. (Paramount). Natividad, the owner of the truck, filed a claim with Paramount, who dispatched an adjuster to investigate the incident and recommended payment to Natividad. Paramount issued a check to Paed's wife for medical expenses and another check to the hospital for the victims' treatment. Lara and Paed filed a criminal case against Manuel, and Lara reserved the right to file a separate civil action against the operators and drivers of both vehicles, as well as Paramount. They eventually filed a civil case for damages against Garcia, Macasieb, Manuel, Natividad, and Paramount. The court declared Natividad, Manuel, and Paramount in default due to their continued failure to appear during the trial, and after protracted proceedings, the court rendered a decision in favor of Lara and Paed, ordering the defendants to pay damages.

ISSUES:

1. Whether or not the Regional Trial Court of Manila had jurisdiction over the person of the petitioner as insurer of the motor vehicle involved in the accident.

2. Whether or not the defendants were properly declared in default.

RULING:

1. No. The Regional Trial Court of Manila did not have jurisdiction over the person of the petitioner as insurer of the motor vehicle involved in the accident. The court lacked jurisdiction because the petitioner, as an entity distinct from its insured, was not impleaded in the civil case. Moreover, there was no finding that the petitioner voluntarily submitted itself to the jurisdiction of the trial court.

2. No. The defendants were not properly declared in default. The trial court erred in declaring them in default when they failed to appear during the trial. Due process required that the defendants be properly notified and given the opportunity to defend themselves. The mere failure to appear does not warrant a declaration of default.

PRINCIPLES:

• Courts can only exercise jurisdiction over parties who are properly impleaded in a case and have voluntarily submitted to its jurisdiction.

• Due process requires that parties be properly notified and given the opportunity to defend themselves before being subjected to adverse judgments.

• Mere failure to appear during trial does not automatically warrant a declaration of default.