Optima Realty Corporation vs. Hertz Phil. Exclusive Cars, Inc.

A defendant who files a motion seeking affirmative relief, such as leave to file an answer with counterclaim, voluntarily submits to the court's jurisdiction and cures any defect in the service of summons, provided that the objection to jurisdiction is not raised explicitly and unequivocally as a special appearance distinct from the request for affirmative relief.

Optima Realty Corporation, engaged in the business of leasing commercial spaces, entered into a Contract of Lease with Hertz Phil. Exclusive Cars, Inc. for a 131-square-meter office unit and a parking slot in the Optima Building. The lease period was amended to run from October 1, 2003 to February 28, 2006. During the lease term, Hertz accumulated arrears in rentals and utility bills. The contract required Hertz to give written notice of intent to renew at least 90 days prior to expiration, but Hertz failed to do so within the stipulated period.

• Optima and Hertz entered into a Contract of Lease dated December 12, 2002, which was amended on March 9, 2004, to set the lease period from October 1, 2003 to February 28, 2006.
• Renovations in the Optima Building from January to November 2005 allegedly caused a 50% drop in Hertz's monthly sales.
• Hertz requested a 50% rent discount for May through August 2005, which Optima granted via letter dated December 8, 2005.
• Hertz subsequently failed to pay rentals for August 2005 to February 2006 (seven months) and utility bills for November 2005 to February 2006 (four months).
• The Contract of Lease required written notice of intent to renew at least 90 days prior to termination (by November 30, 2005 for the February 28, 2006 expiration date).
• Hertz belatedly sent a letter expressing intent to negotiate renewal on December 21, 2005, which Optima rejected as untimely.
• On January 30, 2006, Hertz filed a Complaint for Specific Performance, Injunction and Damages before the Regional Trial Court against Optima.
• On March 1, 2006, Optima demanded Hertz to vacate the premises and pay arrears totaling ?420,967.28.
• Hertz refused to vacate, prompting Optima to file a Complaint for Unlawful Detainer before the Metropolitan Trial Court (MeTC), Branch 64, Makati City.
• Summons for the Unlawful Detainer case was served on March 14, 2006 on Henry Bobiles, Quality Control Supervisor of Hertz, who received it per telephone instruction of Manager Rudy Tirador.
• On March 28, 2006, Hertz filed a Motion for Leave of Court to File Answer with Counterclaim, stating therein that "in spite of the defective service of summons, [it] opted to file the instant Answer with Counterclaim."
• The Answer with Counterclaim itself did not raise improper service of summons as a defense, but instead raised litis pendentia, pari delicto, performance of obligations, and lack of cause of action, and asserted a counterclaim for damages against Optima.

• That the MeTC acquired jurisdiction over the person of respondent Hertz through voluntary appearance, as evidenced by its filing of a Motion for Leave to File Answer with Counterclaim and the assertion of affirmative relief via counterclaim.
• That the reference to "defective service of summons" in the Motion for Leave did not constitute a valid special appearance challenging jurisdiction, as the motion sought affirmative relief and the Answer itself did not raise lack of jurisdiction as a defense.
• That the unlawful detainer case is not barred by litis pendentia because the pending specific performance case involves different causes of action and reliefs (renegotiation and reconnection of utilities vs. ejectment and collection of arrears).
• That ejectment was proper under Article 1673 of the Civil Code due to non-payment of rent and expiry of the lease term, and that the award of attorney's fees was justified by Hertz's unjustified refusal to vacate.

• That the MeTC failed to acquire jurisdiction over the person of Hertz because summons was improperly served on a Quality Control Supervisor, who is not among the officers authorized to receive summons under Section 11, Rule 14 of the Rules of Civil Procedure.
• That the filing of the Motion for Leave to File Answer was a conditional appearance to challenge jurisdiction, not a voluntary submission, and that the mention of "defective service" preserved its objection.
• That the unlawful detainer case is barred by litis pendentia because of the pendency of its Complaint for Specific Performance filed before the RTC involving the same parties and subject matter.
• That its failure to pay rent was justified by the substantial decrease in sales caused by renovations, and that the 90-day notice requirement was waived or should be deemed substantially complied with given the circumstances.

• Procedural Issues:
  • Whether the Metropolitan Trial Court properly acquired jurisdiction over the person of respondent Hertz despite the allegedly defective service of summons.
• Substantive Issues:
  • Whether the unlawful detainer case is barred by litis pendentia by reason of the pending specific performance case filed by Hertz.
  • Whether the ejectment of Hertz and the award of damages, attorney's fees and costs are proper.

• Procedural:
  • The MeTC acquired jurisdiction over the person of Hertz through voluntary appearance. Citing Philippine Commercial International Bank v. Spouses Dy, the Court held that jurisdiction is acquired either by service of summons or voluntary appearance, and that one who seeks affirmative relief is deemed to have submitted to the court's jurisdiction. Although Hertz mentioned "defective service of summons" in its Motion for Leave to File Answer, this did not constitute a special appearance because the motion sought affirmative relief (admission of Answer with Counterclaim), and the Answer itself never raised improper service as a defense but instead asserted a counterclaim. A special appearance must explicitly and unequivocally challenge jurisdiction; failure to do so while seeking affirmative relief constitutes voluntary submission.
• Substantive:
  • The unlawful detainer case is not barred by litis pendentia. While there is identity of parties, the rights asserted and reliefs prayed for differ: the specific performance case sought renegotiation of the lease, reconnection of utilities, and damages, while the unlawful detainer case sought ejectment and collection of rental arrears. Since the reliefs are different, there is no litis pendentia.
  • The ejectment and award of damages were proper. Hertz failed to pay rentals for seven months and utility bills for four months, constituting grounds for ejectment under Article 1673(2) of the Civil Code. Additionally, the lease expired on February 28, 2006, because Hertz failed to give the required 90-day notice for renewal, constituting grounds for ejectment under Article 1673(1). Hertz's continued occupation after lease expiration justified the award of monthly compensation equivalent to the contract rent (?54,200.00) and attorney's fees (?30,000.00) for its unjustified retention of the premises.

• Voluntary Appearance — Jurisdiction over the defendant's person may be acquired by voluntary appearance, which occurs when a party files a motion seeking affirmative relief. Filing a motion to admit an answer with counterclaim constitutes voluntary submission to the court's jurisdiction, even if the motion contains a passing reference to defective service of summons, provided the objection to jurisdiction is not raised explicitly and unequivocally as a special appearance.
• Special Appearance — A party may challenge the court's jurisdiction over its person through a special appearance, but such objection must be made explicitly and unequivocally. If a party files a pleading or motion seeking affirmative relief while merely mentioning a procedural defect, it is deemed to have voluntarily submitted to jurisdiction.
• Litis Pendentia — Requires concurrence of: (1) identity of parties or representation of same interests; (2) identity of rights asserted and reliefs prayed for founded on the same facts; and (3) identity such that any judgment would amount to res judicata in the other case. The doctrine does not apply when the reliefs sought in the two actions are different.
• Grounds for Judicial Ejectment under Article 1673 of the Civil Code — Judicial ejectment is proper upon: (1) expiry of the period agreed upon or before the expiration of the notice in case of tacit renewal (Article 1673(1)); and (2) failure to pay the price of the lease or compliance with the conditions agreed upon (Article 1673(2)).

• "One who seeks an affirmative relief is deemed to have submitted to the jurisdiction of the court."
• "Special appearance operates as an exception to the general rule on voluntary appearance... objections to the jurisdiction of the court over the person of the defendant must be explicitly made, i.e., set forth in an unequivocal manner; and failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in instances where a pleading or motion seeking affirmative relief is filed and submitted to the court for resolution."

• Philippine Commercial International Bank v. Spouses Dy — Controlling precedent establishing that filing motions seeking affirmative relief constitutes voluntary submission to jurisdiction, and that special appearances must be explicit and unequivocal.
• Ssangyong Corp. v. Unimarine Shipping Lines, Inc. — Cited for the elements of litis pendentia.
• Santos v. NLRC — Cited for the principle that jurisdiction over the defendant may be acquired by service of summons or voluntary appearance.

• Section 11, Rule 14 of the Rules of Civil Procedure — Governs service of summons upon private domestic corporations, requiring service to be made on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel.
• Article 1673(1) and (2) of the Civil Code — Provide grounds for judicial ejectment upon expiry of the lease period and failure to pay rent or comply with lease conditions.
• Rule 45 of the Rules of Court — Governs petitions for review on certiorari to the Supreme Court.