Philippine Supreme Court Jurisprudence > Year 2013 > January 2013 Decisions > G.R. No. 183035 : January 09, 2013 - OPTIMA REALTY CORPORATION, Petitioner, v. HERTZ PHIL. EXCLUSIVE CARS, INC., RESPONDENT.:

Before us is a Rule 45 Petition assailing the Decision¹ςrνl1 and Resolution²ςrνl1 of the Court of Appeals (CA) in CA-GR SP No. 99890, which reversed the Decision³ςrνl1 and Resolution⁴ςrνl1 of the Regional Trial Court (RTC), Branch 137, Makati City in Civil Case No. 06-672. The RTC had affirmed in toto the 22 May 2006 Decision⁵ςrνl1 of the Metropolitan Trial Court (MeTC), Branch 64, Makati City in Civil Case No. 90842 evicting respondent Hertz Phil. Exclusive Cars, Inc. (Hertz) and ordering it to pay back rentals and other arrearages to petitioner Optima Realty Corporation (Optima).cralawlibrary

Optima is engaged in the business of leasing and renting out commercial spaces and buildings to its tenants. On 12 December 2002, it entered into a Contract of Lease with respondent over a 131-square-meter office unit and a parking slot in the Optima Building for a period of three years commencing on 1 March 2003 and ending on 28 February 2006.⁶ςrνl1 On � � 9 March 2004, the parties amended their lease agreement by shortening the lease period to two years and five months, commencing on 1 October 2003 and ending on 28 February 2006.⁷ςrνl1

Renovations in the Optima Building commenced in January and ended in November 2005.⁸ςrνl1 As a result, Hertz alleged that it experienced a 50% drop in monthly sales and a significant decrease in its personnel's productivity. It then requested a 50% discount on its rent for the months of May, June, July and August 2005.⁹ςrνl1

On 8 December 2005, Optima granted the request of Hertz.¹⁰ςrνl1 However, the latter still failed to pay its rentals for the months of August to December of 2005 and January to February 2006,¹¹ςrνl1 or a total of seven months. In addition, Hertz likewise failed to pay its utility bills for the months of November and December of 2005 and January and February of 2006,¹²ςrνl1 or a total of four months.cralawlibrary

On 8 December 2005, Optima wrote another letter to Hertz,¹³ςrνl1 reminding the latter that the Contract of Lease could be renewed only by a new negotiation between the parties and upon written notice by the lessee to the lessor at least 90 days prior to the termination of the lease period.¹⁴ςrνl1 As no letter was received from Hertz regarding its intention to seek negotiation and extension of the lease contract within the 90-day period, Optima informed it that the lease would expire on 28 February 2006 and would not be renewed.¹⁵ςrνl1

On 21 December 2005, Hertz wrote a letter belatedly advising Optima of the former's desire to negotiate and extend the lease.¹⁶ςrνl1 However, as the Contract of Lease provided that the notice to negotiate its renewal must be given by the lessee at least 90 days prior to the expiration of the contract, petitioner no longer entertained respondent's notice.cralawlibrary

On 30 January 2006, Hertz filed a Complaint for Specific Performance, Injunction and Damages and/or Sum of Money with prayer for the issuance of a Temporary Restraining Order (TRO) and Writ of Preliminary Injunction (Complaint for Specific Performance) against Optima. In that Complaint, Hertz prayed for the issuance of a TRO to enjoin petitioner from committing acts that would tend to disrupt respondent's peaceful use and possession of the leased premises; for a Writ of Preliminary Injunction ordering petitioner to reconnect its utilities; for petitioner to be ordered to renegotiate a renewal of the Contract of Lease; and for actual, moral and exemplary damages, as well as attorney's fees and costs.cralawlibrary

On 1 March 2006, Optima, through counsel, wrote Hertz a letter requiring the latter to surrender and vacate the leased premises in view of the expiration of the Contract of Lease on 28 February 2006.¹⁷ςrνl1 It likewise demanded payment of the sum of ?420,967.28 in rental arrearages, unpaid utility bills and other charges.¹⁸ςrνl1 Hertz, however, refused to vacate the leased premises.¹⁹ςrνl1 As a result, Optima was constrained to file before the MeTC a Complaint for Unlawful Detainer and Damages with Prayer for the Issuance of a TRO and/or Preliminary Mandatory Injunction (Unlawful Detainer Complaint) against Hertz.²⁰ςrνl1

On 14 March 2006, Summons for the Unlawful Detainer Complaint was served on Henry Bobiles, quality control supervisor of Hertz, who complied with the telephone instruction of manager Rudy Tirador to receive the Summons.²¹ςrνl1

On 28 March 2006, or 14 days after service of the Summons, Hertz filed a Motion for Leave of Court to file Answer with Counterclaim and to Admit Answer with Counterclaim (Motion for Leave to File Answer).²²ςrνl1 In that Motion, Hertz stated that, "in spite of the defective service of summons, [it] opted to file the instant Answer with Counterclaim with Leave of Court.”²³ςrνl1 In the same Motion, it likewise prayed that, in the interest of substantial justice, the Answer with Counterclaim attached to the Motion for Leave to File Answer should be admitted regardless of its belated filing, since the service of summons was defective.²⁴ςrνl1

On 22 May 2006, the MeTC rendered a Decision,²⁵ςrνl1 ruling that petitioner Optima had established its right to evict Hertz from the subject premises due to nonpayment of rentals and the expiration of the period of lease.²⁶ςrνl1 The dispositive portion of the Decision reads:chanroblesvirtualawlibrary

WHEREFORE, premises considered, the Court hereby renders judgment for the plaintiff and against the defendant, ordering:

1. the defendant corporation and all persons claiming rights from it to immediately vacate the leased premises and to surrender possession thereof to the plaintiff;
   
   
2. the defendant corporation to pay the plaintiff the amount of Four Hundred Twenty Thousand Nine Hundred Sixty Seven Pesos and 28/100 (P420,967.28) representing its rentals arrearages and utility charges for the period of August 2005 to February 2006, deducting therefrom defendant's security deposit;
   
   
3. the defendant corporation to pay the amount of Fifty Four Thousand Two Hundred Pesos (P54,200.00) as a reasonable monthly compensation for the use and occupancy of the premises starting from March 2006 until possession thereof is restored to the plaintiff; and
   
   
4. the defendant corporation to pay the amount of Thirty Thousand Pesos (P30,000.00) as and for attorney's fees; and
   
   
5. the cost of suit.cralawlibrary
   
   

SO ORDERED.²⁷ςrνl1

Hertz appealed the MeTC's Decision to the RTC.²⁸ςrνl1

Finding no compelling reason to warrant the reversal of the MeTC's Decision, the RTC affirmed it by dismissing the appeal in a Decision²⁹ςrνl1 dated 16 March 2007.cralawlibrary

On 18 June 2007, the RTC denied respondent's Motion for Reconsideration of its assailed Decision.³⁰ςrνl1

Hertz thereafter filed a verified Rule 42 Petition for Review on Certiorari with the CA.³¹ςrνl1

On appeal, the CA ruled that, due to the improper service of summons, the MeTC failed to acquire jurisdiction over the person of respondent Hertz. The appellate court thereafter reversed the RTC and remanded the case to the MeTC to ensure the proper service of summons. Accordingly, the CA issued its 17 March 2008 Decision, the fallo of which reads:chanroblesvirtualawlibrary

WHEREFORE, premises considered, the May 22, 2006 Decision of the Metropolitan Trial Court of Makati City, Branch 64, in Civil Case No. 90842, and both the March 16, 2007 Decision, as well as the June 18, 2007 Resolution, of the Regional Trial Court of Makati City, Branch 137, in Civil Case No. 06-672, are hereby REVERSED, ANNULLED and SET ASIDE - due to lack of jurisdiction over the person of the defendant corporation HERTZ. This case is hereby REMANDED to the Metropolitan Trial Court of Makati City, Branch 64, in Civil Case No. 90842, which is DIRECTED to ensure that its Sheriff properly serve summons to only those persons listed in Sec. 11, Rule 14 of the Rules of Civil Procedure in order that the MTC could acquire jurisdiction over the person of the defendant corporation HERTZ.cralawlibrary

SO ORDERED.³²ςrνl1

Petitioner's Motion for Reconsideration of the CA's Decision was denied in a Resolution dated 20 May 2008.³³ςrνl1

Aggrieved by the ruling of the appellate court, petitioner then filed the instant Rule 45 Petition for Review on Certiorari with this Court.³⁴ςrνl1

THE ISSUES
As culled from the records, the following issues are submitted for resolution by this Court:

1. Whether the MeTC properly acquired jurisdiction over the person of respondent Hertz;
   
   
2. Whether the unlawful detainer case is barred by litis pendentia; and
   
   
3. Whether the ejectment of Hertz and the award of damages, attorneys fees and costs are proper.

THE COURT'S RULING

We grant the Petition and reverse the assailed Decision and Resolution of the appellate court.cralawlibrary

I
The MeTC acquired jurisdiction over the person of
respondent Hertz.
In civil cases, jurisdiction over the person of the defendant may be acquired either by service of summons or by the defendant's voluntary appearance in court and submission to its authority.³⁵ςrνl1

In this case, the MeTC acquired jurisdiction over the person of respondent Hertz by reason of the latter's voluntary appearance in court.cralawlibrary

In Philippine Commercial International Bank v. Spouses Dy,³⁶ςrνl1 we had occasion to state:chanroblesvirtualawlibrary

Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power of legal processes exerted over his person, or his voluntary appearance in court. As a general proposition, one who seeks an affirmative relief is deemed to have submitted to the jurisdiction of the court. It is by reason of this rule that we have had occasion to declare that the filing of motions to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, is considered voluntary submission to the court's jurisdiction. This, however, is tempered by the concept of conditional appearance, such that a party who makes a special appearance to challenge, among others, the court's jurisdiction over his person cannot be considered to have submitted to its authority.cralawlibrary

Prescinding from the foregoing, it is thus clear that:

(1)	Special appearance operates as an exception to the general rule on voluntary appearance;
(2)	Accordingly, 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
(3)	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. (Emphases supplied)

In this case, the records show that the following statement appeared in respondent's Motion for Leave to File Answer:chanroblesvirtualawlibrary

[I]n spite of the defective service of summons, the defendant opted to file the instant Answer with Counterclaim with Leave of Court, upon inquiring from the office of the clerk of court of this Honorable Court and due to its notice of hearing on March 29, 2005 application for TRO/Preliminary Mandatory Injunction was received on March 26, 2006. (Emphasis supplied)ςηαñrοblεš �νιr†υαl �lαω �lιbrαrÿ ³⁷ςrνl1

Furthermore, the Answer with Counterclaim filed by Hertz never raised the defense of improper service of summons. The defenses that it pleaded were limited to litis pendentia, pari delicto, performance of its obligations and lack of cause of action.³⁸ςrνl1 Finally, it even asserted its own counterclaim against Optima.³⁹ςrνl1

Measured against the standards in Philippine Commercial International Bank, these actions lead to no other conclusion than that Hertz voluntarily appeared before the court a quo.cralawlibrary

We therefore rule that, by virtue of the voluntary appearance of respondent Hertz before � the MeTC, the trial court acquired jurisdiction over respondent's.cralawlibrary

II
The instant ejectment case is not barred by litis pendentia.
Hertz contends that the instant case is barred by litis pendentia because of the pendency of its Complaint for Specific Performance against Optima before the RTC.cralawlibrary

We disagree.cralawlibrary

Litis pendentia requires the concurrence of the following elements:

(1)	Identity of parties, or at least their representation of the same interests in both actions;
(2)	Identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and
(3)	Identity with respect to the two preceding particulars in the two cases, such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case.40ςrνl1

Here, while there is identity of parties in both cases, we find that the rights asserted and the reliefs prayed for under the Complaint for Specific Performance and those under the present Unlawful Detainer Complaint are different. As aptly found by the trial court:chanroblesvirtualawlibrary

[T]he Complaint for Specific Performance] seeks to compel plaintiff-appellee Optima to: (1) renegotiate the contract of lease; (2) reconnect the utilities at the leased premises; and (3) pay damages. On the other hand, the unlawful detainer case sought the ejectment of defendant-appellant Hertz from the leased premises and to collect arrears in rentals and utility bills.⁴¹ςrνl1

As the rights asserted and the reliefs sought in the two cases are different, we find that the pendency of the Complaint for Specific Performance is not a bar to the institution of the present case for ejectment.cralawlibrary

III
The eviction of respondent and the award of damages,
attorney's fees and costs were proper.
We find that the RTC's ruling upholding the ejectment of Hertz from the building premises was proper. First, respondent failed to pay rental arrearages and utility bills to Optima; and, second, the Contract of Lease expired without any request from Hertz for a renegotiation thereof at least 90 days prior to its expiration.cralawlibrary

On the first ground, the records show that Hertz failed to pay rental arrearages and utility bills to Optima. Failure to pay timely rentals and utility charges is an event of default under the Contract of Lease,⁴²ςrνl1 entitling the lessor to terminate the lease.cralawlibrary

Moreover, the failure of Hertz to pay timely rentals and utility charges entitles the lessor to judicially eject it under the provisions of the Civil Code.⁴³ςrνl1

On the second ground, the records likewise show that the lease had already expired on 28 February 2006 because of Hertz's failure to request a renegotiation at least 90 days prior to the termination of the lease period.cralawlibrary

The pertinent provision of the Contract of Lease reads:chanroblesvirtualawlibrary

x x x. The lease can be renewed only by a new negotiation between the parties upon written notice by the LESSEE to be given to the LESSOR at least 90 days prior to termination of the above lease period.⁴⁴ςrνl1

As the lease was set to expire on 28 February 2006, Hertz had until 30 November 2005 within which to express its interest in negotiating an extension of the lease with Optima. However, Hertz failed to communicate its intention to negotiate for an extension of the lease within the time agreed upon by the parties. Thus, by its own provisions, the Contract of Lease expired on 28 February 2006.cralawlibrary

Under the Civil Code, the expiry of the period agreed upon by the parties is likewise a ground for judicial ejectment.⁴⁵ςrνl1

As to the award of monthly compensation, we find that Hertz should pay adequate compensation to Optima, since the former continued to occupy the leased premises even after the expiration of the lease contract. As the lease price during the effectivity of the lease contract was ?54,200 per month, we find it to be a reasonable award.cralawlibrary

Finally, we uphold the award of attorney's fees in the amount of ?30,000 and judicial costs in the light of Hertz's unjustifiable and unlawful retention of the leased premises, thus forcing Optima to file the instant case in order to protect its rights and interest.cralawlibrary

From the foregoing, we find that the MeTC committed no reversible error in its 22 May 2006 Decision, and that the RTC committed no reversible error either in affirming the MeTC's Decision.cralawlibrary

WHEREFORE, in view of the foregoing, the instant Rule 45 Petition for Review is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 99890 are hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court, Branch 137, Makati City in Civil Case No. 06-672 affirming in toto the Decision of the Metropolitan Trial Court, Branch 64, Makati City in Civil Case No. 90842 is hereby REINSTATED and AFFIRMED.chanroblesvirtuallawlibrary

SO ORDERED.

Leonardo-De Castro, Bersamin, Villarama, Jr., and Reyes, JJ., concur.cralawlibrary

Endnotes:

---

¹ςrνl1 Rollo, pp. 39-48; CA Decision dated 17 March 2008, penned by Associate Justice Vicente Q. Roxas and concurred in by Associate Justices Josefina Guevara-Salonga and Ramon R. Garcia.cralawlibrary

²ςrνl1 Id. at 38; CA Resolution dated 20 May 2008, penned by Associate Justice Vicente Q. Roxas and concurred in by Associate Justices Josefina Guevara-Salonga and Ramon R. Garcia.cralawlibrary

³ςrνl1 Id. at 49-61; RTC Decision dated 16 March 2007, penned by Presiding Judge Jenny Lind R. Aldecoa-Delorino.cralawlibrary

⁴ςrνl1 CA rollo, pp. 47-49; RTC Resolution dated 18 June 2007, penned by Presiding Judge Jenny Lind R. Aldecoa-Delorino.cralawlibrary

⁵ςrνl1 Id. at 205-209; MeTC Decision dated 22 May 2006, penned by Judge Dina Pestaño Teves.cralawlibrary

⁶ςrνl1 Id. at 84-85; Contract of Lease dated 12 December 2002.cralawlibrary

⁷ςrνl1 Id. at 153-154; Amendment to the Contract of Lease dated 9 March 2004.cralawlibrary

⁸ςrνl1 Id. at 68; Complaint of Exclusive Cars, Inc. dated 30 January 2006.cralawlibrary

⁹ςrνl1 Id. at 97.cralawlibrary

¹⁰ςrνl1 Id. at 105; letter of Optima dated 8 December 2005.cralawlibrary

¹¹ςrνl1 Id. at 114; Complaint (With Application for Temporary Restraining Order and/or Preliminary Mandatory Injunction) dated 10 March 2006.cralawlibrary

¹²ςrνl1 Id.cralawlibrary

¹³ςrνl1 Id. at 103; letter of Optima dated 8 December 2005.cralawlibrary

¹⁴ςrνl1 Id. at 86; Contract of Lease dated 12 December 2002.cralawlibrary

¹⁵ςrνl1 Id. at 103; letter of Optima dated 8 December 2005.cralawlibrary

¹⁶ςrνl1 Id. at 104; letter of Hertz dated 21 December 2005.cralawlibrary

¹⁷ςrνl1 Id. at 159-160; letter of Picazo Buyco Tan Fider & Santos dated 1 March 2006.cralawlibrary

¹⁸ςrνl1 Id. at 160.cralawlibrary

¹⁹ςrνl1 Id. at 117; Complaint (With Application for Temporary Restraining Order and/or Preliminary Mandatory Injunction) dated 10 March 2006.cralawlibrary

²⁰ςrνl1 Id. at 111-122.cralawlibrary

²¹ςrνl1 Id. at 352; Sheriff's Return dated 15 March 2006.cralawlibrary

²²ςrνl1 Id. at 175-177.cralawlibrary

²³ςrνl1 Id. at 176; Motion for Leave of Court to file Answer with Counterclaim and to Admit Answer with Counterclaim.cralawlibrary

²⁴ςrνl1 Id.cralawlibrary

²⁵ςrνl1 Id. at 205-209.cralawlibrary

²⁶ςrνl1 Id. at 208.cralawlibrary

²⁷ςrνl1 Id. at 208-209.cralawlibrary

²⁸ςrνl1 Id. at 210; Notice of Appeal dated 20 June 2006.cralawlibrary

²⁹ςrνl1 Id. at 33-45.cralawlibrary

³⁰ςrνl1 Id. at 47-49; Resolution dated 18 June 2007.cralawlibrary

³¹ςrνl1 Id. at 2-29; Petition dated 25 July 2007.cralawlibrary

³²ςrνl1 Rollo, pp. 47-48.cralawlibrary

³³Id. at 38.cralawlibrary

³⁴ςrνl1 Id. at 13-32; Petition for Review on Certiorari (Under Rule 45 of the Rules of Court) dated 27 June 2008.cralawlibrary

³⁵ςrνl1 Santos v. NLRC, 325 Phil. 145 (1996).cralawlibrary

³⁶ςrνl1 G.R. No. 171137, 5 June 2009, 588 SCRA 612, 627-628.cralawlibrary

³⁷ςrνl1 CA rollo, p. 176.cralawlibrary

³⁸ςrνl1 Id. at 178-185.cralawlibrary

³⁹ςrνl1 Id. at 185-186.cralawlibrary

⁴⁰ςrνl1 Ssangyong Corp. v. Unimarine Shipping Lines, Inc., 512 Phil. 171 (2005).cralawlibrary

⁴¹ςrνl1 CA rollo, p. 43; RTC Decision dated 16 March 2007.cralawlibrary

⁴²ςrνl1 Id. at 93; Contract of Lease dated 12 December 2002.cralawlibrary

⁴³ςrνl1 Civil Code, Art. 1673 (2).cralawlibrary

⁴⁴ςrνl1 CA rollo, p. 86; Contract of Lease dated 12 December 2002.cralawlibrary

⁴⁵ςrνl1 Civil Code, Art. 1673 (1).