G.R. No. 204796 - Reicon Realty Builders Corp. vs. Diamond Dragon Realty and Management

Case Summary (G.R. No. 204796)

Factual Background

The parties executed a lease dated January 9, 1991, under which Reicon Realty Builders Corporation leased certain property in Sta. Mesa, Quezon City to Diamond Dragon Realty and Management, Inc. for twenty years. Diamond sublet portions to Jollibee Foods Corporation and Maybunga U.K. Enterprises. Beginning in June 2006, Diamond allegedly failed to pay rental obligations and issued checks that were dishonored. Reicon sent a demand and purportedly terminated the lease by letter dated July 23, 2007, and subsequently executed separate leases with the subtenants.

Trial Court Proceedings

On November 12, 2009, Diamond filed a complaint for breach of contract and damages against Reicon, Jollibee, Maybunga, and others, alleging unlawful interference and seeking, among other relief, the annulment of Reicon’s unilateral termination and the separate leases. Reicon filed a special appearance and moved to dismiss on grounds of lack of jurisdiction over its person based on alleged improper service, lack of legal capacity of Diamond to sue due to alleged SEC revocation, and lack of cause of action for unlawful interference. The RTC denied the motion to dismiss in an Order dated June 9, 2010, and denied reconsideration on September 16, 2010, concluding that improper service of summons was not a ground for dismissal under Section 1, Rule 16, and that corporate existence could be challenged only by quo warranto under Sec. 20 of Batas Pambansa Blg. 68.

Proceedings Before the Court of Appeals

Reicon filed a petition for certiorari under Rule 65 in the Court of Appeals challenging the RTC’s denial of the motion to dismiss. The CA issued a Show Cause requiring proof of service and later recorded that its earlier notice to Diamond at Suite 305, AIC Burgundy Empire Tower was returned marked “RTS-Moved Out.” Diamond, through counsel Atty. Anselmo A. Marqueda, filed a manifestation in which it asserted that the certiorari petition must be dismissed for failure to serve a copy on its counsel of record, invoking the rule that service upon counsel constitutes valid service where a party is represented. In a Resolution dated May 21, 2012, the CA dismissed Reicon’s petition outright for non-compliance with proof of service under Section 3, Rule 46 and for failure to serve counsel under Section 2, Rule 13. Reicon’s motion for reconsideration was denied on November 21, 2012.

Issue Presented to the Supreme Court

The sole issue presented was whether Reicon’s petition for certiorari before the Court of Appeals was properly served upon the person of Diamond so as to vest the CA with jurisdiction over its person.

Supreme Court’s Disposition

The Supreme Court granted the petition. It reversed and set aside the CA Resolutions dated May 21, 2012 and November 21, 2012, and directed the Court of Appeals to reinstate the certiorari petition docketed as CA-G.R. SP No. 116845, subject to the conditions and directions stated by the Court.

Legal Basis and Reasoning on Service of Process

The Court analyzed Section 3, Rule 46, which requires filing of the petition with proof of service on the respondent, and Section 4, Rule 46, which provides that the court acquires jurisdiction over the person of the respondent by service of its order or resolution indicating initial action on the petition or by voluntary submission. The records contained registry receipts and affidavits of service indicating that a copy of the certiorari petition had been mailed to the address Diamond had used in the RTC pleadings. The Court held that service of the petition upon the respondent at its last known business address complied with Section 3, Rule 46, because a certiorari proceeding is an original and independent action and, at the preliminary stage, service on the respondent itself is sufficient. The Court concluded that the rule in Section 2, Rule 13 requiring service upon counsel when a party has appeared by counsel did not automatically apply to the service of the petition in an original certiorari action.

Voluntary Submission and Special Appearance

The Court further determined that the CA had acquired jurisdiction by virtue of Diamond’s voluntary submission through its counsel’s manifestation dated May 5, 2011. The Court explained that although a special appearance may preserve an objection to jurisdiction, a party who seeks affirmative relief in the court’s proceedings is deemed to have submitted to jurisdiction. The Court cited Philippine Commercial International Bank v. Spouses Dy to the effect that filing motions seeking affirmative relief is considered voluntary submission unless a conditional appearance explicitly and unequivocally objects to jurisdiction. Because Diamond’s manifestation sought dismissal of the petition on the merits rather than specifically contesting the CA’s service of its order indicating initial action, the Court treated the filing as voluntary submission and not a conditional appearance challenging jurisdiction.

Precedents Considered

The Court relied on prior decisions addressing the nature of certiorari as an original proceeding and principles on acquisition of jurisdiction. The Court cited China Banking Corporation v. Cebu Printing and Packaging Corporation and Republic v. Caguioa in support of the proposition that service as required by the Rules and service upon the respondent at his recorded address may suffice for initial acquisition of jurisdiction in original actions.

Direction for Further Proceedings and Protection of Due Process

The Court directed the CA to reinstate t

Case Syllabus (G.R. No. 204796)

Parties and Procedural Posture

Reicon Realty Builders Corporation was the petitioner before the Court seeking relief from the Court of Appeals' dismissal of its certiorari petition.
Diamond Dragon Realty and Management, Inc. was the respondent in the underlying civil action and the respondent before the CA and this Court.
Jollibee Foods Corporation and Maybunga U.K. Enterprises were impleaded as defendants in the underlying RTC action.
The petition before the Court assailed the CA Resolutions dated May 21, 2012 and November 21, 2012 dismissing Reicon's Rule 65 certiorari petition for procedural defects in service.

Key Factual Allegations

Reicon owned the subject real property covered by Transfer Certificate of Title No. 330668 and leased it to Diamond by a Contract of Lease dated January 9, 1991 for twenty years at a monthly rental of P75,000 subject to periodic increments.
Diamond sublet portions of the premises to Jollibee and Maybunga and allegedly ceased paying rent beginning June 2006, with checks from June to December 2006 dishonored on presentment.
Reicon sent a demand through counsel on July 23, 2007 terminating the January 9, 1991 Contract and subsequently entered into separate leases with Jollibee and Maybunga for the occupied portions.
Diamond filed Civil Case No. 72319 in the RTC of Pasig City on December 14, 2009 for breach of contract and unlawful interference, seeking among other reliefs the annulment of Reicon's unilateral termination and separate leases and recovery of unpaid rentals.

RTC Proceedings and Rulings

Reicon filed a special appearance and a motion to dismiss dated January 26, 2010 asserting lack of jurisdiction over its person due to improper service, Diamond's lack of legal capacity owing to SEC revocation of its registration, and lack of cause of action.
The RTC denied Reicon's motion to dismiss in an Order dated June 9, 2010 and denied the motion for reconsideration on September 16, 2010.
The RTC ruled that improper service of the complaint was not a ground for dismissal under Section 1, Rule 16 and that corporation existence could only be collaterally inquired into by quo warranto under Sec. 20, Corporation Code.

CA Proceedings and Rulings

Reicon filed a petition for certiorari under Rule 65 in the Court of Appeals docketed as CA-G.R. SP No. 116845 on November 18, 2010.
The CA required Reicon to show cause for failure to acquire jurisdiction over Diamond under Section 4, Rule 46 after a prior CA notice to Diamond was returned "RTS-Moved Out."
Diamond, through counsel Atty. Marqueda, filed a manifestation under special appearance asserting that Reicon failed to serve the petition upon counsel as required, and the CA dismissed the certiorari petition in a Resolution dated May 21, 2012 for non-compliance with proof of service under Section 3, Rule 46 and the service-upon-counsel rule under Section 2, Rule 13.
The CA denied Reicon's motion for reconsideration in a Resolution dated November 21, 2012.

Issue Presented

The sole issue was whether Reicon's certiorari petition before the CA was validly served upon the person of Diamond so that the CA acquired jurisdiction over Diamond's person.

Court's Ruling and Disposition

The Court granted Reicon's petition for review on certiorari and held that the CA erred in dismissing the certiorari petition for lack of proof of service and for not having served counsel.
The Court reversed and set aside the CA Resolutions dated May 21, 2012 and November 21, 2012 and directed the CA to reinstate the certiorari petition CA-G.R. SP No. 116845.
The Court ordered Reicon to submit proof that service of its petition complied with Rule 13, Section 13 and ordered Diamond to furnish the CA with its current address and to confirm whether Atty. Marqueda would represent it going forward.

Doctrinal Holdings

The Court held that under Section 3, Rule 46, a certiorari petition must be accompanied by proof of service upon the respondent itself and that failure to comply may be ground for dismissal.
The Court held that, because a certiorari proceeding under Rule 46 is an original and independent action, service of the petition upon the respondent, and not upon the respondent's counsel, ordinarily satisfied the service requirement at the initiation of the action.
The Court interpreted Section 4, Rule 46 to mean that an appellate court acquires jurisdiction over the person of the respondent either by service of its order indicating initial action on the petition or by the respondent's voluntary submission to jurisdiction.

Jurisdictional Analysis and Application

The Court found record evidence of registry receipts, an affidavit of service, and registry numbers indicating that Reicon served a copy of its certiorari petition on Diamond at Suite 305, AIC Burgundy Empire Tower, which Diamond declared as its business address in the RTC complaint.
The Court ruled that the CA erred in applying Section 2, Rule 13 to require service upon counsel at the initial stage of a certiorari petition because appearance by counsel does not substitute for service of the independent original action.
The Court further held that Diamond voluntarily submitted to the CA's jurisdiction by filing a manifestation on May 5, 2011 that sought affirmative relief, and that such conduct converted the special appearance into voluntary submission rather than a proper conditional appearance challenging jurisdiction.

Procedural Directives and Safeguards

The Court directed the CA to reinstate the certiorari petition and to allow Reicon an opportunity to file full proof of compliance with Section 13, Rule 13 as to service by registered mail, including the registry receipt or the unclaimed letter and postmaster's notice if applicable.
The Court ordered Diamond to furnish the CA with the details of its current address and to confirm whether Atty. Marqueda would represent it in the main proceedings or to notify the CA of any change in counsel.
The Court admonished the CA to resolve the controversy with dispatch to avoid further delay and stated that subsequent service upon counsel, once counsel is confirmed, would bind Diamond.

Authorities and Precedents Relied Upon

The Court cited Republic v. Caguioa for propositions on proof of service and compliance with Rule 13.
The Court relied on China Bank