G.R. No. 182153 - Tung Ho Steel Enterprises Corp. vs. Ting Guan Trading Corp.

Case Summary (G.R. No. 182153)

Factual Background

Tung Ho contracted with Ting Guan on January 9, 2002 for delivery of heavy metal scrap iron and steel. Tung Ho filed for arbitration with the ICC in Singapore after alleged nondelivery. The ICC rendered an award on June 18, 2004, directing Ting Guan to pay US$ 659,646.15 as actual damages with interest, arbitration costs of US$ 47,000.00, and legal costs of NT$ 761,448.00 and US$ 34,552.83. On October 24, 2004, Tung Ho filed a complaint for recognition and enforcement of the arbitral award before the RTC of Makati, Branch 145.

Trial Court Proceedings

Ting Guan moved to dismiss the RTC complaint on grounds of lack of capacity to sue and prematurity, and later filed a supplemental motion to dismiss alleging improper venue because its principal place of business was in Cebu. The RTC denied the motions on May 11, 2005. Ting Guan moved for reconsideration and for the first time challenged the RTC’s jurisdiction over its person, asserting defective service on Ms. Fe Tejero who was not its corporate secretary within the meaning of Section 11, Rule 14. The RTC denied reconsideration on November 21, 2005, ruling that Ting Guan had voluntarily submitted to jurisdiction by raising grounds other than lack of jurisdiction.

Proceedings before the Court of Appeals

Ting Guan filed a petition for certiorari under Rule 65 with the Court of Appeals and secured injunctive relief. Tung Ho argued that Rule 65 was improper except for jurisdictional defects and that the proper recourse was to answer and appeal. The Court of Appeals, in a decision dated July 5, 2006, dismissed the complaint for lack of jurisdiction over the person, holding that Tung Ho failed to establish that Tejero was Ting Guan’s corporate secretary. The CA also held that a certiorari petition was proper when the motion to dismiss raised lack of jurisdiction and that other grounds may be raised in a motion to dismiss before answer. Tung Ho and Ting Guan filed partial motions for reconsideration; the CA denied Ting Guan’s motion on December 5, 2006 and later denied Tung Ho’s partial motion on March 12, 2008.

Proceedings before the Supreme Court in G.R. No. 176110

Ting Guan filed a petition in G.R. No. 176110 seeking additional bases for dismissal, including prematurity, nullity of the foreign arbitral award, improper venue, and repugnance to public policy. On April 24, 2007, Tung Ho filed a comment that did not press for reversal of the CA decision on jurisdiction. The Supreme Court denied Ting Guan’s petition on June 18, 2007 and denied reconsideration on November 12, 2007; the Court entered judgment on January 8, 2008 and referred the matter back to the RTC. The RTC then declared the case closed and terminated on January 16, 2008 because of the CA dismissal for lack of jurisdiction.

Procedural Complication and Subsequent Remedies

While Ting Guan pursued its petition to the Supreme Court, Tung Ho had a pending partial motion for reconsideration before the CA. Tung Ho later filed a Rule 45 petition (the present G.R. No. 182153) to contest the CA’s July 5, 2006 decision and its March 12, 2008 resolution. Tung Ho argued that the return of service constituted prima facie proof that Tejero was corporate secretary and that the sheriff was presumed to have performed his duties, and alternatively sought declaration of voluntary appearance by Ting Guan or issuance of alias summons. Ting Guan countered that issue preclusion and finality barred the present petition.

Issues Presented

The Supreme Court framed the issues as (one) whether the present petition was barred by res judicata, and (two) whether the RTC acquired jurisdiction over the person of Ting Guan, specifically whether (a) Tejero was the proper person to receive summons under Section 11, Rule 14, and (b) whether Ting Guan voluntarily appeared before the trial court.

The Court’s Disposition

The Supreme Court found merit in Tung Ho’s petition and reversed and set aside the July 5, 2006 decision and the March 12, 2008 resolution of the Court of Appeals. The Supreme Court ordered reinstatement of SP. Proc. No. M.-5954 and remanded the records to the court of origin for further proceedings, with no costs.

Legal Basis: Res judicata and Finality

The Court held that res judicata did not bar Tung Ho’s petition because the earlier disposition in G.R. No. 176110 did not reach all the issues and did not finally determine the merits regarding jurisdiction. The Court explained that for res judicata to apply the prior judgment must be final and on the merits. The Supreme Court further held that the appellate court’s jurisdiction cannot be ousted while it had pending incidents; the CA’s jurisdiction remained because Tung Ho’s partial motion for reconsideration before the CA was unresolved when the Supreme Court resolved G.R. No. 176110. The Supreme Court emphasized that timely filing of a motion for reconsideration and a Rule 45 petition prevented the CA decision from attaining finality and invoked Rule 45, Section 2 on the time to file a petition for review.

Legal Basis: Jurisdiction Over the Person and Service of Summons

On the factual question whether Tejero was a corporate secretary, the Court declined to disturb the CA’s factual finding that Tejero was not authorized under Section 11, Rule 14 to receive summons, citing the rule that this Court does not reexamine factual findings of lower courts in the absence of compelling reasons. On the legal question whether the trial court nevertheless acquired jurisdiction, the Court concluded that Ting Guan had voluntarily appeared before the RTC. The Court explained that Ting Guan filed successive motions to dismiss and a supplemental motion without raising lack of jurisdiction over its person in the first motion, contrary to the omnibus motion rule and the requirement that defenses available be raised promptly. The Court invoked the rule that failure to raise lack of jurisdiction over the person in the first motion to dismiss constitutes waiver. The Court described successive motions as dilatory and held that such conduct amounted to voluntary appearance, which is equivalent to valid service of summons.

Remedy and Alternative Measures

The Court noted that even if Ting Guan had not voluntarily appeared, the proper course was to order the RTC to issue an alias summons rather than dismiss the complaint fo

Case Syllabus (G.R. No. 182153)

Parties and Procedural Posture

TUNG HO STEEL ENTERPRISES CORPORATION is a foreign corporation organized under the laws of Taiwan, Republic of China.
TING GUAN TRADING CORPORATION is a domestic corporation organized under the laws of the Philippines.
TUNG HO filed a complaint for recognition and enforcement of a foreign arbitral award before the Regional Trial Court of Makati, Branch 145, on October 24, 2004.
TING GUAN moved to dismiss the complaint on grounds of lack of capacity to sue and prematurity, and later filed a supplemental motion to dismiss alleging improper venue in Cebu.
The RTC denied the motion to dismiss in an order dated May 11, 2005 and denied reconsideration on November 21, 2005 while ruling that TING GUAN had voluntarily submitted to the court’s jurisdiction.
TING GUAN filed a petition for certiorari with application for injunctive relief before the Court of Appeals, which in a July 5, 2006 decision dismissed the complaint for lack of jurisdiction over the person.
The Court of Appeals denied partial motions for reconsideration on December 5, 2006 and March 12, 2008 as reflected in the records.
TING GUAN filed a petition (docketed G.R. No. 176110) in this Court which the Court resolved against TING GUAN by resolution dated June 18, 2007, with an entry of judgment on January 8, 2008 that led to the RTC declaring the case closed on January 16, 2008.
TUNG HO filed the present petition for review on certiorari under Rule 45 (docketed G.R. No. 182153) on May 7, 2008 to challenge the CA decision and resolution.

Key Factual Allegations

TUNG HO and TING GUAN entered into a contract of sale dated January 9, 2002 for the delivery of heavy metal scrap iron and steel.
TING GUAN allegedly failed to deliver the full quantity contracted, prompting TUNG HO to seek arbitration before the ICC International Court of Arbitration in Singapore.
The ICC issued an award on June 18, 2004 ordering TING GUAN to pay TUNG HO actual damages of US$659,646.15 with interest at 6% per annum from December 4, 2002 until final payment, arbitration costs of US$47,000.00, and legal costs and expenses of NT$761,448.00 and US$34,552.83.
Service of summons in the enforcement action was effected on one Fe Tejero, whom TUNG HO asserted was the corporate secretary of TING GUAN, while TING GUAN denied that Tejero was authorized to receive summons under Section 11, Rule 14 of the Rules of Court.

Procedural Questions Before Courts

The determinative procedural questions were whether the present petition was barred by res judicata and whether the trial court acquired jurisdiction over the person of TING GUAN.
The personal-jurisdiction question broke down into whether Tejero was the proper person to receive summons under Section 11, Rule 14 and whether TING GUAN made a voluntary appearance before the RTC.
Secondary procedural issues concerned the timeliness and effect of motions for reconsideration, the proper remedy to challenge a denial of a motion to dismiss, and the effect of entry of judgment in related Supreme Court proceedings.

Statutory and Doctrinal Framework

The Court applied Section 11, Rule 14 (persons authorized to receive summons), Rule 15, Section 8, Rule 16, Section 4, Rule 9, Section 3, Rule 51, Section 10, Rule 52, Section 4, and Rule 45 of the Rules of Court as quoted in the records.
The Court treated res judicata as the doctrine that a final judgment on the merits by a court of competent jurisdiction is conclusive on the rights of the parties in later suits.
The Court invoked the omnibus-motion rule requiring that a motion attacking a pleading, order, judgment, or proceeding include all objections then available in order to avoid multiplicity and dilatory tactics.
The Court recognized the remedial