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TUNG HO STEEL ENTERPRISES CORPORATION v. TING GUAN TRADING CORPORATION

FACTS:

Petitioner Tung Ho Steel Enterprises Corp. (Tung Ho), a foreign corporation organized under the laws of Taiwan, entered into a contract of sale with respondent Ting Guan Trading Corp. (Ting Guan), a domestic corporation organized under the laws of the Philippines, for the delivery of heavy metal scrap iron and steel. When Ting Guan failed to deliver the full quantity as promised, Tung Ho filed for arbitration before the ICC International Court of Arbitration (ICC) in Singapore.

The ICC ruled in favor of Tung Ho and ordered Ting Guan to pay actual damages, cost of arbitration, and legal costs and expenses. Subsequently, Tung Ho filed an action for recognition and enforcement of the arbitral award before the Regional Trial Court (RTC) of Makati, Branch 145. Ting Guan filed a motion to dismiss based on lack of capacity to sue, prematurity, and improper venue.

The RTC denied Ting Guan's motions to dismiss, ruling that the latter had voluntarily submitted to the court's jurisdiction. Ting Guan then filed a petition for certiorari before the Court of Appeals (CA), challenging the denial of the motion to dismiss.

The CA dismissed Tung Ho's complaint for lack of jurisdiction over Ting Guan. The CA held that Tung Ho failed to establish that the person who received the summons is Ting Guan's corporate secretary. The CA also ruled that a petition for certiorari is the proper remedy to challenge the denial of a motion to dismiss based on lack of jurisdiction. Both parties moved to partially reconsider the CA decision, but the motion was denied.

Ting Guan filed a petition for review on certiorari before the Supreme Court (SC) questioning the CA's rulings. Tung Ho also filed a petition for review on certiorari.

ISSUES:

  1. Whether or not the ruling in a previous case operates as res judicata in the present case.

  2. Whether or not the Court of Appeals (CA) was ousted of its jurisdiction with the promulgation of a previous Supreme Court (SC) decision.

  3. Whether or not the timely filing of a motion for reconsideration and a petition for review on certiorari prevents a decision from attaining finality.

  4. Whether or not the trial court acquired jurisdiction over the person of the defendant.

  5. Whether the denial of the motion to dismiss can be the subject of a petition for certiorari before the CA.

  6. Whether the filing of successive motions to dismiss is improper and dilatory.

  7. Whether the defense of lack of jurisdiction over the person can be raised in succeeding motions and pleadings.

  8. Whether the lower courts should dismiss a case solely on the ground of improper service of summons or if they should order the issuance of an alias summons.

  9. Whether the entry of judgment in a previous petition bars the present meritorious petition.

  10. Whether the entry of judgment made by the Court was premature and inefficacious due to the pendency of a motion for reconsideration with the Court of Appeals.

  11. Whether the recall or setting aside of the entry of final judgment was proper.

RULING:

  1. The ruling in a previous case does not operate as res judicata in the present case because it did not conclusively rule on all the issues raised by the parties in the present case. Therefore, the Court is not precluded from ruling on the jurisdictional issue raised in the present petition.

  2. The CA was not ousted of its jurisdiction with the promulgation of the previous SC decision because there remained a pending incident before the CA, specifically the resolution of the petitioner's motion for reconsideration, when the previous SC decision was promulgated.

  3. The timely filing of a motion for reconsideration before the CA and a petition for review on certiorari before the SC prevented the decision from attaining finality. To deny the petitioner's petition would deprive the petitioner of its fair opportunity to appeal the case in compliance with the Rules of Court.

  4. The trial court acquired jurisdiction over the person of the defendant because the defendant voluntarily appeared before the trial court by taking a procedural recourse before that court. The defendant's voluntary appearance is equivalent to service of summons.

  5. An order denying a motion to dismiss cannot be the subject of a petition for certiorari as the defendant still has an adequate remedy before the trial court i.e., to file an answer and to subsequently appeal the case if he loses the case. Exceptions are if the ground raised in the motion to dismiss is lack of jurisdiction over the person of the defendant or over the subject matter.

  6. The filing of successive motions to dismiss, under the guise of "supplemental motion to dismiss" or "motion for reconsideration", is improper and dilatory.

  7. Failure to raise the issue of improper service of summons in the first motion to dismiss constitutes a waiver of this defense and cannot be belatedly raised in succeeding motions and pleadings.

  8. The lower courts should not dismiss a case solely on the ground of improper service of summons. They should instead order the issuance of an alias summons on the proper person in the interest of substantial justice and to expedite the proceedings.

  9. The entry of judgment in a previous petition does not bar the present meritorious petition if a timely motion for reconsideration was filed and the execution of the judgment was stayed.

  10. Yes, the entry of judgment made by the Court was premature and inefficacious due to the pendency of a motion for reconsideration with the Court of Appeals. The Court follows the rule that the entry of judgments may only be had if there is no appeal or motion for reconsideration timely filed. The date when the judgment or final resolution becomes executory shall be deemed as the date of its entry. The pendency of the motion for reconsideration with the Court of Appeals made the entry of the judgment of the Court premature and inefficacious for not being final and executory.

  11. Yes, the recall or setting aside of the entry of final judgment was proper. The Court relies on a previous ruling which states that an entry of judgment may be recalled or lifted motu proprio when it is clear that the decision assailed has not yet become final under the rules. The recall is consistent with the inherent power of every court to amend and control its process and orders so as to make them conformable to law and justice.

PRINCIPLES:

  • Res judicata applies when a final judgment on the merits has been rendered by a court of competent jurisdiction, conclusively determining the parties' rights and obligations with respect to the causes of action and the subject matter of the case.

  • Once a court has obtained jurisdiction over a controversy, its jurisdiction to proceed to the final determination of the case is retained.

  • Factual findings of lower courts are final and binding on the SC, unless there are compelling reasons to deviate from them.

  • Litigants should not be allowed to reiterate identical motions, speculating on the possible change of opinion of the courts or judges.

  • The defendant must file a motion to dismiss or an answer within a certain period of time after service of summons, and the denial of a motion must be followed by the filing of an answer within the remaining period, which cannot be less than five days from the receipt of the notice of denial.

  • An order denying a motion to dismiss cannot be the subject of a petition for certiorari. The defendant still has an adequate remedy to file an answer and subsequently appeal the case. (Exception: lack of jurisdiction over the person or the subject matter)

  • Filing successive motions to dismiss is improper and dilatory.

  • Lack of jurisdiction over the person defense should be raised in the very first motion to dismiss, failure to do so constitutes a waiver of the defense.

  • The lower courts should not dismiss a case solely on the ground of improper service of summons. They should order the issuance of an alias summons on the proper person.

  • Entry of judgment may only be made if no appeal or motion for reconsideration was timely filed. Filing a motion for reconsideration stays the execution of the judgment.

  • The entry of judgment makes a judgment, order, or resolution final and executory, but it is not the operative act that makes the judgment, order, or resolution final and executory.

  • The court has the inherent power to recall or set aside an entry of judgment to achieve a verdict consistent with law and justice.