The Supreme Court, in Tung Ho Steel Enterprises Corp. v. Ting Guan Trading Corporation, clarified that a party’s voluntary appearance in court, through the filing of motions without initially contesting jurisdiction, constitutes a waiver of the defense of lack of jurisdiction over their person. This means that even if the initial service of summons was defective, the party’s subsequent actions acknowledging the court’s authority cures the defect, allowing the case to proceed.

Challenging Jurisdiction Too Late? The Case of the Enforced Arbitral Award

Tung Ho Steel Enterprises Corp., a Taiwanese company, sought to enforce an arbitral award against Ting Guan Trading Corp., a Philippine domestic corporation, after Ting Guan failed to deliver contracted metal scrap. The case centered around whether the Regional Trial Court (RTC) of Makati properly acquired jurisdiction over Ting Guan, given the initial questions regarding the validity of summons. Ting Guan initially moved to dismiss the case, citing lack of capacity to sue, prematurity, and improper venue. The RTC denied these motions, leading Ting Guan to file a petition for certiorari before the Court of Appeals (CA), which ultimately dismissed the complaint due to lack of jurisdiction over Ting Guan’s person, finding that the person who received the summons was not authorized to do so. Tung Ho appealed, raising questions of res judicata and voluntary appearance.

The Supreme Court reversed the CA’s decision, holding that Ting Guan had, in fact, voluntarily submitted to the RTC’s jurisdiction. The Court emphasized that while the initial service of summons may have been defective, Ting Guan’s subsequent actions constituted a waiver of this defect. This ruling underscores the principle that a party cannot invoke the court’s jurisdiction to seek relief while simultaneously denying that jurisdiction exists.

Res judicata, the principle that prevents parties from relitigating issues already decided by a competent court, was also considered. The Court clarified that its prior ruling in G.R. No. 176110 did not operate as res judicata because it did not conclusively rule on the jurisdictional issues. According to the Court:

Contrary to Ting Guan’s position, our ruling in G.R. No. 176110 does not operate as res judicata on Tung Ho’s appeal; G.R. No. 176110 did not conclusively rule on all issues raised by the parties in this case so that this Court would now be barred from taking cognizance of Tung Ho’s petition. Our disposition in G.R. No. 176110 only dwelt on technical or collateral aspects of the case, and not on its merits.  Specifically, we did not rule on whether Tung Ho may enforce the foreign arbitral award against Ting Guan in that case.

Building on this principle, the Court highlighted that once a court acquires jurisdiction, it retains that jurisdiction until the case is fully resolved. Therefore, the CA was not ousted of its jurisdiction when G.R. No. 176110 was promulgated, as there remained a pending incident before the CA, namely, the resolution of Tung Ho’s motion for reconsideration.

Addressing the issue of voluntary appearance, the Supreme Court referenced Section 20, Rule 14 of the Rules of Court, stating that:

Voluntary appearance shall be equivalent to service of summons.

In this context, the Court emphasized the importance of the omnibus motion rule, which requires parties to raise all available objections in a single motion, thereby preventing piecemeal litigation and discouraging dilatory tactics. Here is the Omnibus motion rule:

Under the omnibus motion rule, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available.

The Court found that Ting Guan’s failure to raise the issue of improper service of summons in its initial motion to dismiss was a fatal error. By raising other grounds for dismissal without contesting jurisdiction over its person, Ting Guan effectively waived its right to challenge the court’s authority. The Court emphasized that:

In Anunciacion v. Bocanegra, we categorically stated that the defendant should raise the affirmative defense of lack of jurisdiction over his person in the very first motion to dismiss. Failure to raise the issue of improper service of summons in the first motion to dismiss is a waiver of this defense and cannot be belatedly raised in succeeding motions and pleadings.

Even if there had been no voluntary appearance, the CA should have directed the RTC to issue an alias summons to ensure proper service. The Court cited Lingner & Fisher GMBH vs. Intermediate Appellate Court, noting the importance of courts curing defects in service of summons to promote substantial justice and expedite proceedings.

The Supreme Court acknowledged the procedural complexities in the case, particularly the CA’s handling of the parties’ motions for reconsideration. However, the Court emphasized that Tung Ho had diligently pursued its remedies under the Rules of Court and should not be penalized for the procedural missteps of the lower courts. The Court also pointed out that there was:

the pendency of Tung Ho’s MR with the CA made the entry of the judgment of the Court in the Ting Guan petition premature and inefficacious for not being final and executory.

The court highlighted the policy laid down in Realty Sales Enterprises, Inc. and Macondray Farms, Inc. v. Intermediate Appellate Court, et al., stating that an entry of judgment may be recalled or lifted when it is clear that the decision assailed of has not yet become final under the rules. Thus, the Court held that the entry of judgment in G.R. No. 176110 was premature and should not bar the present petition.

FAQs

What was the key issue in this case?	The central issue was whether the trial court acquired jurisdiction over Ting Guan, considering the questions regarding service of summons and Ting Guan’s subsequent actions before the court.
What is meant by ‘voluntary appearance’ in court?	Voluntary appearance refers to a party’s actions that indicate submission to the court’s jurisdiction, such as filing motions or pleadings without contesting jurisdiction over their person. This is generally equivalent to proper service of summons.
What is the ‘omnibus motion rule’?	The omnibus motion rule requires parties to raise all available objections in a single motion, preventing piecemeal litigation and discouraging dilatory tactics. Failure to include an objection in the initial motion typically waives the right to raise it later.
What is the significance of ‘alias summons’?	An alias summons is a second summons issued when the initial service of summons is defective. It is a means for the court to ensure proper service and acquire jurisdiction over the defendant.
What does ‘res judicata‘ mean?	Res judicata is a legal principle that prevents parties from relitigating issues that have already been decided by a competent court in a prior case. It promotes finality in litigation and prevents repetitive lawsuits.
What was the Court’s final ruling?	The Supreme Court reversed the Court of Appeals’ decision and ordered the reinstatement of the case before the Regional Trial Court, holding that Ting Guan had voluntarily submitted to the court’s jurisdiction.
Why did the Court emphasize the importance of timely filing motions?	The Court emphasized the importance of timely filing motions to prevent delays and ensure orderly procedure. Parties must raise all available objections at the earliest opportunity to avoid waiving their rights.
What is the practical implication of this ruling for businesses?	This ruling reminds businesses to promptly address any jurisdictional issues in the first motion to avoid waiving the right to contest jurisdiction. It also clarifies that participation in court proceedings without objection can be deemed as voluntary submission to jurisdiction.

In conclusion, the Supreme Court’s decision in Tung Ho Steel Enterprises Corp. v. Ting Guan Trading Corporation provides valuable guidance on the principles of voluntary appearance and waiver of jurisdictional defenses. Parties must be vigilant in raising all available objections at the earliest opportunity to preserve their rights.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Tung Ho Steel Enterprises Corporation vs. Ting Guan Trading Corporation, G.R. No. 182153, April 07, 2014