Dy Teban Trading v. Dy
REITERATIONFacts
The Antecedents: Petitioner Dy Teban Trading, Inc. (DTTI) filed an action for injunction against respondents Peter C. Dy, Johnny C. Dy, and Ramon C. Dy due to alleged squandering of cash sales and stocks by Johnny, an employee, and forcible opening and deprivation of use of DTTI's Montilla branch store. Respondents, in turn, filed an action for dissolution of the corporation. Both cases were raffled to the RTC, Butuan City, designated as a commercial court. Procedural History: The action for dissolution was dismissed for non-payment of docket fees. The RTC jointly heard the cases. Lorencio C. Dy was presented as a witness for DTTI, and his cross-examination was repeatedly reset due to various reasons, including counsel's unavailability and marking of additional documents. The RTC warned respondents that failure to cross-examine would result in a waiver of their right. On June 18, 2007, respondents' counsel failed to appear, and the RTC declared their right to cross-examine waived. Respondents' motion for reconsideration was denied. Subsequently, respondents filed a petition for certiorari before the Court of Appeals (CA). The RTC admitted DTTI's exhibits and set respondents' presentation of evidence. Respondents filed a supplemental petition for certiorari, but no TRO or injunction was issued. On May 26, 2008, respondents failed to appear for their presentation of evidence, filing only an urgent motion for continuance, which the RTC denied, declaring them to have waived their right to present evidence. The RTC rendered a decision in favor of DTTI. The CA, however, annulled the RTC's orders and decision, remanding the case for further proceedings, ruling that the RTC acted with grave abuse of discretion. The Petition: DTTI filed a petition for review on certiorari before the Supreme Court, assailing the CA's decision. DTTI argued that the RTC correctly declared the waiver of respondents' rights to cross-examine and present evidence. Respondents countered that the RTC lacked jurisdiction as the case was not an intra-corporate dispute and that they were deprived of due process.
Issue(s)
Whether the action for injunction filed by DTTI was an intra-corporate case properly heard by the RTC acting as a special commercial court. Whether the CA erred in reversing the RTC's orders and holding that respondents were deprived of their right to present evidence and to cross-examine DTTI's witness.
Ruling
The Supreme Court granted the petition, reversed the Court of Appeals' Decision, and reinstated the Decision and Orders of the Regional Trial Court.
Ratio Decidendi
On the first issue (Jurisdiction and Nature of the Case): The Supreme Court held that the action filed by DTTI was a civil action for injunction and not an intra-corporate dispute. Applying the relationship and nature of controversy tests, the Court found no allegation that respondents were stockholders, nor that the dispute arose from internal corporate matters. The complaint sought to prevent respondents from controlling DTTI's branch store and to gain access to the property, which falls under the general jurisdiction of RTCs as a civil action. While the case was heard by an RTC designated as a commercial court, this was a matter of procedure, not jurisdiction, as RTCs retain general jurisdiction over ordinary civil cases. Furthermore, respondents waived any objection to this procedural propriety by submitting to the RTC's authority and participating in the proceedings. On the second issue (Waiver of Right to Cross-Examine and Present Evidence): The Supreme Court found that the CA erred in reversing the RTC's orders. The Court reiterated that the right to cross-examine is a fundamental right but can be waived, expressly or impliedly. The facts showed that respondents were repeatedly given opportunities to cross-examine DTTI's witness, Lorencio C. Dy, but failed to do so due to reasons attributable to their counsel's negligence and dilatory tactics. The RTC had warned respondents of the consequences of further delays. Atty. Go's explanation for missing the June 18, 2007 hearing was deemed unmeritorious, as he failed to file a formal motion for postponement and relied on the opposing counsel's generosity and the court's discretion. The Court emphasized that counsel's negligence binds the client. Similarly, respondents waived their right to present evidence when they failed to appear on May 26, 2008, despite no injunction or TRO halting the proceedings. Their motion for continuance lacked merit, and Section 7, Rule 65 of the Rules of Court mandates that the public respondent proceed with the principal case in the absence of injunctive relief. The RTC was warranted in declaring the waiver to prevent further undue delay, as trials cannot be held hostage by the negligence or dilatory tactics of parties.
Main Doctrine
The Supreme Court held that the RTC correctly declared the respondents to have waived their right to cross-examine the witness and to present evidence, as their repeated failures to appear or to file proper motions for postponement were attributable to their own counsel's negligence and dilatory tactics, thereby upholding the trial court's authority to control proceedings and prevent undue delay, and that the RTC, despite being designated as a commercial court, retained general jurisdiction over ordinary civil cases.