Dy Teban Trading, Inc. vs. Dy

The right to cross-examine witnesses and present evidence, being personal rights, may be waived expressly or impliedly through conduct amounting to renunciation; repeated failure to attend scheduled hearings without valid justification or formal motions for postponement constitutes an implied waiver that does not violate due process, and the designation of an RTC as a Special Commercial Court does not divest it of general jurisdiction over ordinary civil actions.

Dy Teban Trading, Inc. (DTTI) is a domestic closed corporation owned by the Dy siblings with principal offices in Butuan City. Due to management disagreements, DTTI instituted an action for injunction against Peter, Johnny, and Ramon Dy before the RTC, alleging that Johnny Dy, an employee at the Montilla branch, had squandered cash sales and stocks either for personal benefit or for the benefit of his co-respondents. Respondents filed a separate action for dissolution of the corporation which was eventually dismissed for failure to pay proper docket fees. Both cases were raffled to Branch 33 of the RTC, designated as a commercial court.

• DTTI filed a complaint for injunction against respondents Peter C. Dy, Johnny C. Dy, and Ramon C. Dy before the Regional Trial Court (RTC) of Butuan City on September 7, 2004, docketed as an intra-corporate case.
• DTTI alleged that Johnny C. Dy, an employee at the Montilla branch, colluded with Peter and Ramon Dy to squander cash sales and stocks from the branch, prompting DTTI to weld the branch doors shut to prevent further losses.
• Respondents allegedly forcibly opened the Montilla branch and continuously deprived DTTI of its use, prompting the injunction suit.
• Respondents filed a separate action for dissolution of the corporation which was dismissed due to failure to pay proper docket fees.
• DTTI presented Lorencio C. Dy as witness on June 28, 2005, with cross-examination initially scheduled for August 30, 2005.
• On August 30, 2005, respondents' counsel Atty. Rabor moved for postponement due to Atty. Go's health problems; the RTC granted the motion and reset the hearing to September 22, 2005, warning that further failure to cross-examine due to Atty. Go's absence would result in waiver.
• Following the death of Presiding Judge Victor A. Tomaneng, the case was transferred to Judge Eduardo S. Casals, with hearings reset to January 17, 2006, May 9, 2006, and October 16, 2006.
• On October 16, 2006, the hearing was postponed due to health problems of DTTI's counsel Atty. Asis, without objection from respondents, and reset to March 5, 2007.
• On March 5, 2007, Atty. Asis marked three additional documents, prompting Atty. Go to request time to study them; the RTC reset the cross-examination to June 18, 2007.
• On June 18, 2007, neither Atty. Go nor Atty. Rabor appeared for respondents, and no motion for postponement was filed; Atty. Go later claimed he had called Atty. Asis on June 16, 2007 to inform him he had to fly to Cebu for another case.
• The RTC issued an Order on June 18, 2007 declaring respondents to have waived their right to cross-examine Lorencio C. Dy and giving DTTI 15 days to file its formal offer of evidence.
• Respondents filed a motion for reconsideration arguing deprivation of due process, which the RTC denied on October 10, 2007, noting that Atty. Go could have requested co-counsel Atty. Rabor to appear or filed a formal motion for postponement.
• On November 16, 2007, respondents filed a special civil action for certiorari with the Court of Appeals (CA-G.R. SP No. 02051-MIN) challenging the June 18, 2007 and October 10, 2007 Orders.
• On March 3, 2008, the RTC granted DTTI's motion for admission of exhibits and set respondents' presentation of evidence for May 26, 2008.
• Respondents filed a supplemental petition with the CA on April 2, 2008 challenging the March 3, 2008 Order and applying for a TRO.
• On May 26, 2008, neither respondents nor their counsel appeared for the scheduled presentation of evidence; instead, they filed an urgent motion for continuance citing the pendency of the certiorari case.
• The RTC denied the motion for continuance and declared respondents to have waived their right to present evidence, deeming the case submitted for decision.
• On August 22, 2008, the RTC rendered a Decision granting the injunction and ordering respondents to pay damages based solely on Lorencio's unchallenged testimony and documentary evidence.
• On December 17, 2008, the Court of Appeals annulled the RTC's June 18, 2007 and May 26, 2008 Orders and the August 22, 2008 Decision, remanding the case for further proceedings.

• The RTC correctly declared respondents to have waived their right to cross-examine and present evidence because respondents failed to file written motions for postponement and the reasons invoked were insufficient.
• Respondents were not entitled to a continuance as a matter of right, and the grant of postponement lies within the sound discretion of the court.
• While the action was a civil action for injunction and not an intra-corporate dispute, the RTC had jurisdiction over the case as a regular court despite its designation as a commercial court.

• The RTC lacked jurisdiction because the action for injunction was not an intra-corporate dispute; the complaint contained no allegation that respondents were stockholders acting in such capacity, making the RTC decision void.
• The Court of Appeals properly reversed the RTC because respondents were deprived of due process when the RTC haphazardly declared them to have waived their right to cross-examine and present evidence.
• Atty. Go had informed opposing counsel of his inability to attend the June 18, 2007 hearing due to a conflicting case in Cebu, and the RTC should have considered this informal notice.

• Procedural Issues:
  • Whether the Court of Appeals correctly reversed the Regional Trial Court's orders declaring respondents waived their right to cross-examine and present evidence.
• Substantive Issues:
  • Whether the action filed before the RTC was an intra-corporate case properly heard by the RTC acting as a special commercial court.
  • Whether the RTC's declaration of waiver deprived respondents of their right to due process.

• Procedural:
  • The Supreme Court reversed the Court of Appeals' decision and reinstated the Regional Trial Court's orders and decision.
  • The RTC did not gravely abuse its discretion in declaring waiver of the right to cross-examine because respondents were given multiple opportunities over two years but failed to attend the June 18, 2007 hearing without filing a formal motion for postponement or valid justification; counsel's negligence binds the client.
  • The RTC did not gravely abuse its discretion in declaring waiver of the right to present evidence because respondents failed to appear on May 26, 2008 despite being given sufficient notice, and Section 7, Rule 65 of the Rules of Court mandates that the trial court proceed with the principal case within ten days from the filing of a certiorari petition absent a TRO.
• Substantive:
  • The action was a civil action for injunction, not an intra-corporate dispute, because the complaint failed to allege that respondents were stockholders acting in such capacity (failing the relationship test) and did not seek enforcement of rights under the Corporation Code (failing the nature of controversy test).
  • Nevertheless, the RTC had jurisdiction over the civil action because the designation of a branch as a Special Commercial Court does not divest the RTC of its general jurisdiction over ordinary civil cases under BP 129; jurisdiction is determined by statute, not internal procedural designations.
  • Respondents waived any objection to procedural propriety by submitting to the RTC's authority and participating in the proceedings.
  • There was no deprivation of due process because due process is satisfied when a party is accorded a meaningful opportunity to be heard, which respondents failed to avail of due to reasons attributable to themselves and their counsel.

• Waiver of the Right to Cross-Examine — The right to cross-examine is a personal right that may be waived expressly or impliedly by conduct amounting to a renunciation of the right; a party is deemed to have waived the right when given an opportunity to confront and cross-examine an opposing witness but failed to do so for reasons attributable to himself or herself alone, as repeatedly failing to attend scheduled hearings without valid justification constitutes an implied waiver.
• Waiver of the Right to Present Evidence — The right to present evidence may be waived when a party has been consistently given the opportunity to participate in proceedings but failed to do so without justifiable reason; courts must balance the administration of justice against speedy disposition and are justified in declaring waiver when trials are threatened by negligence or dilatory tactics.
• Intra-Corporate Dispute Tests — To establish jurisdiction over intra-corporate disputes, the complaint must meet both the relationship test (dispute between corporation and stockholders/officers or among stockholders) and the nature of controversy test (dispute intrinsically connected with regulation of corporation and enforcement of rights under the Corporation Code).
• Jurisdiction of Special Commercial Courts — The designation of an RTC branch as a Special Commercial Court is a procedural tool to expedite commercial cases and does not divest the court of its general jurisdiction over ordinary civil cases under BP 129; jurisdiction is determined by the allegations in the complaint and statutory law, not by internal administrative designations.

• "The right of a party to confront and cross-examine opposing witnesses in a judicial litigation, be it criminal or civil in nature, or in proceedings before administrative tribunals with quasi-judicial powers, is a fundamental right which is part of due process. However, the right is a personal one which may be waived expressly or impliedly by conduct amounting to a renunciation of the right of cross-examination."
• "Courts possess the duty and authority to control the proceedings before it. This includes the setting of trial dates and allowing postponement of hearings. Lawyers, in turn, as officers of the court, are duty bound to obey and respect court orders."
• "Far from being a right, the grant of a motion for postponement is a privilege addressed to the court's sound discretion. Hence, a party filing such motion must not assume that it will be granted."
• "Counsel's negligence binds the client."
• "Due process is satisfied as long as the party is accorded an opportunity to be heard. If it is not availed of, it is deemed waived or forfeited without violating the constitutional guarantee."

• Strategic Alliance Development Corporation v. Star Infrastructure Development Corporation — Cited for the test to determine intra-corporate disputes, explaining that the controversy must not only be rooted in the existence of an intra-corporate relationship but must also refer to the enforcement of the parties' correlative rights and obligations under the Corporation Code.
• Gonzales v. GJH Land, Inc. — Cited for the principle that the designation of a branch as a Special Commercial Court does not shed the RTC's general jurisdiction over ordinary civil cases under BP 129, as such designation is merely a procedural tool.
• Savory Luncheonette v. Lakas ng Manggagawang Pilipino — Cited for the doctrine that the right to cross-examine is a personal right that may be waived expressly or impliedly, and that failure to avail of the opportunity to cross-examine for reasons attributable to the party constitutes waiver.
• SCC Chemicals Corporation v. Court of Appeals — Cited for the principle that repeated failure to conduct cross-examination despite numerous opportunities granted amounts to a waiver of the right.
• Spouses Santos v. Alcazar — Cited for the rule that a party moving for postponement should be in court on the day set for trial if the motion is not acted upon favorably, as he has no right to rely on the liberality of the court or the generosity of the adverse party.
• Reyes v. Court of Appeals — Cited for the principle that postponement of trial lies in the discretion of the trial court, which must be exercised wisely with a view to doing substantial justice.
• Bautista v. Court of Appeals — Cited for the doctrine that where a party was afforded an opportunity to participate in the proceedings but failed to do so, he cannot complain of deprivation of due process.
• Gohu v. Gohu — Cited for the principle that an order declaring waiver upholds the court's duty to ensure that trial proceeds despite deliberate delay and refusal to proceed on the part of one party.

• Section 5, Republic Act No. 8799 (Securities Regulation Code) — Transferred jurisdiction over intra-corporate disputes from the SEC to RTCs designated as commercial courts.
• Section 7, Rule 65 of the Rules of Court — Mandates that the public respondent shall proceed with the principal case within ten days from the filing of a petition for certiorari absent a temporary restraining order or preliminary injunction.
• Article III, Section 1 of the Constitution — Due process clause providing that no person shall be deprived of life, liberty or property without due process of law.
• Batas Pambansa Blg. 129, Section 19 — Grants the Regional Trial Court general jurisdiction over all civil actions in which the subject of the litigation is incapable of pecuniary estimation.