Boaz International Trading Corporation and F.R. Cement Corporation v. Woodward Japan, Inc. and North Front Shipping Services Inc. ,418 SCRA 287 (2003)

FACTS:

Respondent Woodward Japan, Inc. filed a complaint for a ‘Sum of Money and Damages’ against petitioners Boaz International Trading Corp. and F. R. Cement Corp.

Petitioners Boaz and F. R. Cement filed their answer to the complaint as well as a third party complaint against North Front Shipping Services, Inc.

Respondent North Front filed its answer to the third-party complaint with a counterclaim against the third-party plaintiffs.

COURT a quo: scheduled a pre-trial conference for 04 November 1997. This initial pre-trial conference was however postponed to give the parties time to settle their respective claims amicably. Succeeding schedules of pre-trial conference were likewise cancelled for the same reason. Finally, when it became apparent that the parties would not be able to arrive at an amicable settlement, the trial court scheduled a pre-trial conference anew.

On the scheduled day of the pre-trial conference, both Woodward and its counsel failed to appear.

Consequently, counsel for Boaz and F. R. Cement moved that Woodward be declared non-suited, that the complaint against them be dismissed and that they be allowed to present evidence on their counterclaim.

COURT a quo: granted the motion of Boaz and F. R. Cement to dismiss the complaint of Woodward and the motion of North Front to dismiss the third-party complaint of Boaz and F. R. Cement.

Petitioner Boaz and F. R. Cement presented their evidence consisting of the testimony of one Jose Ernesto Rodriguez and reserved the right to present the original of certain documents. No formal offer of evidence has yet been made by Boaz and F. R. Cement.

Respondent Woodward filed a ‘Motion to Reinstate Plaintiff’s (Woodward’s) Complaint and Allow Them to Present Evidence Ex-Parte.

TC: granted Woodward’s ‘Motion to Reinstate Plaintiff’s (Woodward’s) Complaint and Allow Them to Present Evidence Ex-Parte

Petitioner Boaz and F. R. Cement moved for reconsideration but the trial court denied the same.

Imputing grave abuse of discretion on the part of the trial court, Petitioners Boaz and F. R. Cement elevated the case to the CA under Rule 65.

CA: in prosecuting the claim of Woodward against petitioners, its lawyers acted negligently. It found that the trial court did not act without or in excess of jurisdiction or with grave abuse of discretion when it reinstated Woodward’s Complaint.

Hence, this petition for review.

ISSUE: Whether or not the CA erred in sustaining the RTC’s Order reinstating the Complaint of Woodward.

HELD: Yes. The CA erred in affirming the Order of the RTC and in ordering the reinstatement of the third-party Complaint of petitioners against North Front Shipping Services, Inc.

First, the rules on pretrial were designed precisely to secure the just, speedy and inexpensive disposition of an action. The parties themselves -- not only their counsels -- are required to be present, so that they can discuss and possibly agree on a settlement and thus end the case justly, speedily and inexpensively right there and then. The Rules explicitly impose upon the former the duty to appear at the pretrial conference. The representative of Woodward, as well as its counsel, failed to do so on the date set for the purpose -- not just on October 20, 1998, but also earlier, on September 17, 1998. By its unexplained nonappearance, it inexcusably delayed the case and even caused added expense to the opposing party who had come to court in obedience to the Rules. Evidently, the RTC’s October 20, 1998 Order dismissing the case was proper and in accord with Section 5 of Rule 18, which provides that "[t]he failure of the plaintiff to appear [for pretrial] shall be cause for dismissal of the action."

Second, after violating the rules on pretrial, Woodward had the temerity to file a Motion for Reconsideration beyond the 15-day reglementary period, again in violation of the Rules. Then, upon denial of that Motion, instead of properly elevating the denial to the appellate court for review, it filed a Motion to Reinstate Complaint. As previously explained, the latter Motion amounted to a second motion for reconsideration, which is prohibited by the Rules. By its acts, Woodward unnecessarily delayed the disposition of the case and caused additional expenses to all involved. Furthermore, such acts indicate a propensity to violate the Rules or a gross ignorance thereof, either of which deserves nothing less than opprobrium.

Third, the CA did not err in finding negligence on the part of the counsel of Woodward, which is nonetheless bound by such negligence. "Settled [is the] rule that the negligence of counsel binds the client." We find no cogent reason to depart from this settled rule, especially because the counsel’s negligence in the present case has not been sufficiently explained.

Fourth, Respondent Woodward has failed to demonstrate that it has a meritorious case. It filed a collection case against Petitioner Boaz International Trading Corporation for demurrage charges in the total sum of US$75,065.96. Yet it has failed to show prima facie any agreement on the payment of demurrages. The April 18, 1995 Letter, which Woodward unilaterally made and which Petitioner Boaz did not sign, does not show that the latter agreed to pay demurrages of "US$6,500/half despatch" in case the discharge rate fell below 2,500MT.

Contrary to Woodward’s contention, Boaz has not admitted the April 18, 1995 Letter-Agreement. Paragraph 1.8 of the Answer is not a "negative pregnant." Woodward itself states that a "negative pregnant is that form of denial which at the same time involves an affirmative implication favorable to the opposing party." Since the aforementioned paragraph is explicitly an admission, not a denial, it follows that it cannot be taken as a denial pregnant with an admission of substantial facts.