Philippine Supreme Court Jurisprudence

Philippine Supreme Court Jurisprudence > Year 2003 > December 2003 Decisions > G.R. No. 147793 December 11, 2003 - BOAZ INTERNATIONAL TRADING CORP., ET AL. v. WOODWARD JAPAN, INC., ET AL.:



[G.R. No. 147793. December 11, 2003.]




The liberal construction of the Rules of Court is resorted to only to promote substantial justice, not to delay or undermine legal processes. The Rules are designed to assure the orderly and predictable course of justice. Unduly relaxing them would be an injustice to the innocent parties who honor and obey them, and unfairly reward those who neglect or fail to follow them.

The Case

Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, assailing the January 18, 2001 Decision 2 and the April 2, 2001 Resolution 3 of the Court of Appeals (CA) in CA-GR SP No. 56848. We quote the decretal portion of the Decision:chanrob1es virtua1 1aw 1ibrary

"WHEREFORE, premises considered, the Order dated 09 August 1999 is MODIFIED in the sense that the third-party complaint of Boaz International Trading Corp. and F. R. Cement Corp. against North Front Shipping Services, Inc. must be as it is hereby reinstated. In all other respects, the Order is AFFIRMED. Finally, the writ of preliminary injunction issued by this Court on 29 June 2000 is perforce dissolved." 4

The assailed Resolution denied petitioners’ Motion for Reconsideration.

On the other hand, the dispositive portion of the August 9, 1999 Order of the Regional Trial Court (RTC) of Makati City (Branch 135), which the CA later modified, reads as

"WHEREFORE, premises considered, Order is hereby issued:chanrob1es virtual 1aw library

‘1. Reinstating plaintiff’s complaint and allowing plaintiff to present its evidence on its complaint;

‘2. Allowing plaintiff to refute and/or present evidence against the ex-pare evidence presented by defendants on their counterclaim.’" 5

The Facts

The facts of the case are summarized by the CA as

"Respondent Woodward Japan, Inc. (Woodward, for brevity) filed a complaint for a ‘Sum of Money and Damages’ against petitioners Boaz International Trading Corp. (Boaz, for brevity) and F. R. Cement Corp. (F. R. Cement, for brevity). The complaint, docketed as Civil Case No. 96-1440, was raffled to the RTC of Makati, Branch 135, presided over by public respondent Judge Francisco B. Ibay.

"Petitioners Boaz and F. R. Cement filed their [A]nswer to the complaint as well as a third party complaint against North Front Shipping Services, Inc. (North Front[,] for brevity).

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

"The 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 for 20 October 1998.

"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 presence evidence on their counterclaim.

"Third-party defendant North Front likewise filed a motion to dismiss the third-party complaint which was not objected to by third-party plaintiffs Boaz and F. R. Cement.

"In an Order dated 20 October 1998, the 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.

"Counsel for Woodward thereafter filed an urgent ex parte motion 1) to reconsider the Order of 20 October 1998, 2) to set aside the same Order allowing Boaz and F. R. Cement to present their evidence ex parte and 3) to allow Woodward to present its evidence. Petitioners Boaz and F. R. Cement filed their opposition thereto.

"In an Order dated 16 February 1999, Woodward’s urgent ex[-]parte motion was denied for being filed out of time.

"On 28 April 1998, 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.

"On 25 June 1999, Woodward filed a ‘Motion to Reinstate Plaintiff’s (Woodward’s) Complaint and Allow Them to Present Evidence Ex-Parte.’ In support of its motion, Woodward attached the affidavit of Atty. Pierre M. Alcantara, as associate lawyer of the law firm of Belo, Gozon, Parel, Asuncion and Lucila Law Office which handled Woodward’s case in the court a quo. The affidavit of Atty. Alcantara explained the circumstances why Woodward was not represented in the pre-trial conference on 20 October 1998. The affidavit likewise contains Atty. Alcantara’s tacit admission of his neglect to fully protect the interests of Woodward.

"Boaz and F. R. Cement filed their opposition to Woodward’s motion to which Woodward filed a reply.

"In an Order dated 9 August 1999, the trial court granted Woodward’s ‘Motion to Reinstate Plaintiff’s (Woodward’s) Complaint and Allow Them to Present Evidence Ex-Parte, . . .

x       x       x

"Boaz and F. R. Cement moved for reconsideration but the trial court in its Order of 12 November 1999 denied the same." 6

Imputing grave abuse of discretion on the part of the trial court, petitioners elevated the case to the CA under Rule 65.chanrob1es virtua1 1aw 1ibrary

Ruling of the Court of Appeals

In prosecuting the claim of Woodward against petitioners, its lawyers acted negligently, according to the CA’s ruling, which we

"As admitted by Atty. Pierre M. Alcantara in his affidavit which was appended to Woodward’s motion to reinstate complaint, a high fever prevented him from attending the pre-trial conference scheduled on 20 October 1998. This fact was made known to the handling lawyer, Atty. Jonel S. Mercado. However, no action was taken by Atty. Mercado to assign a substitute counsel for the pre-trial conference. Consequently, Woodward was declared non-suited and its complaint against Boaz and F. R. Cement was dismissed. To compound the initial neglect of the two lawyers, neither of them had seen fit to take appropriate action to protect their client’s interest. While Atty. Alcantara filed a motion for reconsideration, the same was filed out of time, hence, denied by the trial court. Worse, both Attys. Alcantara and Mercado failed to inform the handling partner, Atty. Enrique Belo, and most of all, the client Woodward of the status of the case a quo. Consequently, the order of dismissal attained finality leaving Woodward no option but to file the motion to reinstate its complaint." 7

However, the appellate court further ruled that" [c]ounsel’s gross negligence should not be allowed to deprive Woodward of a chance to prove its claim as this would amount to injustice and outright deprivation of property." It further held that "when the court a quo granted Woodward’s motion to reinstate the complaint, it in effect amended, in the interest of justice, its previous order declaring Woodward non-suited." All considered, the CA 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. 8

The Issues

Petitioners raise the following issues for our

"Whether or not the Court of Appeals erred in ruling that Judge Ibay acted within the ambit of his jurisdiction and without grave abuse of discretion when he granted Woodward’s ‘Motion To Reinstate Complaint.’

"Whether or not Judge Ibay acted without or in excess of his jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in ordering the reinstatement of the complaint in Civil Case No. 96-1440.

- Whether or not Woodward was bound by the negligence of its counsel

- Whether or not the appearance of the parties at the pre-trial conference is mandatory.

- Whether or not Woodward’s consistent failure to observe the provisions of the Rules of Court should be considered fatal to its cause.

- Whether or not the reinstatement of Woodward’s Complaint had any legal basis.

- Whether or not Judge Ibay already lost jurisdiction to amend, modify, reverse or set aside his dismissal order dated 20 October 1998 on 10 November 1998." 9

The main issue to be resolved is whether the CA erred in sustaining the RTC’s Order reinstating the Complaint of Woodward.

The Court’s Ruling

The Petition has merit.

Main Issue:chanrob1es virtual 1aw library

Reinstatement of the Complaint

On October 20, 1998, Woodward and its counsel failed to appear for a pre-trial conference in Civil Case No. 96-1440. Hence, on motion of petitioners, its Complaint was dismissed in an Order issued on the same day. Respondent Woodward filed a Motion for Reconsideration of the Order on November 12, 1998, 17 days after it received a copy thereof. The trial court denied the Motion for being filed out of time.

On June 25, 1999, more than seven (7) months after the finality of the November 12, 1998 Order, Woodward filed a "Motion to Reinstate [its] Complaint and Allow [it] to Present Evidence." This Motion was granted by the RTC in its August 9, 1999 Order.

Jurisdiction of the RTC to Reverse Its October 20, 1998 Order

Indisputably, the August 9, 1999 Order reversed the one issued on October 20, 1998, which, as early as November 15, 1998, was already final as to Woodward. This reversal cannot be countenanced. When the dismissal of an order attains finality through the lapse of the 15-day reglementary period, the issuing court loses jurisdiction and control over that order, and it can no longer make any disposition inconsistent with its dismissal. 10 Upon the finality of the dismissal, the court has no more power to amend, modify, reverse or set aside the order. 11

Legal Basis of the Motion Reinstating the Complaint

The Motion to Reinstate Complaint asked the trial court to reverse or reconsider its Order dismissing the Complaint. Hence, this Motion was in reality Woodward’s second motion for reconsideration, as it was filed months after the denial of its first one. Section 5 of Rule 37 explicitly states that" [n]o party shall be allowed a second motion for reconsideration of a judgment or final order." Clearly, Woodward’s Motion to Reinstate its Complaint was not sanctioned by the Rules of Court or the law.

Liberal Interpretation of the Rules of Court

Respondent Woodward pushes for a liberal interpretation of the Rules of Court. It insists that the emerging trend in our jurisprudence is to afford all litigants the amplest opportunity for the proper and just determination of their cause, free from the constraints of technicalities.

Indeed, espoused by jurisprudence and the Rules is liberal interpretation which, however, is geared towards the attainment of a certain goal: "a just, speedy and inexpensive disposition of every action and proceeding." 12 Respondent Woodward has failed to show how a liberal construction of the Rules, which it violated with impunity, would result in the attainment of that goal. On the other hand, there are a number of reasons that justify the disallowance of such interpretation in the present case.chanrob1es virtua1 law library


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 13 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."cralaw virtua1aw library

Procedural Rules

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.

Negligence of Counsel

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." 14 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.

To cater to the pleas of Woodward and to reinstate its Complaint would put a premium on negligence and thus encourage the non-termination of this case. Like all other clients, Respondent Woodward is bound by the acts of its counsel in the conduct of a case and has to bear with the consequences thereof. It cannot thereafter be heard to complain that the result might have been different had its counsel proceeded differently. The rationale for the rule is easily discernible. If the negligence of counsel be admitted as a reason for opening a case, there would never be an end to litigation so long as there is a new counsel to be hired every time it is shown that the prior one had not been sufficiently diligent, experienced or learned. 15

Merit of Respondent’s Collection Case

Fourth, Respondent Woodward has failed to demonstrate that it has a meritorious case. It filed a collection case against Petitioner Boaz International Trading Corp. (hereinafter referred to as "Boaz") 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, 16 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.

To sum up, the trial court gravely abused its discretion in issuing its August 9, 1999 Order, considering that (1) its October 20, 1998 Order was already final; (2) the reinstatement of the Complaint is not in accordance with the Rules of Court or the law; and (3) there is no justification for liberally construing the Rules in order to serve the ends of justice. Corollary to this conclusion, the CA erred in affirming the August 9, 1999 Order of the RTC and in ordering the reinstatement of the third-party Complaint of petitioners against North Front Shipping Services, Inc.

WHEREFORE, the Petition is GRANTED. The August 9, 1999 Order of the trial court is SET ASIDE and NULLIFIED. No pronouncement as to costs.

SO ORDERED.cralaw : red

Davide, Jr., C.J., Ynares-Santiago, Carpio and Azcuna, JJ., concur.


1. Rollo, pp. 23–49.

2. Id., pp. 53–65; penned by Justice Wenceslao I. Agnir Jr. and concurred in by Justices Salome A. Montoya (Division chairman) and Salvador J. Valdez Jr. (member).

3. Id., pp. 67–69; penned by Justice Wenceslao I. Agnir Jr. and concurred in by Justices Ma. Alicia Austria-Martinez (Division chair and now a member of this Court) and Salvador J. Valdez Jr.

4. Assailed CA Decision, pp. 12–13; rollo, pp. 64–65.

5. RTC Decision, pp. 3–4; rollo, pp. 185–186. Written by Judge Francisco B. Ibay.

6. Assailed CA Decision, pp. 2–7; rollo, pp. 54–59.

7. Id., pp. 9–10 & 61–62.

8. This case was deemed submitted for resolution on September 30, 2002, upon receipt by the Court of petitioners’ Memorandum, which was signed by Atty. Lorna Imelda M. Suarez. Respondent Woodward’s Memorandum, filed on August 29, 2002, was signed by Attys. Eric Vincent A. Estoesta and Regino A. Moreno.

9. Petitioners’ Memorandum, pp. 10–11; rollo, pp. 463–464.

10. Madarieta v. RTC, Branch 28, Mambajao, Camiguin, 383 Phil. 381, February 28, 2000; citing Ortigas & Company Limited Partnership v. Velasco, 234 SCRA 455, July 25, 1994.

11. Olympia International, Inc. v. Court of Appeals, 180 SCRA 353, December 20, 1989.

12. 6 of Rule 1 of the Rules of Court.

13. 4 of Rule 18 of the Rules of Court.

14. Greenhills Airconditioning and Services, Inc. v. NLRC, 315 Phil. 409, 417, June 27, 1995, per Padilla, J.

15. Gold Line Transit, Inc. v. Ramos, 415 Phil. 492, August 15, 2001; Fernandez v. Tan Tiong Tick, 111 Phil. 773, April 28, 1961.

16. Rollo, p. 431.

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