G.R. No. 180817 June 23, 2009
MULTI-TRANS AGENCY PHILS. INC., Petitioner, vs. ORIENTAL ASSURANCE CORP., Respondent.

FACTS

Respondent Oriental Assurance Corporation filed a complaint for sum of money against petitioner Multi-Trans Agency Phils. Inc. and Neptune Orient Lines, Ltd. before the Regional Trial Court (RTC) of Manila. The complaint alleged that Oriental’s predecessor-in-interest, Imrex Enterprises, imported 72 boxes and one pal/box of Opacolor from England, shipped from Southampton to Manila on board the vessel “Tokyo Bay” under Bill of Lading No. MA-19943/02, with the shipment transshipped from Singapore on board the vessel “M/V Neptune Beryl.” The shipment was insured by Oriental under Marine Insurance Policy No. OAC-M-96/688. Upon arrival in Manila, only 72 boxes were delivered; one pal/box was shortlanded. Oriental paid Imrex Enterprises the value of the missing box (P256,937.03) and, claiming subrogation rights, demanded payment from Multi-Trans and Neptune. Both refused, prompting the lawsuit.
Petitioner Multi-Trans filed a Motion to Dismiss on the ground that the complaint did not state a cause of action against it, arguing it was named in the Bill of Lading as agent of the Multimodal Transport Operator, not as operator/ship agent of the vessel “Tokyo Bay.” The RTC denied the motion. Petitioner failed to file an Answer and was declared in default. The RTC proceeded with the presentation of evidence ex parte against Neptune as well, after Neptune and its counsel failed to appear at pre-trial. The RTC rendered a decision holding petitioner and Neptune solidarily liable to respondent.
Petitioner, through new counsel, filed a Motion for New Trial and to Admit Attached Answer, alleging excusable neglect due to its former counsel’s negligence in failing to file an Answer or a motion to lift the order of default despite knowledge thereof. The RTC denied the motion. Petitioner appealed to the Court of Appeals, which affirmed the RTC decision with modification, deleting the award of attorney’s fees. Petitioner’s motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s denial of petitioner’s Motion for New Trial.

RULING

No, the Court of Appeals did not err. The Supreme Court denied the petition and affirmed the assailed Court of Appeals Decision and Resolution. The Court held that the negligence of petitioner’s former counsel, Atty. Jose Ma. Austria, was not excusable. Counsel received the order denying the motion to dismiss on February 25, 1998, but took no further action—he did not file an Answer, did not file a motion to lift the order of default when he learned of it, and did not inform petitioner of the adverse developments. This constituted gross negligence, not simple inadvertence. The negligence of counsel binds the client, and petitioner failed to prove that it exercised the diligence of a reasonably prudent person in monitoring its case. The Court found no compelling reason to grant the motion for new trial, as the negligence was not excusable and did not warrant the relaxation of procedural rules.