G.R. No. 191353 / G.R. No. 194533. April 19, 2017.
PHILIPPINE STEEL COATING CORP. (formerly Ultra Mar Aqua Resource, Inc.), Petitioner, vs. EDUARD QUINONES (formerly Fermida Construction Services), Respondent.

FACTS

Petitioner Ultra Mar Aqua Resource, Inc. entered into a Contract Agreement with respondent Fermida Construction Services for the construction of a warehouse. During construction, variations were made upon Ultra Mar’s request. After completion, Fermida submitted billing statements, but Ultra Mar refused payment, alleging substandard work, delay, and Fermida’s failure to submit certain reports and permits. Fermida filed a Complaint for Collection.
During pre-trial, Ultra Mar’s counsel failed to file the required pre-trial brief and attend the conference, leading the RTC to declare Ultra Mar in default and allow Fermida to present evidence ex parte. Counsel filed an Omnibus Motion to lift the default, citing health reasons, but failed to submit the required medical certificate as ordered by the RTC. The motion was denied, and the RTC rendered a decision in favor of Fermida, ordering payment of the contract sum with variations, plus damages.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s denial of Ultra Mar’s Omnibus Motion to lift the order of default and its subsequent decision on the merits.

RULING

The Supreme Court denied the petition and affirmed the CA. On procedure, the RTC did not commit grave abuse of discretion in denying the motion to lift the default. Default orders are addressed to the court’s sound discretion. Ultra Mar’s counsel offered an unsubstantiated excuse for his failure and subsequently did not comply with the RTC’s simple directive to submit a medical certificate. This failure constituted gross negligence, binding upon the client.
On the merits, the CA correctly affirmed the RTC’s award based on the evidence presented ex parte. The court-appointed independent engineer’s report confirmed that variations were executed, likely upon Ultra Mar’s verbal instructions, as there was no written objection from Ultra Mar during construction. While the report noted minor defects, it did not negate the existence of the contract and the variations. Ultra Mar, having been declared in default, lost its right to present contrary evidence and is deemed to have admitted the material allegations of the complaint. The award for the contract price and cost of variations was thus supported by preponderant evidence. The principle that a client is bound by the negligence of its counsel applies with full force.