Case Summary (G.R. No. 159636)
Factual Background
Marie Grace Pagulayan-Gammad was a passenger aboard a Victory Liner bus traveling from Manila to Tuguegarao. At approximately 3:00 a.m., the bus fell into a ravine in Barangay Baliling, Sta. Fe, Nueva Vizcaya, resulting in her death and physical injuries to other passengers. In May 1996, her heirs filed a complaint for damages due to breach of contract of carriage against Victory Liner. Victory Liner contended the accident was purely accidental and that it exercised extraordinary diligence during its operation.
Procedural History
The RTC set pre-trial hearings, but Victory Liner’s counsel failed to appear on one occasion, leading to a default declaration that was later set aside upon motion. The petitioner’s counsel failed to cross-examine the respondent’s witness and failed to present evidence, resulting in the case being submitted for decision. The RTC rendered judgment in favor of respondents, awarding actual damages, death indemnity, exemplary and moral damages, compensatory damages, attorney’s fees, and suit costs. Victory Liner appealed to the Court of Appeals, which affirmed the ruling with modifications, primarily reducing the amounts awarded. Victory Liner moved for reconsideration before the CA, which was denied, prompting the filing of the present petition for review.
Issue on Counsel’s Negligence and Due Process
Victory Liner argued that its former counsel's negligence in failing to appear and to cross-examine witnesses deprived it of due process. The Supreme Court reiterated the general rule that a client is bound by the negligence or acts of its counsel. Exceptions are recognized only when gross or reckless negligence results in deprivation of due process or when justice so requires. In this case, the Court found no gross or reckless negligence. The petitioner was represented, had answered the complaint, participated in pre-trial, and filed an appeal. Notices for the pre-trial were sent and received by petitioner, and contributory negligence was attributed to it for delay in authorizing counsel. The Court distinguished this case from APEX Mining, Inc., where counsel’s egregious negligence warranted relief. The Court held that petitioner was not denied due process because it had ample opportunity to be heard but lost its chance due to its counsel’s ordinary negligence.
Liability of Victory Liner for Breach of Contract of Carriage
Using the 1987 Constitution and applicable laws, the Court affirmed that as a common carrier, Victory Liner is bound to carry passengers safely with the utmost diligence. The death of a passenger raises a presumption of negligence by the carrier unless rebutted by proof of extraordinary diligence. Victory Liner failed to rebut this presumption; therefore, it was liable for breach of contract of carriage.
Award of Damages: Actual, Death Indemnity, Moral, Exemplary, Compensatory, and Attorney’s Fees
The Court modified the damage awards as follows:
- Indemnity for Death: The statutory indemnity fixed at P50,000.00, consistent with prevailing jurisprudence.
- Compensatory Damages (Loss of Earning Capacity): Award deleted for lack of documentary evidence. Testimonial evidence alone is insufficient unless the deceased was self-employed earning less than minimum wage, or a daily wage worker earning less than minimum wage; these exceptions did not apply to the deceased who had a regular government position and salary.
- Temperate Damages: Awarded P500,000.00 as moderate damages due to proven pecuniary loss where exact amount cannot be certainly proven.
- Moral Damages: Awarded P100,000.00 to compensate for grief due to the breach of contract resulting in death. Moral damages are recoverable in breach of contract cases when bad faith or gross negligence exists or where the breach constitutes a tort.
- Exemplary Damages: Awarded P100,000.00 because petitioner failed to prove extraordinary diligence and was presumed reckless; exemplary damages are awarded by way of example for public good in cases of wanton or reckless conduct.
- Actual Damages: Reduced to P78,160.00 as only expenses with official receipts were recognized; other claimed expenses for burial and tomb construction lacked sufficient proof.
- Attorney’s Fees: Awarded at 10% of total amounts adjudged, justified due to the grant of exemplary damages under Article 2208 of the Civil Code.
Interest on Awards
Pursuant to established jurisprudence, the Court imposed legal interest at 12% per annum calculated from the finality of the decision until full satisfaction. The interest applies because the obligation breached resulting
Case Syllabus (G.R. No. 159636)
Procedural Background and Facts
- The case arises from a petition for review on certiorari assailing the April 11, 2003 decision of the Court of Appeals (CA) which affirmed with modification the November 6, 1998 decision of the Regional Trial Court (RTC) of Tuguegarao, Cagayan, Branch 5.
- The RTC and subsequently the CA found Victory Liner, Inc., the petitioner, liable for breach of contract of carriage in Civil Case No. 5023.
- On March 14, 1996, Marie Grace Pagulayan-Gammad, wife of respondent Rosalito Gammad and a passenger on a Victory Liner air-conditioned bus bound for Tuguegarao, died after the bus, traveling at high speed, fell into a ravine in Barangay Baliling, Sta. Fe, Nueva Vizcaya. Other passengers were physically injured.
- The heirs of the deceased filed a complaint for damages arising from culpa contractual against Victory Liner, alleging negligence. The petitioner denied liability, claiming accident and extraordinary diligence during its 50 years of operation.
- Several pre-trials and hearings were scheduled with some delays and failure of petitioner’s counsel to appear, resulting initially in default declarations which were later set aside.
- Petitioner failed to cross-examine respondents’ witness on the scheduled dates due to counsel’s nonappearance; its motions to reset were either untimely or after the case was already considered submitted for decision.
- The RTC awarded damages totaling several million pesos including actual, death indemnity, compensatory, moral, exemplary damages, attorney’s fees, and costs of suit.
- On appeal, the CA modified the amounts, reducing actual damages, compensatory damages, but affirming moral and exemplary damages and counsel fees.
- Petitioner filed a motion for reconsideration praying for remand to present evidence or alternatively for dismissal, alleging counsel's gross negligence deprived it of due process. This motion was denied.
Issues for Resolution
- Whether petitioner’s counsel was guilty of gross negligence depriving petitioner of due process.
- Whether petitioner should be held liable for breach of contract of carriage.
- Whether the award of damages was proper and supported by evidence.
Counsel’s Negligence and Due Process
- The general rule is that a client is bound by the acts and negligence of his counsel within the scope of their authority.
- Exceptions exist when gross or palpable negligence by counsel deprives the client of due process or results in outright deprivation of liberty or property, warranting relief.
- In this case, the record shows counsel acted repeatedly: filing answer and pre-trial brief, successfully lifting default, proposing settlement, and timely appealing adverse judgment.
- The petitioner was notified multiple times to appear at pre-trial, but only later authorized representation through a special power of attorney executed after default declaration was issued.
- Petitioner itself was contributorily negligent for lack of timely action, thus fault cannot be solely attributed to counsel.
- The precedent cited by petitioner (APEX Mining, Inc.) differs significantly as there counsel deliberately misrepresented case status and failed to file appeal; such circumstances are absent here.
- Jurisprudence from cases like Gold Line Transit, Inc. v. Ramos and Macalalag v. Om