FACTS:

On March 14, 1996, respondent's wife was on board a Victory Liner bus bound for Tuguegarao, Cagayan from Manila. The bus fell into a ravine, resulting in the death of respondent's wife and injuries to other passengers. Respondent filed a complaint for damages against the petitioner. The trial court initially declared petitioner in default but later lifted the order. Petitioner refused to admit that the deceased was a passenger of their bus and proposed a lower amount for settlement. The trial court rendered a decision in favor of respondent, awarding damages. Petitioner appealed to the Court of Appeals, which affirmed the trial court's decision with modification. Petitioner's motion for reconsideration was denied. Petitioner now files a petition for review on certiorari, arguing that the negligence of their former counsel deprived them of due process and that the award of damages was improper. The issues for resolution are whether petitioner's counsel was guilty of gross negligence, whether petitioner should be held liable for breach of contract of carriage, and whether the award of damages was proper.

The case involves a petitioner who claims that they were denied due process of law because of the negligence of their former counsel. The record shows that the petitioner's counsel filed an Answer and Pre-trial Brief, successfully moved for the setting aside of the order of default, and represented the petitioner at the pre-trial. However, the counsel failed to file motions for reconsideration of certain orders and only filed an appeal with the Court of Appeals. The petitioner also failed to attend the pre-trial despite receiving multiple notices, and only executed a special power of attorney after the order of default was issued. The court cites a previous case where the negligent counsel allowed an adverse decision to become final and executory and deliberately misrepresented the case as still pending. The court finds that the petitioner was not denied due process as they were given every opportunity to be heard, but the opportunity to participate in the trial was lost due to negligence. The court also rejects the petitioner's argument that they were deprived of due process and states that they must bear the consequences of their choice of counsel. The court emphasizes that if negligence of counsel were allowed as a reason for opening cases, there would be no end to suits. The court also cites another case where a dismissed employee contended that the negligence of their counsel deprived them of due process, but the court debunked the contention.

ISSUES:

1. Whether the petitioner can be granted relief from judgment due to the negligence of its former counsel.

2. Whether petitioner is liable for breach of contract of carriage.

3. Whether indemnity for loss of earning capacity can be given despite lack of documentary evidence.

4. Whether temperate damages can be awarded for loss of earning capacity.

5. Whether moral damages and exemplary damages can be awarded for breach of contract of carriage.

6. Whether the actual damages awarded should be further reduced to the amount supported by official receipts.

7. Whether attorney's fees can be recovered when exemplary damages are awarded.

8. Whether the petitioner should be held liable for payment of interest as damages for breach of the contract of carriage.

9. When should the interest be computed and at what rate?

RULING:

1. The petitioner cannot be granted relief from judgment due to the negligence of its former counsel. A client is bound by the action of his counsel in the conduct of a case, and he cannot complain later that the result might have been different had his counsel proceeded differently. Relief from judgment based on the negligence of counsel would set a dangerous precedent and contradict settled doctrines of trial and procedure.

2. The petitioner is liable for breach of contract of carriage. A common carrier is presumed to have been at fault or negligent when a passenger dies or is injured unless this presumption is rebutted. In this case, there is no evidence to rebut the presumption that the proximate cause of the passenger's death was the petitioner's negligence. Therefore, the courts below correctly ruled that the petitioner was guilty of breach of contract of carriage.

3. No indemnity for loss of earning capacity can be given in cases where there is a lack of documentary proof.

4. Temperate damages in the amount of P500,000.00 can be awarded when some pecuniary loss has been suffered but its amount cannot be proved with certainty.

5. Moral damages and exemplary damages can be awarded for breach of contract of carriage if the defendant acted in bad faith, was guilty of gross negligence, or had wanton disregard of contractual obligations.

6. The actual damages awarded should be further reduced to the amount supported by official receipts.

7. Attorney's fees can be recovered when exemplary damages are awarded, and the reasonable amount is equivalent to 10% of the total amount adjudged.

8. Yes, the petitioner should be held liable for payment of interest as damages for breach of the contract of carriage.

9. The interest shall be computed upon the finality of the decision at the rate of 12% per annum until satisfaction.

PRINCIPLES:

• A client is bound by the actions of their counsel in the conduct of a case and cannot later complain about it.

• Relief from judgment based on the negligence of counsel is not granted unless there is gross or palpable negligence.

• Every litigation must come to an end, and access to the courts must have limits.

• In a contract of carriage, the common carrier is presumed to be at fault or negligent when a passenger dies or is injured, unless this presumption is rebutted.

• Documentary evidence is generally required to substantiate a claim for damages for loss of earning capacity, except in certain exceptions such as self-employed individuals earning less than the minimum wage or daily-wage workers earning less than the minimum wage.

• Indemnity for loss of earning capacity cannot be given in cases where there is a lack of documentary proof.

• Temperate damages can be awarded when the amount of pecuniary loss cannot be proved with certainty.

• Moral damages and exemplary damages can be awarded for breach of contract of carriage if the defendant acted in bad faith, was guilty of gross negligence, or had wanton disregard of contractual obligations.

• Only substantiated and proven expenses will be recognized as actual damages.

• Attorney's fees can be recovered when exemplary damages are awarded, and the reasonable amount is equivalent to 10% of the total amount adjudged.

• When an obligation is breached, the contravenor can be held liable for payment of interest in the concept of actual and compensatory damages.

• When the obligation consists of the payment of a sum of money, the interest due should be that which may have been stipulated in writing. In the absence of stipulation, the rate of interest shall be 12% per annum from the time of default.

• When an obligation, not constituting a loan or forbearance of money, is breached, the court may impose interest on the amount of damages awarded at the rate of 6% per annum.

• No interest shall be awarded on unliquidated claims or damages except when the demand can be established with reasonable certainty.

• The interest shall begin to run from the time the claim is made judicially or extrajudicially when the demand is established with reasonable certainty. Otherwise, the interest shall begin to run only from the date the judgment of the court is made.

• The legal interest, whether the case falls under paragraph 1 or paragraph 2, shall be 12% per annum from the finality of the judgment until satisfaction.