G.R. No. 159636

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• moral damages may also be awarded in case the death of a passenger results from a breach of carriage.

• In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort that results in physical injuries.

• petitioner was correctly found liable for breach of contract of carriage.

• on March 14, 1996, his wife Marie Grace

• was on board an air-conditioned Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the bus while running at a high speed fell on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the death of Marie Grace and physical injuries to other passengers.

• respondent heirs of the deceased filed a complaint5 for damages arising from culpa contractual against petitioner. In its answer,6 the petitioner claimed that the incident was purely accidental and that it has always exercised extraordinary diligence in its 50 years of operation.

• trial court rendered its decision in favor of respondents

• judgment is hereby rendered in favor of the plaintiffs and against the defendant Victory Liner, Incorporated, ordering the latter to pay the following: 1. Actual Damages -------------------- P 122,000.00 2. Death Indemnity --------------------- 50,000.00 3. Exemplary and Moral Damages----- 400,000.00 4. Compensatory Damages ---------- 1,500,000.00 5. Attorney’s Fees --------------------- 10% of the total amount granted 6. Cost of the Suit.

• On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court with modification

• 1. Actual Damages in the amount of P88,270.00; 2. Compensatory Damages in the amount of P1,135,536,10; 3. Moral and Exemplary Damages in the amount of P400,000.00; and 4. Attorney’s fees equivalent to 10% of the sum of the actual, compensatory, moral, and exemplary damages herein adjudged.

• Represented by a new counsel, petitioner on May 21, 2003 filed a motion for reconsideration praying that the case be remanded to the trial court for cross- examination of respondents’ witness and for the presentation of its evidence; or in the alternative, dismiss the respondents’ complaint.

• On August 21, 2003, the Court of Appeals denied petitioner’s motion for reconsideration.

• Hence, this petition for review principally based on the fact that the mistake or gross negligence of its counsel deprived petitioner of due process of law. Petitioner also argues that the trial court’s award of damages were without basis and should be deleted.

• (2) whether petitioner should be held liable for breach of contract of carriage; and (3) whether the award of damages was proper.

• It is settled that the negligence of counsel binds the client. This is based on the rule that any act performed by a counsel within the scope of his general or implied authority is regarded as an act of his client. Consequently, the mistake or negligence of counsel may result in the rendition of an unfavorable judgment against the client.

• exceptions to the foregoing have been recognized by the court in cases where reckless or gross negligence of counsel deprives the client of due process of law, or when its application will result in outright deprivation of the client’s liberty or property or where the interests of justice so require, and accord relief to the client who suffered by reason of the lawyer’s gross or palpable mistake or negligence.

• The exceptions, however, are not present in this case. The record shows that Atty. Paguirigan filed an Answer and Pre-trial Brief for petitioner.

• Although initially declared as in default, Atty. Paguirigan successfully moved for the setting aside of the order of default.

• Although Atty. Paguirigan failed to file motions for reconsideration of the orders declaring petitioner to have waived the right to cross-examine respondents’ witness and to present evidence, he nevertheless, filed a timely appeal with the Court of Appeals assailing the decision of the trial court. Hence, petitioner’s claim that it was denied due process lacks basis.

• Petitioner too is not entirely blameless. Prior to the issuance of the order declaring it as in default for not appearing at the pre-trial, three notices