Five Star Bus Co., Inc. vs. Court of Appeals

A party is bound by the negligence of its counsel in failing to attend a pre-trial conference after receiving proper notice, and a default order issued thereunder is valid. Furthermore, an appellee who does not file an appeal is barred from seeking a modification or increase of the damages awarded in the original judgment.

Private respondents Pedro and Lydia Santos filed a complaint for breach of contract of carriage and damages against petitioners Five Star Bus Co., Inc. and its driver, Carlos Salonga, seeking indemnification for the death of their son, Joey Santos, who was a passenger in a bus that collided with a trailer truck. The petitioners' counsel of record, Atty. Arnel Nadias, received a pre-trial notice with instructions to notify his clients. Despite having seventeen days' notice, Atty. Nadias, who had resigned as house counsel but had not formally withdrawn his appearance, failed to appear at the pre-trial with his clients. The trial court declared the petitioners in default and later rendered a decision awarding compensatory damages, actual damages, and attorney's fees.

• Nature of the Action: The case originated from a complaint for breach of contract of carriage and damages filed by the parents of a deceased passenger against the bus company and its driver.
• The Pre-Trial and Default: The trial court issued a pre-trial notice to the petitioners' counsel, Atty. Arnel Nadias, with the express instruction to notify his clients. Atty. Nadias received the notice on September 28, 1992. He resigned as house counsel on September 30, 1992, but did not file a formal withdrawal of appearance. Neither he nor the petitioners appeared at the pre-trial on October 15, 1992. The trial court declared the petitioners in default.
• Trial and Judgment: Private respondents presented evidence ex parte. The trial court rendered a decision awarding P50,000.00 in compensatory damages, P12,000.00 in actual damages (funeral expenses), and P10,000.00 in attorney's fees.
• Appeal and Modification: On appeal, the Court of Appeals affirmed the trial court's decision and added an award of P50,000.00 for moral damages.

• Invalidity of Default Order: Petitioners argued that the trial court erred in declaring them in default because they, as parties, were never personally notified of the pre-trial conference, violating their right to due process.
• Error in Awarding Moral Damages: Petitioners contended that the Court of Appeals erred in granting an additional award of moral damages, as the private respondents did not appeal the trial court's decision.

• Validity of Pre-Trial Notice: Respondents countered that the pre-trial notice was properly served on petitioners' counsel of record, who had the legal duty to notify his clients. The negligence of counsel binds the client.
• Propriety of Moral Damages: The decision text does not detail specific arguments by respondents regarding the moral damages award on appeal, as the Court's analysis focused on the procedural bar.

• Default Order: Whether the trial court correctly declared the petitioners in default for failure to attend the pre-trial conference despite notice to their counsel.
• Award of Moral Damages on Appeal: Whether the Court of Appeals could validly increase the award of damages by granting moral damages when the private respondents did not appeal the trial court's decision.

• Default Order: The declaration of default was proper. The pre-trial notice was correctly served on petitioners' counsel of record with the directive to inform his clients. Counsel's failure to appear, despite having ample time to notify the petitioners, constitutes negligence that binds the client. The trial court was not required to conduct the trial immediately after declaring default.
• Award of Moral Damages on Appeal: The additional award of moral damages by the Court of Appeals was erroneous. A party who does not appeal a judgment is bound by it. An appellee may not seek a modification or increase of the award, as that would require filing an appeal. The Court of Appeals' decision was modified to delete the P50,000.00 moral damages.

• Binding Effect of Counsel's Negligence — The rule is that clients are bound by the actions, including the negligence, of their counsel. When a pre-trial notice is served on counsel with the instruction to notify the client, and counsel fails to do so, the client suffers the consequences, including a declaration of default for non-appearance.
• Limitation on Appellee's Relief — An appellee who has not appealed from a judgment may not seek its modification or reversal. He may only argue for the affirmance of the judgment on other grounds, but cannot obtain affirmative relief different from or greater than that granted by the lower court.

• "Atty. Naidas received the notice on September 28, 1992, i.e., seventeen (17) days before the scheduled conference and two (2) days before his resignation as house counsel of petitioner Five Star. He had ample time to notify petitioners of the pre-trial conference." — This underscores the adequacy of notice to counsel and the consequent duty to inform the client.
• "Fairness dictates that a party who has not appealed from a judgment of the trial court is bound by the terms of the judgment. We reiterate the rule that an appellee, who is not an appellant, may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he may not do so if his purpose is to have the judgment modified or reversed, in which case he must appeal." — This articulates the doctrinal limitation on an appellee's ability to seek increased awards.

• Ng v. Alfaro, 238 SCRA 486 (1994) — Cited for the rule that the duty of counsel upon whom a pre-trial notice is served is to ensure the client receives such notice and attends the pre-trial.
• Heirs of Juan Oclarit v. Court of Appeals, 233 SCRA 239 (1994) and related cases — Cited for the principle that an appellee who does not appeal cannot seek modification of the judgment.

• Section 1, Rule 20 of the Rules of Court (Pre-trial) — The procedural rule governing pre-trial conferences, compliance with which was at issue in the default order.
• Circular No. 1-89 of the Supreme Court — The circular mandating the filing of pre-trial briefs, which the petitioners also failed to comply with, contributing to the default order.

• Justice Regalado
• Justice Romero
• Justice Mendoza
• Justice Torres, Jr.

N/A — The decision was unanimous.