VILLA RHECAR BUS AND/OR ITS MANAGER, PETITIONER, VS. FRUCTUOUSO DE LA CRUZ AND HONORABLE NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, RESPONDENTS.

Villa Rhecar Bus versus De la Cruz

The Case

This is a petition for certiorari brought by Villa Rhecar Bus, a transportation firm operating in Davao City, against Fructuouso De la Cruz, its former line inspector, and against the National Labor Relations Commission, Second Division. The petitioner asks the Supreme Court to set aside the Commission's resolution affirming a labor arbiter's money judgment in favor of the employee. The case matters because it fixes the boundary between a genuine denial of procedural due process and the ordinary consequence of a party's own lawyer's neglect: the client is bound by the mistakes of counsel, and due process protects the opportunity to be heard, not the success of the defense.

Procedural History

De la Cruz filed a complaint with the National Labor Relations Commission over unpaid separation pay, holiday pay, thirteenth month pay, and emergency living allowance. The case was assigned to Labor Arbiter Jose O. Libron. The parties, through counsel, agreed that their position papers would be submitted within twenty days from April 8, 1985, after which the case would be deemed submitted for resolution. Counsel for the petitioner did not file within that period. In a decision dated March 13, 1986, the Labor Arbiter ruled for the private respondent, holding that the petitioner had waived its right to adduce evidence.

The petitioner appealed to the Commission, arguing that the Labor Arbiter committed grave abuse of discretion amounting to lack of jurisdiction by deciding on the employee's position papers alone. In a resolution promulgated on April 30, 1987, the Second Division dismissed the appeal for lack of merit, observing that the petitioner should proceed against its counsel rather than insist on a right already waived. The petitioner elevated the matter to the Supreme Court on July 8, 1987. Although captioned a petition for review on certiorari, the Court treated it as a petition for certiorari under Rule 65 in the interest of justice, on account of the jurisdictional issues raised.

Facts

Villa Rhecar Bus employed Fructuouso De la Cruz as a line inspector beginning in April 1979. His employment lasted until December 4, 1984. A dispute arose over the separation pay, holiday pay, thirteenth month pay, and emergency living allowance due to him, and he filed a complaint with the National Labor Relations Commission.

In the proceedings before the Labor Arbiter, the petitioner was represented by Attorney Ruben Pasamonte. Through counsel, the parties agreed that their respective position papers would be submitted within twenty days from April 8, 1985, after which the case would be deemed submitted for resolution. Counsel for the petitioner failed to file the required papers within that period.

The Labor Arbiter then decided the case in favor of the private respondent, holding that the petitioner had waived its right to present evidence. On appeal, the Commission affirmed, and the petitioner came to the Supreme Court insisting that it had been denied procedural due process and that the Labor Arbiter should have sent it a separate notice requiring the submission of its position paper, with a warning that failure to comply would amount to a waiver.

Issues

• Whether or not the Labor Arbiter committed grave abuse of discretion amounting to lack of jurisdiction in deciding the case on the private respondent's position papers alone, after the petitioner's counsel failed to file its position paper within the agreed period.
• Whether or not the petitioner was denied procedural due process, such that the Labor Arbiter was obliged to send it a separate notice requiring the submission of its position paper with a warning that failure to do so would amount to a waiver.
• Whether or not the National Labor Relations Commission committed grave abuse of discretion amounting to loss of jurisdiction in dismissing the petitioner's appeal for lack of merit.

Applicable Provisions

Section 23 of Rule 138 of the Rules of Court, on the authority of attorneys to bind their clients, provides:

Section 23. Authority of attorneys to bind clients. Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and in taking appeals, and in all matters of ordinary judicial procedure.

This provision is the anchor of the ruling: the agreement of counsel on the submission period bound the client, and notice to counsel was notice to the client.

The Court also invoked the Civil Code provisions on agency, Articles 1868 to 1932, which govern the binding effect of acts done by an agent within the scope of his authority, including a lawyer retained by a party.

Ruling

On the first issue, the Court held that the Labor Arbiter committed no grave abuse of discretion. It was unfortunate that the petitioner's lawyer neglected his responsibilities, and that negligence produced a judgment adverse to the client. But such a mistake binds the client, for as a general rule a client is bound by the mistakes of his counsel. Only when the application of the general rule would result in serious injustice should an exception be made, and here no undue prejudice was satisfactorily demonstrated. There was only an unsupported claim of prejudice, without explanation. The petitioner had retained counsel of its choice and must bear the consequences of its faulty option.

On the second issue, the Court held that there was no denial of procedural due process. In applying the principle of due process, what is safeguarded is not the lack of previous notice but the denial of the opportunity to be heard. The question is not whether the petitioner succeeded in defending its interest, but whether it had the opportunity to present its side. Notice to counsel is notice to the client. The proposal that the Labor Arbiter send a separate notice to the client should not be taken seriously; otherwise the Civil Code provisions on agency and Section 23 of Rule 138 would be put to naught. If the negligence of counsel had indeed caused serious prejudice, the petitioner could take the necessary legal steps against him.

On the third issue, the Court held that the Commission committed no grave abuse of discretion amounting to loss of jurisdiction in dismissing the appeal. The petition for certiorari was therefore dismissed for lack of merit.

Doctrine

First, a client is bound by the mistakes of his counsel. Only when the general rule would work serious injustice is an exception called for, and the party claiming prejudice must satisfactorily demonstrate it, not merely assert it.

Second, procedural due process protects the opportunity to be heard, not the actual success of a party's defense. Where counsel was given, and bound the client to, a period to submit a position paper, the client cannot complain that it was denied due process when its own counsel failed to file.

Third, notice to counsel is notice to the client, flowing from the law of agency and from Section 23 of Rule 138, which gives attorneys authority to bind their clients in all matters of ordinary judicial procedure. A tribunal need not send a separate notice to the client warning of waiver.

Fourth, a party prejudiced by its lawyer's negligence has its remedy against the lawyer, not against the judgment.

Disposition

The petition was dismissed for lack of merit, with no pronouncement as to costs, so the private respondent employee prevailed and the Commission's resolution stood.

Remember This

Memorize the line that notice to counsel is notice to the client, and that due process means the opportunity to be heard, not victory in the hearing. Examiners use this case to test the binding effect of counsel's negligence and agreements, often paired with questions on whether a separate notice of waiver is required.