JOSE SANICO AND VICENTE CASTRO, Petitioners, v. WERHERLINA P. COLIPANO, Respondent.

G.R. No. 209969, September 27, 2017

FACTS:

Colipano filed a complaint on January 7, 1997 for breach of contract of carriage and damages against Sanico and
Castro. Colipano claimed that at 4:00 P.M. more or less of December 25, 1993, Christmas Day, she and her daughter were;
paying passengers in the jeepney operated by Sanico, which was driven by Castro. Colipano claimed she was made to sit on an
empty beer case at the edge of the rear entrance/exit of the jeepney with her sleeping child on her lap. And, at an uphill incline
in the road to Natimao-an, Carmen, Cebu, the jeepney slid backwards because it did not have the power to reach the top.
Colipano pushed both her feet against the step board to prevent herself and her child from being thrown out of the exit, but
because the step board was wet, her left foot slipped and got crushed between the step board and a coconut tree which the
jeepney bumped, causing the jeepney to stop its backward movement. Colipano's leg was badly injured and was eventually
amputated. Colipano prayed for actual damages, loss of income, moral damages, exemplary damages, and attorney's fees.

In their answer, Sanico and Castro admitted that Colipano's leg was crushed and amputated but claimed that it! was
Colipano's fault that her leg was crushed. They admitted that the jeepney slid backwards because the jeepney lost power. The
conductor then instructed everyone not to panic but Colipano tried to disembark and her foot got caught in between the step
board and the coconut tree. Sanico claimed that he paid for all the hospital and medical expenses of Colipano, and that
Colipano eventually freely and voluntarily executed an Affidavit of Desistance and Release of Claim.

RTC found that Sanico and Castro breached the contract of carriage between them and Colipano but only awarded
actual and compensatory damages in favor of Colipano. Only Sanico and Castro appealed to the CA, which affirmed with
modification the RTC Decision.

ISSUE:

a. Whether the CA erred in finding that Sanico and Castro breached the contract of carriage with Colipano;
b. Whether the Affidavit of Desistance and Release of Claim is binding on Colipano; and
c. Whether the CA erred in the amount of damages awarded.

HELD:

A. Only Sanico breached the contract of carriage and Sanico is liable as operator and owner of a common carrier.

Both the CA and RTC found Sanico and Castro jointly and severally liable. This, however, is erroneous because only
Sanico was the party to the contract of carriage with Colipano. Since the cause of action is based on a breach of a contract of
carriage, the liability of Sanico is direct as the contract is between him and Colipano. Castro, being merely the driver of Sanico's
jeepney, cannot be made liable as he is not a party to the contract of carriage.

Since Castro was not a party to the contract of carriage, Colipano had no cause of action against him and the
pomplaint against him should be dismissed. Although he was driving the jeepney, he was a mere employee of Sanico, who was
the operator and owner of the jeepney. The obligation to carry Colipano safely to her destination was with Sanico. In fact, the
elements of a contract of carriage existeid between Colipano and Sanico: consent, as shown when Castro, as employee of
Sanico, accepted Colipano as a passenger when he allowed Colipano to board the jeepney, and as to Colipano, when she
boarded the jeepney; cause or consideration, when Colipano, for her part, paid her fare; and, object, the transportation of
Colipano from the place of departure to the place of destination.

Sanico's attempt to evade liability by arguing that he exercised extraordinary diligence when he hired; Castro, who was
allegedly an experienced and time-tested driver, whom he had even accompanied on a test-drive and in whom he was
personally convinced of the driving skills,30are not enough to exonerate him from liability - because the liability of common
carriers does not cease upon p!roof that they exercised all the diligence of a good father of a family irii the selection. and
supervision of their employees. Thus, Sanico is liable for damages to Colipano because of the injury that Colipano suffered as a
passenger of Sanico's jeepney.

B. The Affidavit of Desistance and Release of Claim is void.

Sanico cannot be exonerated from liability under the Affidavit of Desistance and Release of Claim and his payment of the
hospital and medical bills of Colipano amounting to P44,900.00. The Court finds no reason to depart from these findings of the
CA and the RTC. For there to be a valid waiver, the following requisites are essential:
(1) that the person making the waiver possesses the right, (2) that he has the capacity and power to dispose of the right, (3)
that the waiver must be clear and unequivocal although it may be made expressly or impliedly, and (4) that the waiver is not
contrary to law, public policy, public order, morals, good customs or prejudicial to a third person with a right recognized by law.

While the first two requirements can be said to exist in this case, the third and fourth requirements are, however, lacking. For
the waiver to be clear and unequivocal, the person waiving the right should understand what she is waiving and the effect of
such waiver. Both the CA and RTC made the factual deitermination that Colipano was not able to understand English and that
there was no proof that the documents and their contents and effects were explained to her. These findings of the RTC,
affirmed by the CA, are entitled to great weight and respect. Although there are exceptions to this rule, the exceptions are
absenthere.

Colipano could not have clearly and unequivocally waived her right to claim damages when she had no understanding of the
right she was waiving and the extent of that right. Worse, she was made to sign a document written in a language she did not
understand.

The fourth requirement for a valid waiver is also lacking as the waiver, based on the attendant facts, can only be construed as
contrary to public policy.

The Court reiterates that waivers executed under similar circumstances are indeed contrary to public policy and are void. To
uphold waivers taken from injured passengers who have no knowledge of their entitlement under the law and the extent of
liability of common carriers would indeed dilute the extraordinary diligence required from common carriers, and contravene a
public policy reflected in the Civil Code.

C. There was no basis for the award of compensatory damages in her favor and Sanico is liable to pay interest. The CA
applied the correct formula for computing the loss of Colipano's earning capacity:

Net earning capacity = Life expectancy x [Gross Annual Income - Living Expenses (50% of gross annual income)],
where life expectancy = 2/3 (80-the age of the deceased) the CA erred when it used Colipano's age at the time she testified as
basis for computing the loss of earning capacity.57 The loss of earning capacity commenced when Colipano's leg was crushed on
December 25, 1993. Given that Colipano was 30 years old when she testified on October 14, 1997, she was roughly 27 years old
on December 25, 1993 when the injury was sustained. Following the foregoing formula, the net earning capacity of Colipano is
P212,000.00.

Interest is a form of actual or compensatory damages as it belongs to Chapter 2 of Title XVIII on Damages of the Civil Code.
Under Article 2210 of the Civil Code, "[i]nterest may, in the discretion of the court, be allowed upon damages awarded for
breach of contract." Here, given the gravity of the breach of the contract of carriage causing the serious injury to the leg of
Colipano that resulted in its amputation, the Court deems it just and equitable to award interest from the date of the RTC
decision. Since the award of damages was given by the RTC in its Decision dated October 27, 2006, the interest on the amount
awarded shall be deemed to run beginning October 27, 2006.

As to the rate of interest, in Eastern Shipping Lines, Inc. v. Court of Appeals, the Court ruled that "[w]hen an obligation, not
constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum." Further, upon finality of the judgment awarding a sum of money, the
rate of interest shall be 12% per annum from such finality until satisfaction because the interim period is considered a
forbearance of credit. Subsequently, in Nacar v. Gallery Frames, the rate of legal interest for loans or forbearance of any
money, goods or credits and the rate allowed in judgments was lowered from 12% to 6%. Thus, the applicable rate of interest
to the award of damages to Colipano is 6%.

JOCELYN M. VELOSO
2014-0074