Case Summary (G.R. No. 103102)
Facts of the Incident
On or about December 25, 1993, Colipano and her sleeping child were passengers in the jeepney owned and operated by Sanico and driven by Castro. Colipano was seated on an improvised extension made of an empty beer case at the rear entrance/exit with the child on her lap. The jeepney lost power on an uphill incline and slid backward, causing the vehicle to bump a coconut tree; Colipano’s left foot was crushed between the step board and the tree, resulting in a severe injury and eventual amputation of her leg. Colipano filed suit on January 7, 1997 seeking actual damages, loss of income, moral and exemplary damages, and attorney’s fees. Defendants admitted the amputation and the jeepney’s loss of power but contended that the injury resulted from Colipano’s attempt to disembark and relied on an asserted Affidavit of Desistance and payment of medical expenses.
Procedural History
The Regional Trial Court (RTC), Branch 25, Danao City, found Sanico and Castro solidarily liable for breach of the contract of carriage and awarded actual damages of P2,098.80 and compensatory damages for loss of income of P360,000.00. Only Sanico and Castro appealed to the Court of Appeals (CA), which affirmed with modification and reduced compensatory damages to P200,000.00. Sanico and Castro filed a Rule 45 petition before the Supreme Court without first moving for reconsideration of the CA decision.
Issues Presented
(1) Whether the CA erred in finding both Sanico and Castro liable for breach of the contract of carriage; (2) Whether the Affidavit of Desistance and Release of Claim is binding on Colipano; and (3) Whether the CA erred in the quantum of damages awarded.
Contractual Parties and Liability: Owner/Operator vs. Employee
The Court held that only Sanico, as owner/operator, was party to the contract of carriage with Colipano. Castro, being the driver and thus an employee, was not a party to the contract and therefore not directly liable under a breach-of-contract theory. The Court relied on Soberano v. Manila Railroad Co., which recognizes that parties to a contract of carriage are the passenger and the owner/operator of the carrier; an employee driver is not a contracting party, and an action for breach of contract of carriage is dismissible as to such employee.
Duty of Common Carriers and Presumption of Negligence
As owner and operator of a common carrier, Sanico was bound by the extraordinary diligence standard for the safety of passengers set forth in the Civil Code (Art. 1733 and further reflected in Arts. 1755–1756). When a passenger is injured, Art. 1756 presumes fault or negligence on the carrier, which the carrier may only overcome by proving it exercised extraordinary diligence. The Court found that Sanico failed to rebut this presumption.
Specific Findings of Negligence
The Court accepted the RTC’s factual findings—supported by CA determinations—that permitting Colipano to sit on an improvised beer-case extension at the rear entrance with her child on her lap placed her in greater peril than other passengers. The admitted engine failure was also considered indicative of inadequate maintenance and regular checks given the mountainous route, further evidencing negligence. These factual findings were accorded great weight because the trial court had the opportunity to observe witness demeanors.
Applicability of Article 1759 and Limits of Employer’s Defense
Sanico’s defense that he exercised due diligence in hiring an experienced driver did not absolve him. Article 1759 imposes liability on common carriers for injuries caused by employees’ negligence even if employees acted beyond authority and even if the carrier exercised the diligence of a “good father of a family” in selection and supervision. The only available defenses are proof of extraordinary diligence under Art. 1756 or proof of fortuitous event under Art. 1174, neither of which were established.
Affidavit of Desistance and Release of Claim: Validity and Public Policy
The purported Affidavit of Desistance and Release of Claim and the payment of medical expenses (P44,900.00) did not exonerate Sanico. The RTC and CA found, and the Supreme Court upheld, that Colipano could not understand English and there was no proof the contents were explained to her. The Court reiterated the requisites of a valid waiver—capacity, clear and unequivocal act of disposition, understanding of what is waived, and absence of conflict with law or public policy—and found the third and fourth requisites lacking. The waiver was thus void. The Court emphasized public-policy considerations, following Gatchalian v. Delim, that waivers by injured passengers under such circumstances are construed strictly against carriers and may be offensive to public policy because they would undermine the extraordinary diligence standard imposed on common carriers.
Damages — Actual and Compensatory (Loss of Earning Capacity)
The RTC awarded actual damages of P2,098.80 (supported by receipts) and compensatory damages of P360,000.00 based on an assumed annual earning capacity of P12,000.00 for thirty years at P12,000/year. The CA reduced the compensatory award to P200,000.00 using the Court’s established formula for loss of earning capacity: Net Earning Capacity = Life Expectancy x (Gross Annual Income − Living Expenses), where living expenses are presumed 50% of gross annual income and life expectancy is computed as 2/3 (80 − age). The CA used Colipano’s age at time of testimony rather than age at time of injury.
Correct Computation of Loss of Earning Capacity
The Supreme Court accepted testimonial evidence of Colipano’s annual earnings (P12,000.00) as admiss
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Procedural Posture
- Petition for Review on Certiorari under Rule 45 filed by petitioners Jose Sanico and Vicente Castro assailing the Decision of the Court of Appeals (CA) dated September 30, 2013 in CA‑G.R. CEB‑CV No. 01889.
- The CA affirmed with modification the Regional Trial Court (RTC), Branch 25, Danao City Decision dated October 27, 2006, which found petitioners liable for breach of contract of carriage and awarded actual and compensatory damages to respondent Werherlina P. Colipano.
- Petitioners did not move for reconsideration of the CA Decision before filing the petition before the Supreme Court.
- The Supreme Court rendered a Decision partly granting the petition: it reversed and set aside the CA Decision as to Vicente Castro and dismissed the complaint against him for lack of cause of action; it affirmed with modification the CA Decision as to Jose Sanico, ordering specific damage awards and interest.
Facts
- On or about 4:00 P.M. on December 25, 1993, respondent Werherlina P. Colipano and her daughter were paying passengers in a jeepney owned by Jose Sanico and driven by Vicente Castro.
- Colipano 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.
- At an uphill incline on the road to Natimao‑an, Carmen, Cebu, the jeepney slid backwards because it lost power and did not have the power to reach the top.
- Colipano pushed both feet against the step board to prevent being thrown out; because the step board was wet her left foot slipped and became 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 claimed actual damages, loss of income, moral damages, exemplary damages, and attorney’s fees.
- Sanico and Castro admitted the leg was crushed and amputated, and that the jeepney slid backwards due to loss of power.
- Defendants alleged the injury was Colipano’s fault because she tried to disembark when the conductor had instructed everyone not to panic and her foot got caught; Sanico claimed he paid all hospital and medical expenses amounting to P44,900.00 and that Colipano executed an Affidavit of Desistance and Release of Claim.
- At trial, the RTC found Sanico and Castro liable for breach of contract of carriage and awarded actual damages of P2,098.80 and compensatory damages for loss of income in the amount of P360,000.00.
Issues Presented
- Whether the CA erred in finding that both Sanico and Castro breached the contract of carriage with Colipano.
- Whether the Affidavit of Desistance and Release of Claim is binding on Colipano.
- Whether the CA erred in the quantum of damages awarded.
Legal Framework and Authorities Cited
- Civil Code provisions governing common carriers and obligations cited in the Decision:
- Article 1733 (extraordinary diligence of common carriers for safety of passengers and vigilance over goods).
- Article 1755 (obligation to carry passengers safely as far as human care and foresight can provide).
- Article 1756 (presumption that common carriers are at fault in case of injury or death of passengers; presumption overcome only by proof of extraordinary diligence).
- Article 1759 (liability of common carriers for negligence or willful acts of employees; such liability does not cease upon proof of diligence in selection and supervision).
- Article 1170 (liability for fraud, negligence or contravention of tenor of obligation).
- Article 1174 (fortuitous event as defense).
- Article 1409(1) referenced for public policy invalidating certain waivers.
- Articles 2199 to 2215 (Actual or Compensatory Damages referenced).
- Article 2210 (discretion to allow interest upon damages for breach of contract).
- Precedents and authorities relied upon in the Decision:
- Soberano v. Manila Railroad Co. — on parties to contract of carriage and non‑liability of the driver employee who is not a party to contract of carriage.
- Calalas v. Court of Appeals — permitting seating on an unsafe extension seat placed passenger in greater peril; inability to overcome presumption of negligence.
- Magat v. Medialdea — interpretation of "contravene the tenor" of an obligation to include defective performance.
- Gatchalian v. Delim — waiver construed strictly against common carriers and found offensive to public policy when circumstances showed incapacity to waive.
- Heirs of Pedro ClemeAa y Zurbano v. Heirs of Irene B. Bien — testimonial evidence not excludable as "self‑serving" when given under oath and subjected to cross‑examination.
- Philippine National Railways Corp. v. Vizcara — factual findings by CA entitled to great weight and finality.
- Eastern Shipping Lines, Inc. v. Court of Appeals — on awarding interest at discretion of court and rates applicable.
- Nacar v. Gallery Frames — reduction of post‑judgment interest rate from 12% to 6% for loans or forbearance and judgments.
Contract of Carriage and Parties’ Liability
- The cause of action is breach of a contract of carriage; the liability is direct against the party to the contract with the passenger.
- The Court held that only Jose Sanico, as owner and operator of the jeepney and the party to the contract of carriage with Colipano, had direct liability; Vicente Castro, the driver and mere employee, was not a party to the contract and thus had no cause of action against him.
- The Court relied on Soberano and similar authorities that the parties to a contract of carriage are the passenger, the owner, and the operator; an employee driver who is not a party cannot be held liable under the contrac