Facts:

On April 10, 1985, the spouses Sotero Cailipan, Jr. and Zenaida Lopez, along with their adult son George L. Cailipan, filed a complaint for damages against Baliwag Transit, Inc. in connection with a breach of contract of carriage. The incident in question occurred on December 17, 1984, when George, a paying passenger on a Baliwag bus, was thrown off the bus due to the negligent driving of its operator, Leonardo Cruz. This incident resulted in George suffering multiple serious injuries that required hospitalization. His parents incurred medical expenses totaling around ₱200,000, plus approximately ₱10,000 in incidental costs.

In response, Baliwag Transit argued through an answer filed on April 26, 1985, that George was solely responsible for his injuries. They claimed he had abruptly stood up and jumped off the moving bus without warning or provocation despite the driver's protests. Baliwag subsequently filed a third-party complaint against Fortune Insurance and Surety Compan

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Facts:

Filing of the Case and Initial Complaint

• On April 10, 1985, a Complaint for damages arising from a breach of contract of carriage was filed by the private respondents—Spouses Sotero Cailipan, Jr. and Zenaida Lopez, and their son George, who was a paying passenger.
• The incident in question involved George being injured on December 17, 1984, when he was thrown from a Baliwag Transit bus allegedly due to the careless and negligent driving of Leonardo Cruz, the bus’s authorized driver.

Nature of the Incident and Resulting Damages

• The complaint alleged that because of the bus incident along Barangay Patubig, Marilao, Bulacan, George sustained multiple serious physical injuries.
• As a result of the injuries incurred, he was hospitalized, and his parents bore medical expenses amounting to approximately P200,000 plus incidental expenses of about P10,000.

Defense and Affirmative Claim by Baliwag Transit

• On April 26, 1985, Baliwag Transit filed an Answer contending that the injuries suffered by George were solely attributable to his own voluntary act—a claim that he suddenly stood up, headed for the door, and jumped off the moving bus despite the driver’s protestations.
• Subsequently, Baliwag Transit initiated a Third-Party Complaint against Fortune Insurance & Surety Company, Inc. to recover from its third-party liability insurance in the amount of P50,000.
• In the insurance company’s Answer, Fortune Insurance asserted a claim of limited liability, referencing a Schedule of Indemnities that formed part of its insurance policy.

Motions Related to the "Release of Claims"

• On November 14 and 18, 1985, respectively, Fortune Insurance and Baliwag filed Motions to Dismiss based on a “Release of Claims” allegedly executed by George on May 16, 1985 for P8,020.50—purportedly settling his damages in full.
• The Trial Court denied these motions on January 13, 1986 because they were filed too late and after the filing of the Answers.

Procedural Developments and Presentation of Evidence

• On February 5, 1986, Baliwag filed a Motion to Admit an Amended Answer, which was granted. The Amended Answer incorporated the affirmative defense that George’s execution of the “Release of Claims” discharged Baliwag and Fortune Insurance from any liability arising from the incident.
• As evidence, Baliwag offered the notarized “Release of Claims” (Exhibit “1”), which purportedly showed that George had received P8,020.50 in settlement.
• In rebuttal, respondent Sotero Cailipan, Jr. testified that, as George’s father, he maintained that despite George being of legal age, his parents (who had borne the hospital expenses) had not signed nor consented to the Release.

Decisions of the Lower Courts

• The Regional Trial Court (RTC) of Bulacan, Branch 20, issued an Order on August 29, 1986, dismissing both the Complaint and the Third-Party Complaint. The RTC ruled that the contract of carriage was between Baliwag Transit and George—who, although a student still dependent on his parents, possessed the legal capacity to execute the Release of Claims.
• The Court of Appeals later reversed the RTC’s Order on October 22, 1987, holding that the Release of Claims was invalid as a ground for dismissal because it lacked the joint assent of George’s parents, who had a substantial interest in the suit due to their financial outlay for his medical care.
• Additionally, the Court of Appeals opined that the consideration of P8,020.50 was intended solely as settlement for a third-party liability under the insurance policy, rather than as a release of Baliwag’s liability under the contract of carriage, and ordered the case remanded for trial on the merits with instructions for George to return the settlement money to Fortune Insurance.

Issue Presented in the Petition

• Baliwag Transit, aggrieved by the Court of Appeals’ decision, filed a Petition for Review on Certiorari challenging the appellate ruling.
• The central issue for determination was the legal effect of the “Release of Claims” executed by George during the pendency of the case.

Issue:

• Whether the “Release of Claims” executed by George, as the injured and legally competent party, validly discharges both Baliwag Transit and Fortune Insurance from any and all liabilities arising from the incident.
• Whether George, despite his status as a student and being dependent on his parents, possessed the legal capacity to execute such a release without the need for parental consent, especially since the contract of carriage was exclusively between him and Baliwag Transit.
• Whether the restrictiveness of the contractual relationship—being solely between George and Baliwag—excludes his parents, who incurred the hospitalization expenses, from having a substantial interest in the suit.
• Whether the consideration of P8,020.50 was intended to serve as a full and final settlement of all claims against both Fortune Insurance and Baliwag, thereby extinguishing any further causes of action related to the incident.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)