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Transportation Case Digest: Baliwag Transit Corp. v. CA (1989)

G.R. No. 80447 January 31, 1989
Lessons Applicable: Contracting Parties (Transportation)

  • December 17 1984: George, who was a paying passenger on a Baliwag bus (Baliwag) he was thrown off by the bus driven in a careless and negligent manner by Leonardo Cruz, authorized bus driver, along Barangay Patubig, Marilao, Bulacan
    • suffered multiple serious physical injuries
    • confined in the hospital for treatment, incurring medical expenses, which were borne by his parents, Spouses Sotero Cailipan, Jr. and Zenaida Lopez, in the sum of about P200,000.00 plus other incidental expenses of about P10,000.00 
  • April 10 1985: 
    • Baliwag: solely attributable to his own voluntary act in that, without warning and provocation, he suddenly stood up from his seat and headed for the door of the bus as if in a daze, opened it and jumped off while said bus was in motion, in spite of the protestations by the driver and without the knowledge of the conductor
    • Baliwag then filed a Third-Party Complaint against Fortune Insurance & Surety Company, Inc., on its third-party liability insurance in the amount of P50,000.00
      • Fortune Insurance claimed limited liability, the coverage being subject to a Schedule of Indemnities forming part of the insurance policy.
  • November 14 1985 and November 18 1985: Fortune Insurance and Baliwag each filed Motions to Dismiss on the ground that George, in consideration of the sum of P8,020.50 had executed a notarized "Release of Claims" dated 16 May 1985. - denied as they were filed beyond the time for pleading and after the Answer were already filed so Baliwag amended its answer to include such
  • RTC: dismissed the Complaint and Third-party Complaint, ruling that since the contract of carriage is between Baliwag and George L. Cailipan (of legal age) had the exclusive right to execute the Release of Claims despite the fact that he is still a student and dependent on his parents for support
  • October 22 1987: setting aside the appealed Order and holding that the "Release of Claims" cannot operate as a valid ground for the dismissal of the case because it does not have the conformity of all the parties, particularly George's parents, who have a substantial interest in the case as they stand to be prejudiced by the judgment because they spent a sizeable amount for the medical bills of their son
  • Baliwag filed Petition for Review on certiorari
ISSUE: W/N the contract signed by George during case pendency is valid discharging Fortune Insurance and Baliwag from any and all liability 

  • George is of legal age, a graduating student of Agricultural Engineering, and had the capacity to do acts with legal effect (Article 37 in relation to Article 402, Civil Code)
    • could sue and be sued even without the assistance of his parents
  • George had the right to be safely brought to his destination and Baliwag had the correlative obligation to do so
  • Since a contract may be violated only by the parties thereto, as against each other, in an action upon that contract, the real parties in interest, either as plaintiff or as defendant, must be parties to said contract:
    • real party-in-interest -plaintiff - who has a legal right 
    • real party-in-interest-defendant - who has a correlative legal obligation whose act or omission violates the legal right of the former  
  • In the absence of any contract of carriage between Baliwag and George's parents, the latter are not real parties-in-interest in an action for breach of that contract
  • general rule of the common law is that every action must be brought in the name of the party whose legal right has been invaded or infringed
  • The phraseology "any and all claims or causes of action" is broad enough to include all damages that may accrue to the injured party arising from the unfortunate accident.
    • The Release of Claims had the effect of a compromise agreement since it was entered into for the purpose of making a full and final compromise adjustment and settlement of the cause of action involved.
    • compromise - contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced (Article 2028, Civil Code).