G.R. No.

L-37750 May 19, 1978

SWEET LINES, INC., petitioner,

vs.
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental
Branch VII, LEOVIGILDO TANDOG, JR., and ROGELIO
TIRO, respondents.

Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for

petitioner.

Leovigildo Vallar for private respondents.

SANTOS, J.:

This is an original action for Prohibition with Pre Injunction filed October 3,
1973 to restrain respondent Judge from proceeding further with Civil Case
No. 4091, entitled Leovigildo D. Tandog, Jr. and Rogelio Tiro v. Sweet
Lines, Inc." after he denied petitioner's Motion to Dismiss the complaint,
and the Motion for Reconsideration of said order. 1

Briefly, the facts of record follow. Private respondents Atty. Leovigildo

Tandog and Rogelio Tiro, a contractor by professions, bought tickets Nos.
0011736 and 011737 for Voyage 90 on December 31, 1971 at the branch
office of petitioner, a shipping company transporting inter-island
passengers and cargoes, at Cagayan de Oro City. Respondents were to
board petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via
the port of Cebu. Upon learning that the vessel was not proceeding to
Bohol, since many passengers were bound for Surigao, private
respondents per advice, went to the branch office for proper relocation to
M/S "Sweet Town". Because the said vessel was already filled to capacity,
they were forced to agree "to hide at the cargo section to avoid inspection
of the officers of the Philippine Coastguard." Private respondents alleged
that they were, during the trip," "exposed to the scorching heat of the sun
and the dust coming from the ship's cargo of corn grits," and that the tickets
they bought at Cagayan de Oro City for Tagbilaran were not honored and
they were constrained to pay for other tickets. In view thereof, private
respondents sued petitioner for damages and for breach of contract of
carriage in the alleged sum of P10,000.00 before respondents Court of
First Instance of Misamis Oriental. 2
Petitioner moved to dismiss the complaint on the ground of improper
venue. This motion was premised on the condition printed at the back of
the tickets, i.e., Condition No. 14, which reads:

14. It is hereby agreed and understood that any and all actions arising out
of the conditions and provisions of this ticket, irrespective of where it is
issued, shall be filed in the competent courts in the City of Cebu. 3

The motion was denied by the trial court. 4 Petitioner moved to reconnsider
the order of denial, but no avail. 5 Hence, this instant petition for prohibition
for preliminary injunction, 'alleging that the respondent judge has departed
from the accepted and usual course of judicial preoceeding" and "had
acted without or in excess or in error of his jurisdicton or in gross abuse of
discretion. 6

In Our resolution of November 20, 1973, We restrained respondent Judge

from proceeding further with the case and required respondent to
comment. 7 On January 18, 1974, We gave due course to the petition and
required respondent to answer. 8 Thereafter, the parties submitted their
respesctive memoranda in support of their respective contentions. 9

Presented thus for Our resolution is a question is aquestion which, to all

appearances, is one of first impression, to wit — Is Condition No. 14 printed
at the back of the petitioner's passage tickets purchased by private
respondents, which limits the venue of actions arising from the contract of
carriage to theCourt of First Instance of Cebu, valid and enforceable?
Otherwise stated, may a common carrier engaged in inter-island shipping
stipulate thru condition printed at the back of passage tickets to its vessels
that any and all actions arising out of the ocntract of carriage should be
filed only in a particular province or city, in this case the City of Cebu, to the
exclusion of all others?

Petitioner contends thaty Condition No. 14 is valid and enforceable, since

private respndents acceded to tit when they purchased passage tickets at
its Cagayan de Oro branch office and took its vessel M/S "Sweet Town" for
passage to Tagbilaran, Bohol — that the condition of the venue of actions
in the City of Cebu is proper since venue may be validly waived, citing
cases; 10 that is an effective waiver of venue, valid and binding as such,
since it is printed in bold and capital letters and not in fine print and merely
assigns the place where the action sing from the contract is institution
likewise citing cases; 11 and that condition No. 14 is unequivocal and
mandatory, the words and phrases "any and all", "irrespective of where it is
issued," and "shag" leave no doubt that the intention of Condition No. 14 is
to fix the venue in the City of Cebu, to the exclusion of other places; that
the orders of the respondent Judge are an unwarranted departure from
established jurisprudence governing the case; and that he acted without or
in excess of his jurisdiction in is the orders complained of. 12

On the other hand, private respondents claim that Condition No. 14 is not
valid, that the same is not an essential element of the contract of carriage,
being in itself a different agreement which requires the mutual consent of
the parties to it; that they had no say in its preparation, the existence of
which they could not refuse, hence, they had no choice but to pay for the
tickets and to avail of petitioner's shipping facilities out of necessity; that the
carrier "has been exacting too much from the public by inserting
impositions in the passage tickets too burdensome to bear," that the
condition which was printed in fine letters is an imposition on the riding
public and does not bind respondents, citing cases; 13 that while venue 6f
actions may be transferred from one province to another, such
arrangement requires the "written agreement of the parties", not to be
imposed unilaterally; and that assuming that the condition is valid, it is not
exclusive and does not, therefore, exclude the filing of the action in
Misamis Oriental, 14

There is no question that there was a valid contract of carriage entered into
by petitioner and private respondents and that the passage tickets, upon
which the latter based their complaint, are the best evidence thereof. All the
essential elements of a valid contract, i.e., consent, cause or consideration
and object, are present. As held in Peralta de Guerrero, et al. v. Madrigal
Shipping Co., Inc., 15

It is a matter of common knowledge that whenever a passenger boards a

ship for transportation from one place to another he is issued a ticket by the
shipper which has all the elements of a written contract, Namely: (1) the
consent of the contracting parties manifested by the fact that the passenger
boards the ship and the shipper consents or accepts him in the ship for
transportation; (2) cause or consideration which is the fare paid by the
passenger as stated in the ticket; (3) object, which is the transportation of
the passenger from the place of departure to the place of destination which
are stated in the ticket.
It should be borne in mind, however, that with respect to the fourteen (14)
conditions — one of which is "Condition No. 14" which is in issue in this
case — printed at the back of the passage tickets, these are commonly
known as "contracts of adhesion," the validity and/or enforceability of which
will have to be determined by the peculiar circumstances obtaining in each
case and the nature of the conditions or terms sought to be enforced. For,
"(W)hile generally, stipulations in a contract come about after deliberate
drafting by the parties thereto, ... there are certain contracts almost all the
provisions of which have been drafted only by one party, usually a
corporation. Such contracts are called contracts of adhesion, because the
only participation of the party is the signing of his signature or his 'adhesion'
thereto. Insurance contracts, bills of lading, contracts of make of lots on the
installment plan fall into this category" 16

By the peculiar circumstances under which contracts of adhesion are

entered into — namely, that it is drafted only by one party, usually the
corporation, and is sought to be accepted or adhered to by the other party,
in this instance the passengers, private respondents, who cannot change
the same and who are thus made to adhere thereto on the "take it or leave
it" basis — certain guidelines in the determination of their validity and/or
enforceability have been formulated in order to that justice and fan play
characterize the relationship of the contracting parties. Thus, this Court
speaking through Justice J.B.L. Reyes in Qua Chee Gan v. Law Union and
Rock Insurance Co., 17 and later through Justice Fernando in Fieldman
Insurance v. Vargas, 18 held —

The courts cannot ignore that nowadays, monopolies, cartels and

concentration of capital endowed with overwhelm economic power,
manage to impose upon parties d with them y prepared 'agreements' that
the weaker party may not change one whit his participation in the
'agreement' being reduced to the alternative 'to take it or leave it,' labelled
since Raymond Saleilles 'contracts by adherence' (contracts d' adhesion) in
contrast to those entered into by parties bargaining on an equal footing.
Such contracts (of which policies of insurance and international bill of
lading are prime examples) obviously cap for greater strictness and
vigilance on the part of the courts of justice with a view to protecting the
weaker party from abuses and imposition, and prevent their becoming traps
for the unwary.
To the same effect and import, and, in recognition of the character of
contracts of this kind, the protection of the disadvantaged is expressly
enjoined by the New Civil Code —

In all contractual property or other relations, when one of the parties is at a

disadvantage on account of his moral dependence, ignorance indigence,
mental weakness, tender age and other handicap, the courts must be
vigilant for his
protection. 19

Considered in the light Of the foregoing norms and in the context Of

circumstances Prevailing in the inter-island ship. ping industry in the
country today, We find and hold that Condition No. 14 printed at the back of
the passage tickets should be held as void and unenforceable for the
following reasons first, under circumstances obligation in the inter-island
ship. ping industry, it is not just and fair to bind passengers to the terms of
the conditions printed at the back of the passage tickets, on which
Condition No. 14 is Printed in fine letters, and second, Condition No. 14
subverts the public policy on transfer of venue of proceedings of this
nature, since the same will prejudice rights and interests of innumerable
passengers in different s of the country who, under Condition No. 14, will
have to file suits against petitioner only in the City of Cebu.

1. It is a matter of public knowledge, of which We can take judicial notice,

that there is a dearth of and acute shortage in inter- island vessels plying
between the country's several islands, and the facilities they offer leave
much to be desired. Thus, even under ordinary circumstances, the piers
are congested with passengers and their cargo waiting to be transported.
The conditions are even worse at peak and/or the rainy seasons, when
Passengers literally scramble to whatever accommodations may be availed
of, even through circuitous routes, and/or at the risk of their safety — their
immediate concern, for the moment, being to be able to board vessels with
the hope of reaching their destinations. The schedules are — as often as
not if not more so — delayed or altered. This was precisely the experience
of private respondents when they were relocated to M/S "Sweet Town" from
M/S "Sweet Hope" and then any to the scorching heat of the sun and the
dust coming from the ship's cargo of corn grits, " because even the latter
was filed to capacity.

Under these circumstances, it is hardly just and proper to expect the

passengers to examine their tickets received from crowded/congested
counters, more often than not during rush hours, for conditions that may be
printed much charge them with having consented to the conditions, so
printed, especially if there are a number of such conditions m fine print, as
in this case. 20

Again, it should be noted that Condition No. 14 was prepared solely at the
ms of the petitioner, respondents had no say in its preparation. Neither did
the latter have the opportunity to take the into account prior to the purpose
chase of their tickets. For, unlike the small print provisions of contracts —
the common example of contracts of adherence — which are entered into
by the insured in his awareness of said conditions, since the insured is
afforded the op to and co the same, passengers of inter-island v do not
have the same chance, since their alleged adhesion is presumed only from
the fact that they purpose chased the tickets.

It should also be stressed that slapping companies are franchise holders of

certificates of public convenience and therefore, posses a virtual monopoly
over the business of transporting passengers between the ports covered by
their franchise. This being so, shipping companies, like petitioner, engaged
in inter-island shipping, have a virtual monopoly of the business of
transporting passengers and may thus dictate their terms of passage,
leaving passengers with no choice but to buy their tickets and avail of their
vessels and facilities. Finally, judicial notice may be taken of the fact that
the bulk of those who board these inter-island vested come from the low-
income groups and are less literate, and who have little or no choice but to
avail of petitioner's vessels.

2. Condition No. 14 is subversive of public policy on transfers of venue of

actions. For, although venue may be changed or transferred from one
province to another by agreement of the parties in writing t to Rule 4,
Section 3, of the Rules of Court, such an agreement will not be held valid
where it practically negates the action of the claimants, such as the private
respondents herein. The philosophy underlying the provisions on transfer of
venue of actions is the convenience of the plaintiffs as well as his
witnesses and to promote 21 the ends of justice. Considering the expense
and trouble a passenger residing outside of Cebu City would incur to
prosecute a claim in the City of Cebu, he would most probably decide not
to file the action at all. The condition will thus defeat, instead of enhance,
the ends of justice. Upon the other hand, petitioner has branches or offices
in the respective ports of call of its vessels and can afford to litigate in any
of these places. Hence, the filing of the suit in the CFI of Misamis Oriental,
as was done in the instant case, will not cause inconvenience to, much less
prejudice, petitioner.

Public policy is ". . . that principle of the law which holds that no subject or
citizen can lawfully do that which has a tendency to be injurious to the
public or against the public good ... 22 Under this principle" ... freedom of
contract or private dealing is restricted by law for the good of the
public. 23 Clearly, Condition No. 14, if enforced, will be subversive of the
public good or interest, since it will frustrate in meritorious cases, actions of
passenger cants outside of Cebu City, thus placing petitioner company at a
decided advantage over said persons, who may have perfectly legitimate
claims against it. The said condition should, therefore, be declared void and
unenforceable, as contrary to public policy — to make the courts accessible
to all who may have need of their services.

WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining

order issued on November 20, 1973, is hereby LIFTED and SET ASIDE.
Costs against petitioner.

Fernando (Chairman), Aquino, Concepcion, Jr., JJ., concur.

Antonio, J., reserves his vote.

Separate Opinions

BARREDO, J., concurring:

I concur in the dismissal of the instant petition.

Only a few days ago, in Hoechst Philippines, Inc. vs. Francisco Torres, et
al., G. R. No. L-44351, promulgated May 18, 1978, We made it clear that
although generally, agreements regarding change of venue are
enforceable, there may be instances where for equitable considerations
and in the better interest of justice, a court may justify the laying of, the
venue in the place fixed by the rules instead of following written stipulation
of the parties.

In the particular case at bar, there is actually no written agreement as to

venue between the parties in the sense contemplated in Section 3 of Rule
4, which governs the matter. I take it that the importance that a stipulation
regarding change of the venue fixed by law entails is such that nothing less
than mutually conscious agreement as to it must be what the rule means.
In the instant case, as well pointed out in the main opinion, the ticket issued
to private respondents by petitioner constitutes at best a "contract of
adhesion". In other words, it is not that kind of a contract where the parties
sit down to deliberate, discuss and agree specifically on all its terms, but
rather, one which respondents took no part at all in preparing, since it was
just imposed upon them when they paid for the fare for the freight they
wanted to ship. It is common knowledge that individuals who avail of
common carriers hardly read the fine prints on such tickets to note anything
more than the price thereof and the destination designated therein.

Under these circumstances, it would seem that, since this case is already
in respondent court and there is no showing that, with its more or less
known resources as owner of several inter-island vessels plying between
the different ports of the Philippines for sometime already, petitioner would
be greatly inconvenienced by submitting to the jurisdiction of said
respondent court, it is best to allow the proceedings therein to continue. I
cannot conceive of any juridical injury such a step can cause to anyone
concerned. I vote to dismiss the petition.

Separate Opinions

BARREDO, J., concurring:

I concur in the dismissal of the instant petition.

Only a few days ago, in Hoechst Philippines, Inc. vs. Francisco Torres, et
al., G. R. No. L-44351, promulgated May 18, 1978, We made it clear that
although generally, agreements regarding change of venue are
enforceable, there may be instances where for equitable considerations
and in the better interest of justice, a court may justify the laying of, the
venue in the place fixed by the rules instead of following written stipulation
of the parties.

In the particular case at bar, there is actually no written agreement as to

venue between the parties in the sense contemplated in Section 3 of Rule
4, which governs the matter. I take it that the importance that a stipulation
regarding change of the venue fixed by law entails is such that nothing less
than mutually conscious agreement as to it must be what the rule means.
In the instant case, as well pointed out in the main opinion, the ticket issued
to private respondents by petitioner constitutes at best a "contract of
adhesion". In other words, it is not that kind of a contract where the parties
sit down to deliberate, discuss and agree specifically on all its terms, but
rather, one which respondents took no part at all in preparing, since it was
just imposed upon them when they paid for the fare for the freight they
wanted to ship. It is common knowledge that individuals who avail of
common carriers hardly read the fine prints on such tickets to note anything
more than the price thereof and the destination designated therein.

Under these circumstances, it would seem that, since this case is already
in respondent court and there is no showing that, with its more or less
known resources as owner of several inter-island vessels plying between
the different ports of the Philippines for sometime already, petitioner would
be greatly inconvenienced by submitting to the jurisdiction of said
respondent court, it is best to allow the proceedings therein to continue. I
cannot conceive of any juridical injury such a step can cause to anyone
concerned. I vote to dismiss the petition.

Footnotes

1 Rollo, p. 2.

2 Id, P. 12, Annex "B",

3 Id., p. 18, Annex "C".

4 Id., p. 20, Annex "D".

5 Id., pp. 21 an d 26, Annexes "E" and "F"

6 Rollo, p. 5; Petition, paars. 8, 9 &10.

7 Id., p. 30.

8 Id., p. 47.

9 Id., pp. 66 and 76.

10 Manila Company vs. Attorney General 20 Phil 523; Central Azucarera

de Tarlac vs. de Loon, 56 Phil 129; Marquez Lain Cay vs. Del Rosario, 55
Phil 622; Abuton vs. Paler, 54 Phil 519, De la Rosa vs. De Borja, 53 Phil
990; Samson vs. Carra 50 Phil 647, See Rollo, p. 77.

11 Central Azucarera de Tarlac vs. de Leon, supra; Air France v C , 18

SCRA, (Sept. 28, 1966), p. 155, Id, pp. 77 and 80.

12 Rollo, pp. 81-81, Memorandum of Petitioner.

13 Shewaram v PAL Inc., G.R. No. L-20099, July 7, 1966, 17 SCRA

606-612; Mirasol vs. Robert Dollar and Company, 53 Phil 124, See Rollo,
p. 79.

14 Rollo. pp- 66-70, Memorandum of Respondents, citing Polytrade

Corporation v. Blanco, 30 SCRA 187-191.

15 106 Phil 485 (1959).

16 Paras, Civil Code of the Philippines, Seventh ed., Vol. 1, p. 80.

17 98 Phil 95 (1955).

18 L-24833. 25 SCRA 70 (1968).

19 Civil Code, Art. 24.

20 Condition No. 14 is the last condition printed at the back of the 4 x 6

inches pa tickets.

21 See Nicolas v. Reparations Commission et al G. R. No. L-28649 (21

May 1975), 64 SCRA 111, 116.

22 Ferrazini v. Gsell, 34 Phil 711-712 (1916).

23 Id., p. 712.