Case Summary (G.R. No. L-37750)
Petitioner and Respondent Roles
Sweet Lines, Inc. is an inter-island common carrier engaged in passenger and cargo transport. Tandog and Tiro are purchasers of passage tickets who sued Sweet Lines for damages and breach of contract of carriage. The respondent judge denied petitioner’s motion to dismiss for improper venue, prompting the petition for prohibition and preliminary injunction.
Procedural and Key Dates
Complaint filed before the CFI of Misamis Oriental; petition for prohibition with preliminary injunction filed October 3, 1973; Supreme Court issued a temporary restraining order November 20, 1973 and gave the petition due course January 18, 1974. Final disposition rendered May 19, 1978.
Applicable Law
Applicable constitutional framework: 1973 Constitution (appropriate to the decision date). Governing statutory and procedural authorities and principles invoked include the Civil Code (Art. 24 cited), Rule 4, Section 3 of the Rules of Court (regarding venue by agreement), and established jurisprudence on contracts of adhesion and contracts of carriage cited in the record.
Facts
On December 31, 1972 Tandog and Tiro purchased passage tickets (Nos. 011736 and 011737) at Sweet Lines’ Cagayan de Oro branch for Voyage 90, originally to be carried on M/S "Sweet Hope" to Tagbilaran via Cebu. After learning the vessel would not proceed to Bohol, they were relocated to M/S "Sweet Town." That vessel was full, and they allegedly concealed themselves in the cargo section to avoid inspection. During the trip they were exposed to heat and dust from the ship’s cargo, their tickets were not honored for the intended destination, and they were constrained to pay for other tickets. They sued for damages totalling P110,000.00 for breach of the contract of carriage.
Trial-Court Rulings and Petition for Prohibition
Petitioner moved to dismiss for improper venue relying on Condition No. 14 printed on the back of its tickets: any and all actions arising out of the ticket "shall be filed in the competent courts in the City of Cebu." The trial court denied the motion and denied a motion for reconsideration. Petitioner then sought prohibition and preliminary injunction in the Supreme Court, alleging the trial judge acted in excess of jurisdiction.
Legal Issue Presented
Whether Condition No. 14—printed on the back of passage tickets and purporting to require that any and all actions arising out of the contract of carriage be filed only in the courts of the City of Cebu—is valid and enforceable to the exclusion of other competent fora.
Petitioner’s Contentions
Sweet Lines argued that Condition No. 14 is a valid and effective waiver of venue: passengers acceded to it by purchasing tickets; the clause is printed in bold and capital letters and is thus conspicuous; the language ("any and all," "irrespective of where it is issued," "shall") is unequivocal and mandatory; venue may be waived or fixed by agreement and the condition should be enforced.
Respondents’ Contentions
Tandog and Tiro contended that Condition No. 14 is not a valid part of the contract of carriage but rather a separate unilateral imposition constituting a contract of adhesion. They argued they had no real opportunity to negotiate or refuse the clause, that it was printed in fine print and imposed on the public, and that change of venue requires a written mutual agreement under Rule 4, Section 3. They further asserted that even if valid, the clause was not exclusive and did not bar filing in Misamis Oriental.
Court’s Finding on Existence of Contract of Carriage
The Court recognized the existence of a valid contract of carriage as reflected by the passage tickets: the tickets show consent (boarding and acceptance), consideration (fare), and object (transportation from departure to destination). However, the Court treated the printed conditions at the back of the tickets as provisions of a contract of adhesion whose enforceability depends on the circumstances.
Court’s Analysis: Contracts of Adhesion and Protective Norms
The Court emphasized that the conditions printed on tickets are typically contracts of adhesion—terms drafted unilaterally by the carrier and presented on a "take-it-or-leave-it" basis. Because of the inequality and potential for imposition in such contracts, jurisprudence and the Civil Code (Art. 24) require greater judicial vigilance to protect weaker parties from unfair or oppressive stipulations. The Court noted the necessity of examining the particular circumstances and the nature of the clause sought to be enforced.
Court’s Analysis: Practical Circumstances in Inter-Island Shipping
The Court took judicial notice of the congested, high-demand, and resource-constrained conditions of inter-island shipping: congested piers, rush conditions, schedule changes, and the propensity of passengers to accept whatever accommodations are available. Under such conditions, passengers generally lack the opportunity to examine or negotiate ticket clauses; they often consist of low-income and less literate persons who cannot realistically insist on alternative terms. Shipping companies hold franchises and effectively possess a virtual monopoly over certain routes; they can dictate terms that passengers must accept to travel.
Court’s Analysis: Public Policy on Transfer of Venue
The Court reasoned that while parties may agree in writing to transfer venue und
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Principal Facts
- Private respondents Leovigildo D. Tandog, Jr. (an attorney) and Rogelio Tiro (a contractor) purchased passage tickets Nos. 011736 and 011737 for Voyage 90 on December 31, 1972 at the Cagayan de Oro branch office of petitioner Sweet Lines, Inc., an inter-island passenger and cargo shipping company.
- Private respondents intended to travel to Tagbilaran City (Bohol) on petitioner’s vessel M/S "Sweet Hope" bound for Tagbilaran via Cebu.
- Upon learning the vessel was not proceeding to Bohol because many passengers were bound for Surigao, private respondents were relocated at the branch office to M/S "Sweet Town".
- M/S "Sweet Town" was filled to capacity; private respondents agreed to "hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard."
- During the trip respondents alleged they were "exposed to the scorching heat of the sun and the dust coming from the ship’s cargo of corn grits," that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored, and that they were constrained to pay for other tickets.
- Private respondents sued petitioner for damages and for breach of the contract of carriage in the alleged sum of P110,000.00 in Civil Case No. 4091 before the Court of First Instance (CFI) of Misamis Oriental.
Procedural History
- Petitioner moved to dismiss the complaint for improper venue, invoking a condition printed at the back of its passage tickets (Condition No. 14) fixing venue in the City of Cebu.
- The trial court (respondent Judge Bernardo Teves) denied the motion to dismiss and denied petitioner’s motion for reconsideration.
- Petitioner filed an original action for Prohibition with Preliminary Injunction on October 3, 1973, to restrain the respondent judge from proceeding further with Civil Case No. 4091 after denial of the motion to dismiss and reconsideration.
- The Court of Appeals (Supreme Court) issued a restraining order on November 20, 1973, restraining the respondent judge from proceeding with the case and required respondents to comment.
- The petition was given due course on January 18, 1974, and the parties later submitted memoranda in support of their respective contentions.
- Decision promulgated May 19, 1978.
Issue Presented
- Whether Condition No. 14 printed at the back of petitioner’s passage tickets, which purports to limit venue of any and all actions arising out of the ticket to the competent courts in the City of Cebu, is valid and enforceable.
- Stated alternatively: May a common carrier engaged in inter-island shipping unilaterally stipulate, through a condition printed on passage tickets, that actions arising out of the contract of carriage must be filed only in a particular province or city (here, Cebu) to the exclusion of all others?
Content of Condition No. 14 (as cited)
- The printed text of Condition No. 14: "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."
- The record states Condition No. 14 is the last condition printed at the back of the 4 x 6 inches passage tickets.
- Conflicting descriptions in the parties’ positions: petitioner describes the condition as printed "in bold and capital letters and not in fine print," whereas the Court’s findings and respondents describe the condition as printed in fine letters.
Petitioner’s Contentions
- Condition No. 14 is valid and enforceable because private respondents acceded to it when they purchased the passage tickets at petitioner’s Cagayan de Oro branch and boarded petitioner’s vessel for passage to Tagbilaran.
- Venue may be validly waived, and the stipulation on venue constitutes an effective waiver, citing prior cases (e.g., Manila Railroad Company v. Attorney General; Central Azucarera de Tarlac v. de Leon; Air France v. Carrascoso among others).
- The wording of Condition No. 14 ("any and all," "irrespective of where it is issued," "shall") is unequivocal and mandatory, leaving no doubt that the parties intended to fix venue in the City of Cebu to the exclusion of other places.
- The orders of the respondent judge denying the motion to dismiss and reconsideration depart from established jurisprudence on venue stipulations and constitute action without or in excess of jurisdiction or in gross abuse of discretion.
Private Respondents’ Contentions
- Condition No. 14 is not valid because it is not an essential element of the contract of carriage but a separate agreement requiring mutual consent.
- Respondents had no participation in the preparation of Condition No. 14 and could not refuse it; they were constrained to purchase tickets and avail themselves of petitioner’s facilities out of necessity.
- The condition constitutes an imposition on the riding public, printed in fine letters, and therefore does not bind respondents (citing Shewaram v. PAL, Mirasol v. Robert Dollar and Co.).
- While venue may be transferred by written agreement under Rule 4, Section 3 of the Rules of Court