TOPIC: IN ADHESION CONTRACTS, STIPULATION VOID IF
CONTRARY TO PUBLIC POLICY
NATURE OF THE CASE: This case was elevated to the SC to
restrain the CFI of Misamis Oriental to proceed in the complaint filed by
Tandog and Tiro against Sweet Lines on the ground that the venue was improperly
laid.
FACTS:
Sweet Lines is a shipping company
which transports inter-island passengers and cargoes at Cagayan de Oro City.
Rogelio Tiro, a contractor, and Atty. Leovigildo Tandog bought tickets from
Sweet Lines and were bound to Bohol. When they were about to board M/S “Sweet
Hope” which was bound for Tagbilaran City via the port of Cebu, they were
informed that the vessel will not proceed to Bohol because most of the
passengers were bound to Surigao. They were advised to relocate and board to
M/S “Sweet Town”. However, the said vessel was already full and 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.” Further, the
tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and
they were constrained to pay for other tickets. Thus, Tandog and Tiro filed a
complaint against Sweet Lines for damages and breach of contract of carriage in
the CFI of Misamis Oriental (Cagayan de Oro is the capital of Misamis
Oriental).
SWEET LINES: It moved to dismiss the complaint on the
ground of improper venue. This was based on the condition printed at the back
of the tickets purchased by Tandog and Tiro 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.
CFI: Denied the motion to dismiss.
Sweet Lines: Motion for Reconsideration.
CFI: Denied the motion for reconsideration.
---Hence,
this petition.
ISSUE: WON a common carrier engaged in
inter-island shipping may stipulate thru condition printed at the back of
passage tickets to its vessels that any and all actions arising out of the
contract 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.
WON
the venue of the action should be in the City of Cebu as stipulated by the
condition in the ticket bought by Tandog and Tiro.
SWEET LINES: The condition is valid and
enforceable since Tandog and Tiro acceded to it when they purchased the tickets
at its Cagayan de Oro branch office and took its vessel M/S "Sweet
Town" for passage to Tagbilaran, Bohol. Moreover, venue may be validly
waived and it is clear that the ticket stipulates that the condition had fixed
the venue in the City of Cebu. Thus, the orders of the CFI 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.
TANDOG AND TIRO: The condition in the ticket is not
valid as it 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. Tandog and Tiro 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. Further, the
carrier "has been exacting too much from the public by inserting
impositions in the passage tickets too burdensome to bear," and the
condition which was printed in fine letters is an imposition on the riding
public and does not bind respondents. Lastly, while venue of 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.
HELD: No, the actuations of Sweet Lines
(putting a condition at the back of its tickets fixing the venue for any
complaints filed against them in the City of Cebu) is contrary to public policy.
Thus, the venue was not improperly laid in the CFI of Misamis Oriental.
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.
However,
with respect to the condition 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"
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 fair play characterize the
relationship of the contracting parties.
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 in Art.
24 of 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.
protection.
Considered
in the light Of the foregoing norms and in the context of circumstances
prevailing in the inter-island shipping industry in the country today, the SC
declared the condition at the back of the passage to be void and unenforceable.
First, under circumstances obligation in the inter-island shipping industry, it
is not just and fair to bind passengers to the terms of the conditions printed
at the back of the passage tickets. Second, the condition 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 the said condition, will have to file suits against
petitioner only in the City of Cebu.
Moreover,
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. Thus, passengers cannot be
expected to read all the conditions much less consider the public policies that
the conditions therein violate.
Additionally,
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 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. Clearly, the subject condition, 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.
Thus, PETITION IS DENIED.
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