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VOL. 83, MAY 19, 1978 355

E. S. Baltao & Co. Inc. vs. China Banking Corporation

No. L-35093. May 19, 1978.*

E. S. BALTAO & CO. INC., petitioner, vs. CHINA

BANKING CORPORATION and FEDERICO O.
BORROMEO, INC., respondents.

Remedial Law; Appeals; Timeliness of Appeal; Where

dismissal is sought for on the omission merely in the record on
appeal of the facts showing timeliness but not the factual
timeliness of the appeal, the same is inconsistent with substantial
justice.—The foregoing ruling is aptly applicable to the instant
case, the circumstances in the Araneta case being practically
identical in the two cases. The strict rule relied upon by
respondents about the application of section 1, Rule 50 in the
cases beginning with Government of the Philippines vs. Antonio,
15 SCRA 119, are not necessarily controlling anymore. Where
appellee does not deny the factual timeliness of the appeal
approved by the trial court, and the only ground invoked for
dismissal is the omission in the record on appeal of the facts
showing such timeliness, We regard the technical objection as
inconsistent with substantial justice. (Pimentel vs. Court of
Appeals, 64 SCRA 475; Luna vs. Court of Appeals, 67 SCRA 503;
Krueger vs. Court of Appeals, 69 SCRA 50 and others of similar
vein.)
Attorneys; It would be best for members of the bar to make it a
point to know and comply with the rules and not rely on the Court
to save the situation for their clients.—It may not be amiss to add
here, however, that it is best that the members of the bar should
make it a point to know and to comply with the rules, which are
as simple as they can be, without having to depend on this Court
to save the situation for their clients in the paramount interest of
substantial justice.

PETITION for certiorari to review the resolution of the

Court of Appeals.

______________

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* SECOND DIVISION.

356

356 SUPREME COURT REPORTS ANNOTATED

E. S. Baltao & Co. Inc. vs. China Banking Corporation

The facts are stated in the opinion of the Court.

          Eugenio T. Estavillo and Lino M. Patajo for
petitioner.
     Sycip, Salazar, Feliciano, Hernandez & Castillo for
respondent China Banking Corporation.
          Modesto Mendoza for respondent Federico O.
Borromeo, Inc.

BARREDO, J.:

Petition for certiorari impugning the resolutions of the

Court of Appeals of February 9, 1972 and April 21, 1972 in
CA-G.R. No. 45569, E. S. Baltao & Co. Inc. vs. F. O.
Borromeo et al., insofar as the same dismissed the appeal
of E. S. Baltao & Co. from the decision of the Court of First
Instance of Rizal in Civil Case No. 6660, between the same
parties, on the ground that the record on appeal filed with
the trial court by herein petitioner does not “contain the
date when plaintiff received copy of the appealed decision,
pursuant to Section 1 (a), Rule 50 of the Rules of Court,
which requirement is mandatory and jurisdictional.”
When this case was set for hearing on February 8, 1978,
none of the parties could reliably inform the Court as to
when in fact petitioner was served with the copy of trial
court’s decision being appealed from, hence the Court
resolved to require them to verify the matter and submit
the result to the Court. On February 10, 1978, counsel for
respondent China Banking Corporation submitted his
“Compliance and Manifestation” stating that:

“1. Copy of the appealed Decision (dated December 28, 1968) was
received by petitioner’s counsel on January 28, 1969.
“2. On February 26, 1969, petitioner filed an Ex-Parte Motion
for extension of 20 days from February 27, 1969 within which to
file its record on appeal On February 27, 1969, an order was
issued by the trial court granting petitioner’s motion for
extension.
“3. Petitioner filed the Record on Appeal dated March 10, 1969
on March 12, 1969.” (Page 57, Record.)

Thus, it is unquestionable that petitioner’s appeal in

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question was in fact perfected on time.

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E. S. Baltao & Co. Inc. vs. China Banking Corporation

Now, as to the omission in the record on appeal to state

when petitioner was served notice of the decision, it
appears that in acting on the motion to approve said record
on appeal, the trial court issued the following order:

“Acting on plaintiff’s motion for Approval of Amended Record on

Appeal dated the 2nd instant, and defendant China Banking
Corporation having manifested its non-objection to the same, as
prayed, the Branch Clerk of Court is directed to insert pages 43(a)
to 43(i) attached to the Motion as Annex ‘A’, after page 43 of
plaintiff’s Record on Appeal, and to attach the subject Index
Thereto. With the compliance of the above, plaintiff’s Amended
Record on Appeal, Notice of Appeal, Appeal Bond are APPROVED
and the Clerk of Court is directed to give due course to the appeal
by complying with the pertinent provisions of the Rules of Court.”
(Pp. 148-149, Record on Appeal.)

In a similar case decided by this Court, the trial court

approved appellant’s record on appeal as follows:

“It appearing that the defendants have already included the

motion to dismiss, opposition filed thereto and the resolution of
the court thereon, in the amended Record on Appeal filed by the
defendants, and for want of any further objection on the part of
the plaintiff, AS PRAYED FOR, the amended record on appeal
filed by the defendants is hereby approved. (R.A. p. 172).” (72
SCRA 417)

     Ruling on the propriety of such approval, We held:

“It may be added here that when Araneta objected to the original
record on appeal, it was only on the ground of omission of certain
papers therein, not for its being out of time. Under the omnibus
motion rule, the objection of untimeliness was waived by Araneta,
and it is reasonable to assume that he would not have raised such
a clearly jurisdictional fatality, if in fact the original Doronila
record on appeal had been filed out of time. Since the purpose of
the strict rule of literal compliance with the ‘material data rule’ is
to avoid debate on the timeliness of the appeal, and there is here
no occasion for such debate, such timeliness being a matter no
longer disputable by Araneta, it should follow that the amended

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record on appeal may be read in the sense that the order of the
court approving the same includes the finding that the original
thereof had been filed

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E. S. Baltao & Co. Inc. vs. China Banking Corporation

on time. We hold that thus read, said amended record on appeal

sufficiently complies with the rules. (Berkenkotter, supra, and
subsequent rulings analogous thereto.) (Araneta vs. Doronila, 72
SCRA 413, 420.)

The foregoing ruling is aptly applicable to the instant case,

the circumstances in the Araneta case being practically
identical in the two cases. The strict rule relied upon by
respondents about the application of Section 1, Rule 50 in
the cases beginning with Government of the Philippines vs.
Antonio, 15 SCRA 119, are not necessarily controlling
anymore. Where appellee does not deny the factual
timeliness of the appeal approved by the trial court, and
the only ground invoked for dismissal is the omission in the
record on appeal of the facts showing such timeliness, We
regard the technical objection as inconsistent with
substantial justice. (Pimentel vs. Court of Appeals, 64
SCRA 475; Luna vs. Court of Appeals, 67 SCRA 503;
Krueger vs. Court of Appeals, 69 SCRA 50 and others of
similar vein.) It may not be amiss to add here, however,
that it is best that the members of the bar should make it a
point to know and to comply with the rules, which are as
simple as they can be, without having to depend on this
Court to save the situation for their clients in the
paramount interest of substantial justice.
Anent the ground being also invoked by private
respondents that petitioner has not yet filed its appellant’s
brief notwithstanding the expiration of the original period
and extensions granted by the Court of Appeals, We agree
with petitioner that the issue in this case, which was
resolved by the appellate court before the expiration of
petitioner’s period, constitutes a prejudicial question, the
result of which must in logic and practical reasons be
awaited, since there might be no appeal for which a brief
would be needed. However, We must state that even if only
out of courtesy and good practice, petitioner should have
taken the proper and timely moves in the Court of Appeals
for the corresponding suspension of said period.
WHEREFORE, the petition is granted; the resolutions of

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the Court of Appeals complained of are set aside, and the

respondent Court of Appeals is directed to give due course
to
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E. S. Baltao & Co. Inc. vs. China Banking Corporation

petitioner’s appeal in question by granting it a reasonable

period within which to file its brief. Costs against private
respondents.

          Fernando (Chairman), Aquino, Concepcion Jr.,

Santos, JJ., concur.
     Antonio, J., did not take part

Petition granted; the resolutions are set aside.

Notes.—The death of an accused-appellant after final

judgment of a trial court but before the judgment had
become final and executory due to the pendency of an
appeal extinguishes his criminal liability but his civil
liability survives. (People vs. Sendaydiego, 81 SCRA 133).
To re-open a case for the purpose of increasing the penalty
as is sought in the Government’s appeal would place the
accused in double jeopardy and violate Section 2, Rule 118
of the Rules of Court. (People vs. Paet, 100 Phil. 357).
The appellant’s inability to finish his brief on time on
account of poverty and the fact that he need to raise money
to pay the expenses of the appeal is a sufficient ground for
extending the existing period within which to file brief.
(Gregorio vs. Court of Appeals, 72 SCRA 121).
Section 1, Rule 50 of the Rules of Court, in the matter of
dismissal of appeal, confers upon the appellate court
merely a power and does not impose a duty; the same is not
mandatory but merely directory which thus requires a
great deal of circumspection, considering all the attendant
circumstances. (Lopez vs. Court of Appeals, 75 SCRA 402).
A deficiency in the record on appeal which failed to state
when the decision of the trial court was received by the
appellants is not a ground for the dismissal of the appeal
when it is a fact of record that the trial court approved the
record on appeal. The appellate court may rely on such
approval for the purpose of determining that the appeal
was made on time. (Morales vs. Court of Appeals, 68 SCRA
304).
The perfection of an appeal within the statutory or

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reglementary period is mandatory and jurisdictional and

that
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E. S. Baltao & Co. Inc. vs. China Banking Corporation

failure to so perfect an appeal renders final and executory

the questioned decision and deprives the appellate court of
jurisdiction to entertain the appeal. The lapse of the appeal
period deprives the courts of jurisdiction to alter the final
judgment. An exception to this rule is where there is a
timely petition for relief from judgment within the
reglementary period (within 30 days from knowledge/notice
of the decision-award and within three [3] months from
entry hereof in workmen’s compensation cases. (Carreon vs.
Workmen’s Compensation Commission, 77 SCRA 297).
The failure of appellant to comment on motion to
dismiss appeal is not a ground for perfunctory dismissal of
the appeal; a resolution requiring counsel to show cause
why no disciplinary action should be imposed and, better
yet, a resolution on the merits of the motion to dismiss, is
the more sound procedure. (Marquez vs. Court of Appeals,
77 SCRA 523.)
A motion to dismiss an appeal on the ground that the
record on appeal does not contain data showing that the
appeal was perfected on time is barred by laches where the
movant allowed 6 years after the filing of their brief to
elapse without moving for the dismissal of the case.
(Sarmiento vs. Salud, 46 SCRA 365.)
A trial court is nowhere granted authority to dismiss on
its own motion an appeal already taken by a party by the
timely filing of the notice and record on appeal and appeal
bond, upon the ground of failure to prosecute. (Agoncillo vs.
Court of Ap-peals, 48 SCRA 147.)
Where the claim of the defendant is based on a defense
which is unavailable to him, his appeal may be considered
frivolous and made solely for delay (Tiu vs. Court of
Appeals, 37 SCRA 99).
An appeal from a contempt order does not automatically
carry with it an appeal from the order of eviction.
(Dumalagan vs. Palangpangan, 58 SCRA 151.)
New issues not brought before the trial court will be
entertained by the appellate court without the need of
supplemental pleadings where all the facts for
determination of said issues are before the appellate

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tribunal and matters of public interests need to be

promptly settled. (Asiatic Integrated Corporation vs.
Alicpala, 67 SCRA 60.)

361

VOL. 83, MAY 19, 1978 361

Sweet Lines, Inc. vs. Teves

In the light of Section 31 of the Judiciary Act, “the rule

requiring the appellant to specify in his notice of appeal the
court to which the appeal is being made, is merely
directory, and failure to comply therewith or an error as to
the Court indicated is not fatal to the appeal. (Sonora vs.
Tongoy, 44 SCRA 411.)

——o0o——

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.

Civil Law; Common carriers; Contracts of adhesion, concept

of.—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,
there 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 other party is the
signing of his signature or his ‘adhesion’ thereto. Insurance
contracts, bills of lading, contracts of sale 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
hereto on the “take it or leave it” basis—certain guidelines in the

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determination of their validity and/or enforceability have been

formulated in order to insure that justice and fair play
characterize the relationship of the contracting parties.

________________

* SECOND DIVISION.

362

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Sweet Lines, Inc. vs. Teves

Same; Same; Acute shortage of interisland vessels taken

judicial notice of by courts; Passengers of interisland vessels not
expected to examine their ticket for printed conditions therein;
Reason.—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 secure 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 allegedly “exposed to the scorching
heat of the sun and the dust coming from the ship’s cargo of corn
grits,” because even the latter vessel was filled 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 thereon, much less
charge them with having consented to the conditions, so printed,
especially if there are a number of such conditions in fine print, as
in this case.
Same; Same; Condition 14 of shipping ticket which provides
that all actions arising out of conditions and provisions of the
ticket irrespective of where issued shall be filed in the City of Cebu
is void as it was prepared solely at petitioner’s instance without
participation of respondents; Courts take judicial notice of fact

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that passengers availing of shipping facilities come from low

income and less literate groups.—Again, it should be noted that
Condition No. 14 was prepared solely at the instance of the
petitioner; respondents had no say in its preparation. Neither did
the latter have the opportunity to take the same into account
prior to the purchase of their tickets. For, unlike the small print
provisions of insurance contracts—the common example of
contracts of adherence—which are entered into by the insured in
full awareness of said conditions, since the insured is afforded the
opportunity to examine and consider the same, passengers of
inter-island vessels do not have the same chance, since their
alleged adhesion is presumed only from the fact that they
purchased the passage tickets. It should also be stressed that
shipping

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Sweet Lines, Inc. vs. Teves

companies are franchise holders of certificates of public

convenience and, therefore, possess 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 vessels come from the low-income groups
and are less literate, and who have little or no choice but to avail
of petitioner’s vessels.
Same; Same; Condition 14 subversive of public policy on
transfers of venue of actions; Philosophy behind transfers of venue
of actions; Public policy, concept of.—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 pursuant 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

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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 had
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. .
.”. Under this principle “. . . freedom of contract or private dealing
is restricted by law for the good of the public.” 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 claimants 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.

364

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Sweet Lines, Inc. vs. Teves

Barredo, J., Concurring

Remedial Law; Venue; Civil Law; Common Carriers; Tickets

issued by interisland vessel show that actually no written
agreement as to venue between the parties as contemplated by Sec.
3, Rule 4 of Rules of Court; Where case already in respondent court
and no showing that petitioner with its resources would not suffer
inconvenience, trial court can continue proceedings started in said
court.—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 the 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

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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”. x x x 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 interisland 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.

ORIGINAL ACTION in the Supreme Court. Prohibition

with preliminary injunction.

The facts are stated in the opinion of the Court.

     Filiberto Leonardo, Abelardo C. Almario & Samuel B.
Abadiano for petitioner.
     Leovigildo Vallar for private respondents.

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Sweet Lines, Inc. vs. Teves

SANTOS, J.:

This is an original action for Prohibition with Preliminary

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,
1
and the Motion for Reconsideration
of said order.
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

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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 P110,000.00
before respondents
2
Court of First Instance of Misamis
Oriental.
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:

________________

1 Rollo, p. 2.
2 Id., p. 12, Annex “B”.

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Sweet Lines, Inc. vs. Teves

“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
3
courts in the City of Cebu.”
4
The motion was denied by the trial court. Petitioner5
moved
to reconsider the order of denial, but to no avail. Hence,
this instant petition for prohibition with preliminary
injunction, alleging that the respondent judge had departed
from the “accepted and usual course of judicial proceeding”
and “had acted without or in excess or 6 in error of his
jurisdiction or in gross abuse of discretion.”
In Our resolution of November 20, 1973, We restrained
respondent Judge from proceeding further 7
with the case
and required respondents to comment. On January 18,
1974, We gave due course 8
to the petition and required
respondents to answer. Therefter, the parties submitted
their respective
9
memoranda in support of their respective
contentions.

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Presented thus for Our resolution is a question 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 the Court of First Instance of Cebu, valid and
enforceable? Otherwise stated, may a common carrier
engaged in inter-island shipping stipulate thru a 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?
Petitioner contends that Condition No. 14 is valid and
enforceable, since private respondents acceded to it when
they

_______________

3 Id., p. 18, Annex “C”.

4 Id., p. 20, Annex “D”.
5 Id., pp. 21 and 26, Annexes “E” and “F”
6 Rollo, p. 5; Petition, pars. 8, 9 & 10.
7 Id., p. 30.
8 Id., p. 47.
9 Id., pp. 66 and 76.

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VOL. 83, MAY 19, 1978 367

Sweet Lines, Inc. vs. Teves

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 fixing the venue of
actions in the City of Cebu 10is proper since venue may be
validly waived, citing cases; 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 arising11
from the contract is
instituted, likewise citing cases; and that condition No. 14
is unequivocal and mandatory, the words and phrases “any
and all”, “irrespective of where it is issued,” and “shall”
leave no doubt that the intention of Condition No. 14 is to
fix the venue in the City of Cebu, to the exclusion of all
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

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12
of his jurisdiction in issuing the orders complained of.
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 the13 riding public and does not
bind respondents, citing cases; that while venue of actions

______________

10 Manila Railroad Company vs. Attorney General, 20 Phil. 523;

Central Azucarera de Tarlac vs. de Leon, 56 Phil. 129; Marquez Lim Cay
vs. Del Rosario, 55 Phil. 622; Abuton vs. Paler, 54 Phil. 519; De la Rosa vs.
De Borja, 53 Phil. 990; Samson vs. Carratela, 50 Phil. 647, See Rollo, p.
77.
11 Central Azucarera de Tarlac vs. de Leon, supra; Air France vs.
Carrascoso, 18 SCRA, (Sept. 28, 1966), p. 155, Id., pp. 77 and 80.
12 Rollo, pp. 81-81, Memorandum of Petitioner.
13 Shewaram vs. 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.

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Sweet Lines, Inc. vs. Teves

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,14 exclude the filing of the action in 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. As held 15in Peralta de
Guerrero, et al. v. Madrigal Shipping Co., Inc.,

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“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

________________

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

Corporation v. Blanco, 30 SCRA 187-191.
15 106 Phil. 485 (1959).

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VOL. 83, MAY 19, 1978 369

Sweet Lines, Inc. vs. Teves

the only participation of the party is the signing of his

signature or his ‘adhesion’ thereto. Insurance contracts,
bills of lading, contracts of 16sale 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

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determination of their validity and/or enforceability have

been formulated in order to insure that justice and fair play
characterize the relationship of the contracting parties.
Thus, this Court speaking through Justice J.B.L. Reyes 17
in
Qua Chee Gan v. Law Union and Rock Insurance Co., and
later through
18
Justice Fernando in Fieldman Insurance v.
Vargas, held—

“The courts cannot ignore that nowadays, monopolies, cartels and

concentration of capital, endowed with overwhelming economic
power, manage to impose upon parties dealing with them
cunningly 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 call 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

peculiar 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,
ig-

________________

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

17 98 Phil. 95 (1955).
18 L-24833. 25 SCRA 70 (1968).

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370 SUPREME COURT REPORTS ANNOTATED

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norance, indigence, mental weakness, tender age and other

handicap, 19
the courts must be vigilant for his 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, We find and hold

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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 obtaining 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, 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
parts 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 secure 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 allegedly “exposed to the scorching
heat of the sun and the dust coming from the ship’s cargo of
corn grits,” because even the latter vessel was filled to
capacity.

_____________

19 Civil Code, Art. 24.

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Sweet Lines, Inc. vs. Teves

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
thereon, much less charge them with having consented to

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the conditions, so printed, especially if there are

20
a number
of such conditions in fine print, as in this case.
Again, it should be noted that Condition No. 14 was
prepared solely at the instance of the petitioner;
respondents had no say in its preparation. Neither did the
latter have the opportunity to take the same into account
prior to the purchase of their tickets. For, unlike the small
print provisions of insurance contracts—the common
example of contracts of adherence—which are entered into
by the insured in full awareness of said conditions, since
the insured is afforded the opportunity to examine and
consider the same, passengers of inter-island vessels do not
have the same chance, since their alleged adhesion is
presumed only from the fact that they purchased the
passage tickets.
It should also be stressed that shipping companies are
franchise holders of certificates of public convenience and,
therefore, possess 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 vessels 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 pursuant to Rule 4,
Section 3, of

______________

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

inches passage tickets.

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Sweet Lines, Inc. vs. Teves

the Rules of Court, such an agreement will not be held

valid where it practically negates the action of the

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claimants, such as the private respondents herein. The

philosophy underlying the provisions on transfer of venue
of actions is the convenience of the plaintiffs 21as 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 inconvience
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 22to be injurious to the public or against the public
good. . .”. Under this principle “. . . freedom of contract or
private 23dealing is restricted by law for the good of the
public.” 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
claimants 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
DISMISSED. The restraining order issued on November
20, 1973, is hereby LIFTED and SET ASIDE. Costs against
petitioner.

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

concur.
     Barredo, J., concurs with a separate opinion.
Antonio, J., reserves his vote.

__________________

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.

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VOL. 83, MAY 19, 1978 373

Sweet Lines, Inc. vs. Teves
Petition dismissed Order lifted and set aside.

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 interisland 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
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can cause to anyone concerned.

I vote to dismiss the petition.
Petition dismissed Order lifted and set aside.

Notes.—The contract of air carriage generates a relation

attended with a public duty. Neglect or malfeasance of the
carrier’s employees could give ground for an action for
damages. (Zulueta vs. Pan American World Airways, Inc.,
43 SCRA 397).
In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and
1744 of the New Civil Code. (Davila vs. Philippine Air
Lines, 49 SCRA 497).
The registered owner of a common carrier is liable for
damages resulting from a breach of contract of carriage.
The transferee is, however, liable to the registered owner of
the vehicle for the damages cause to passengers. (Perez vs.
Gutier-rez, 53 SCRA 149).
A provisional claim filed before the delivery of the cargo,
in anticipation of any possible loss or damage while the
cargo is in the arrastre operator’s custody is premature and
specualtive. (American Insurance Company of Newark vs.
Manila Port Service, 72 SCRA 18; Manila Port Service vs.
Fortune Insurance & Surety Co., Inc., 45 SCRA 65).
The 15-day notice to the arrastre operator of any
damage or loss of cargo is reckoned from the date the
consignee or claimant learns of the loss or damage or from
the date when with the exercise of due diligence,
information regarding the loss or damage could have been
obtained. (New Zealand Insurance Co., Ltd. vs. Manila Port
Service, 19 SCRA 801) The reason for this rule is that
before the claimant or consignee learns of the shortage or
damage he is in no position to make a claim since the goods
are in the arrastre contractor’s custody; otherwise the
arrastre operator may escape liability by simply
withholding knowledge as to the loss or damage until after
the
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VOL. 83, MAY 19, 1978 3 75

Sweet Lines, Inc. vs. Teves

expiration of the 15-day period from the discharge of the

last package from the carrying vessel (Yu Kimteng

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Construction Corporation vs. Manila Railroad Company, 15

SCRA 292).
1. Statutory Construction: General terras may be
restricted by specific words, with the result that the
general language will be limited by specific language which
indicates the statute’s object and purpose. (Colgate
Palmolive Philippines, Inc. vs. Gimenez, 1 SCRA 267.)
2. Contracts: Where the provisions of a contract are
ambiguous, such ambiguity must be construed against the
party who drafted the same; and it appearing that the
contract in question must be construed against appellant.
(Coscolluela vs. Valderrama, 2 SCRA 1095.)
A written document speaks a uniform language; the
spoken word could be notoriously unreliable. If only to
achieve stability in the relations between passenger and air
carrier, adherence to the terms of a ticket is desirable. (Air
France vs. Carrascoso, 18 SCRA 155.)
A contract between two persons cannot bind another not
a party thereto, merely because he is aiyare of such
contract and fcog acted with knowledge thereof. (Manila
Port Service vs. Court of Appeals, 20 SCRA 1214.)
3. Venue: The venue of civil actions in the Court of First
Instance is where the plaintiff resides or where the
defendant resides or found (Section 1, Rule 5, Rules of
Court), but the latter phrase (may be found) applies only to
cases where the defendant has no residence in the
Philippines. (Portillo vs. Reyes, 3 SCRA 311.)
The stipulation that “the parties agree to sue and be
sued in the courts of Manila, “does not preclude the filing of
suits in the residence of plaintiff or defendant under
Section 2(b), Rule 4, Rules of Court, in the absence of
qualifying or restrictive words in the agreement which
would indicate that Manila alone is the venue agreed upon
by the parties (Polytrade Corporation vs. Blanco, 30 SCRA
187.)

——o0o——

376

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