Sweet Lines, Inc. v. Teves
REITERATIONFacts
The Antecedents: Private respondents, Atty. Leovigildo Tandog and Rogelio Tiro, purchased passage tickets for Voyage 90 on December 31, 1971, from petitioner Sweet Lines, Inc., a shipping company, for travel from Cagayan de Oro City to Tagbilaran City via Cebu. Upon learning the vessel was not proceeding to Bohol, they were advised to transfer to another vessel, M/S "Sweet Town." Due to the vessel being filled to capacity, they were compelled to "hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard." During the trip, they alleged they were exposed to heat and dust from corn grits cargo and were forced to pay for new tickets. Procedural History: Private respondents filed a complaint for damages and breach of contract of carriage against petitioner before the Court of First Instance (CFI) of Misamis Oriental, claiming P10,000.00. Petitioner moved to dismiss the complaint based on Condition No. 14 printed on the back of the tickets, which stipulated that any action arising from the contract of carriage must be filed in the competent courts in Cebu City. The CFI denied the motion to dismiss and the subsequent motion for reconsideration. The Petition: Petitioner filed an original action for Prohibition with Preliminary Injunction before the Supreme Court, seeking to restrain the respondent Judge from proceeding with the case, alleging grave abuse of discretion and departure from the usual course of judicial proceedings.
Issue(s)
Whether Condition No. 14, limiting the venue of actions to Cebu City, printed on the back of petitioner's passage tickets, is valid and enforceable. Whether the respondent Judge committed a grave abuse of discretion in denying petitioner's motion to dismiss.
Ruling
The petition for prohibition is dismissed. The restraining order is lifted and set aside. Condition No. 14 is declared void and unenforceable.
Ratio Decidendi
On the validity and enforceability of Condition No. 14: The Supreme Court held that Condition No. 14, which stipulated that any and all actions arising from the contract of carriage must be filed in the competent courts in Cebu City, is void and unenforceable. The Court characterized such conditions on the back of passage tickets as "contracts of adhesion," which are drafted solely by one party (the corporation) and accepted by the other party (the passenger) on a "take it or leave it" basis. The Court emphasized that the validity and enforceability of such contracts of adhesion must be determined by the peculiar circumstances of each case and the nature of the conditions sought to be enforced. In this instance, the Court found that the condition was not just and fair due to the circumstances prevailing in the inter-island shipping industry, where there is a dearth of vessels, congested piers, and passengers often scramble for accommodations, making it difficult for them to examine tickets thoroughly. Furthermore, the condition was printed in fine letters, and passengers had no say in its preparation. The Court also ruled that Condition No. 14 subverts the public policy on the transfer of venue of proceedings, as it practically negates the action of claimants residing outside Cebu City by imposing significant expense and trouble, thus defeating the ends of justice. The Court noted that shipping companies, as franchise holders, possess a virtual monopoly, allowing them to dictate terms, and that the bulk of passengers come from low-income groups who have little choice but to avail of their services. Therefore, enforcing such a condition would be contrary to public policy, which aims to make courts accessible to all. On the alleged grave abuse of discretion: Since the Supreme Court found Condition No. 14 to be void and unenforceable, the respondent Judge's denial of the motion to dismiss, which was premised on this condition, was not an act of grave abuse of discretion. The Judge correctly proceeded with the case, allowing private respondents to pursue their claim in the CFI of Misamis Oriental, which was not inconvenient to the petitioner as it had branches in various ports of call.
Main Doctrine
A stipulation in a contract of carriage limiting the venue of actions to a specific city, printed on the back of a passage ticket, is void and unenforceable if it is in the nature of a contract of adhesion, is printed in fine letters, and subverts public policy by practically negating the action of claimants, especially considering the circumstances of the inter-island shipping industry and the disadvantaged position of passengers.