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G.R. No.

L-31150 July 22, 1975 (without their young wards who had enplaned much earlier), they were
issued KLM tickets for their entire trip. However, their coupon for the Aer
KONINKLIJKE LUCHTVAART MAATSHAPPIJ N.V., otherwise known as Lingus portion (Flight 861 for June 22, 1965) was marked "RQ" which meant
KLM ROYAL DUTCH AIRLINES, petitioner, "on request".
vs.
THE HONORABLE COURT OF APPEALS, CONSUELO T. MENDOZA and After sightseeing in American and European cities (they were in the
RUFINO T. MENDOZA, respondents. meantime joined by their two young companions), the respondents arrived in
Frankfurt, Germany. They went to a KLM office there and obtained a
Picazo, Agcaoili, Santayana, Reyes and Tayao for petitioner. confirmation from Aer Lingus of seat reservations on flight 861. After
meandering in London, Paris and Lisbon, the foursome finally took wing to
Bengzon, Villegas, Zarraga, Narciso and Cudala for respondents. Barcelona for their trip to Lourdes, France.

In the afternoon of June 22, 1965 the respondents with their wards went to
the Barcelona airport to take their plane which arrived at 4:00 o'clock. At the
airport, the manager of Aer Lingus directed the respondents to check in.
CASTRO, J.: They did so as instructed and were accepted for passage. However,
although their daughter and niece were allowed to take the plane, the
In this appeal by way of certiorari the Koninklijke Luchtvaart Maatschappij respondents were off-loaded on orders of the Aer Lingus manager who
N.V., otherwise known as the KLM Royal Dutch Airlines (hereinafter referred brusquely shoved them aside with the aid of a policeman and who shouted at
to as the KLM) assails the award of damages made by the Court of Appeals them, "Conos! Ignorantes Filipinos!"
in CA-G.R. 40620 in favor of the spouses Rufino T. Mendoza and Consuelo
T. Mendoza (hereinafter referred to as the respondents).1äwphï1.ñët Mrs. Mendoza later called up the manager of Aer Lingus and requested that
they provide her and her husband means to get to Lourdes, but the request
Sometime in March 1965 the respondents approached Tirso Reyes, was denied. A stranger, however, advised them to take a train, which the two
manager of a branch of the Philippine Travel Bureau, a travel agency, for did; despite the third class accommodations and lack of food service, they
consultations about a world tour which they were intending to make with their reached Lourdes the following morning. During the train trip the respondents
daughter and a niece. Reyes submitted to them, after preliminary had to suffer draft winds as they wore only minimum clothing, their luggage
discussions, a tentative itinerary which prescribed a trip of thirty-five legs; the having gone ahead with the Aer Lingus plane. They spent $50 for that train
respondents would fly on different airlines. Three segments of the trip, the trip; their plane passage was worth $43.35.
longest, would be via KLM. The respondents expressed a desire to visit
Lourdes, France, and discussed with Reyes two alternate routes, namely, On March 17, 1966 the respondents, referring to KLM as the principal of Aer
Paris to Lourdes and Barcelona to Lourdes. The respondents decided on the Lingus, filed a complaint for damages with the Court of First Instance of
Barcelona-Lourdes route with knowledge that only one airline, Aer Lingus, Manila arising from breach of contract of carriage and for the humiliating
serviced it. treatment received by them at the hands of the Aer Lingus manager in
Barcelona. After due hearing, the trial court awarded damages to the
The Philippine Travel Bureau to which Reyes was accredited was an agent respondents as follows: $43.35 or its peso equivalent as actual damages,
for international air carriers which are members of the International Air P10,000 as moral damages, P5,000 as exemplary damages, and P5,000 as
Transport Association, popularly known as the "IATA," of which both the KLM attorney's fees, and expenses of litigation.
and the Aer Lingus are members.
Both parties appealed to the Court of Appeals. The KLM sought complete
After about two weeks, the respondents approved the itinerary prepared for exoneration; the respondents prayed for an increase in the award of
them, and asked Reyes to make the necessary plane reservations. Reyes damages. In its decision of August 14, 1969 the Court of Appeals decreed as
went to the KLM, for which the respondents had expressed preference. The follows: "Appellant KLM is condemned to pay unto the plaintiffs the sum of
KLM thereafter secured seat reservations for the respondents and their two $43.35 as actual damages; P50,000 as moral damages; and P6,000 as
companions from the carriers which would ferry them throughout their trip, attorney's fees and costs."
with the exception of Aer Lingus. When the respondents left the Philippines
Hence, the present recourse by the KLM. (a) Article 30 of the Warsaw Convention has no application in the case at bar
which involves, not an accident or delay, but a willful misconduct on the part
The KLM prays for exculpation from damages on the strength of the following of the KLM's agent, the Aer Lingus. Under article 25 of the same Convention
particulars which were advanced to but rejected by the Court of Appeals: the following is prescribed:

(a) The air tickets issued to the respondents stipulate that carriage ART. 25. (1) The carrier shall not be entitled to avail himself
thereunder is subject to the "Convention for the Unification of Certain Rules of the provisions of this convention which exclude or limit his
Relating to International Transportation by Air," otherwise known as the liability, if the damage is caused by his willful misconduct or
"Warsaw Convention," to which the Philippine Government is a party by by such default on his part as, in accordance with the law of
adherence, and which pertinently provides.1 the court to which the case is submitted, is considered to be
equivalent to willful misconduct.3
ART. 30. (1) In the case of transportation to be performed by
various successive carriers and failing within the definition (2) Similarly, the carrier shall not be entitled to avail himself
set out in the third paragraph of Article I, each carrier who of the said provisions, if the damage is caused under the
accepts passengers, baggage, or goods shall be subject to same circumstances by any agent of the carrier acting within
the rules set out in the convention, and shall be deemed to the scope of his employment. (emphasis by respondents)
be one of the contracting parties to the contract of
transportation insofar as the contract deals with that part of (b) The condition in their tickets which purportedly excuse the KLM from
transportation which is performed under his supervision.2 liability appears in very small print, to read which, as found by the Court of
Appeals, one has practically to use a magnifying glass.
(2) In the case of transportation of this nature, the passenger
or his representative can take action only against the carrier (c) The first paragraph of the "Conditions of Contract" appearing identically
who performed the transportation during which the accident on the KLM tickets issued to them idubitably shows that their contract was
or the delay occured, save in the case where, by express one of continuous air transportation around the world:
agreement, the first carrier has assumed liability for the
whole journey. (emphasis supplied) 1 ... "carriage" includes the air carrier issuing this ticket and
all carriers that carry or undertake to carry the passenger or
(b) On the inside front cover of each ticket the following appears under the his baggage hereunder or perform any other service
heading "Conditions of Contract": incidental to such air carriage... Carriage to be performed
hereunder by several successive carrier is regarded as a
1 ... (a) Liability of carrier for damages shall be limited to single operation.
occurrences on its own line, except in the case of checked
baggage as to which the passenger also has a right of action (d) The contract of air transportation was exclusively between the
against the first or last carrier. A carrier issuing a ticket or respondents and the KLM, the latter merely endorsing its performance to
checking baggage for carriage over the lines of others does other carriers, like Aer Lingus, as its subcontractors or agents, as evidenced
so only as agent.. by the passage tickets themselves which on their face disclose that they are
KLM tickets. Moreover, the respondents dealt only with KLM through the
(c) All that the KLM did after the respondents completed their arrangements travel agency.
with the travel agency was to request for seat reservations among the
airlines called for by the itinerary submitted to the KLM and to issue tickets 1. The applicability insisted upon by the KLM of article 30 of the Warsaw
for the entire flight as a ticket-issuing agent. Convention cannot be sustained. That article presupposes the occurrence of
either an accident or a delay, neither of which took place at the Barcelona
The respondents rebut the foregoing arguments, thus: airport; what is here manifest, instead, is that the Aer Lingus, through its
manager there, refused to transport the respondents to their planned and
contracted destination.
2. The argument that the KLM should not be held accountable for the tortious responsible for the abuse, injury and embarrassment suffered by the
conduct of Aer Lingus because of the provision printed on the respondents' respondents at the hands of a supercilious boor of the Aer Lingus.
tickets expressly limiting the KLM's liability for damages only to occurrences
on its own lines is unacceptable. As noted by the Court of Appeals that ACCORDINGLY, the judgment of the Court of Appeals dated August 14,
condition was printed in letters so small that one would have to use a 1969 is affirmed, at KLM's cost.
magnifying glass to read the words. Under the circumstances, it would be
unfair and inequitable to charge the respondents with automatic knowledge
or notice of the said condition so as to preclude any doubt that it was fairly
and freely agreed upon by the respondents when they accepted the passage
tickets issued to them by the KLM. As the airline which issued those tickets
with the knowledge that the respondents would be flown on the various legs
of their journey by different air carriers, the KLM was chargeable with the
duty and responsibility of specifically informing the respondents of conditions
prescribed in their tickets or, in the very least, to ascertain that the
respondents read them before they accepted their passage tickets. A
thorough search of the record, however, inexplicably fails to show that any
effort was exerted by the KLM officials or employees to discharge in a proper
manner this responsibility to the respondents. Consequently, we hold that the
respondents cannot be bound by the provision in question by which KLM
unilaterally assumed the role of a mere ticket-issuing agent for other airlines
and limited its liability only to untoward occurrences on its own lines.

3. Moreover, as maintained by the respondents and the Court of Appeals, the


passage tickets of the respondents provide that the carriage to be performed
thereunder by several successive carriers "is to be regarded as a single
operation," which is diametrically incompatible with the theory of the KLM
that the respondents entered into a series of independent contracts with the
carriers which took them on the various segments of their trip. This position
of KLM we reject. The respondents dealt exclusively with the KLM which
issued them tickets for their entire trip and which in effect guaranteed to them
that they would have sure space in Aer Lingus flight 861. The respondents,
under that assurance of the internationally prestigious KLM, naturally had the
right to expect that their tickets would be honored by Aer Lingus to which, in
the legal sense, the KLM had indorsed and in effect guaranteed the
performance of its principal engagement to carry out the respondents'
scheduled itinerary previously and mutually agreed upon between the
parties.

4. The breach of that guarantee was aggravated by the discourteous and


highly arbitrary conduct of an official of the Aer Lingus which the KLM had
engaged to transport the respondents on the Barcelona-Lourdes segment of
their itinerary. It is but just and in full accord with the policy expressly
embodied in our civil law which enjoins courts to be more vigilant for the
protection of a contracting party who occupies an inferior position with
respect to the other contracting party, that the KLM should be held
G.R. No. 60673 May 19, 1992 Upon arriving in Manila on the same date, January 16, 1975, Rapadas
claimed and was given all his checked-in baggages except the attache case.
PAN AMERICAN WORLD AIRWAYS, INC., petitioner, Since Rapadas felt ill on his arrival, he sent his son, Jorge Rapadas to
vs. request for the search of the missing luggage. The petitioner exerted efforts
JOSE K. RAPADAS and THE COURT OF APPEALS, respondents. to locate the luggage through the Pan American World Airways-Manila
International Airport (PAN AM-MIA) Baggage Service.
Froilan P. Pobre for private respondent.
On January 30, 1975, the petitioner required the private respondent to put
the request in writing. The respondent filled in a Baggage Claim Blank Form.
GUTIERREZ, JR., J.: Thereafter, Rapadas personally followed up his claim. For several times, he
called up Mr. Panuelos, the head of the Baggage Section of PAN AM. He
This is a petition for review assailing the decision of the respondent Court of also sent letters demanding and reminding the petitioner of his claim.
Appeals which affirmed in toto the trial court decision on the liability of
petitioner Pan American World Airways for damages due to private Rapadas received a letter from the petitioner's counsel dated August 2, 1975
respondent. The trial court ruled that the petitioner can not avail of a offering to settle the claim for the sum of one hundred sixty dollars ($160.00)
limitation of liabilities for lost baggages of a passenger. The dispositive representing the petitioner's alleged limit of liability for loss or damage to a
portion of the trial court decision reads: passenger's personal property under the contract of carriage between
Rapadas and PAN AM. Refusing to accept this kind of settlement, Rapadas
WHEREFORE, in view of the foregoing considerations, judgment is hereby filed the instant action for damages on October 1, 1975. Rapadas alleged
rendered ordering defendant to pay plaintiff by way of actual damages the that PAN AM discriminated or singled him out in ordering that his luggage be
equivalent peso value of the amount of $5,228.90 and 100 paengs, nominal checked in. He also alleged that PAN AM neglected its duty in the handling
damages in the amount of P20,000.00 and attorney's fees of P5,000.00, and and safekeeping of his attache case from the point of embarkation in Guam
the costs of the suit. Defendant's counterclaim is dismissed. (Rollo, p. 13) to his destination in Manila. He placed the value of the lost attache case and
its contents at US$42,403.90. According to him, the loss resulted in his
On January 16, 1975, private respondent Jose K. Rapadas held Passenger failure to pay certain monetary obligations, failure to remit money sent
Ticket and Baggage Claim Check No. 026-394830084-5 for petitioner's Flight through him to relatives, inability to enjoy the fruits of his retirement and
No. 841 with the route from Guam to Manila. While standing in line to board vacation pay earned from working in Tonga Construction Company (he
the flight at the Guam airport, Rapadas was ordered by petitioner's handcarry retired in August 1974) and inability to return to Tonga to comply with then
control agent to check-in his Samsonite attache case. Rapadas protested existing contracts.
pointing to the fact that other co-passengers were permitted to handcarry
bulkier baggages. He stepped out of the line only to go back again at the end In its answer, petitioner-defendant PAN AM acknowledged responsibility for
of it to try if he can get through without having to register his attache case. the loss of the attache case but asserted that the claim was subject to the
However, the same man in charge of handcarry control did not fail to notice "Notice of Baggage Liability Limitations" allegedly attached to and forming
him and ordered him again to register his baggage. For fear that he would part of the passenger ticket. The petitioner argued that the same notice was
miss the plane if he insisted and argued on personally taking the valise with also conspicuously posted in its offices for the guidance of the passengers.
him, he acceded to checking it in. He then gave his attache case to his
brother who happened to be around and who checked it in for him, but At the trial, private respondent showed proof of his retirement award and
without declaring its contents or the value of its contents. He was given a vacation pay amounting to $4,750.00. He claimed that the attache case also
Baggage Claim Tag No. P-749-713. (Exhibit "B" for the plaintiff-respondent) contained other money consisting of $1,400 allegedly given to him by his
son, Jaime, as a round trip fare of his (plaintiff-respondent) wife, but which
amount was later found to be actually intended by Jaime as payment for
arrears of a lot purchased from Tropical Homes, Inc.; $3,000 allegedly given The private respondent, on the other hand, insists that he is entitled to as
by his brothers for payment of taxes and for constructing improvements on much damages as those awarded by the court and affirmed by the
the Rapadas estates; and $300.00 birthday present of the spouses Mr. and respondent appellate court.
Mrs. Ruben Canonizado to plaintiff-respondent's wife. He also claimed
having kept several items in the attache case, namely –– (1) contracts and After a review of the various arguments of the opposing parties as well as the
records of employment, letters of commendation, testimonials and records of the case, the Court finds sufficient basis under the particular facts
newspaper clippings on his achievement for 13 years in Tonga, New Zealand of this case for the availment of the liability limitations under the Warsaw
and Australia, drafts of manuscripts, photographs and drivers license alleged Convention.
to be worth $20,000.00; a Polaroid camera, films, calculator, and other
There is no dispute, and the courts below admit, that there was such a Notice
personal items worth $403.90; memorabilia, autographs personally acquired
appearing on page two (2) of the airline ticket stating that the Warsaw
from Charles Lindberg, Lawrence Rockefeller and Ryoichi Sasakawa, a
Convention governs in case of death or injury to a passenger or of loss,
commemorative palladium coin worth Tongan 100 paengs and unused
damage or destruction to a passenger's luggage.
Tongan stamps, all totalling $7,500.00; and a plan worth $5,000.00 drawn by
his son Jaime, who is an architect, for the construction of a residential house The Notice states:
and a 6-story commercial building. Rapadas claimed the amount of the
attache case itself to be $25.50. (See Decision in Civil Case No. 99564 in If the passenger's journey involves an ultimate destination or stop in a
Amended Record on Appeal, pp. 61-85) country other than the country of departure the Warsaw Convention may be
applicable and the Convention governs and in most cases limits the liability
The lower court ruled in favor of complainant Rapadas after finding no of carriers for death or personal injury and in respect of loss of or damage to
stipulation giving notice to the baggage liability limitation. The court rejected baggage. See also notice headed "Advice to International Passengers on
the claim of defendant PANAM that its liability under the terms of the Limitation of Liability." (The latter notice refers to limited liability for death or
passenger ticket is only up to $160.00. However, it scrutinized all the claims personal injury to passengers with proven damages not exceeding US
of the plaintiff. It discredited insufficient evidence to show discriminatory acts $75,000 per passenger; Exhibit "K" for plaintiff respondent, Table of Exhibits,
or bad faith on the part of petitioner PANAM. p. 19)
On appeal, the Court of Appeals affirmed the trial court decision. Hence, this Furthermore, paragraph 2 of the "Conditions of Contract" also appearing on
petition. page 2 of the ticket states:
The main issue raised in the case at bar is whether or not a passenger is 2. Carriage hereunder is subject to the rules and limitations relating to liability
bound by the terms of a passenger ticket declaring that the limitations of established by the Warsaw Convention unless such carriage is not
liability set forth in the Warsaw Convention (October 12, 1929; 137 League of "international carriage" as defined by that Convention. (Exhibit "K", supra)
Nations Treaty Series II; See Proclamation No. 201 [1955], 51 O.G. 4933
[October, 1955]) as amended by the Hague Protocol (September 28, 1955; We note that plaintiff-respondent Rapadas presented as proof of the
478 UNTS 373; III PTS 515), shall apply in case of loss, damage or Passenger Ticket and Baggage Check No. 026-394830084-5 a xerox copy of
destruction to a registered luggage of a passenger. its page 2 which contains the Notice and Conditions of Contract, and also
page 3 which recites the Advice to International Passengers on Limitation of
The petitioner maintains that its liability for the lost baggage of respondent Liability. He also presented two xerox copies of Flight Coupon No. 3 of the
Rapadas was limited to $160.00 since the latter did not declare a higher same passenger ticket showing the fares paid for the trips Honolulu to Guam,
value for his baggage and did not pay the corresponding additional charges. Guam to Manila, and Manila to Honolulu to prove his obligations which
remained unpaid because of the unexpected loss of money allegedly placed
inside the missing attache case. Rapadas explained during the trial that the
same passenger ticket was returned by him to one Mr. S.L. Faupula of the (2) For the purposes of this Convention, the expression "international
Union Steam Ship Company of New Zealand, Ltd., Tonga who demanded carriage" means any carriage in which, according to the agreement between
the payment of the fares or otherwise, the return of the unused plane tickets the parties, the place of departure and the place of destination, whether or
(including the subject Passenger Ticket & Baggage Check No. 026- not there be a breach in the carriage or a transhipment, are situated either
394830084-5). The issuance of these tickets was facilitated by Mr. Faupula within the territories of two High Contracting Parties or within the territory of a
on credit. single High Contracting Party if there is an agreed stopping place within the
territory of another State, even if that State is not a High Contracting Party.
Meanwhile, the petitioner offered as evidence Exhibit "1" also showing page Carriage between two points within the territory of a single High Contracting
2 of the passenger ticket to prove the notice and the conditions of the Party without an agreed stopping place within the territory of another State is
contract of carriage. It likewise offered Exhibit "1-A", a xerox copy of a not international carriage for the purposes of this Convention. ("High
"Notice of Baggage Liability Limitations" which the trial court disregarded and Contracting Party" refers to a state which has ratified or adhered to the
held to be non-existent. The same Exhibit "1-A" contained the following Convention, or which has not effectively denounced the Convention [Article
stipulations: 40A(l)]).

NOTICE OF BAGGAGE LIABILITY LIMITATIONS –– Liability for loss, delay, Nowhere in the Warsaw Convention, as amended, is such a detailed notice
or damage to baggage is limited as follows unless a higher value is declared of baggage liability limitations required. Nevertheless, it should become a
in advance and additional charges are paid: (1) for most international travel common, safe and practical custom among air carriers to indicate
(including domestic portions of international journeys) to approximately $8.16 beforehand the precise sums equivalent to those fixed by Article 22 (2) of the
per pound ($18.00 per kilo; now $20.00 per Exhibit "13") for checked Convention.
baggage and $360 (now $400 per Exhibit "13") per passenger for unchecked
baggage; (2) for travel wholly between U.S. points, to $500 per passenger on The Convention governs the availment of the liability limitations where the
most carriers (a few have lower limits). Excess valuation may not be declared baggage check is combined with or incorporated in the passenger ticket
on certain types of valuable articles. Carriers assume no liability for fragile or which complies with the provisions of Article 3, par. l (c). (Article 4, par. 2) In
perishable articles. Further information may be obtained from the carrier. the case at bar, the baggage check is combined with the passenger ticket in
(Table of Exhibits, p. 45) one document of carriage. The passenger ticket complies with Article 3, par. l
(c) which provides:
The original of the Passenger Ticket and Baggage Check No. 026-
394830084-5 itself was not presented as evidence as it was among those (l) In respect of the carriage of passengers a ticket shall be delivered
returned to Mr. Faupula. Thus, apart from the evidence offered by the containing:
defendant airline, the lower court had no other basis for determining whether
or not there was actually a stipulation on the specific amounts the petitioner (a) . . .
had expressed itself to be liable for loss of baggage.
(b) . . .
Although the trial court rejected the evidence of the defendant-petitioner of a
(c) a notice to the effect that, if the passenger's journey involves an ultimate
stipulation particularly specifying what amounts it had bound itself to pay for
destination or stop in a country other than the country of departure, the
loss of luggage, the Notice and paragraph 2 of the "Conditions of Contract"
Warsaw Convention may be applicable and that the Convention governs and
should be sufficient notice showing the applicability of the Warsaw
in most cases limits the liability of carriers for death or personal injury and in
limitations.
respect of loss of or damage to baggage.
The Warsaw Convention, as amended, specifically provides that it is
We have held in the case of Ong Yiu v. Court of Appeals, supra, and
applicable to international carriage which it defines in Article 1, par. 2 as
reiterated in a similar case where herein petitioner was also sued for
follows:
damages, Pan American World Airways v. Intermediate Appellate Court (164 reasonably careful person also dictates that cash and jewelry should be
SCRA 268 [1988]) that: removed from checked-in-luggage and placed in one's pockets or in a
handcarried Manila-paper or plastic envelope.
It (plane ticket) is what is known as a contract of "adhesion", in regards which
it has been said that contracts of adhesion wherein one party imposes a The alleged lack of enough time for him to make a declaration of a higher
ready made form of contract on the other, as the plane ticket in the case at value and to pay the corresponding supplementary charges cannot justify his
bar, are contracts not entirely prohibited. The one who adheres to the failure to comply with the requirement that will exclude the application of
contract is in reality free to reject it entirely; if he adheres, he gives his limited liability. Had he not wavered in his decision to register his luggage, he
consent. (Tolentino, Civil Code, Vol. IV, 1962 ed., p. 462, citing Mr. Justice could have had enough time to disclose the true worth of the articles in it and
J.B.L. Reyes, Lawyer's Journal, January 31, 1951, p. 49) And as held in to pay the extra charges or remove them from the checked-in-luggage.
Randolph v. American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Moreover, an airplane will not depart meantime that its own employee is
Rosenchein v. Trans World Airlines, Inc., 349 S.W. 2d 483, "a contract asking a passenger to comply with a safety regulation.
limiting liability upon an agreed valuation does not offend against the policy
of the law forbidding one from contracting against his own negligence. Passengers are also allowed one handcarried bag each provided it conforms
to certain prescribed dimensions. If Mr. Rapadas was not allowed to
Considering, therefore, that petitioner had failed to declare a higher value for handcarry the lost attache case, it can only mean that he was carrying more
his baggage, he cannot be permitted a recovery in excess of P100.00 . . . (91 than the allowable weight for all his luggages or more than the allowable
SCRA 223 at page 231) number of handcarried items or more than the prescribed dimensions for the
bag or valise. The evidence on any arbitrary behavior of a Pan Am employee
We hasten to add that while contracts of adhesion are not entirely prohibited, or inexcusable negligence on the part of the carrier is not clear from the
neither is a blind reliance on them encouraged. In the face of facts and petition. Absent such proof, we cannot hold the carrier liable because of
circumstances showing they should be ignored because of their basically one arbitrariness, discrimination, or mistreatment.
sided nature, the Court does not hesitate to rule out blind adherence to their
terms. (See Sweet Lines, Inc. v. Teves, 83 SCRA 361, 368-369[1978]) We are not by any means suggesting that passengers are always bound to
the stipulated amounts printed on a ticket, found in a contract of adhesion, or
The arguments of the petitioner do not belie the fact that it was indeed printed elsewhere but referred to in handouts or forms. We simply recognize
accountable for the loss of the attache case. What the petitioner is concerned that the reasons behind stipulations on liability limitations arise from the
about is whether or not the notice, which it did not fail to state in the plane difficulty, if not impossibility, of establishing with a clear preponderance of
ticket and which it deemed to have been read and accepted by the private evidence the contents of a lost valise or suitcase. Unless the contents are
respondent will be considered by this Court as adequate under the declared, it will always be the word of a passenger against that of the airline.
circumstances of this case. As earlier stated, the Court finds the provisions in If the loss of life or property is caused by the gross negligence or arbitrary
the plane ticket sufficient to govern the limitations of liabilities of the airline for acts of the airline or the contents of the lost luggage are proved by
loss of luggage. The passenger, upon contracting with the airline and satisfactory evidence other than the self-serving declarations of one party,
receiving the plane ticket, was expected to be vigilant insofar as his luggage the Court will not hesitate to disregard the fine print in a contract of adhesion.
is concerned. If the passenger fails to adduce evidence to overcome the (See Sweet Lines Inc. v. Teves, supra) Otherwise, we are constrained to rule
stipulations, he cannot avoid the application of the liability limitations. that we have to enforce the contract as it is the only reasonable basis to
arrive at a just award.
The facts show that the private respondent actually refused to register the
attache case and chose to take it with him despite having been ordered by We note that the finding on the amount lost is more of a probability than a
the PANAM agent to check it in. In attempting to avoid registering the proved conclusion.
luggage by going back to the line, private respondent manifested a disregard
of airline rules on allowable handcarried baggages. Prudence of a The trial court stated:
xxx xxx xxx and other expenses of litigation incurred by the plaintiff." We, however, raise
the award to P10,000.00 considering the resort to the Court of Appeals and
We come now to the actual loss of $4,750.00 which the plaintiff claims was this Court.
the amount of his retirement award and vacation pay. According to the
plaintiff, this was in cash of $100 denominations and was placed in an WHEREFORE, the petition is hereby GRANTED and the decision of the
envelope separate from the other money he was carrying. Plaintiff presented respondent Court of Appeals is REVERSED and SET ASIDE. The petitioner
the memorandum award, Exhibit T-1 and the vouchers of payment, Exhibits is ordered to pay the private respondent damages in the amount of
T-2 and T-3. Under the circumstances, recited by the plaintiff in which the US$400.00 or its equivalent in Philippine Currency at the time of actual
loss occurred, the Court believes that plaintiff could really have placed this payment, P10,000.00 in attorney's fees, and costs of the suit.
amount in the attache case considering that he was originally handcarrying
said attache case and the same was looked, and he did not expect that he SO ORDERED.
would be required to check it in. . . . (Amended Record on Appeal, p. 75;
Emphasis ours)

The above conclusion of the trial court does not arise from the facts. That the
attache case was originally handcarried does not beg the conclusion that the
amount of $4,750.00 in cash could have been placed inside. It may be noted
that out of a claim for US$42,403.90 as the amount lost, the trial court found
for only US$5,228.90 and 100 paengs. The court had doubts as to the total
claim.

The lost luggage was declared as weighing around 18 pounds or


approximately 8 kilograms. At $20.00 per kilogram, the petitioner offered to
pay $160.00 as a higher value was not declared in advance and additional
charges were not paid. We note, however, that an amount of $400.00 per
passenger is allowed for unchecked luggage. Since the checking-in was
against the will of the respondent, we treat the lost bag as partaking of
involuntarily and hurriedly checked-in luggage and continuing its earlier
status as unchecked luggage. The fair liability under the petitioner's own
printed terms is $400.00. Since the trial court ruled out discriminatory acts or
bad faith on the part of Pan Am or other reasons warranting damages, there
is no factual basis for the grant of P20,000.00 damages.

As to the question of whether or not private respondent should be paid


attorney's fees, the Court sustains the finding of the trial court and the
respondent appellate court that it is just and equitable for the private
respondent to recover expenses for litigation in the amount of P5,000.00.
Article 22(4) of the Warsaw Convention, as amended does not preclude an
award of attorney's fees. That provision states that the limits of liability
prescribed in the instrument "shall not prevent the court from awarding, in
accordance with its own law, in addition, the whole or part of the court costs
G.R. No. 103338 January 4, 1994 undertakes, within such ten-year period, to register said parcel of land under
the TORRENS SYSTEM and all expenses appurtenant thereto shall be for
FEDERICO SERRA, petitioner, his sole account.
vs.
THE HON. COURT OF APPEALS AND RIZAL COMMERCIAL BANKING If, for any reason, said parcel of land is not registered under the TORRENS
CORPORATION, respondents. SYSTEM within the aforementioned ten-year period, the LESSEE shall have
the right, upon termination of the lease to be paid by the LESSOR the market
Andres R. Amante, Jr. for petitioner. value of the building and improvements constructed on said parcel of land.
R.C. Domingo, Jr. & Associates for private respondent. The LESSEE is hereby appointed attorney-in-fact for the LESSOR to register
said parcel of land under the TORRENS SYSTEM in case the LESSOR, for
any reason, fails to comply with his obligation to effect said registration within
NOCON, J.: reasonable time after the signing of this Agreement, and all expenses
appurtenant to such registration shall be charged by the LESSEE against the
A promise to buy and sell a determinate thing for a price certain is rentals due to the LESSOR.
reciprocally demandable. An accepted unilateral promise to buy and sell a
determinate thing for a price certain is binding upon the promisor if the 2. During the period of the lease, the LESSEE covenants to pay the
promise is supported by a consideration distinct from the price. (Article 1479, LESSOR, at the latter's residence, a monthly rental of SEVEN HUNDRED
New Civil Code) The first is the mutual promise and each has the right to PESOS (P700.00), Philippine Currency, payable in advance on or before the
demand from the other the fulfillment of the obligation. While the second is fifth (5th) day of every calendar month, provided that the rentals for the first
merely an offer of one to another, which if accepted, would create an four (4) months shall be paid by the LESSEE in advance upon the signing of
obligation to the offeror to make good his promise, provided the acceptance this Contract.
is supported by a consideration distinct from the price.
3. The LESSEE is hereby authorized to construct as its sole expense a
Disputed in the present case is the efficacy of a "Contract of Lease with building and such other improvements on said parcel of land, which it may
Option to Buy", entered into between petitioner Federico Serra and private need in pursuance of its business and/or operations; provided, that if for any
respondent Rizal Commercial Banking Corporation. (RCBC). reason the LESSEE shall fail to exercise its option mentioned in paragraph
(1) above in case the parcel of land is registered under the TORRENS
Petitioner is the owner of a 374 square meter parcel of land located at SYSTEM within the ten-year period mentioned therein, said building and/or
Quezon St., Masbate, Masbate. Sometime in 1975, respondent bank, in its improvements, shall become the property of the LESSOR after the expiration
desire to put up a branch in Masbate, Masbate, negotiated with petitioner for of the 25-year lease period without the right of reimbursement on the part of
the purchase of the then unregistered property. On May 20, 1975, a contract the LESSEE. The authority herein granted does not, however, extend to the
of LEASE WITH OPTION TO BUY was instead forged by the parties, the making or allowing any unlawful, improper or offensive used of the leased
pertinent portion of which reads: premises, or any use thereof, other than banking and office purposes. The
maintenance and upkeep of such building, structure and improvements shall
1. The LESSOR leases unto the LESSEE, an the LESSEE hereby accepts in likewise be for the sole account of the LESSEE. 1
lease, the parcel of land described in the first WHEREAS clause, to have and
to hold the same for a period of twenty-five (25) years commencing from The foregoing agreement was subscribed before Notary Public Romeo F.
June 1, 1975 to June 1, 2000. The LESSEE, however, shall have the option Natividad.
to purchase said parcel of land within a period of ten (10) years from the date
of the signing of this Contract at a price not greater than TWO HUNDRED Pursuant to said contract, a building and other improvements were
TEN PESOS (P210.00) per square meter. For this purpose, the LESSOR constructed on the land which housed the branch office of RCBC in Masbate,
Masbate. Within three years from the signing of the contract, petitioner and as counterclaim petitioner alleged that:
complied with his part of the agreement by having the property registered
and 1. The rental of P700.00 has become unrealistic and unreasonable, that
placed under the TORRENS SYSTEM, for which Original Certificate of Title justice and equity will require its adjustment.
No. 0-232 was issued by the Register of Deeds of the Province of Masbate.
2. By the institution of the complaint he suffered moral damages which may
Petitioner alleges that as soon as he had the property registered, he kept on be assessed at P100,000.00 and award of attorney's fee of P25,000.00 and
pursuing the manager of the branch to effect the sale of the lot as per their exemplary damages at P100,000.00.6
agreement. It was not until September 4, 1984, however, when the
Initially, after trial on the merits, the court dismissed the complaint. Although
respondent bank decided to exercise its option and informed petitioner,
it found the contract to be valid, the court nonetheless ruled that the option to
through a letter, 2 of its intention to buy the property at the agreed price of not
buy in unenforceable because it lacked a consideration distinct from the price
greater than P210.00 per square meter or a total of P78,430.00. But much to
and RCBC did not exercise its option within reasonable time. The prayer for
the surprise of the respondent, petitioner replied that he is no longer selling
readjustment of rental was denied, as well as that for moral and exemplary
the property.3
damages.7
Hence, on March 14, 1985, a complaint for specific performance and
Nevertheless, upon motion for reconsideration of respondent, the court in the
damages were filed by respondent against petitioner. In the complaint,
order of January 9, 1989, reversed itself, the dispositive portion reads:
respondent alleged that during the negotiations it made clear to petitioner
that it intends to stay permanently on property once its branch office is WHEREFORE, the Court reconsiders its decision dated June 6, 1988, and
opened unless the exigencies of the business requires otherwise. Aside from hereby renders judgment as follows:
its prayer for specific performance, it likewise asked for an award of
P50,000.00 for attorney's fees P100,000.00 as exemplary damages and the 1. The defendant is hereby ordered to execute and deliver the proper deed of
cost of the suit.4 sale in favor of plaintiff selling, transferring and
conveying the property covered by and described in the Original Certificate of
A special and affirmative defenses, petitioner contended: Title 0-232 of the Registry of Deeds of Masbate for the sum of Seventy Eight
Thousand Five Hundred Forty Pesos (P78,540,00), Philippine Currency;
1. That the contract having been prepared and drawn by RCBC, it took
undue advantage on him when it set in lopsided terms. 2. Defendant is ordered to pay plaintiff the sum of Five Thousand
(P5,000.00) Pesos as attorney's fees;
2. That the option was not supported by any consideration distinct from the
price and hence not binding upon him. 3. The counter claim of defendant is hereby dismissed; and
3. That as a condition for the validity and/or efficacy of the option, it should 4. Defendants shall pay the costs of suit.8
have been exercised within the reasonable time after the registration of the
land under the Torrens System; that its delayed action on the option have In a decision promulgated on September 19, 1991,9 the Court of Appeals
forfeited whatever its claim to the same. affirmed the findings of the trial court that:

4. That extraordinary inflation supervened resulting in the unusual decrease 1. The contract is valid and that the parties perfectly understood the contents
in the purchasing power of the currency that could not reasonably be forseen thereof;
or was manifestly beyond the contemplation of the parties at the time of the
establishment of the obligation, thus, rendering the terms of the contract 2. The option is supported by a distinct and separate consideration as
unenforceable, inequitable and to the undue enrichment of RCBC. 5 embodied in the agreement;
3. There is no basis in granting an adjustment in rental. Article 1324 of the Civil Code provides that when an offeror has allowed the
offeree a certain period to accept, the offer maybe withdrawn at anytime
Assailing the judgment of the appellate court, petitioner would like us to before acceptance by communicating such withdrawal, except when the
consider mainly the following: option is founded upon consideration, as something paid or promised. On the
other hand, Article 1479 of the Code provides that an accepted unilateral
1. The disputed contract is a contract of adhesion.
promise to buy and sell a determinate thing for a price certain is binding upon
2. There was no consideration to support the option, distinct from the price, the promisor if the promise is supported by a consideration distinct from the
hence the option cannot be exercised. price.

3. Respondent court gravely abused its discretion in not granting currency In a unilateral promise to sell, where the debtor fails to withdraw the promise
adjustment on the already eroded value of the stipulated rentals for twenty- before the acceptance by the creditor, the transaction becomes a bilateral
five years. contract to sell and to buy, because upon acceptance by the creditor of the
offer to sell by the debtor, there is already a meeting of the minds of the
The petition is devoid of merit. parties as to the thing which is determinate and the price which is
certain. 14 In which case, the parties may then reciprocally demand
There is no dispute that the contract is valid and existing between the parties, performance.
as found by both the trial court and the appellate court. Neither do we find the
terms of the contract unfairly lopsided to have it ignored. Jurisprudence has taught us that an optional contract is a privilege existing
only in one party — the buyer. For a separate consideration paid, he is given
A contract of adhesion is one wherein a party, usually a corporation, the right to decide to purchase or not, a certain merchandise or property, at
prepares the stipulations in the contract, while the other party merely affixes any time within the agreed period, at a fixed price. This being his prerogative,
his signature or his "adhesion" thereto. These types of contracts are as he may not be compelled to exercise the option to buy before the time
binding as ordinary contracts. Because in reality, the party who adheres to expires. 15
the contract is free to reject it entirely. Although, this Court will not hesitate to
rule out blind adherence to terms where facts and circumstances will show On the other hand, what may be regarded as a consideration separate from
that it is basically one-sided. 10 the price is discussed in the case of Vda. de Quirino v. Palarca 16 wherein the
facts are almost on all fours with the case at bar. The said case also involved
We do not find the situation in the present case to be inequitable. Petitioner a lease contract with option to buy where we had occasion to say that "the
is a highly educated man, who, at the time of the trial was already a CPA- consideration for the lessor's obligation to sell the leased premises to the
Lawyer, and when he entered into the contract, was already a CPA, holding lessee, should he choose to exercise his option to purchase the same, is the
a respectable position with the Metropolitan Manila Commission. It is evident obligation of the lessee to sell to the lessor the building and/or improvements
that a man of his stature should have been more cautious in transactions he constructed and/or made by the former, if he fails to exercise his option to
enters into, particularly where it concerns valuable properties. He is amply buy leased premises." 17
equipped to drive a hard bargain if he would be so minded to.
In the present case, the consideration is even more onerous on the part of
Petitioner contends that the doctrines laid down in the cases of the lessee since it entails transferring of the building and/or improvements on
Atkins Kroll v. Cua Hian Tek, 11 Sanchez v. Rigos, 12 and Vda. de Quirino the property to petitioner, should respondent bank fail to exercise its option
v. Palarca 13 were misapplied in the present case, because 1) the option within the period stipulated. 18
given to the respondent bank was not supported by a consideration distinct
from the price; and 2) that the stipulated price of "not greater than P210.00 The bugging question then is whether the price "not greater than TWO
per square meter" is not certain or definite. HUNDRED PESOS" is certain or definite. A price is considered certain if it is
so with reference to another thing certain or when the determination thereof
is left to the judgment of a specified person or persons. 19 And generally, of the Philippine currency, or fluctuation in the value of pesos manifestly
gross inadequacy of price does not affect a contract of sale. 20 beyond the contemplation of the parties at the time of the establishment of
the obligation. 23
Contracts are to be construed according to the sense and meaning of the
terms which the parties themselves have used. In the present dispute, there Premises considered, we find that the contract of "LEASE WITH OPTION TO
is evidence to show that the intention of the parties is to peg the price at BUY" between petitioner and respondent bank is valid, effective and
P210 per square meter. This was confirmed by petitioner himself in his enforceable, the price being certain and that there was consideration distinct
testimony, as follows: from the price to support the option given to the lessee.

Q. Will you please tell this Court what was the offer? WHEREFORE, this petition is hereby DISMISSED, and the decision of the
appellate court is hereby AFFIRMED.
A. It was an offer to buy the property that I have in Quezon City (sic).
SO ORDERED.
Q. And did they give you a specific amount?
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.
xxx xxx xxx

A. Well, there was an offer to buy the property at P210 per square meters
(sic).

Q. And that was in what year?

A . 1975, sir.

Q. And did you accept the offer?

A. Yes, sir. 21

Moreover, by his subsequent acts of having the land titled under the Torrens
System, and in pursuing the bank manager to effect the sale immediately,
means that he understood perfectly the terms of the contract. He even had
the same property mortgaged to the respondent bank sometime in 1979,
without the slightest hint of wanting to abandon his offer to sell the property
at the agreed price of P210 per square meter. 22

Finally, we agree with the courts a quo that there is no basis, legal or factual,
in adjusting the amount of the rent. The contract is the law between the
parties and if there is indeed reason to adjust the rent, the parties could by
themselves negotiate for the amendment of the contract. Neither could we
consider the decline of the purchasing power of the Philippine peso from
1983 to the time of the commencement of the present case in 1985, to be so
great as to result in an extraordinary inflation. Extraordinary inflation exists
when there in an unimaginable increase or decrease of the purchasing power
G.R. No. L-37750 May 19, 1978 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
SWEET LINES, INC., petitioner, proper since venue may be validly waived, citing cases; 10 that is an effective waiver of venue, valid and
vs. binding as such, since it is printed in bold and capital letters and not in fine print and merely assigns the place
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO where the action sing from the contract is institution likewise citing cases; 11 and that condition No. 14 is
TANDOG, JR., and ROGELIO TIRO, respondents. 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
Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for petitioner.
established jurisprudence governing the case; and that he acted without or in excess of his jurisdiction in is the
orders complained of. 12
Leovigildo Vallar for private respondents.
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
SANTOS, J.: 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
This is an original action for Prohibition with Pre Injunction filed October 3, 1973 to restrain respondent Judge from one province to another, such arrangement requires the "written agreement of the parties", not to be
from proceeding further with Civil Case No. 4091, entitled Leovigildo D. Tandog, Jr. and Rogelio Tiro v. Sweet imposed unilaterally; and that assuming that the condition is valid, it is not exclusive and does not, therefore,
Lines, Inc." after he denied petitioner's Motion to Dismiss the complaint, and the Motion for Reconsideration of exclude the filing of the action in Misamis Oriental, 14
said order. 1

There is no question that there was a valid contract of carriage entered into by petitioner and private
Briefly, the facts of record follow. Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, a contractor respondents and that the passage tickets, upon which the latter based their complaint, are the best evidence
by professions, bought tickets Nos. 0011736 and 011737 for Voyage 90 on December 31, 1971 at the branch thereof. All the essential elements of a valid contract, i.e., consent, cause or consideration and object, are
office of petitioner, a shipping company transporting inter-island passengers and cargoes, at Cagayan de Oro present. As held in Peralta de Guerrero, et al. v. Madrigal Shipping Co., Inc., 15
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". It is a matter of common knowledge that whenever a passenger boards a ship for
Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section transportation from one place to another he is issued a ticket by the shipper which has
to avoid inspection of the officers of the Philippine Coastguard." Private respondents alleged that they were, all the elements of a written contract, Namely: (1) the consent of the contracting parties
during the trip," "exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn manifested by the fact that the passenger boards the ship and the shipper consents or
grits," and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were accepts him in the ship for transportation; (2) cause or consideration which is the fare
constrained to pay for other tickets. In view thereof, private respondents sued petitioner for damages and for paid by the passenger as stated in the ticket; (3) object, which is the transportation of
breach of contract of carriage in the alleged sum of P10,000.00 before respondents Court of First Instance of the passenger from the place of departure to the place of destination which are stated
Misamis Oriental. 2 in the ticket.

Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was premised on the It should be borne in mind, however, that with respect to the fourteen (14) conditions — one of which is
condition printed at the back of the tickets, i.e., Condition No. 14, which reads: "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
14. It is hereby agreed and understood that any and all actions arising out of the sought to be enforced. For, "(W)hile generally, stipulations in a contract come about after deliberate drafting by
conditions and provisions of this ticket, irrespective of where it is issued, shall be filed the parties thereto, ... there are certain contracts almost all the provisions of which have been drafted only by
in the competent courts in the City of Cebu. 3 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
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 By the peculiar circumstances under which contracts of adhesion are entered into — namely, that it is drafted
or in error of his jurisdicton or in gross abuse of discretion. 6 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
In Our resolution of November 20, 1973, We restrained respondent Judge from proceeding further with the
enforceability have been formulated in order to that justice and fan play characterize the relationship of the
case and required respondent to comment. 7 On January 18, 1974, We gave due course to the petition and
contracting parties. Thus, this Court speaking through Justice J.B.L. Reyes in Qua Chee Gan v. Law Union
required respondent to answer. 8 Thereafter, the parties submitted their respesctive memoranda in support of
and Rock Insurance Co., 17 and later through Justice Fernando in Fieldman Insurance v. Vargas, 18 held —
their respective contentions. 9

The courts cannot ignore that nowadays, monopolies, cartels and concentration of
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 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
private respondents, which limits the venue of actions arising from the contract of carriage to theCourt of First
participation in the 'agreement' being reduced to the alternative 'to take it or leave it,'
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 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
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? (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 offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the
with a view to protecting the weaker party from abuses and imposition, and prevent filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvenience
their becoming traps for the unwary. to, much less prejudice, petitioner.

To the same effect and import, and, in recognition of the character of contracts of this kind, the protection of Public policy is ". . . that principle of the law which holds that no subject or citizen can lawfully do that which
the disadvantaged is expressly enjoined by the New Civil Code — 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
In all contractual property or other relations, when one of the parties is at a passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said
disadvantage on account of his moral dependence, ignorance indigence, mental persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared
weakness, tender age and other handicap, the courts must be vigilant for his void and unenforceable, as contrary to public policy — to make the courts accessible to all who may have
protection. 19 need of their services.

Considered in the light Of the foregoing norms and in the context Of circumstances Prevailing in the inter- WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining order issued on November 20,
island ship. ping industry in the country today, We find and hold that Condition No. 14 printed at the back of 1973, is hereby LIFTED and SET ASIDE. Costs against petitioner.
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 Fernando (Chairman), Aquino, Concepcion, Jr., JJ., concur.
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. Antonio, J., reserves his vote.

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 Separate Opinions
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 BARREDO, J., concurring:
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 I concur in the dismissal of the instant petition.
of such conditions m fine print, as in this case. 20

Only a few days ago, in Hoechst Philippines, Inc. vs. Francisco Torres, et al., G. R. No. L-44351, promulgated
Again, it should be noted that Condition No. 14 was prepared solely at the ms of the petitioner, respondents May 18, 1978, We made it clear that although generally, agreements regarding change of venue are
had no say in its preparation. Neither did the latter have the opportunity to take the into account prior to the enforceable, there may be instances where for equitable considerations and in the better interest of justice, a
purpose chase of their tickets. For, unlike the small print provisions of contracts — the common example of court may justify the laying of, the venue in the place fixed by the rules instead of following written stipulation
contracts of adherence — which are entered into by the insured in his awareness of said conditions, since the of the parties.
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.
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
It should also be stressed that slapping companies are franchise holders of certificates of public convenience stipulation regarding change of the venue fixed by law entails is such that nothing less than mutually
and therefore, posses a virtual monopoly over the business of transporting passengers between the ports conscious agreement as to it must be what the rule means. In the instant case, as well pointed out in the main
covered by their franchise. This being so, shipping companies, like petitioner, engaged in inter-island shipping, opinion, the ticket issued to private respondents by petitioner constitutes at best a "contract of adhesion". In
have a virtual monopoly of the business of transporting passengers and may thus dictate their terms of other words, it is not that kind of a contract where the parties sit down to deliberate, discuss and agree
passage, leaving passengers with no choice but to buy their tickets and avail of their vessels and facilities. specifically on all its terms, but rather, one which respondents took no part at all in preparing, since it was just
Finally, judicial notice may be taken of the fact that the bulk of those who board these inter-island vested come imposed upon them when they paid for the fare for the freight they wanted to ship. It is common knowledge
from the low-income groups and are less literate, and who have little or no choice but to avail of petitioner's that individuals who avail of common carriers hardly read the fine prints on such tickets to note anything more
vessels. than the price thereof and the destination designated therein.

2. Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue may be Under these circumstances, it would seem that, since this case is already in respondent court and there is no
changed or transferred from one province to another by agreement of the parties in writing t to Rule 4, Section showing that, with its more or less known resources as owner of several inter-island vessels plying between
3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the the different ports of the Philippines for sometime already, petitioner would be greatly inconvenienced by
claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of submitting to the jurisdiction of said respondent court, it is best to allow the proceedings therein to continue. I
venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote 21 the ends of cannot conceive of any juridical injury such a step can cause to anyone concerned. I vote to dismiss the
justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to petition.
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
Separate Opinions

BARREDO, J., concurring: