Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 82233 March 22, 1990

JOSE BARITUA and EDGAR BITANCOR, petitioners,

vs.
HONORABLE COURT OF APPEALS, NICOLAS NACARIO and VICTORIA RONDA
NACARIO, respondents.

Domingo Lucenario for petitioners.

Ernesto A. Atienza for private respondents.

SARMIENTO, J.:

This petition for review on certiorari assails as erroneous and contrary to existing relevant laws and
applicable jurisprudence the decision 1 of the Court of Appeals dated December 11, 1987 which
reversed and set aside that of the Regional Trial Court, Branch XXXII, at Pili, Camarines Sur. 2 The
challenged decision adjudged the petitioners liable to the private respondents in the total amount of
P20,505.00 and for costs.

The facts are as follows:

In the evening of November 7, 1979, the tricycle then being driven by Bienvenido Nacario along the
national highway at Barangay San Cayetano, in Baao, Camarines Sur, figured in an accident with JB
Bus No. 80 driven by petitioner Edgar Bitancor and owned and operated by petitioner Jose
Baritua. 3 As a result of that accident Bienvenido and his passenger died 4 and the tricycle was
damaged. 5 No criminal case arising from the incident was ever instituted. 6

Subsequently, on March 27, 1980, as a consequence of the extra-judicial settlement of the matter
negotiated by the petitioners and the bus insurer — Philippine First Insurance Company, Incorporated
(PFICI for brevity) — Bienvenido Nacario's widow, Alicia Baracena Vda. de Nacario, received
P18,500.00. In consideration of the amount she received, Alicia executed on March 27, 1980 a
"Release of Claim" in favor of the petitioners and PFICI, releasing and forever discharging them from
all actions, claims, and demands arising from the accident which resulted in her husband's death and
the damage to the tricycle which the deceased was then driving. Alicia likewise executed an affidavit
of desistance in which she formally manifested her lack of interest in instituting any case, either civil
or criminal, against the petitioners. 7

On September 2, 1981, or about one year and ten months from the date of the accident on November
7, 1979, the private respondents, who are the parents of Bienvenido Nacario, filed a complaint for
damages against the petitioners with the then Court of First Instance of Camarines Sur. 8 In their
complaint, the private respondents alleged that during the vigil for their deceased son, the petitioners
through their representatives promised them (the private respondents) that as extra-judicial
settlement, they shall be indemnified for the death of their son, for the funeral expenses incurred by
reason thereof, and for the damage for the tricycle the purchase price of which they (the private
respondents) only loaned to the victim. The petitioners, however, reneged on their promise and
instead negotiated and settled their obligations with the long-estranged wife of their late son. The
Nacario spouses prayed that the defendants, petitioners herein, be ordered to indemnify them in the
amount of P25,000.00 for the death of their son Bienvenido, P10,000.00 for the damaged tricycle,
P25,000.00 for compensatory and exemplary damages, P5,000.00 for attorney's fees, and for moral
damages. 9

After trial, the court a quo dismissed the complaint, holding that the payment by the defendants
(herein petitioners) to the widow and her child, who are the preferred heirs and successors-in-interest
of the deceased Bienvenido to the exclusion of his parents, the plaintiffs (herein private respondents),
extinguished any claim against the defendants (petitioners). 10

The parents appealed to the Court of Appeals which reversed the judgment of the trial court. The
appellate court ruled that the release executed by Alicia Baracena Vda. de Nacario did not discharge
the liability of the petitioners because the case was instituted by the private respondents in their own
capacity and not as "heirs, representatives, successors, and assigns" of Alicia; and Alicia could not
have validly waived the damages being prayed for (by the private respondents) since she was not the
one who suffered these damages arising from the death of their son. Furthermore, the appellate court
said that the petitioners "failed to rebut the testimony of the appellants (private respondents) that they
were the ones who bought the tricycle that was damaged in the incident. Appellants had the burden
of proof of such fact, and they did establish such fact in their testimony . . . 11 Anent the funeral
expenses, "(T)he expenses for the funeral were likewise shouldered by the appellants (the private
respondents). This was never contradicted by the appellees (petitioners). . . . Payment (for these)
were made by the appellants, therefore, the reimbursement must accrue in their favor. 12

Consequently, the respondent appellate court ordered the petitioners to pay the private respondents
P10,000.00 for the damage of the tricycle, P5,000.00 for "complete" funeral services, P450.00 for
cemetery lot, P55.00 for oracion adulto, and P5,000.00 for attorney's fees. 13 The petitioners moved
for
a reconsideration of the appellate court's decision 14 but their motion was denied. 15 Hence, this
petition.

The issue here is whether or not the respondent appellate court erred in holding that the petitioners
are still liable to pay the private respondents the aggregate amount of P20,505.00 despite the
agreement of extrajudicial settlement between the petitioners and the victim's compulsory heirs.

The petition is meritorious.

Obligations are extinguished by various modes among them being by payment. Article 1231 of the
Civil Code of the Philippines provides:

Art. 1231. Obligations are extinguished:

(1) By payment or performance;

(2) By the loss of the thing due;

(3) By the condonation or remission of the debt;

(4) By the confusion or merger of the rights of creditor and debtor;

(5) By compensation;

(6) By novation.

(Emphasis ours.)

There is no denying that the petitioners had paid their obligation petition arising from the accident that
occurred on November 7, 1979. The only question now is whether or not Alicia, the spouse and the
one who received the petitioners' payment, is entitled to it.

Article 1240 of the Civil Code of the Philippines enumerates the persons to whom payment to
extinguish an obligation should be made.

Art 1240. Payment shall be made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to receive it.

Certainly there can be no question that Alicia and her son with the deceased are the successors in
interest referred to in law as the persons authorized to receive payment. The Civil Code states:

Article 887. The following are compulsory heirs:

1. Legitimate children and descendants, with respect to their legitimate parents and
ascendants;

2. In default of the foregoing, legitimate parents and ascendants with respect to their
legitimate children and decendants;

3. The widow or widower;

4. Acknowledged natural children and natural children by legal fiction;

5. Other illegitimate children referred to in Article 287.

 Compulsory heirs mentioned in Nos. 3, 4 and 5 are not excluded by those in Nos. 1 and
2. Neither do they exclude one another. (Emphasis ours.)

Article 985. In default of legitimate children and descendants of the deceased, his
parents and ascendants shall inherit from him, to the exclusion of collateral relatives.

(Emphasis ours.)

It is patently clear that the parents of the deceased succeed only when the latter dies without a
legitimate descendant. On the other hand, the surviving spouse concurs with all classes of heirs. As it
has been established that Bienvenido was married to Alicia and that they begot a child, the private
respondents are not successors-in-interest of Bienvenido; they are not compulsory heirs. The
petitioners therefore acted correctly in settling their obligation with Alicia as the widow of Bienvenido
and as the natural guardian of their lone child. This is so even if Alicia had been estranged from
Bienvenido. Mere estrangement is not a legal ground for the disqualification of a surviving spouse as
an heir of the deceased spouse.

Neither could the private respondents, as alleged creditors of Bienvenido, seek relief and
compensation from the petitioners. While it may be true that the private respondents loaned to
Bienvenido the purchase price of the damaged tricycle and shouldered the expenses for his funeral,
the said purchase price and expenses are but money claims against the estate of their deceased
son. 16 These money claims are not the liabilities of the petitioners who, as we have said, had been
released by the agreement of the extra-judicial settlement they concluded with Alicia Baracena Vda.
de Nacario, the victim's widow and heir, as well as the natural guardian of their child, her co-heir. As a
matter of fact, she executed a "Release Of Claim" in favor of the petitioners.

WHEREFORE, the petition is GRANTED; the decision of the Court of Appeals is REVERSED and
SET ASIDE and the decision of the Regional Trial Court is hereby REINSTATED. Costs against the
private respondents.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. 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.

Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for petitioner.

Leovigildo Vallar for private respondents.

SANTOS, J.:

This is an original action for Prohibition with Pre 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,
and the Motion for Reconsideration of said order. 1

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 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 P10,000.00 before respondents Court of
First Instance of Misamis Oriental. 2

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:

14. It is hereby agreed and understood that any and all actions arising out of the
conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in
the competent courts in the City of Cebu. 3

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 or in error of his jurisdicton or in gross abuse of discretion. 6

In Our resolution of November 20, 1973, We restrained respondent Judge from proceeding further
with the case and required respondent to comment. 7 On January 18, 1974, We gave due course to
the petition and required respondent to answer. 8 Thereafter, the parties submitted their respesctive
memoranda in support of their respective contentions. 9

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 private respondents, which limits the venue of actions arising from the contract of
carriage to theCourt of First 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 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?
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 proper since venue may be validly waived, citing cases; 10 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 sing from the contract is institution likewise citing
cases; 11 and that condition No. 14 is 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 established jurisprudence governing the case;
and that he acted without or in excess of his jurisdiction in is the orders complained of. 12

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 the riding public and does not bind respondents, citing
cases; 13 that while venue 6f actions may be transferred from one province to another, such
arrangement requires the "written agreement of the parties", not to be imposed unilaterally; and that
assuming that the condition is valid, it is not exclusive and does not, therefore, exclude the filing of
the action in Misamis Oriental, 14

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 in Peralta de Guerrero, et al. v. Madrigal Shipping Co., Inc., 15

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 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

By the peculiar circumstances under which contracts of adhesion are entered into — namely, that it is
drafted only by one party, usually the corporation, and is sought to be accepted or adhered to by the
other party, in this instance the passengers, private respondents, who cannot change the same and
who are thus made to adhere thereto on the "take it or leave it" basis — certain guidelines in the
determination of their validity and/or enforceability have been formulated in order to that justice and
fan play characterize the relationship of the contracting parties. Thus, this Court speaking through
Justice J.B.L. Reyes in Qua Chee Gan v. Law Union and Rock Insurance Co., 17 and later through
Justice Fernando in Fieldman Insurance v. Vargas, 18 held —

The courts cannot ignore that nowadays, monopolies, cartels and concentration of
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
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 cap 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 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, ignorance indigence, mental
weakness, tender age and other handicap, the courts must be vigilant for his
protection. 19

Considered in the light Of the foregoing norms and in the context Of circumstances Prevailing in the
inter-island ship. ping industry in the country today, We find and hold 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 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 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.

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 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 received from crowded/congested counters, more often than not during rush hours, for
conditions that may be printed much charge them with having consented to the conditions, so printed,
especially if there are a number of such conditions m fine print, as in this case. 20

Again, it should be noted that Condition No. 14 was prepared solely at the ms of the petitioner,
respondents had no say in its preparation. Neither did the latter have the opportunity to take the into
account prior to the purpose chase of their tickets. For, unlike the small print provisions of contracts
— the common example of contracts of adherence — which are entered into by the insured in his
awareness of said conditions, since the 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.

It should also be stressed that slapping companies are franchise holders of certificates of public
convenience and therefore, posses 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 vested 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 t to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it
practically negates the action of the claimants, such as the private respondents herein. The
philosophy underlying the provisions on transfer of venue of actions is the convenience of the
plaintiffs as well as his witnesses and to promote 21 the ends of justice. Considering the expense and
trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of
Cebu, he would most probably decide not to file the action at all. The condition will thus defeat,
instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the
respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing
of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause
inconvenience to, much less prejudice, petitioner.
Public policy is ". . . that principle of the law which holds that no subject or citizen can lawfully do that
which has a tendency to be injurious to the public or against the public good ... 22 Under this principle"
... freedom of contract or private dealing is restricted by law for the good of the public. 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 passenger cants outside of Cebu City, thus placing petitioner company
at a decided advantage over said persons, who may have perfectly legitimate claims against it. The
said condition should, therefore, be declared void and unenforceable, as contrary to public policy —
to make the courts accessible to all who may have need of their services.

WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining order issued on November
20, 1973, is hereby LIFTED and SET ASIDE. Costs against petitioner.

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

Antonio, J., reserves his vote.

Separate Opinions

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 inter-island
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 can cause to
anyone concerned. I vote to dismiss the petition.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-27033 October 31, 1969

POLYTRADE CORPORATION, plaintiff-appellee,

vs.
VICTORIANO BLANCO, defendant-appellant.

Paredes, Poblador, Cruz and Nazareno for plaintiff-appellee.

Isidro T. Almeda and Mario T. Banzuela for defendant-appellant.

SANCHEZ, J.:

Suit before the Court of First Instance of Bulacan on four causes of action to recover the purchase
price of rawhide delivered by plaintiff to defendant. 1 Plaintiff corporation has its principal office and
place of business in Makati, Rizal. Defendant is a resident of Meycauayan, Bulacan. Defendant
moved to dismiss upon the ground of improper venue. He claims that by contract suit may only be
lodged in the courts of Manila. The Bulacan court overruled him. He did not answer the complaint. In
consequence, a default judgment was rendered against him on September 21, 1966, thus:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant

ordering defendant to pay plaintiff the following amounts:

First Cause of — P60,845.67, with interest thereon at 1% a month from May

Action 9, 1965 until the full amount is paid.

Second Cause — P51,952.55, with interest thereon at 1% a month from

of Action March 30, 1965 until the full amount is paid.

Third Cause of — P53,973.07, with interest thereon at 1% a month from July

Action 3, 1965 until the full amount is paid.

Fourth Cause — P41,075.22, with interest thereon at 1% a month 2 until the

of Action full amount is paid.

In addition, defendant shall pay plaintiff attorney's fees amounting to 25% of the principal
amount due in each cause of action, and the costs of the suit. The amount of P400.00 shall be
deducted from the total amount due plaintiff in accordance with this judgment.

Defendant appealed.

1. The forefront question is whether or not venue was properly laid in the province of Bulacan where
defendant is a resident.

Section 2 (b), Rule 4 of the Rules of Court on venue of personal actions triable by courts of first
instance — and this is one — provides that such "actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiffs resides, at the election of the plaintiff." Qualifying this provision in Section 3 of the same Rule
which states that venue may be stipulated by written agreement — "By written agreement of the
parties the venue of an action may be changed or transferred from one province to another."

Defendant places his case upon Section 3 of Rule 4 just quoted. According to defendant, plaintiff and
defendant, by written contracts covering the four causes of action, stipulated that: "The parties agree
to sue and be sued in the Courts of Manila." This agreement is valid.3 Defendant says that because of
such covenant he can only be sued in the courts of Manila. We are thus called upon to shake
meaning from the terms of the agreement just quoted.

But first to the facts. No such stipulation appears in the contracts covering the first two causes of
action. The general rule set forth in Section 2 (b), Rule 4, governs, and as to said two causes of
action, venue was properly laid in Bulacan, the province of defendant's residence.

The stipulation adverted to is only found in the agreements covering the third and fourth causes of
action. An accurate reading, however, of the stipulation, "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. The
plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive
words which would indicate that Manila and Manila alone is the venue are totally absent therefrom.
We cannot read into that clause that plaintiff and defendant bound themselves to file suits with
respect to the last two transactions in question only or exclusively in Manila. For, that agreement did
not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of
Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the
courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur.

Illuminating on this point is Engel vs. Shubert Theatrical Co., 151 N.Y.S. 593, 594. And this, became
there the stipulation as to venue is along lines similar to the present. Said stipulation reads: "In case
of dispute, both contracting parties agree to submit to the jurisdiction of the Vienna courts." And the
ruling is: "By the clause in question the parties do not agree to submit their disputes to the jurisdiction
of the Viennese court, and to those courts only. There is nothing exclusive in the language used.
They do agree to submit to the Viennese jurisdiction, but they say not a word in restriction of the
jurisdiction of courts elsewhere; and whatever may be said on the subject of the legality of contracts
to submit controversies to courts of certain jurisdictions exclusively, it is entirely plain that such
agreements should be strictly construed, and should not be extended by implication."

Venue here was properly laid.

2. Defendant next challenges the lower court's grant to plaintiff of interest at the rate of one per
centum per month. Defendant says that no such stipulation as to right of interest appears in the sales
confirmation orders which provided: "TERMS — 60 days after delivery with interest accruing on
postdated cheques beyond 30 days." The flaw in this argument lies in that the interest and the rate
thereof are expressly covenanted in the covering trust receipts executed by defendant in favor of
plaintiff, as follows: "All obligations of the undersigned under this agreement of trust shall bear interest
at the rate of one per centum (1%) per month from the date due until paid."

On this score, we find no error.

3. Defendant protests the award of attorneys' fees which totals P51,961.63, i.e., 25% of the total
principal indebtedness of P207,846.51 (exclusive of interest). Defendant's thesis is that the foregoing
sum is "exorbitant and unconscionable."

To be borne in mind is that the attorneys' fees here provided is not, strictly speaking, the attorneys'
fees recoverable as between attorney and client spoken of and regulated by the Rules of Court.
Rather, the attorneys' fees here are in the nature of liquidated damages and the stipulation therefor is
aptly called a penal clause.4 It has been said that so long as such stipulation does not contravene
law, morals, or public order, it is strictly binding upon defendant.5 The attorneys' fees so provided are
awarded in favor of the litigant, not his counsel. It is the litigant, not counsel, who is the judgment
creditor entitled to enforce the judgment by execution.6

The governing law then is Article 2227 of the Civil Code, viz.: "Liquidated damages, whether intended
as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable." For
this reason, we do not really have to strictly view the reasonableness of the attorneys' fees in the light
of such factors as the amount and character of the services rendered, the nature and importance of
the litigation, and the professional character and the social standing of the attorney. We do concede,
however, that these factors may be an aid in the determination of the iniquity or unconscionableness
of attorneys' fees as liquidated damages.

May the attorneys' fees (P51,961.63) here granted be tagged as iniquitous or unconscionable? Upon
the circumstances, our answer is in the negative. Plaintiff's lawyers concededly are of high standing.
More important is that this case should not have gone to court. It could have been easily avoided had
defendant been faithful in complying with his obligations. It is not denied that the rawhide was
converted into leather and sold by defendant. He raises no defense. In fact, he did not even answer
the complaint in the lower court, and was thus declared in default. Nor does he deny the principal
liability. Add to all these the fact that the writ of attachment issued below upon defendant's properties
yielded no more than P400 and the picture is complete. The continued maintenance by defendant of
the suit is plainly intended for delay. The attorneys' fees awarded cannot be called iniquitous or
unconscionable.

In the very recent case of Universal Motors Corporation vs. Dy Hian Tat (1969), 28 SCRA 161, 170,
we allowed attorneys' fees in the form of liquidated damages at the rate of 25% of the total amount of
the indebtedness. Here, the trial court has already reduced the attorneys' fees from the stipulated
25% "of the total amount involved, principal and interest, then unpaid" to only 25% of
the principal amount due. There is no reason why such judgment should be disturbed.
FOR THE REASON GIVEN, the appealed judgment is hereby affirmed, except that interest granted,
in reference to the fourth cause of action, should start from March 24, 1965.

Costs against defendant-appellant. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and
Barredo, JJ., concur.

Baritua vs. CA (GR 100748)

It is fundamental that the situs for bringing real and personal civil actions is fixed by the rules to attain
the greatest convenience possible to parties litigants and their witnesses by affording them maximum
accessibility to the courts of justice. The choice of venue is given to the plaintiff but is not left to his
caprice. It cannot unduly deprive a resident defendant of the rights conferred upon him by the Rules
of Court.

When the complaint was filed in Rosales, Pangasinan, not one of the parties was a resident of the
town. Private respondent was a resident of Los Angeles, California while his attorney-in-fact was a
resident of Cubao, Quezon City. Petitioners business address according to private respondent is in
Pasay City, although petitioner claims he resides in Gubat, Sorsogon. The venue in Rosales,
Pangasinan was indeed improperly laid.

G.R. No. L-37750 May 19, 1978

Lessons Applicable: Contract of Adhesion (Transportation)

Laws Applicable:

FACTS:

 Atty. Leovigildo Tandog and Rogelio Tiro bought tickets for Tagbilaran City via the port of Cebu
 Since many passengers were bound for Surigao, M/S "Sweet Hope would not be proceeding to
Bohol
 They went to the proper brancg office and was relocated to M/S "Sweet Town" where they
were forced to agree "to hide at the cargo section to avoid inspection of the officers of the
Philippine Coastguard." and they were exposed to the scorching heat of the sun and the dust
coming from the ship's cargo of corn grits and their tickets were not honored so they had to
purchase a new one
 They sued Sweet Lines for damages and for breach of contract of carriage before the Court of
First Instance of Misamis Oriental who dismissed the compalitn for improper venue
 A motion was premised on the condition printed at the back of the tickets -dismissed
 instant petition for prohibition for preliminary injunction

ISSUE: W/N 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 arising out of the contract of carriage
should be filed only in a particular province or city

HELD: NO.petition for prohibition is DISMISSED. Restraining order LIFTED and SET ASIDE

 contract of adhesion
 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
 just imposed upon them when they paid for the fare for the freight they wanted to ship
 We find and hold that Condition No. 14 printed at the back of the passage tickets should be held
as void and unenforceable for the following reasons
 circumstances obligation in the inter-island ship
 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
 subversive of public policy on transfers of venue of actions
 philosophy underlying the provisions on transfer of venue of actions is the convenience of the
plaintiffs as well as his witnesses and to promote 21 the ends of justice.
Polytrade vs Blanco

0 SCRA 187 – Legal Ethics – Two Concepts of Attorney’s Fees

Blanco was sued by Polytrade for damages as he failed to pay a delivery of rawhide (to be converted
to leather and leather products). For failing to answer the suit, he was declared in default and among
those awarded in favor of Polytrade Corporation is attorney’s fee of P51,961.63 which is equivalent to
25% of the principal indebtedness of Blanco to Polytrade. Blanco now claims that said judgment
against him is exorbitant and unconscionable.
ISSUE: Whether or not Blanco is correct.
HELD: No. This case would have never reached the courts had Blanco been current with his
obligation to Polytrade. He never raised any defense as he did not file an answer. Bottom line is, the
case could have been easily avoided without Polytrade having to go to trial.
The attorney’s fees awarded in favor of Polytrade and not his counsel. Such an arrangement is not
illegal. It is the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by
execution. Further, Polytrade may have spent much for its counsel considering its counsel’s high
standing.