G.R. No.

72494 August 11, 1989 Same; Same; Same; Same; In the case at bar, the parties did not
stipulate that only the courts of Singapore to the exclusion of all the rest
HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner, has jurisdiction; Jurisdiction defined.—Applying the foregoing to the case
at bar, the parties did not thereby stipulate that only the courts of
vs. Singapore, to the exclusion of all the rest, has jurisdiction. Neither did
the clause in question operate to divest Philippine courts of jurisdiction.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE
In International Law, jurisdiction is often defined as the right of a State
APPELLATE COURT, respondents.
to exercise authority over persons and things within its boundaries
subject to certain exceptions.
Quiason, Makalintal, Barot & Torres for petitioner.

Alejandro, Aranzaso & Associates for private respondents.

Remedial Law; Jurisdiction; A state does not have jurisdiction in the

absence of some reasonable basis for exercising it whether the
MEDIALDEA, J.:
proceedings are in rem, quasi in rem or in personam.—While it is true
that “the transaction took place in Singaporean setting” and that the This is a petition for review on certiorari of the decision of the
Joint and Several Guarantee contains a choice-of-forum clause, the very Intermediate Appellate Court (now Court of Appeals) dated August 2,
essence of due process dictates that the stipulation that “[t]his 1985, which reversed the order of the Regional Trial Court dated
guarantee and all rights, obligations and liabilities arising hereunder shall February 28,1985 denying the Motion to Dismiss filed by private
be construed and determined under and may be enforced in accordance respondents Jack Robert Sherman and Deodato Reloj.
with the laws of the Republic of Singapore. We hereby agree that the
Courts in Singapore shall have jurisdiction over all disputes arising under A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed
this guarantee” be liberally construed. One basic principle underlies all by petitioner Hongkong and Shanghai Banking Corporation (hereinafter
rules of jurisdiction in International Law: a State does not have referred to as petitioner BANK) against private respondents Jack Robert
jurisdiction in the absence of some reasonable basis for exercising it, Sherman and Deodato Reloj, docketed as Civil Case No. Q-42850 before
whether the proceedings are in rem, quasi in rem or in personam. To be the Regional Trial Court of Quezon City, Branch 84.
reasonable, the jurisdiction must be based on some minimum contacts
that will not offend traditional notions of fair play and substantial It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd.
justice. (hereinafter referred to as COMPANY), a company incorporated in
Singapore applied with, and was granted by, the Singapore branch of
petitioner BANK an overdraft facility in the maximum amount of
Singapore dollars 200,000.00 (which amount was subsequently
Same; Same; Same; Defense of private respondents that the complaint increased to Singapore dollars 375,000.00) with interest at 3% over
should have been filed in Singapore is based merely on technicality.—The petitioner BANK prime rate, payable monthly, on amounts due under
defense of private respondents that the complaint should have been said overdraft facility; as a security for the repayment by the COMPANY
filed in Singapore is based merely on technicality. They did not even of sums advanced by petitioner BANK to it through the aforesaid
claim, much less prove, that the filing of the action here will cause them overdraft facility, on October 7, 1982, both private respondents and a
any unnecessary trouble, damage, or expense. On the other hand, there certain Robin de Clive Lowe, all of whom were directors of the
is no showing that petitioner BANK filed the action here just to harass COMPANY at such time, executed a Joint and Several Guarantee (p. 53,
private respondents. Rollo) in favor of petitioner BANK whereby private respondents and
Lowe agreed to pay, jointly and severally, on demand all sums owed by
the COMPANY to petitioner BANK under the aforestated overdraft
Same; Same; Venue; A stipulation that the parties agree to sue and be facility.
sued in the courts of Manila does not preclude the filing of suits in the
The Joint and Several Guarantee provides, inter alia, that:
residence of plaintiff or defendant.—In the case of Polytrade Corporation
vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187, it was This guarantee and all rights, obligations and liabilities arising hereunder
ruled: “x x x. An accurate reading, however, of the stipulation, ‘The shall be construed and determined under and may be enforced in
parties agree to sue and be sued in the Courts of Manila,’ does not accordance with the laws of the Republic of Singapore. We hereby agree
preclude the filing of suits in the residence of plaintiff or defendant. The that the Courts of Singapore shall have jurisdiction over all disputes
plain meaning is that the parties merely consented to be sued in Manila. arising under this guarantee. ... (p. 33-A, Rollo).
Qualifying or restrictive words which would indicate that Manila and
Manila alone is the venue are totally absent therefrom. We cannot read The COMPANY failed to pay its obligation. Thus, petitioner BANK
into that clause that plaintiff and defendant bound themselves to file demanded payment of the obligation from private respondents,
suits with respect to the last two transactions in question only or conformably with the provisions of the Joint and Several Guarantee.
exclusively in Manila. For, that agreement did not change or transfer Inasmuch as the private respondents still failed to pay, petitioner BANK
venue. It simply is permissive. The parties solely agreed to add the filed the above-mentioned complaint.
courts of Manila sa tribunals to which they may resort. They did not
waive their right to pursue remedy in the courts specifically mentioned On December 14,1984, private respondents filed a motion to dismiss (pp
in Section 2(b) of Rule 4. Renuntiatio non praesumitur.” 54-56, Rollo) which was opposed by petitioner BANK (pp. 58-62, Rollo).
Acting on the motion, the trial court issued an order dated February 28,
1985 (pp, 64-65, Rollo), which read as follows:
The controversy stems from the interpretation of a provision in the Joint
In a Motion to Dismiss filed on December 14, 1984, the defendants seek and Several Guarantee, to wit:
the dismissal of the complaint on two grounds, namely:
(14) This guarantee and all rights, obligations and liabilites arising
1. That the court has no jurisdiction over the subject matter of hereunder shall be construed and determined under and may be
the complaint; and enforced in accordance with the laws of the Republic of Singapore. We
hereby agree that the Courts in Singapore shall have jurisdiction over all
2. That the court has no jurisdiction over the persons of the disputes arising under this guarantee. ... (p. 53-A, Rollo)
defendants.
In rendering the decision in favor of private respondents, the Court of
In the light of the Opposition thereto filed by plaintiff, the Court finds no Appeals made, the following observations (pp. 35-36, Rollo):
merit in the motion. "On the first ground, defendants claim that by
virtue of the provision in the Guarantee (the actionable document) There are significant aspects of the case to which our attention is
which reads — invited. The loan was obtained by Eastern Book Service PTE, Ltd., a
company incorporated in Singapore. The loan was granted by the
This guarantee and all rights, obligations and liabilities arising hereunder Singapore Branch of Hongkong and Shanghai Banking Corporation. The
shall be construed and determined under and may be enforced in Joint and Several Guarantee was also concluded in Singapore. The loan
accordance with the laws of the Republic of Singapore. We hereby agree was in Singaporean dollars and the repayment thereof also in the same
that the courts in Singapore shall have jurisdiction over all disputes currency. The transaction, to say the least, took place in Singporean
arising under this guarantee, the Court has no jurisdiction over the setting in which the law of that country is the measure by which that
subject matter of the case. The Court finds and concludes otherwise. relationship of the parties will be governed.
There is nothing in the Guarantee which says that the courts of
Singapore shall have jurisdiction to the exclusion of the courts of other xxx xxx xxx
countries or nations. Also, it has long been established in law and
jurisprudence that jurisdiction of courts is fixed by law; it cannot be Contrary to the position taken by respondents, the guarantee
conferred by the will, submission or consent of the parties. agreement compliance that any litigation will be before the courts of
Singapore and that the rights and obligations of the parties shall be
On the second ground, it is asserted that defendant Robert' , Sherman is construed and determined in accordance with the laws of the Republic
not a citizen nor a resident of the Philippines. This argument holds no of Singapore. A closer examination of paragraph 14 of the Guarantee
water. Jurisdiction over the persons of defendants is acquired by service Agreement upon which the motion to dismiss is based, employs in clear
of summons and copy of the complaint on them. There has been a valid and unmistakeable (sic) terms the word 'shall' which under statutory
service of summons on both defendants and in fact the same is admitted construction is mandatory.
when said defendants filed a 'Motion for Extension of Time to File
Responsive Pleading on December 5, 1984. Thus it was ruled that:

WHEREFORE, the Motion to Dismiss is hereby DENIED. ... the word 'shall' is imperative, operating to impose a duty which may
be enforced (Dizon vs. Encarnacion, 9 SCRA 714).lâwphî1.ñèt
SO ORDERED.
There is nothing more imperative and restrictive than what the
A motion for reconsideration of the said order was filed by private agreement categorically commands that 'all rights, obligations, and
respondents which was, however, denied (p. 66, Rollo). liabilities arising hereunder shall be construed and determined under
and may be enforced in accordance with the laws of the Republic of
Private respondents then filed before the respondent Intermediate Singapore.'
Appellate Court (now Court of Appeals) a petition for prohibition with
preliminary injunction and/or prayer for a restraining order (pp. 39-48, While it is true that "the transaction took place in Singaporean setting"
Rollo). On August 2, 1985, the respondent Court rendered a decision (p. and that the Joint and Several Guarantee contains a choice-of-forum
37, Rollo), the dispositive portion of which reads: clause, the very essence of due process dictates that the stipulation that
"[t]his guarantee and all rights, obligations and liabilities arising
WHEREFORE, the petition for prohibition with preliminary injuction is hereunder shall be construed and determined under and may be
hereby GRANTED. The respondent Court is enjoined from taking further enforced in accordance with the laws of the Republic of Singapore. We
cognizance of the case and to dismiss the same for filing with the proper hereby agree that the Courts in Singapore shall have jurisdiction over all
court of Singapore which is the proper forum. No costs. disputes arising under this guarantee" be liberally construed. One basic
principle underlies all rules of jurisdiction in International Law: a State
SO ORDERED. does not have jurisdiction in the absence of some reasonable basis for
exercising it, whether the proceedings are in rem quasi in rem or in
The motion for reconsideration was denied (p. 38, Rollo), hence, the
personam. To be reasonable, the jurisdiction must be based on some
present petition.
minimum contacts that will not offend traditional notions of fair play
The main issue is whether or not Philippine courts have jurisdiction over and substantial justice (J. Salonga, Private International Law, 1981, p.
the suit. 46). Indeed, as pointed-out by petitioner BANK at the outset, the instant
case presents a very odd situation. In the ordinary habits of life, anyone
would be disinclined to litigate before a foreign tribunal, with more cases brought before them (J. Salonga, Private International Law, 1981,
reason as a defendant. However, in this case, private respondents are pp. 37-38).lâwphî1.ñèt
Philippine residents (a fact which was not disputed by them) who would
rather face a complaint against them before a foreign court and in the As regards the issue on improper venue, petitioner BANK avers that the
process incur considerable expenses, not to mention inconvenience, objection to improper venue has been waived. However, We agree with
than to have a Philippine court try and resolve the case. Private the ruling of the respondent Court that:
respondents' stance is hardly comprehensible, unless their ultimate
intent is to evade, or at least delay, the payment of a just obligation. While in the main, the motion to dismiss fails to categorically use with
exactitude the words 'improper venue' it can be perceived from the
The defense of private respondents that the complaint should have been general thrust and context of the motion that what is meant is improper
filed in Singapore is based merely on technicality. They did not even venue, The use of the word 'jurisdiction' was merely an attempt to copy-
claim, much less prove, that the filing of the action here will cause them cat the same word employed in the guarantee agreement but conveys
any unnecessary trouble, damage, or expense. On the other hand, there the concept of venue. Brushing aside all technicalities, it would appear
is no showing that petitioner BANK filed the action here just to harass that jurisdiction was used loosely as to be synonymous with venue. It is
private respondents. in this spirit that this Court must view the motion to dismiss. ... (p. 35,
Rollo).
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033,
October 31, 1969, 30 SCRA 187, it was ruled: At any rate, this issue is now of no moment because We hold that venue
here was properly laid for the same reasons discussed above.
... 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 The respondent Court likewise ruled that (pp. 36-37, Rollo):
suits in the residence of plaintiff or defendant. The plain meaning is that
the parties merely consented to be sued in Manila. Qualifying or ... In a conflict problem, a court will simply refuse to entertain the case if
restrictive words which would indicate that Manila and Manila alone is it is not authorized by law to exercise jurisdiction. And even if it is so
the venue are totally absent therefrom. We cannot read into that clause authorized, it may still refuse to entertain the case by applying the
that plaintiff and defendant bound themselves to file suits with respect principle of forum non conveniens. ...
to the last two transactions in question only or exclusively in Manila. For,
However, whether a suit should be entertained or dismissed on the basis
that agreement did not change or transfer venue. It simply is permissive.
of the principle of forum non conveniens depends largely upon the facts
The parties solely agreed to add the courts of Manila as tribunals to
of the particular case and is addressed to the sound discretion of the
which they may resort. They did not waive their right to pursue remedy
trial court (J. Salonga, Private International Law, 1981, p. 49).lâwphî1.ñèt
in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio
Thus, the respondent Court should not have relied on such principle.
non praesumitur.
Although the Joint and Several Guarantee prepared by petitioner BANK
is a contract of adhesion and that consequently, it cannot be permitted
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. to take a stand contrary to the stipulations of the contract, substantial
Lagamon, etc., et al., G.R. No. 57250, October 30, 1981, 108 SCRA 740, bases exist for petitioner Bank's choice of forum, as discussed earlier.
where the stipulation was "[i]n case of litigation, jurisdiction shall be
Lastly, private respondents allege that neither the petitioner based at
vested in the Court of Davao City." We held:
Hongkong nor its Philippine branch is involved in the transaction sued
Anent the claim that Davao City had been stipulated as the venue, upon. This is a vain attempt on their part to further thwart the
suffice it to say that a stipulation as to venue does not preclude the filing proceedings below inasmuch as well-known is the rule that a defendant
of suits in the residence of plaintiff or defendant under Section 2 (b), cannot plead any defense that has not been interposed in the court
Rule 4, Rules of Court, in the absence of qualifying or restrictive words in below.
the agreement which would indicate that the place named is the only
ACCORDINGLY, the decision of the respondent Court is hereby
venue agreed upon by the parties.
REVERSED and the decision of the Regional Trial Court is REINSTATED,
Applying the foregoing to the case at bar, the parties did not thereby with costs against private respondents. This decision is immediately
stipulate that only the courts of Singapore, to the exclusion of all the executory.
rest, has jurisdiction. Neither did the clause in question operate to divest
SO ORDERED.
Philippine courts of jurisdiction. In International Law, jurisdiction is often
defined as the light of a State to exercise authority over persons and
things within its boundaries subject to certain exceptions. Thus, a State
does not assume jurisdiction over travelling sovereigns, ambassadors
and diplomatic representatives of other States, and foreign military units
stationed in or marching through State territory with the permission of
the latter's authorities. This authority, which finds its source in the
concept of sovereignty, is exclusive within and throughout the domain of
the State. A State is competent to take hold of any judicial matter it sees
fit by making its courts and agencies assume jurisdiction over all kinds of