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HONGKONG AND SHANGHAI BANKING CORPORATION v.

JACK ROBERT SHERMAN,


DEODATO RELOJ, IAC
G.R. No. 72494, August 11, 1989

FACTS
- A complain for collection for a sum of money was filed by petitioner against private
respondents before the RTC of QC.
- In 1981, Eastern Book Supply Service PTE, Ltd., a company incorporated with
Singapore was granted by the Singapore Branch of petitioner bank an overdraft
facility (maximum of 200,,000 Singaporean dollars, later increased to 375K) with 3%
interest. As security, private respondents and one Robin de Clive Lowe (company
directors) executed a Joint and Several Guarantee in favor of petitioner.
- The Joint and Several Guarantee provides that all liabilities arising from the
agreement shall be construed, determined and may be enforced according to
Singaporean laws and that Singapore shall have jurisdiction over all disputes arising
from the guarantee.
- When East Book and subsequently, private respondents filed to pay, petitioner filed
said complaint.
Private respondents filed a Motion To Dismiss on the ground that the court has no
jurisdiction over the subject matter, over the private respondents.
- RTC: Denied Motion to Dismiss filed by private respondents. MR denied.
- IAC: Reversed RTC Decision. MR denied.

ISSUES
Whether or not Philippine Courts have jurisdiction over the suit.

RULING
YES. While the transaction took place mostly in Sngapore and the Guarantee contains a
choice-of-forum clause, due process demands that the stipulation that the guarantee
shall be construed, determined and may be enforced in accordance with Singapore laws
should be construed liberally.
One basic principle underlies all rules of jurisdiction in international law a State does
not have jurisdiction in the absence of some reasonable basis for exercising it (whether
proceedings are in rem or in personam). To be reasonable, the jurisdiction must be
based on some minimum contacts while in line with fair play and substantial jusitce.
It is unusual that private respondents, who are Filipino residents, would insist on having
the case before a foreign court and incur more expenses and inconvenience. This is
incomprehensible, unless their motive is to evade or delay payment of the obligation.
Their contention that the complaint should have been filed in Singapore is a mere
technicality. They did not even prove that the filing of the action here would cause
unnecessary trouble, damage or expense. In Polytrade Corporation v. Blanco, it was
held that the stipulation providing that the parties agree to sue and be sued in the Courts
of Manila does not preclude the filing of suits in other places as the plain meaning is that
the parties merely consented to be sued in Manila; there were no qualifying or restricting
words indicating that Manila alone is the venue. The stipulation is merely permissive and
the parties did not waive their right to pursue remedy in other courts.

Here, the parties did not stipulate that only the courts of Singapore, to the exclusion of
the rest, have jurisdiction. The stipulation did not operate to divest Philippine courts of
jurisdiction since, in international law, States have the right of jurisdiction over persons
and things within its boundaries (subject to exceptions such as traveling sovereigns,
diplomat, foreign military stationed in or marching through with the permission of State
authorities). A State is competent to take hold of any judicial matter it sees fit by making
its courts assume jurisdiction over cases brought before them. (NOTE: the court held
that jurisdiction here is loosely associated with venue, but this is of no moment since
venue is deemed properly laid in this case)
The IAC held that a court may refuse to entertain the case (a) for lack of jurisdiction or
(b) on the ground of the principle of forum non conveniens. Whether a suit should be
entertained or dismissed on the ground of forum non conveniens depends on the facts of
the case and is addressed to the sound discretion of the trial court. Thus, respondent
court should not have relied on the principle.
Private respondents allege that neither the petitioner nor its Philippine Branch is involved
in the transaction sued upon. However, this was now allowed since they did not plead
this in the lower courts.