G.R. No. 72494, Aug. 11, 1989
- Choice-of-forum clause
- Jurisdiction and Venue
- Parties can stipulate as to their choice of venue. But if the stipulation is not restrictive, it shall be treated as merely permissive and will not bar the other party from airing the case in a different forum which has jurisdiction over the subject matter.
FACTS:
Sometime in 1981, Eastern Book Supply PTE, Ltd. (Company), a company incorporated in Singapore, applied with and was granted by the Singapore Branch of HSBC an overdraft facility. To secure the overdraft facility, private respondents who were directors of the Company executed a Joint and Several Guarantee in favour of HSBC, which provides that:
“This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this guarantee….”
However, when the Company failed to pay its obligation, HSBC filed this action with the Philippine courts. In a Motion to Dismiss, the private respondents raised the abovementioned provision of the Joint and Several Guarantee. The trial court affirmed the plaintiffs but CA reversed, citing said provision as basis.
ISSUE:
- Whether or not Philippine courts have jurisdiction over the suit
HELD:
The Supreme Court held that the clause in question did not operate to divest the Philippine courts of jurisdiction.
While it is true that “the transaction took place in Singaporean setting” and that the Joint and Several Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that “[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee” be liberally construed. 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 the proceedings are in rem, quasi in rem, or in personam. To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice. 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 reason as a defendant. However, in this case, private respondents are 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 process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve the case. Private respondents' stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a just obligation.
The defense of private respondents that the complaint should have been filed in Singapore is based merely on technicality. They did not even claim, much less prove, that the filing of the action here will cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing that petitioner BANK filed the action here just to harass private respondents.
The parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to divest 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 cases brought before them.
