FIRST DIVISION

[G.R. No. 72494. August 11, 1989.]

HONGKONG AND SHANGHAI BANKING CORPORATION , petitioner, vs.

JACK ROBERT SHERMAN, DEODATO RELOJ AND THE
INTERMEDIATE APPELLATE COURT , respondents.

Quiason, Makalintal, Barot & Torres for petitioner.

Alejandro, Aranzaso & Associates for private respondents.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; VENUE; STIPULATIONS AS TO VENUE BETWEEN

PARTIES DOES NOT PRECLUDE FILING OF SUITS IN THE RESIDENCE OF PLAINTIFF OR
DEFENDANT. — A stipulation as to venue does not preclude the ling of suits in the
residence of plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in the
absence of qualifying or restrictive word a in the agreement which would indicate that the
place named is the only venue agreed upon by the parties. (Polytrade Corporation v.
Blanco, G.R. No. L-27033, December 31, 1969 and other cases cited)
2. INTERNATIONAL LAW; JURISDICTION, DEFINED. — In International Law, jurisdiction
is often de ned as the right of a State to exercise authority over persons and things within
its boundaries subject to certain exceptions.
3. ID.; SOVEREIGNTY; CONCEPT, CONSTRUED. — A State does not assume jurisdiction
over traveling 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 nds 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 t by making its courts and agencies
assume jurisdiction over all kinds of cases brought before them (J. Salonga, Private
International Law, 1981, pp. 37-38).
4. ID.; JURISDICTION; PRINCIPLE OF FORUM NON CONVENIENS; APPLICATION OF
PRINCIPLE ADDRESSED TO THE SOUND DISCRETION OF THE COURT. — Whether a suit
should be entertained or dismissed on the basis of the principle of forum non conveniens
depends largely upon the facts of the particular case and is addressed to the, sound
discretion of the trial court (J. Salonga, Private International Law, 1981, p. 49).
5. REMEDIAL LAW; ACTIONS; APPEAL, A DEFENDANT CANNOT PLEAD ANY DEFENSE
NOT INTERPOSED IN THE COURT BELOW. — Lastly, private respondents allege that neither
the petitioner based at Hongkong nor its Philippine branch is involved in the transaction
sued upon. This is a vain attempt on their part to further thwart the proceedings below
inasmuch as well-known is the rule that a defendant cannot plead any defense that has not
been interposed in the court below.

DECISION
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 MEDIALDEA , J : p

This is a petition for review on certiorari of the decision of the Intermediate Appellate
Court (now Court of Appeals) dated August 2, 1985, which reversed the order of the
Regional Trial Court dated February 28, 1985 denying the Motion to Dismiss led by
private respondents Jack Robert Sherman and Deodato Reloj.
A complaint for collection of a sum of money (pp. 49-52, Rollo) was led by petitioner
Hongkong and Shanghai Banking Corporation (hereinafter referred to as petitioner BANK)
against private respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil
Case No. Q-42850 before the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (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 increased to
Singapore dollar 375,000.00) with interest at 3% over petitioner BANK's prime rate,
payable monthly, on amounts due under said overdraft facility; as a security for the
repayment by the COMPANY of sum advanced by petitioner BANK to it through the
aforesaid overdraft facility, on October 7, 1982, both private respondents and a certain
Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a
Joint and Several Guarantee (p. 53, 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 a forestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, 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 overall disputes arising under this guarantee . . ." (p. 33-A,
Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of
the obligation from private respondents, conformably with the provisions of the Joint and
Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK
filed the abovementioned complaint.
On December 14, 1984, private respondents led a motion to dismiss (pp. 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. 6465, Rollo), which read as follows:
"In a Motion to Dismiss led on December 14, 1984, the defendants seek the
dismissal of the complaint on two grounds, namely:

"1. That the court has no jurisdiction over the subject matter of
the complaint; and

"2. That the court has no jurisdiction over the persons of the
defendants.
"In the light of the Opposition thereto led by plaintiff, the Court nds no merit in
the motion.

"On the rst ground, defendants claim that by virtue of the provision in the
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 Guarantee (the actionable document) which reads —

"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 in Singapore shall have jurisdiction over all disputes arising
under this guarantee,'

the Court has no jurisdiction over the subject matter of the case. The Court nds
and concludes otherwise. There is nothing in the Guarantee which says that the
courts of Singapore shall have jurisdiction to the exclusion of the courts of other
countries or nations. Also, it has long been established in law and jurisprudence
that jurisdiction of courts is xed by law; it cannot be conferred by the will,
submission or consent of the parties.

"On the second ground, it is asserted that defendant Robert Sherman is not a
citizen nor a resident of the Philippines. This argument holds no water.
Jurisdiction over the persons of defendants is acquired by service of summons
and copy of the complaint on them. There has been a valid service of summons
on both defendants and in fact the same is admitted when said defendants led
a 'Motion for Extension of Time to File Responsive Pleading' on December 5,
1984. LLjur

"WHEREFORE, the Motion to Dismiss is hereby DENIED.

"SO ORDERED."

A motion for reconsideration of the said order was led by private respondents which was,
however, denied (p. 66, Rollo). Private respondents then led before the respondent
Intermediate Appellate Court (now Court of Appeals) a petition for prohibition with
preliminary injunction and/or prayer for a restraining order (pp. 39-48, Rollo). On August 2,
1985, the respondent Court rendered a decision (p. 37, Rollo), the dispositive portion of
which reads:
"WHEREFORE, the petition for prohibition with preliminary injunction is hereby
GRANTED. The respondent Court is enjoined a taking from further cognizance of
the case and to dismiss the same for ling with the proper court of Singapore
which is the proper forum. No costs.
SO ORDERED."

The motion for reconsideration was denied (p. 38, Rollo),hence, the present petition.
The main issue is whether or not Philippine courts have jurisdiction over the suit.
The controversy stems from the interpretation of a provision in the Joint and Several
Guarantee, to wit:
"(14) 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 in Singapore shall have jurisdiction over all disputes arising under this
guarantee . . ." (p. 53-A, Rollo)

In rendering the decision in favor of private respondents, the Court of Appeals made the
following observations (pp. 35-36, Rollo):

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 "There are signi cant aspects of the case to which our attention is invited. The
loan was obtained by Eastern Book Service PTE, Ltd., a company, incorporated in
Singapore. The loan was granted by the Singapore Branch of Hongkong and
Shanghai Banking Corporation. The Joint and Several Guarantee was also
concluded in Singapore. The loan was in Singaporean dollars and the repayment
thereof also is the same currency. The transaction, to say the least, took place in
Singaporean setting in which the law of that country is the measure by which that
relationship of the panties will be governed.
xxx xxx xxx

"Contrary to the position taken by respondents, the guarantee agreement

commands that any litigation will be before the courts of Singapore and that the
rights and obligations of the parties shall be constructed and determined in
accordance with the laws of the Republic of Singapore. A closer examination of
paragraph 14 of the Guarantee Agreement upon which the motion to dismiss is
based, employs in clear and unmistakable (sic) terms the word 'shall' which under
statutory construction is mandatory.
"Thus, it was ruled that:
'. . . the word 'shall' is imperative, operating to impose a duty which
may be enforced' (Dizon vs. Encarnacion, 9 SCRA 714).
"There is nothing more imperative and restrictive than what the agreement
categorically commands that '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."

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 (J. Salonga, Private International Law, 1981, p.
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 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. LLphil

The defense of private respondents that the complaint should have been led in Singapore
is based merely on technicality. They did not even claim, much less prove, that the ling of
the action here will cause them any unnecessary trouble, damage, or expense. On the other
hand, there is no showing that petitioner BANK led the action here just to harass private
respondents.
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 In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30
SCRA 187, it was ruled:
". . . An accurate reading, however, of the stipulation, "The parties agree to sue and
be sued in the Courts of Manila,' does not preclude the ling 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
le 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 speci cally mentioned in Section 2(b) of Rule 4. Renuntiatio non
praesumitur."
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al.,
G.R. No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was "(i)n case of
litigation, jurisdiction shall be vested in the Court of Davao City." We held:
"Anent the claim that Davao City had been stipulated as the venue, su ce it to
say that a stipulation as to venue does not preclude the ling of suits in the
residence of plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in
the absence of qualifying or restrictive word a in the agreement which would
indicate that the place named is the only venue agreed upon by the parties."

Applying the foregoing to the case at bar, 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 de ned as the right 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 traveling 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 nds 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 t by making its courts and
agencies assume jurisdiction over all kinds of cases brought before them (J. Salonga,
Private International Law, 1981, pp. 37-38).
As regards the issue on improper venue, petitioner BANK avers that the objection to
improper venue has been waived. However, We agree with the ruling of the respondent
Court that:
"While in the main, the motion to dismiss fails to categorically use with exactitude
the words 'improper venue' it can be perceived from the general thrust and context
of the motion that what is meant is improper venue. The use of the word
'jurisdiction' was merely an attempt to copy-cat the same word employed in the
guarantee agreement but conveys the concept of `venue.' Brushing aside all
technicalities, it would appear that jurisdiction was used loosely as to be
synonymous with venue. It is in this spirit that this Court must view the motion to
dismiss. . . ." (p. 35, Rollo).

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.
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 The respondent Court likewise ruled that (pp. 36-37, Rollo):
" . . .In a convict problem, a court will simply refuse to entertain the case if it is not
authorized by law to exercise jurisdiction. And even if it is so authorized, it may
still refuse to entertain the case by applying the principle of forum non
conveniens. . . ."
However, whether a suit should be entertained or dismissed on the basis of the
principle of forum non conveniens depends largely upon the facts of the particular case
and is addressed to the, sound discretion of the trial court (J. Salonga, Private
International Law, 1981, p. 49). Thus, the respondent Court should not have relied on
such principle.
Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of
adhesion and that consequently, it cannot be permitted to take a stand contrary to the
stipulations of the contract, substantial bases exist for petitioner BANK's choice of forum,
as discussed earlier.
Lastly, private respondents allege that neither the petitioner based at Hongkong nor its
Philippine branch is involved in the transaction sued upon. This is a vain attempt on their
part to further thwart the proceedings below inasmuch as well-known is the rule that a
defendant cannot plead any defense that has not been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision
of the Regional Trial Court is REINSTATED, with costs against private respondents. This
decision is immediately executory.
SO ORDERED.
Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.

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