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



 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.

 In International Law, jurisdiction is often defined as the right of a State to exercise authority over
persons and things within its boundaries subject to certain exceptions.

FACTS: A complaint for collection of sum of money was filed by Hongkong Shanghai Banking
Corporation (HSBC) against here private respondents because of the loan granted by the HSBC Singapore
Branch to Eastern Book Supply PTE, Ltd. whereby private respondents, who were all directors of the said
company during that time, agreed to pay jointly and severally, on demand all sums owed by Eastern to
HSBC, which was evident in the Joint and Several Guanrantee duly signed by the private respondents. Due
to the company’s failure to pay, HSBC demanded payment to the respondents but to no avail, hence the
aforestated complaint.
The private respondents moved for a Motion to Dismiss before the RTC of Quezon City on the
ground that the court has no jurisdiction over the subject matter as well as over the persons. The reason that
the private respondents interposed was that it was the courts of Singapore that has jurisdiction over the case
because the transaction took place in a Singaporean setting. On the second argument that the court has no
jurisdiction over the person was because Robert Sherman was not a Filipino citizen nor a resident of the
Philippines. Both arguments hold no water, hence the Motion to Dismiss was denied. A motion for
reconsideration was filed but was denied. Thereafter, a petition for prohibition with preliminary injunction
and/or prayer for a restraining order was submitted to the appellate court, which it granted. HSBC, filed a
motion for reconsideration, to no avail, hence, the present petition.

ISSUE: Whether or not Philippine courts have jurisdiction over the suit
Whether or not there is improper venue

RULING: Yes. In the case of Neville vs Lagamon it was ruled by the Supreme Court that a stipulation
as to venue does not preclude the filing 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 words in the agreement which would
indicate that the place named is the only venue agreed upon by the parties.
The court likewise ruled that the issue of venue now is of no moment because the venue, in this case, was
properly laid down. In a conflict problem, a court will simply refuse to entertain the case if it is not

Pahati, Pia Roelen C.

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. Thus, the appellate 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.

Pahati, Pia Roelen C.