Hongkong and Shanghai Banking Corporation v. Sherman
REITERATIONFacts
1. The Antecedents: The underlying dispute involves a complaint for collection of a sum of money filed by Hongkong and Shanghai Banking Corporation (HSBC) against Jack Robert Sherman and Deodato Reloj. The debt originated from an overdraft facility granted by HSBC's Singapore branch to Eastern Book Supply Service PTE, Ltd., a Singaporean company. As security for this facility, Sherman and Reloj, directors of the company, executed a Joint and Several Guarantee, agreeing to pay HSBC on demand all sums owed by the company. The guarantee stipulated that it and all related rights, obligations, and liabilities would be construed and enforced according to the laws of the Republic of Singapore, and that the Courts of Singapore would have jurisdiction over all disputes arising under the guarantee. 2. Procedural History: Following the company's failure to pay and HSBC's demand for payment from Sherman and Reloj, HSBC filed a complaint for collection in the Regional Trial Court (RTC) of Quezon City. Sherman and Reloj filed a motion to dismiss, arguing that the court lacked jurisdiction over the subject matter and the persons, citing the jurisdiction clause in the guarantee. The RTC denied this motion, finding that the guarantee did not exclusively vest jurisdiction in Singaporean courts and that jurisdiction over the persons was established by valid service of summons and their subsequent appearance. After the RTC denied their motion for reconsideration, Sherman and Reloj filed a petition for prohibition with preliminary injunction before the Intermediate Appellate Court (IAC). The IAC granted the petition, enjoining the RTC from further proceeding and ordering the dismissal of the case, ruling that the stipulation for Singaporean jurisdiction was mandatory and that Singapore was the proper forum. 3. The Petition: This case is before the Supreme Court on a petition for review on certiorari filed by HSBC. The petition challenges the IAC's decision which reversed the RTC's order and dismissed HSBC's complaint. HSBC argues that the IAC erred in finding that Philippine courts lacked jurisdiction. The core of the dispute lies in the interpretation of the jurisdiction clause in the Joint and Several Guarantee. HSBC contends that the clause, while designating Singaporean law and courts, did not exclusively divest Philippine courts of jurisdiction, citing precedents that such stipulations are permissive rather than restrictive unless explicitly stated. HSBC also argues that the IAC improperly applied the principle of forum non conveniens and that the private respondents waived any objection to venue by not properly raising it. The petition seeks to reinstate the RTC's order denying the motion to dismiss.
Issue(s)
Whether Philippine courts have jurisdiction over the collection suit despite the stipulation in the Joint and Several Guarantee designating the Courts of Singapore as having jurisdiction over disputes, and if the principle of forum non conveniens applies. Whether the private respondents waived their objection to venue by not explicitly using the term 'improper venue' in their motion to dismiss, and whether venue was properly laid in the Philippines.
Ruling
The decision of the respondent Intermediate Appellate Court is REVERSED, and the decision of the Regional Trial Court is REINSTATED. The case is dismissed against private respondents. Costs against private respondents. This decision is immediately executory.
Ratio Decidendi
On the issue of jurisdiction and choice of forum: The Supreme Court held that the stipulation in the Joint and Several Guarantee, stating that "We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee," does not divest Philippine courts of jurisdiction. The Court reiterated the principle that jurisdiction is conferred by law and cannot be conferred or waived by the parties' agreement alone. Citing Polytrade Corporation vs. Blanco and Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al., the Court explained that such a stipulation is merely permissive and does not preclude the filing of suits in other forums, especially in the absence of restrictive words indicating exclusivity. The Court noted that the private respondents, who are Philippine residents, are seeking to litigate in a foreign court, which is an unusual stance, suggesting a possible intent to evade or delay payment. The Court found no basis to apply the principle of forum non conveniens as the private respondents did not prove any unnecessary trouble, damage, or expense from litigating in the Philippines, nor was there a showing that the BANK filed the action to harass them. The Court also pointed out that the Guarantee, being a contract of adhesion, should not be permitted to prejudice the BANK's choice of forum when substantial bases exist for it. On the issue of waiver of venue: The Supreme Court agreed with the respondent Court's observation that while the motion to dismiss did not explicitly use the words 'improper venue,' its general thrust and context conveyed the concept of improper venue. The Court noted that the use of the word 'jurisdiction' was likely an attempt to mirror the language in the guarantee agreement but conveyed the concept of venue. Brushing aside technicalities, the Court viewed the motion to dismiss in this spirit. Therefore, the objection to venue was considered properly raised. However, the Court ultimately found that venue was properly laid in the Philippines based on the preceding discussion regarding jurisdiction and choice of forum.
Main Doctrine
A stipulation in a contract designating a specific court to have jurisdiction over disputes arising therefrom does not divest Philippine courts of jurisdiction, nor does it preclude the filing of suits in other forums, unless restrictive words indicating exclusivity are present. The objection to venue must be raised at the earliest opportunity.