CONFLICT OF LAWS

Dean Ulpiano Sarmiento III

4S 2014-2015
Group 1:
Abasta, Sancho III
Dela Fuente, Rafael Kenneth
Morales, Jonathan Gil
Rodriguez, Earl Allende
I.

INTRODUCTION TO CONFLICT OF LAWS/PRIVATE INTERNATIONAL LAW (Sancho Abasta)

A. Nature, Definition and Scope
Definition: Salonga - Private International Law or Conflict of Laws is that part of the law
of each state which determines whether in dealing with a factual situation involving a
foreign element, the law or judgment of some other state will be recognized or applied
in the forum.
The primary function of this department of law is to determine whether the rules of law
or the judgments of some other state or states, and if so, to what extent, should be
recognized or applied in the forum.
Westlake that department of private jurisprudence which determines before the
courts of what nation each suit should be brought and by the law of what nation it
should be decided.
Judge Goodrich that part of the law which deals with the extent to which the law of a
state operates and determines whether the rules of one or another state should be
applied in a legal situation.
The Second American Restatement that part of the law of each State which
determines what effect is given to the fact that the case may have a significant
relationship to more than one State.
Prof. Brainerd Currie that branch of law designed to deal with conflicts between the
interests of two or more States in applying the policies embodied in their respective
laws.
B. Subject
Private International Law and Conflict of Laws
Private International Law not international but national law
Conflict of laws suggests that all that occurs is a conflict of different laws and
legal systems.
C. Elements of a Conflict of Laws Questions
Problems in the Conflict of Laws arise due to the concurrence of two factors:
(1) the division of the world into different states or territorial units, each state or unit
having different systems of laws; and
(2) the presence of a situation containing a foreign element, that is to say, an event or
transaction affected by the diverse laws of two or more states or territorial units.
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D. Importance and Function

According to Salonga, the function of Private International Law has 3 folds:
(1) To prescribe the conditions under which a court or agency is competent to entertain
a suit or proceeding involving facts containing a foreign element;
(2) To specify the circumstances in which foreign judgment will be recognized as valid
and binding in the forum; and
(3) To determine for each class of cases the particular system of law by reference to
which the rights of the parties must be ascertained this is the fundamental
problem of choice of law
4 important points:
1. Rules of Private International Law, like all other rules of law, apply only to certain
given facts not characterized as creating some legal relationship;
2. The selection of legal systems open to the court is limited to those that are
simultaneously valid;
3. The legal effects of a certain set of facts are not always determined by one single legal
system.
Cumulative application:
a given set of facts may produce legal effects each of which is
governed by a different legal system;
or a given set of facts may produce legal effects only if certain
conditions common to two legal systems are fulfilled
Alternative application: under the Philippine law, if an alien executes a will in
the Philippines, the formal validity of the will may be judged alternatively by the
requirement of internal Philippine law or of his own national law (Art. 817, Civil
Code). If either law considers it formally valid, it may be admitted to probate.

E. Distinguished from Domestic Law

Regarding incidental questions, in purely domestic cases, this poses no difficulty
because a judge will freely move from one domestic law to another to resolve the
dispute. But in a conflict case, the question is whether the incidental question is
resolved by reference either to its own choice of law rules, or to the same law that
governs the main issue.
F. Distinguished from Public International Law

Character

Public International Law

International in nature

Conflict of Laws
National or municipal in
character
Exc: embodied in a
convention (Warsaw
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Source
Recourse

Others

II.

Common will of States

Diplomatic channels,
good offices, mediation,
conciliation, arbitration,
etc.
(traditional PIL)
(1) deals for most part
with
States
(2) recognizes only
transactions in which
sovereign states are
interested

Convention of 1929)
Will of a particular State
National or municipal
tribunals

(1) deals with private

individuals (state has no
direct interest)
(2) assumes control over
transactions strictly
private
in nature, in which the
state
as such generally has no
interest (private
transactions)

HISTORICAL DEVELOPMENT AND SOURCES (Jong Morales)

A. History
(1) Earliest Period Theory of Statutes (12th 18th Centuries)
Rise of Italian city-states (Florence, Milan, Bologna, Pisa, Venice, Padua and
Medina) due to their growing wealth and progress in trade and commerce.
Bartolus (1314-1347) Father of Private International Law
Real statutes (statuta realia) applied to immovable within the territory;
Personal statutes (statuta personalia) applied to and followed a person
outside his domicile, such as laws on personal status and those concerned
movables (mobilia sequuntur personam); Mixed statutes (statuta mixta) contracts
(2) The French jurists of the 16th Century
Different French provinces had separate systems of law called coutume or
customs.
Charles Dumoulin (1500 1566) - Doctrine: Parties to the contract could
choose the law that was to govern their agreement.
Bertrand DArgentre (1519 1590) Doctrines:
1. Whenever there was any doubt as to whether a statutory rule was
personal or real, presumed it is real;
2. In matters of succession, where a person leaves immovables in various
countries, the law of the countries concerned should be applied
respectively to the immovable therein situated rather than for the latter
to be regulated by one and only one law.

(3) The Doctrine of Comitas Gentium (17th Century)

Doctrine of Pure Territoriality
1. Laws of every state operate within the territorial limits, and such is
binding to all subjects but not beyond those limits;
2. Subjects of a state are all those who are found within the limits of its
territory, whether they reside there permanently or whether their
presence there is only temporary.
Doctrine of Comity
3. Every sovereign, out of comity, admits that a law which has already
operated in the country of origin shall retain its force everywhere,
provided that this will not prejudice the subjects of the sovereign by
whom its recognition is sought.
(4) Beginning of Codifications
Prussian General Code of 1794 made emphasis of res magis valet quam,
which as applied to Private International Law:
1. If a person has 2 domiciles, which is possible under European laws, that
domicile is decisive under the law of which the contract or act in
question is valid;
2. If a person domiciled abroad enters into contract within Prussian
territory respecting chattels there, the contract is valid if under the law
is either (his domicile or that of Prussia) he is capable of entering into
contracts.
Other codes Bavarian Code of 1756, French Civil Code of 1804, The Code
of Napoleon.
(5) 19th Century jurists
Two Groups of Writers in Private International Law:
Theoritical
Positive
Deductive method
Inductive method
Begins with a set of priori principles to
Studies actual rules in force and reduce
derive a body of consistent rules.
them to systematic order; do not claim
universal validity.

Joseph Story
- American judge, Commentaries on the Conflict of Laws (1834)
- Maxims:
1. Every nation possesses an exclusive sovereignty and jurisdiction
within its own territory that directly binds all properties within
its territory, and all persons who are residents within it
(territorial sovereignty);

2. No state or nation can by its law directly affect or bind property

out of its own territory, or bind persons not resident therein,
whether they are natural born subjects or others.

Friedrich Carl von Savigny

- Great German jurist, System of Modern Roman Law (1849)
- It is expedient that in cases containing a foreign element, the same
legal relations have to expect the same decision whether the
judgment be pronounced in this state or in that.

Pasquale Stanislao Mancini

- Nationality as the Basis of the Law of Nations (1851)
- Opposing the rule on domicile, Mancini asserts the rule of
nationality, the components of which are: religion, customs of life,
language, race of the people, historical traditions, even the
landscape of the country and its climate
- Personality of an individual is determined only by his nationality; an
individuals personality is recognized only if his nationality is
recognized.

(6) Modern Developments

Neo-statutory system
- two or more independent laws are applicable to conflicts problem
and then proceed to devise some method to determine the law that
shall prevail.
International system
- There exists or should exist, a single body of international rules that
can and should solve all legal problems that involve a foreign
element.

Territorial system
- Only the law of a state applies to persons and things within its
territory. Foreign law is not applied in the forum.

(7) History in the Philippines

The American occupation of the islands and the importation of American

legal concepts and institutions.

B. Sources
(1) Codifications
Napoleonic Code of 1804
German Civil Code of 1896
The Polish Code of Private International Law of 1926
The Italian Code of December 12, 1938
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The Greek Code of March 15, 1940

The Civil Code of the Philippines (RA 386) August 30, 1950
The Code of Commerce of December 1, 1888
The Insurance Code of December 18, 1974

(2) Special Legislation

Foreign Investments Acts of 1991 (RA 7012)
Corporation Code of the Philippines (BP 68)
General Banking Act (RA 337)
Trade Marks and Trade Names Law (RA 166)
The Patent Law (RA 165)
Carriage of Goods by Sea Act (Com. Act 65)
Investment Incentives Act (RA 5186)
Export Incentives Act (RA 6135)
(3) Multilateral Treaties and International Conventions
2 methods of avoiding or minimizing conflicts:
1. To secure by international conventions or treaties the unification of the
internal rules or laws of the various countries or territorial units upon as
many legal subjects as possible;
2. To unify the rules of Private International Law so that a case involving a
foreign element may be decided in the same way, irrespective of the forum
or place of litigation.
(4) Bipartite Treaties
Includes status of aliens, capacity of individuals and business organizations,
judicial assistance, and enforcement of foreign judgments.
(5) Case Law
3 categories:
1. Those which are based on the assumption, though not expressed in clear
language, that only Philippine internal rules govern any problem. This is
noticeable in cases involving contracts and personal status;
2. Those which adopt Anglo-American doctrines and precedents without
regard to the provisions contained in the Civil Code; this is true in cases of
validity of foreign divorces;
3. Those cases which attempted to introduce Anglo-American rules and
doctrines, which a view not only to filling up the gaps by the Civil Code, but
also to merge and harmonize them with established Civil law principles.
(6) International Customs; Law of Nations
1. Immovable property is governed by the law of the situs;
2. Formalities of a legal act are governed by the law of the place where it is
executed; and

3. Tort is governed by the law of the place where the tortuous act was
committed.
(7) The Constitution
Citizenship and naturalization laws
Article IV of the 1935 Constitution, Article III of the 1973 Constitution under
martial law, and Article IV of the 1987 Constitution enumerate who are the
citizens of the Philippines.
(8) Indirect Sources
Natural Law presupposes a body of ideal precepts of universal validity for
all people, at all times, and in all places, derived from the idea of what an
ideal man would do and would not do, would claim and would concede as
the claim of others, and arrived at by pure reason.
Works and treatises of jurists and writers actually influenced courts and
legislatures to adopt their views in the resolution of conflicts probhlems.
III.

JURISDICTION AND CHOICE OF FORUM (Earl Rodriguez and Rafael Dela Fuente)
Ways Of Disposing Of Conflicts Cases:
(1) Dismiss the case, either because of lack of jurisdiction or refusal to assume jurisdiction
over the case;
(2) Assume jurisdiction over the case and apply the internal law of the forum;
(3) Assume jurisdiction over the case and take into account or apply the law of some other
State or states.
Judicial Jurisdiction:

Jurisdiction the right of a state (due to sovereignty) to exercise authority over

persons and things within its boundaries, subject to certain exceptions (ie over
traveling sovereigns, ambassadors and diplomatic representatives, etc).
Judicial jurisdiction legal authority of a state to exercise authority, through its
courts or agencies, to hear and adjudicate cases; power of a court or agency to hear
and determine an issue upon which its decision is sought.
Legislative jurisdiction the power of a state to regulate or control, through rules
of law, interests or persons in a thing, event or situation.

Types Of Jurisdiction
(1) Jurisdiction over the Subject Matter the power to hear and determine cases of
the general class to which the proceedings in question belong and is conferred by
the sovereign authority which organizes the court and defines its powers.
(2) Personal Jurisdiction competence of a court to render a decision that will bind the
parties to the suit.
Jurisdiction over the plaintiff
Jurisdiction over the defendant
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(3) Jurisdiction over the Res (actions in rem, quasi in rem, in personam) - jurisdiction
over the particular subject matter in controversy, regardless of the persons who
may be interested therein.
action in rem purpose of the suit is to affect the interests of all persons in
a thing, the state may render through its courts a valid judgment, as long as
it has jurisdiction over the thing even though it may not have personal
jurisdiction over the persons whose interests are affected.
proceedings quasi in rem purpose is neither to impose a personal liability
or obligation upon anyone, not to affect the interests of all persons in a
thing but to affect the interests of particular persons in a thing.
(4) Jurisdiction and the Due Process Clauses
proceeding in rem service of summons by publication is sufficient because
the case is enforced against the rest of the world.
proceeding in personam personal service of summons or voluntary
appearance of the defendant, by himself or counsel, is required.
proceeding quasi in rem summons by publication is sufficient.
A. Choice of Forum
(1) Dismissing the case; the principle of forum non conveniens
In the US, even though the court has jurisdiction, it will not entertain the suit if
it believes itself to be a seriously inconvenient forum, provided that a more
convenient forum is available to plaintiff.
Professor Scoles and Hay considerations of justice and convenience to all
concerned may lead the court in its discretion to refuse to exercise its
jurisdiction and to force the plaintiff to sue the defendant in a more
appropriately available forum.
3 factors are considered for most convenient forum:
1. Whether the forum is one to which the parties may conveniently
resort;
2. Whether it is in a position to make an intelligent decision as to the
law and the facts; and
3. Whether it has or is likely to have power to enforce its decision (the
principle of effectiveness judge has no right to pronounce a
judgment if it cannot enforce it).
(2) Application of Internal or Domestic Law
The court is to take cognizance of the case and apply domestic law. The only
EXCEPTION: a foreign sovereign, diplomatic official, or public vessel or
property of another State is involved, or where a state has, by treaty,
accepted limitations upon its jurisdiction over certain persons or things.
3 instance when the forum has to apply the internal or domestic law:
1. Where application of internal law is decreed
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Examples: (a) lex situs; and (b) Article 80 of the Family Code.
2. Where there is failure to plead and prove foreign law
RULE: courts dont take judicial notice of foreign law. The foreign
law so invoked must be pleaded and proved, otherwise it is
presumed that such foreign law is similar to Philippine law.
3. Where a case involves any of the exceptions to the application of
foreign law
Exceptions:
(a) The enforcement of the foreign law would run counter to an
important public policy of the forum;
(b) Where the application of the foreign law would infringe
good morality as understood in the forum;
(c) When the foreign law is penal in nature;
(d) Where the foreign law is procedural in nature;
(e) When the question involves immovable property in the
forum;
(f) When the foreign law is fiscal or administrative in nature;
(g) Where the application of foreign law would involve injustice
or injury to the citizens or residents of the forum;
(h) Where the application of foreign law would endanger the
vital interests of the state.
B. Sweet Lines, Inc. vs. Teves, et al., G.R. No. L-37750 (19 May 1978)
Facts: Respondents Atty. Leovigildo Tandog and Rogelio Tiro, bought tickets for Voyage
90 on December 31, 1971 at the branch office of petitioner, Sweet Lines Inc., a shipping
company transporting inter-island passengers and cargoes, at Cagayande Oro City.
Tandog and Tiro were to board Sweet Lines vessel, M/S "Sweet Hope" bound for
Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding
to Bohol (since many passengers were bound for Surigao), Tandog and Tiro, per advice,
went to the branch office for proper relocation to M/S "Sweet Town". Because the said
vessel was already filled to capacity, they were forced to agree "to hide at the cargo
section to avoid inspection of the officers of the Philippine Coastguard."Tandog and Tiro
alleged that they were exposed to the scorching heat of the sun and the dust coming
from the ship's cargo of corn grits during the trip and that the tickets they bought at
Cagayan de Oro City for Tagbilaran were not honoured and they were constrained to
pay for other tickets. Hence, they sued Sweet Lines for damages and for breach of
contract of carriage in the alleged sum of P10,000.00 before CFI of Misamis Oriental.
Sweet Lines moved to dismiss the complaint on the ground of improper venue based on
the condition printed at the back of the tickets: 14. It is hereby agreed and understood
that any and all actions arising out of the conditions and provisions of this ticket,
irrespective of where it is issued, shall be filed in the competent courts in the City of
Cebu. The motion was denied. MR was filed but was also denied. Hence, this instant
petition for prohibition for preliminary injunction, 'alleging that the respondent Judge
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Teves has departed from the accepted and usual course of judicial proceeding" and" had
acted without or in excess or in error of his jurisdiction or in gross abuse of discretion.
Issue: May a common carrier engaged in inter-island shipping stipulate thru a condition
printed at the back of passage tickets to its vessels that any and all actions arising out of
the contract of carriage should be filed only in a particular province or city, in this case
the City of Cebu, to the exclusion of all others?
[Claims of Sweet Lines:
1. Condition No. 14 is valid and enforceable, since Tandog and Tiro acceded to it when
they purchased passage tickets at its Cagayan de Oro branch office and took its vessel
M/S "Sweet Town" for passage to Tagbilaran, Bohol;
2. The condition of the venue of actions in the City of Cebu is proper since venue may be
validly waived;
3. Condition No. 14 is unequivocal and mandatory, the words and phrases "any and all",
"irrespective of where it is issued," and "shag" leave no doubt that the intention of
Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of other places;
4. The orders of the respondent Judge are an unwarranted departure from established
jurisprudence governing the case; and that he acted without or in excess of his
jurisdiction in is the orders complained of]
[Claims of Tandog and Tiro:
1. Condition No. 14 is not valid, since the same is not an essential element of the
contract of carriage, being in itself a different agreement which requires the mutual
consent of the parties to it;
2. They had no say in its preparation, the existence of which they could not refuse,
hence, they had no choice but to pay for the tickets and to avail of Sweet Lines shipping
facilities out of necessity;
3. The carrier "has been exacting too much from the public by inserting impositions in
the passage tickets too burdensome to bear," that the condition which was printed in
fine letters is an imposition on the riding public and is not binding, citing - while venue
of actions may be transferred from one province to another, such arrangement requires
the "written agreement of the parties", not to be imposed unilaterally]
Held: There was a valid contract of carriage entered into by Sweet Lines and Tandog and
Tiro. Furthermore, the passage tickets are the best evidence thereof. All the essential
elements of a valid contract (consent, cause or consideration and object) are present.
Whenever a passenger boards a ship for transportation from one place to another, he is
issued a ticket by the shipper, which has all the elements of a written contract: (1)the
consent of the contracting parties manifested by the fact that the passenger boards the
ship and the shipper consents or accepts him in the ship for transportation; (2) cause or
consideration which is the fare paid by the passenger as stated in the ticket; (3) object,

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which is the transportation of the passenger from the place of departure to the place of
destination which are stated in the ticket.
However, in this case, with respect to the 14 conditions printed at the back of the
passage tickets, these are commonly known as "contracts of adhesion," the validity
and/or enforceability of which will have to be determined by the peculiar circumstances
obtaining in each case and the nature of the conditions or terms sought to be enforced.
Generally, stipulations in a contract come about after deliberate drafting by the parties.
However, there are certain contracts almost all the provisions of which have been
drafted only by one party. Such contracts are called contracts of adhesion, because the
only participation of the other party is the signing of his signature or his 'adhesion'.
Insurance contracts, bills of lading, contracts of make of lots on the instalment plan fall
into this category.
By the peculiar circumstances under which contracts of adhesion are entered into, in
which the other party, in this case, the passengers, who are made to adhere thereto on
the "take it or leave it" basis, certain guidelines in the determination of their validity
and/or enforceability have been formulated for justice and fair play.
In recognition of the character of contracts of this kind, the protection of the
disadvantaged is expressly enjoined by the New Civil Code: Art. 24. In all contractual
property or other relations, when one of the parties is at a disadvantage on account of
his moral dependence, ignorance indigence, mental weakness, tender age and other
handicap, the courts must be vigilant for his protection.
In line with that, the court ruled that Condition No. 14 should be held as void and
unenforceable for the following reasons:
1. Under circumstances obligation in the inter-island shipping industry, it is not just
and fair to bind passengers to the terms of the conditions printed at the back of the
passage tickets.
There is an acute shortage in inter-island vessels plying between the country's several
islands, and with that, the facilities they offer leave much to be desired, thus,
passengers literally scramble to whatever accommodations may be availed of, even
through circuitous routes, and/or at the risk of their safety and this was precisely the
experience of Tandog and Tiro. Under these circumstances, it is hardly just and proper
to expect the passengers to examine their tickets for conditions that may be printed
much charge them with having consented to the conditions, so printed, especially if
there are a number of such conditions in fine print, as in this case.
Also, it should also be stressed that companies are franchise holders of certificates of
public convenience and therefore, possess a virtual monopoly over the business of
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transporting passengers between the ports covered by their franchise. This being so,
shipping companies, like Sweet Lines, engaged in inter-island shipping, have a virtual
monopoly of the business of transporting passengers and may thus dictate their terms
of passage, leaving passengers with no choice but to buy their tickets and avail of their
vessels and facilities.
Lastly, bulk of those who board these inter-island vessels come from the low-income
groups and are less literate, and who have little or no choice but to avail of petitioner's
vessels.
2. Condition No. 14 subverts the public policy on transfer of venue of proceedings of
this nature, since the same will prejudice rights and interests of innumerable
passengers from different places of the country who, under Condition No. 14, will
have to file suits against Sweet Lines only in the City of Cebu.
For, although venue may be changed or transferred from one province to another by
agreement of the parties in writing, based on Rule 4, Section 3, of the Rules of Court,
such an agreement will not be held valid where it practically negates the action of the
claimants. The philosophy underlying the provisions on transfer of venue of actions is
the convenience of the plaintiffs as well as his witnesses and to promote the ends of
justice.
Considering the expense and trouble a passenger residing outside of Cebu City would
incur to prosecute a claim in the City of Cebu, he would most probably decide not to file
the action at all. The condition will defeat the ends of justice.
On the other hand, Sweet Lines has branches or offices in the respective ports of call of
its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in
the CFI of Misamis Oriental will not cause inconvenience or prejudice Sweet Lines.
Public policy is that principle of the law, which holds that no subject or citizen can
lawfully do that which has a tendency to be injurious to the public or against the public
good. Under this principle, the freedom of contract or private dealing is restricted by
law for the good of the public.
Petition for prohibition was dismissed.
Separate Opinions BARREDO, J., concurring: Although, agreements regarding change of
venue are enforceable, there may be instances where for equitable considerations and
in the better interest of justice, a court may justify the laying of the venue in the place
fixed by the rules instead of following written stipulation of the parties. I take it that the
importance that a stipulation regarding change of the venue fixed by law entails is such
that nothing less than mutually conscious agreement as to it must be what the rule
means.
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C. HSBC vs. Jack Robert Sherman, et al., G.R. No. 72494 (11 August 1989)
FACTS: In 1981, Eastern Book Supply Service PTE, Ltd., (Eastern) a company
incorporated in Singapore applied w/, & was granted by the Singapore branch of HSBC
an overdraft facility in the max amount of Singapore $200,000 (w/c amount was
subsequently increased to Singapore $375,000) w/ interest at 3% over HSBC prime rate,
payable monthly, on amounts due under said overdraft facility. As a security for the
repayment by Eastern of sums advanced by HSBC to it through the aforesaid overdraft
facility, in 1982, Jack Sherman, Dodato Reloj, and a Robin de Clive Lowe, all of whom
were directors of Eastern at such time, executed a Joint and Several Guarantee in favor
of HSBC whereby Sherman, Reloj and Lowe agreed to pay, jointly and severally, on
demand all sums owed by Eastern to HSBC under the aforestated overdraft facility.
The Joint and Several Guarantee 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.
Eastern failed to pay its obligation. Thus, HSBC demanded payment of the obligation
from Sherman & Reloj, conformably w/ the provisions of the Joint and Several
Guarantee. Inasmuch as Sherman & Reloj still failed to pay, HSBC filed a complaint for
collection of a sum of money against them. Sherman & Reloj filed a motion to dismiss on
the grounds that (1) the court has no jurisdiction over the subject matter of the
complaint, and (2) the court has no jurisdiction over the person of the defendants.
Issue: W/N Philippine courts should have jurisdiction over the suit.
Held: YES. 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 "this guarantee and all rights,
obligations & liabilities arising hereunder shall be construed & determined under & may
be enforced in accordance w/ 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 HSBC 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, w/ more
reason as a defendant. However, in this case, Sherman & Reloj are Philippine residents
(a fact which was not disputed by them) who would rather face a complaint against
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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. Their
stance is hardly comprehensible, unless their ultimate intent is to evade, or at least
delay, the payment of a just obligation.
The defense of Sherman & Reloj 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
Sherman & Reloj.
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 w/in 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 w/ the permission of the
latter's authorities. This authority, which finds its source in the concept of sovereignty, is
exclusive w/in 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.

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