STATE INVESTMENT HOUSE, INC. ANS STATE FINANCING CENTER, INC. VS CITIBANK, BANK OF AMERICA AND HONGKONG AND SHANGHAI BANK
ISSUE:
Whether or Not foreign banks licensed to do business in the Philippines, may be considered “residents of the Philippine Islands” as contemplated in Sec. 2 of Insol!ency "a# $n ad%udication of insol!ency may be made on the petition of three or more creditors, residents of the Philippine islands, #hose credits or demands accrued int hr Philippine Islands, and the amount of #hich credits or demands are in the aggregate not less than one thousand pesos. FACTS&
'he foreign banks in!ol!ed in the case are (ank of $merica, )itibank, and *ongkong and Shanghai (anking )orporation, all of #hom are creditors of )onsolidated +ines, Inc. )+I-. n /ecember 00, 010, the three banks %ointly filed #ith the 3') of 3i4al a petition for In!olu In!olunta ntary ry Insol! Insol!enc ency y of )+I. )+I. $mong $mong the ground grounds s allege alleged d by the foreig foreign n banks banks is )+I5s )+I5s commission of specific acts of insol!ency, i.e. that )+I suffered its property to remain under attachment for three days for the purpose of hindering or delaying or defrauding its creditors and that )+I has defaulted in the payment pa yment of its current obligations for a period of thirty days. 'he petition for in!oluntary insol!ency #as opposed by herein petitioners State In!estment *ouse, Inc. SI*I- and State 6inancing )enter, Inc. S6)I-. SI*I and S6)I claimed, among others others,, that that the court court had no %urisd %urisdict iction ion to take take cogni4 cogni4anc ance e of the petiti petition on for insol! insol!enc ency y because because the foreign foreign banks are not resident resident creditors of )+I as re7uired under the Insol!ency Insol!ency "a#. 'he 3') rendered %udgment in fa!our of SI*I and S6)I for lack of %urisdiction o!er the sub%ect matter. 'he court ruled that the insol!ency court could not ac7uire %urisdiction to ad%udicate the debtor )+I- as insol!ent because the foreign banks are not “residents of the Philippines”. n petition for re!ie#, the )$ rendered order re!ersing the %udgment of the 3'). 'he )$ ruled that the three banks are residents of the Philippines for the purpose of doing business in the Philippines, and that the Insol!ency "a# #as designed for the benefit of both the creditors and debtors. 'he )$ also reiterated that the authority granted to the three banks by the S8) co!ers not only transacting banking business, but also maintaining suits for the reco!ery of any debt and claims. *ence, SI*I and S6)I brought their appeal before the S) RULING:
'the S) ruled that since the Insol!ency "a# did not mention of the meaning of “residents of the Philippine Islands”, the better approach #ould be to harmoni4e the pro!isions of the )orporation )ode, the 9eneral (anking $ct, the ffshore (anking "a# and the NI3). *ence, the )ourt ruled that it is not really the grant of a license to a foreign corporation to do business in the Philippines that makes it a resident. 'he license merely gi!es legitimacy to its doing doing busine business ss in the country country.. What effect effecti!e i!ely ly makes makes such such foreig foreign n corpor corporati ation on a reside resident nt corporation in the Philippines is its actually being in the Philippines and licitly doing business here, or the “locality of e:istence”, #hich is the necessary element.
SUABILITY OF FOREIGN CORPORATIONS
No foreign corporation transacting business in the Philippines #ithout a license, shall be permitted to maintain or inter!ene in any action, suit or proceeding in any court or administrati!e agency in the Philippines. METHODS OF CORPORATE DISSOLUTION:
0. ;oluntary dissolution < by filing proper papers #ith S8). 2. In!oluntary dissolution < upon !erified complaint filed #ith S8) on grounds authori4ed by la#, i.e serious dissension =non>user of franchise, etc. ?. 8:piration of the term of the corporation @. Shortening of corporate term A. 6ailure to organi4e and commence business #ithin t#o years from date of issuance of certificate of incorporation, or B. "egislati!e dissolution 93CN/S 63 IN;"CN'$3D /ISS"C'IN 0. 6raud or misrepresentation as to the paid>up capital of the corporation 2. +isinterpretation ?. Cltra !ires < mala prohibita, but too numerous infractions, #hich is persistent despite S8) #arnings @. )ontinuous inacti!ity of the corporation for at least A years A. 3efusal to adopt or appro!e by>la#s
