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, 0120, the three banks %ointly filed #ith the 3') of 3i4al a petition for
In!oluntary Insol!ency of )+I. $mong the grounds alleged by the foreign banks is )+I5s
commission of specific acts of insol!ency, i.e. that )+I suffered its property to remain under
attachment for three days for the purpose of hindering or delaying or defrauding its creditors and
that )+I has defaulted in the payment of its current obligations for a period of thirty days.
'he petition for in!oluntary insol!ency #as opposed by herein petitioners State In!estment
*ouse, Inc. ,SI*I- and State 6inancing )enter, Inc. ,S6)I-. SI*I and S6)I claimed, among
others, that the court had no %urisdiction to take cogni4ance of the petition for insol!ency
because the foreign banks are not resident creditors of )+I as re7uired under the Insol!ency
"a#.
'he 3') rendered %udgment in fa!our of SI*I and S6)I for lack of %urisdiction o!er the sub%ect
matter. 'he court ruled that the insol!ency court could not ac7uire %urisdiction to ad%udicate the
debtor ,)+I- as insol!ent because the foreign banks are not residents of the Philippines.
.n petition for re!ie#, the )$ 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 business in the country. What effecti!ely makes such foreign corporation a resident
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
93.CN/S 6.3 IN;."CN'$3D /ISS."C'I.N
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