Case Digest (G.R. No. 79926-27)
Facts:
State Investment House, Inc. and State Financing Center, Inc. v. Citibank, N.A., Bank of America, NT & SA, Hongkong & Shanghai Banking Corporation, and the Court of Appeals, G.R. Nos. 79926-27, October 17, 1991, First Division, Narvasa, J., writing for the Court.On December 11, 1981, three foreign banks — Bank of America NT & SA, Citibank, N.A. and Hongkong & Shanghai Banking Corporation — jointly filed in the Court of First Instance of Rizal (Branch 28) a petition for involuntary insolvency against Consolidated Mines, Inc. (CMI), alleging substantial outstanding loans and specific acts of insolvency under Section 20 of the Insolvency Law. The banks’ petition was amended four days later and docketed Special Procedure No. 9263.
Around the same time, petitioners State Investment House, Inc. (SIHI) and State Financing Center, Inc. (SFCI) had earlier instituted separate collection suits against CMI in the Court of First Instance of Rizal and had procured and executed writs of preliminary attachment on CMI’s royalty/profit-share payments from Benguet Consolidated Mining, Inc. SIHI and SFCI opposed the banks’ insolvency petition on multiple grounds, prominently that the foreign banks were not “resident creditors” within the meaning of Section 20 of the Insolvency Law and therefore the court lacked jurisdiction.
CMI answered denying insolvency and filed a motion to dismiss for lack of capacity to sue by the banks; the trial court deferred resolution of that motion pending a merits hearing. SIHI and SFCI served admissions and later moved for summary judgment (May 23, 1983), arguing that on the pleadings and admissions the Court of First Instance had no jurisdiction because the petitioners were not Philippine residents. The Regional Trial Court (formerly Court of First Instance) granted summary judgment on October 10, 1983, dismissing the insolvency petition for lack of jurisdiction and finding that foreign banks licensed to do business in the Philippines could not be deemed residents for purposes of the Insolvency Law.
The three banks appealed. Procedural changes under B.P. Blg. 129 and transitional rules led to a complex route: petitions and records were referred from the Supreme Court to the Intermediate Appellate Court and ultimately consolidated and heard by the Court of Appeals (Fifteenth Division). The Court of Appeals, in a Decision promulgated July 14, 1987 (written by Judge Lapena, Jr., with Ejercito and Chua, JJ., concurring), reversed the RTC and remanded the case, holding that foreign banks lawfully doing business in the Philippines may be considered “residents” for purposes of the Insolvency Law and that excluding them would be inequitable and inconsistent with other statutes.
SIHI and SFCI then filed a petition for revie...(Subscriber-Only)
Issues:
- Are the foreign banks licensed to do business in the Philippines “resident creditors” within the meaning of Section 20 of the Insolvency Law for purposes of filing an involuntary insolvency petition?
- Is the omission by those banks in their petition to allege expressly, under oath, that they are “residents of the Philippine Islands” fatal to their capacity to petition?
- Do respondents’ ancillary arguments — reciprocity under domiciliary laws, limits on Monetary Board powers, the effect of licensing options under the General Banking Act, or alleged unclean hands (preference payments) — bar the banks from seeking invo...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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