(a) In relation to each type of insolvency procedure available in the legal system of this economy, to what extent are the claims of foreign creditors recognised in the context of administration of that procedure?

 

In the case of both suspension of payments and voluntary insolvency proceedings, Section 15 of the Insolvency Law provides that the debtor is obliged to annex to his petition a schedule which "must contain a full and true statement of all his debts and liabilitics, together with a list of all those to whom, to the best of his creditors and the sum due each X X X." Section 15 does mot distinguish between creditors who are residents of rhe philippine and those who are residents of some other country. The reference to "all his debts" in Section 15 provides basis for the position that the claims of foreigncreditors would be recognized in the proceedings.

Under the Insolvency Law, a petition for involuntary insolvency may be initiated only upon the petition of at least three creditors who are residents of the philippine. A foreign corporation licensed to engage in business in the philippine would qualify as a resident creditor. Thus, the Philippine Supreme Court in State Investment House vs. Citibank (203 SCRA), declared that "what effectively makes such a foreign corporation a resident corporation in the philippine is its actually being in the philippine and licitly doing business here."

In the case of involuntary insolvency proceedings, Section 29 of the Insolvency Law allows creditors who are not the petitioners, to file their claims in the office of the clerk of the court in which the proceedings are pending. Section 29 does not distinguish between resident and non-resident creditors. We therefore believe that both resident and non-resident creditors may file their claims with the local court and that the interests of both would be protected.

(b) What principles or rules apply to the recognition and admission of claims by foreign creditors? (for example )

We believe that the same rules and principles would apply to the recognition and admission of claims by foreign creditors of a corporate debtor that is a resident of the philippine, as would apply to claims by a creditor that is a resident of the philippine.vv

 

(i) Are claims by foreign creditors subject to particular rules in relation to priority of payment?

 

Claims of foreign creditors would not be subject to any different rules as are applicable to claims of resident creditors, even in respect of priority of payment. They would also be governed by Articles 2241, 2242 and 2244 of the New Civil Code of the philippine which lays down the rules in respect of priority of payment of the obligations of an insolvent debtor.

(ii) Do foreign creditors have to satisfy special or additional requirements in order for their claims to be admitted?)

 

there are no special or additional requirements in order for claims of foreign creditors to be admitted, which are not applicable to local creditors.

If the claim of a foreign creditor stems from a foreign judgment in its favor, the following are the conditions and requisites before such foreign judgments may be recognized and enforced in the philippine:

a) There must be proof of the foreign judgment;

b) The judgment must be on a civil or commercial matter;

c) There must be no lack of jurisdiction, no want of notice, no collusion, no fraud, no clear mistake of law or fact.

(c) What law is applied to establish the validity of foreign claims?

 

The applicable law would depend on the nature of the claim. The following are the "Conflicts" rules covering real and personal properties:

a) If the conflict concerns real property, the governing law is the place where the property is situated. The exceptions to this rule are:

i) contracts involving real property but which do not deal with title to such real property shall not necessarily be governed by the law where the property is situated but may be governed by the law voluntarily agreed upon by the parties or the law intended by them expressly or implicitly; and

ii) in contracts where real property is given by way of security, the principal contract is governed by the proper law of the contract while the accessory contract of mortgage is governed by the law of the state where the real property mortgage is situated.

b) For tangible personal property, in general, the law to be applied shall be the law where the property is situated. Vessels, in view of their inherent movability, are governed by the law of the flag.

c) For intangible personal property, the following are the conflicts rules;

i) For the recovery of debts or for the involuntary assignment of debts (garnishment) the proper point of contact is the place where the debtor may be effectively served with summons;

ii) The validity and effectiveness of a voluntary assignment of a debt would depend on the proper law of the contract;

iii) For the purpose of administering debts the situs is the place where the assets of the debtor are actually located;

iv) The validity of the transfer, delivery, or negotiation of the insrtument is in general governed by the law of the situs of the instrument at the time of transfer, delivery, or negotiation;

(a) To what extent does the insolvency law of this economy claim jurisdiction over assets of a corporate debtor situated abroad?

 

(a) There is good basis for the view that Philippine courts or administrative agencies have no effective jurisdiction over assets of a corporate debtor that are situated abroad if the corporate debtor has no control over those assets abroad.

(a) To what extent do the rules of private international law of the legal system of this economy recognise insolvency procedures commenced in foreign jurisdictions?

 

If the property of an insolvent is situated abroad, then Philippine courts should recognize insolvency procedures commenced in a foreign country in respect of property of a debtor located in that country, in the same manner that Philippine courts would not recognize insolvency proceedings instituted abroad involving assets of a debtor located in the philippine.

(b) Under what circumstances, if any, may orders or judgments resulting from foreign insolvency procedures or administrations be recognized or enforced in the legal system of this economy?

 

If the property of the debtor is located abroad, then we believe there should be no reason or need to have the foreign insolvency procedure or administration recognized or enforced in the philippine. If, however, the foreign insolvency proceedings involve property of a debtor that is located in the philippine, we believe that there would be difficulty having a judgment or order in the foreign insolvency proceedings enforced in the philippine, because a Philippine court would take the position that the foreign administrator, body, court or tribunal would have no jurisdiction over assets of the debtor located in the philippine.

(a) What recognition is accorded in the legal system of this economy to the status and capacity of insolvency administrators (for example trustees, liquidators, receivers) appointed in foreign insolvency procedures?

 

Although there are no decisions by local courts on the matter, we believe that the philippine would recognize the capacity of these trustees and liquidators, provided that the assets they administer are located abroad.

(b) To what extent are foreign insolvency administrators entitled to claim, take control of, and realise or deal with property of the corporate debtor situated within the jurisdiction of the legal system of this economy?

 

We do not believe that foreign insolvency administrators would have jurisdiction to claim, take control of and realize or deal with property of the corporate debtor situated within the jurisdiction of the legal system of the philippine.

(a) To what extent does the legal system of this economy recognise the validity of rights of security asserted by foreign creditors over assets of the corporate debtor?

 

They are treated on an equal footing as local creditors with similar security, with the exception that in the case of mortgages over land, the foreign creditors may not bid in any foreclosure sale of the mortgaged land because of the prohibition in the Philippine Constitution against alien landholding.

(b) Are any special rules applicable to determine the validity, extent and ranking of such security rights?

 

No. The same rules would apply as are applicable to local secured creditors.

(a) To which international conventions having some application in insolvency matters is this economy a party?

 

None that we are aware of.

(b) When were these conventions entered into, and what other states are parties?

 

Not applicable.

(c) What observations can be made about the practical results achieved under these international instruments?

 

Not applicable.

(a) Are there any other particular issues or special problems in the field of cross-border insolvency, not included in the answers supplied above, which have presented themselves before the courts of the legal system of this economy?

 

None that we are aware of.

(a) Is the government of this economy aware of the UNCITRAL model law on cross-border insolvency, approved by the United Nations in June 1997?

 

Yes, the government is aware of this. However, no law has been passed by the Philippine Congress based on this model law.