36 | Shell vs Royal | CG

Pilipinas Shell Petroleum Corp vs Royal Ferry Services Inc

Feb 1, 2017 | Leonen, J.
Articles of Incorporation: Principal Place of Business

DOCTRINE: A corporation is considered a resident of the place where its principal office is located as stated in its Articles
of Incorporation. However, when it is uncontroverted that the insolvent corporation abandoned the old principal office,
the corporation is considered a resident of the city where its actual principal office is currently found.

SUMMARY: Royal Ferry services filed a petition for voluntary insolvency in the RTC of Manila since it is the city where they
currently hold office. Pilipinas Shell filed a motion to dismiss claiming that the venue was wrong since the Articles of
Incorporation of Royal Ferry state that its principal place of business is in Makati. Hence, the petition should have been
filed in the RTC of Makati. The RTC initially denied the motion to dismiss but reversed itself in the MR. the CA reinstated
the insolvency proceedings ruling that Makati and Manila are part of 1 region. The SC affirmed the CA but ruled that the
place of venue for insolvency proceedings should be where the actual principal office is found.

FACTS:
• Royal Ferry Services is domestic corporation
o According to its Articles of Incorporation, its principal place of business is 2521 A. Bonifacio St, Bangkal,
Makati City.
o However, it currently holds office in Room 203, BF Condo Bldg, Andres Soriano cor. Solano St, Intramuros,
Manila
• In 2005, Royal Ferry filed a verified petition for voluntary insolvency before the RTC of Manila
• RTC Manila declared Royal Ferry insolvent
• Pilipinas Shell filed a formal notice of claim and a motion to dismiss
o Petition was filed in the wrong venue since the insolvency law provides that it be filed in the court w/
jurisdiction over the corporation’s residence and since Royal Ferry’s articles of incorporation state that its
principal office is in Makati, the petition should have been filed in the RTC of Makati not Manila,
• RTC initially denied the MTD but on an MR by Pilipinas Shell. It reversed itself and granted the dismimssal
o The corporation cannot change its place of business without amending its articles of incorporation
• Royal Ferry filed an appeal w/ CA
• CA reinstated the insolvency proceedings
o RTC Manila has jurisdiction and is the proper venue since the cities of Makati and Manila are part of 1
region
• Pilipinas Shell’s arguments before the SC
o There is no reason to consider Makati and Manila as part of one region for determining venue
o The articles of incorporation sate Makati city as the principal place of business, so the petition should be
filed in Makati; Hyatt Elevators vs Goldstar: corp’s residence is the place where its principal office was
located as stated in the articles of incorporation à the address in Royal Ferry’s articles of incorporation
should control the venue
o Residence of a corporation depends on what is stated in its articles of incorporation regardless of whether
the corp physically moved to a different location
• Royal Ferry claims that jurisdiction is determined by the pleadings and that since it stated in its petition that its
office is in manila, then RTC Manila has jurisdiction.
o the fiction of a corp’s residence must give way to uncontroverted facts

ISSUE: w/n the petition for insolvency was properly filed in Manila à YES

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36 | Shell vs Royal | CG

COURT RULING: PETITION DISMISSED

• Although the FRIA is now the special law that governs insolvency, the relevant proceedings ITCAB took place
before FRIA such that the Insolvency Law must be used
• Insolvency Proceedings: statuatory procedures by which a debtor obtains financial relief and undergoes judicially
supervised reorganization or liquidation of its assets for the benefit of its creditors
• Jurisdiction is acquired based on the allegations of the complaint
à ITCAB, the petition reads that Royal Ferry was incorporated with its principal residence in Makati city but that
at present and during the past 6 months, Royal Ferry has held office in Manila within the jurisdiction of RTC Manila.
• Young Auto Supply vs CA: a corp is a resident of the place where its principal office is located as stated in the
articles of incorporation. The Corp Code requires each corp to specifcy in its articles of incorporation the place
where the principal office of the corp is to be located which must be within the PH. The purpose is to fix the
residence of the corp in a definite place instead of allowing it to be ambulatory
• Sec 14 Insolvency law specifies that the petition for voluntary insolvency be filed before the RTC where the
insolvent debtor has resided in for 6months before the filing of the petition
à the law places a premium on the place of residence before the petition was filed since venue is a matter of
procedure for the convenience of the parties
à if there is a conflict between the place stated in the articles of incorporation and the physical location of the
corp’s main office, the actual place of business should control
à requiring the corp to go back to the place it abandoned is the very definition of inconvenience
à the creditors deal with the corp in the actual place of business. To go back to the abandoned city would just be
confusing
à the 6 month qualification shows intent to find the most accurate location of the debtor’s activities; if the address
in a corp’s articles of incorporation is no longer accurate, then legal fiction should give way to fact
à the law should be read as to lay venue of the proceedings in the actual location of the debtor’s activities
• Hyatt case in applicable ITCAB since in that case, the relocation was inconclusive and it was a complaint for unfair
trade practices and damages, not one for insolvency.
• Makati and manila are treated as 2 distinct venues under BP 129. To deem the interchangeable venues since they
belong to the same region has no basis in law