GR 37682; (November, 1932) (Digest)
G.R. No. 37682; November 26, 1932
CLAUDE NEON LIGHTS, FEDERAL INC., U. S. A., petitioner, vs. PHILIPPINE ADVERTISING CORPORATION and FRANCISCO SANTAMARIA, Judge of First Instance of Manila, respondents.
FACTS
Respondent Philippine Advertising Corporation filed a suit for damages against petitioner Claude Neon Lights, a foreign corporation duly licensed to do business in the Philippines. Simultaneously, respondent applied for a writ of attachment under paragraph 2, Section 424 of the Code of Civil Procedure, which allows attachment “in an action against a defendant not residing in the Philippine Islands.” The application alleged only that petitioner was a foreign corporation with its principal place of business in Washington, D.C., and did not allege any other statutory grounds like intent to defraud or insolvency. The respondent judge granted the writ and, on the same day, appointed a receiver for the attached property—an employee of the respondent corporation. Petitioner moved to dissolve the attachment and receivership, alleging the suit was malicious and without foundation, but the motions were denied.
ISSUE
Whether a duly licensed foreign corporation doing business in the Philippines can be considered “not residing in the Philippine Islands” under paragraph 2, Section 424 of the Code of Civil Procedure, thereby subjecting its property to attachment at the commencement of an action.
RULING
No. The Supreme Court annulled the writ of attachment and the order appointing a receiver. The Court held that a foreign corporation that has complied with Philippine law to be duly licensed to do business in the country, and is actively engaged in business with considerable property therein, should not be deemed “not residing in the Philippine Islands” for purposes of attachment under Section 424. The literal sense of the statute refers to a natural person capable of having a residence. Applying the attachment provision to such a foreign corporation would be discriminatory and contrary to the policy of the law, which encourages foreign investment by granting licensed foreign corporations the same rights as domestic corporations. The Court adopted the minority rule in the United States, finding it better suited to Philippine conditions, and emphasized that the respondent’s use of the statute led to a “monstrous result” by seizing all of petitioner’s property and placing it in the hands of its adversary.
AI Generated by Armztrong.