Claude Neon Lights v. Phil.

Advertising Corporation AUTHOR: Tiglao

[G.R. No. L-37682 // 26 November 1932] NOTES:
TOPIC: What Constitutes Transacting Business
PONENTE: J. Butte
FACTS:
Respondent Philippine Advertising Corporation filed suit against Claude Neon Lights in the CFI claiming 300k and
damages for alleged breach of the agency contract existing between both parties.
Furthermore, respondent filed an application for writ of attachment which states that petitioner is a foreign
corporation since its principal place of business is located in Washington.
It is not alleged in the application that petitioner was about to depart from the Philippines with intent to defraud its
creditors or that it was insolvent or had removed or disposed of its property or was about to do so with intent to
defraud its creditors.
The only ground relied upon by respondent is Section 424 (2) of the Code of Civil Procedure providing that the
plaintiff may have the property of the defendant attached in an action against a defendant not residing in the
Philippine islands.
The CFI judge issued a writ of attachment, hence attaching all the properties of the petitioner in the Philippines. At the
same time, the ex parte petition and nomination of the respondent, the CFI appointed Manuel Grey as receiver of said
properties of the petitioner.
Petitioners filed a motion to dissolve the writ of attachment and receivership. They raise that the petitioner is not
indebted to the respondent in any sum whatever nor has it in any way breached any contracts with the respondent or at
any time interfered in the management of its business in the Philippines as carried on by its agent.
The CFI denied said motions. Hence, petitioner filed a petition for certiorari praying for it to be annulled.

ISSUE(S): W/N this petitioner, a foreign corporation, shall be deemed as not residing in the Philippine islands in the
sense in which that expression would apply to a natural person.

HELD: No. Petition granted. Attachment is annulled.

RATIO:
Corporations, as a rule, are less mobile than individuals. This is specially true of foreign corporations that are
carrying on business by proper authority in these islands. They possess, as a rule, great capital which is seeking
lucrative and more or less permanent investment in young and developing countries like the Philippines.
Section 424 (2) does not apply to a domestic corporation. Our laws and jurisprudence indicate a purpose to assimilate
foreign corporations, duly licensed to do business here. The Court believes that it would be discriminatory to apply
the same rule against a foreign corporation and subject its property to the harsh writ of seizure by attachment when
it has complied not only with every requirement of law made especially of foreign corporations, but in addition with
every requirement of law made for domestic corporations.
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION(S):