G.R. No. 22537 - Behn, Meyer and Co. vs. Stanley

Case Digest (G.R. No. 22537)
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Facts:

Initial action for recovery of imported merchandise
On January 23, 1917, Behn, Meyer & Co., Ltd. (a foreign corporation with a branch in the Philippine Islands) brought an action against the Collector of Customs to recover the possession of certain merchandise imported into the Islands and then in the hands of the Collector.
A. N. Jureidini & Bros. intervened in the case and claimed title to the merchandise based on a sale ordered by the British Admiralty Court of Alexandria, Egypt, in prize court proceedings.
On February 28, 1918, the Court of First Instance rendered judgment for Behn, Meyer & Co., Ltd., ruling that title to the merchandise originally rested in Behn, Meyer & Co., Ltd. and that no record of the prize court proceedings showing that it had been divested of title had been presented in evidence.
On appeal, the Supreme Court reversed the judgment and remanded the case with instructions to allow Jureidini & Bros. a reasonable time to obtain a duly certified copy of the Admiralty Court of Alexandria decision declaring that the merchandise constituted lawful prize.
A new trial was held on February 24, 1922.
After the new trial, judgment was rendered in favor of A. N. Jureidini & Bros. against Behn, Meyer & Co., Ltd. for P1,988 in damages and P1,988 as the value of the merchandise in default of delivery to Jureidini & Bros..

Seizure, receivership, and sale of Behn, Meyer & Co., Ltd.
On February 16, 1918, all the business, property, and assets of the firm Behn, Meyer & Co., Ltd. were taken over by the Alien Property Custodian of the United States under the Trading with the Enemy Act.
By direction of the Alien Property Custodian, W. D. Pemberton was appointed receiver and placed in full charge of the business and assets of the firm.
During January 1919, the business of the Philippine branch was liquidated.
The property and assets in the Philippine Islands, including goodwill, trade-marks, accounts receivable, together with vouchers, entries, and other proofs of indebtedness such as the books of account, were sold to John Bordman by direction and under supervision of the Alien Property Custodian.
The sale was for P660,000, as reflected in letters and bills of sale, Exhibits B, C, D, and E.
The Bank of the Philippine Islands advanced P660,000 to Bordman to purchase the business, property, and assets.
The advanced amount was turned over to W. D. Pemberton, the receiver appointed by the Alien Property Custodian.
On February 21, 1919, Behn, Meyer & Co., Ltd. was declared by the Alien Property Custodian to be an enemy not holding a license granted by the President of the United States.
On the same date, demand was made upon the receiver to convey, transfer, assign, deliver, and pay over to the Alien Property Custodian the net proceeds of the sale and liquidation.
On February 28, 1919, the net proceeds in the amount of P392,674.96 were delivered to the managing director of the Alien Property Custodian’s office in the Philippine Islands, as shown by Exhibits F and G.
As far as the record showed, the P392,674.96 remained in the possession of the Alien Property Custodian.

Unsuccessful execution and appointment of a receiver at the suit of Jureidini & Bros.
Execution of the February 24, 1922 judgment in favor of Jureidini & Bros. was issued and returned unsatisfied.
On August 8, 1922, Jureidini & Bros. filed an ex parte petition in the same case praying that a receiver be appointed to take charge of the estate and effects of Behn, Meyer & Co., Ltd.
On August 10, 1922, the Court of First Instance issued an order appointing Lazarus G. Joseph as receiver upon giving a bond in the amount of P1,000.

Joseph receiver’s action to annul sale and Joseph’s appearance in the case
On September 4, 1923, Lazarus G. Joseph, as receiver, commenced an action in the Court of First Instance of Manila against the Bank of the Philippine Islands and J. M. Menzi.
The action was for civil case No. 24892 and sought to annul the sale of the business, property, and assets of Behn, Meyer & Co., Ltd. to John Bordman, and to recover back the property allegedly sold as property of Behn, Meyer & Co., Ltd.
The action also prayed for an accounting and other relief.
On September 5, 1923, Lazarus G. Joseph, in his capacity as receiver, appeared in the present case in the Court of First Instance and obtained an order directing J. M. Menzi to appear on a certain date and show cause why he should not turn over to the receiver the books of account of Behn, Meyer & Co., Ltd.
On September 14, 1923, John Bordman, J. M. Menzi, and the Bank of the Philippine Islands filed in the same case a motion for permission to intervene solely to vacate the August 10, 1922 order appointing Lazarus G. Joseph receiver.
They alleged they had a legal interest in the subject matter of the receivership and an interest against those of the parties to the receivership proceedings.
They also filed a verified motion setting forth the facts stated above and asking the court to vacate the order appointing the receiver on grounds tha...(Subscriber-Only)

Issues:

Propriety of intervention
Whether the Court of First Instance erred in permitting intervention because:

a final judgment had already been entered; and
the intervenors lacked legal interest in the matter in litigation.

Jurisdiction over receivership involving property controlled by the Alien Property Custodian
Whether the Court of First Instance erred in holding that the appointment of the receiver was in excess of its jurisdiction.
Whether, once Behn, Meyer & Co., Ltd. was declared an enemy not holding a Presidential license, the properties were beyond the jurisdiction and control of Philippine courts because they were in the possession and control of the Alien Property Custodian.
Whether the Trading with Enemy Act deprive...(Subscriber-Only)

Ruling:

(Subscriber-Only)

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Case Digest (G.R. No. 22537)
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