Land Bank v. Reyes
REITERATIONFacts
The Antecedents: Petitioner Land Bank of the Philippines (Land Bank) filed a petition for indirect contempt against Oscar S. Reyes, Simeon Ken R. Ferrer, and Manila Electric Company (MERALCO) for allegedly failing to comply with the Supreme Court's December 14, 2011 Decision in G.R. No. 188376 (LBP v. Suntay). Land Bank owned 42,002,750 shares of stock in MERALCO, acquired through its proprietary functions. These shares were levied and sold at a public auction to satisfy the just compensation for expropriated land owned by Federico Suntay. Josefina Lubrica was the winning bidder, and MERALCO subsequently cancelled Land Bank's shares and issued new certificates to Lubrica. Procedural History: Land Bank filed a Petition for Review on Certiorari to assail the levy and sale of its MERALCO shares. In its December 14, 2011 Decision in LBP v. Suntay, the Supreme Court declared the levy and sale void for failing to determine if the assets were part of the Agrarian Reform Fund (ARF) and for disregarding Land Bank's proprietary rights. The Court emphasized that just compensation payments must be sourced from the ARF. The Decision became final and executory on September 11, 2012. Subsequently, an Order was issued on April 1, 2013, directing the issuance of a Writ of Execution, followed by a Demand to Comply issued to MERALCO on April 12, 2013. The Petition: MERALCO partially complied by delivering 38,635,950 shares and cash/property dividends. However, it failed to deliver the remaining 3,366,800 shares and certain dividends. MERALCO argued that the remaining shares had already been traded on the Philippine Stock Exchange (PSE) and settled through the Securities Clearing Corporation of the Philippines (SCCP), thus no longer owned by Lubrica and beyond MERALCO's power to unilaterally return. Land Bank insisted on full compliance and initiated the contempt proceedings.
Issue(s)
Whether respondents are guilty of indirect contempt for failure to fully comply with the Supreme Court's Decision in LBP v. Suntay. Whether MERALCO's inability to return the remaining 3,366,800 shares constitutes willful disobedience or resistance to a lawful court order.
Ruling
The petition for indirect contempt is DISMISSED.
Ratio Decidendi
On the issue of indirect contempt: The Court ruled in the negative. Indirect contempt requires a willful disregard or disobedience of a court's order. The Court found that the Supreme Court's Decision in LBP v. Suntay, while directing the quashing of certain orders and affirming others, did not directly command MERALCO to cancel the stock certificates issued to Lubrica. The directive to cancel and restore ownership came from RARAD Casabar, which the Supreme Court merely affirmed. Therefore, MERALCO could not be held guilty of disobedience for an act not directly commanded by the Supreme Court's dispositive portion. On MERALCO's inability to return shares: The Court noted that Land Bank itself admitted that MERALCO had already returned 38,635,950 shares, representing 91.98% of the total shares transferred. The remaining 3,366,800 shares could not be returned because they had been lodged with the Philippine Depository & Trust Corp. (PDTC), validly traded on the PSE, and settled by the SCCP prior to the suspension of trading. These shares had passed to third-party owners, and MERALCO was no longer empowered to unilaterally cancel them under the 1999 PSE Trading and Settlement Rules, which prohibited cancellation of matched orders except in cases of computer errors or evident mistakes. The Court emphasized that contempt requires a willful act, and Land Bank failed to show any circumstance indicating MERALCO willfully refused to turn over the remaining shares. The inability to return was due to the legal and practical realities of stock market transactions, not a contumacious refusal.
Main Doctrine
Respondents are not guilty of indirect contempt for failure to fully comply with the Court's Decision in LBP v. Suntay, as there was no willful disregard or defiance of the Court's order. The inability to return certain shares was due to their valid trading and settlement in the stock market, and the Court's decision did not directly command MERALCO to cancel stock certificates.