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    The document summarizes a Supreme Court case between the Land Bank of the Philippines (petitioner) and the Manila Electric Company (MERALCO, respondent). It discusses how MERALCO shares owned by LBP were auctioned off and transferred to a third party. MERALCO was able to return 38.6 million shares to LBP but 3.3 million shares had already been traded on the stock exchange. The Supreme Court ruled that MERALCO was not in indirect contempt because it demonstrated good faith in returning the majority of shares and was unable to retrieve the traded shares, which had passed to third parties according to securities law. The intent to willfully disobey was not present.

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    116. LBP vs. Reyes

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    The document summarizes a Supreme Court case between the Land Bank of the Philippines (petitioner) and the Manila Electric Company (MERALCO, respondent). It discusses how MERALCO shares owned by LBP were auctioned off and transferred to a third party. MERALCO was able to return 38.6 million shares to LBP but 3.3 million shares had already been traded on the stock exchange. The Supreme Court ruled that MERALCO was not in indirect contempt because it demonstrated good faith in returning the majority of shares and was unable to retrieve the traded shares, which had passed to third parties according to securities law. The intent to willfully disobey was not present.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    331 views2 pages

    LBP vs. Reyes

    Uploaded by

    Rob
    The document summarizes a Supreme Court case between the Land Bank of the Philippines (petitioner) and the Manila Electric Company (MERALCO, respondent). It discusses how MERALCO shares owned by LBP were auctioned off and transferred to a third party. MERALCO was able to return 38.6 million shares to LBP but 3.3 million shares had already been traded on the stock exchange. The Supreme Court ruled that MERALCO was not in indirect contempt because it demonstrated good faith in returning the majority of shares and was unable to retrieve the traded shares, which had passed to third parties according to securities law. The intent to willfully disobey was not present.

    Copyright:

    © All Rights Reserved
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    of 2

    G.R. No.

    217428, March 25, 2019

    LAND BANK OF THE PHILIPPINES, PETITIONER, v. OSCAR S. REYES, IN HIS CAPACITY


    AS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE MANILA ELECTRIC COMPANY
    (MERALCO), SIMEON KEN R. FERRER, IN HIS CAPACITY AS CORPORATE SECRETARY
    OF MERALCO, OR THEIR SUCCESSORS-IN-INTEREST, AND MANILA ELECTRIC
    COMPANY, RESPONDENTS.

    The Antecedents

    Facts: Petitioner owns 42,002,750 shares of stock in respondent MERALCO acquired through
    the exercise of its proprietary functions as a regular banking or financial institution, separate and
    distinct from its mandate as the administrator of the Agrarian Reform Fund (ARF). Under
    Executive Order (E.O.) No. 267, petitioner is mandated to segregate its corporate funds as a
    financial banking institution from those of the ARF which are earmarked for payment of just
    compensation.

    For purposes of paying the value of the expropriated land owned by Federico Suntay,
    petitioner's MERALCO shares of stock were levied and sold at a public auction by virtue of the
    Alias Writ of Execution and Order of the former Department of Agrarian Reform (DAR) Regional
    Agrarian Reform Adjudicator Conchita Miñas (RARAD Miñas) in the Department of Agrarian
    Reform Adjudication Board (DARAB) Case. Josefina S. Lubrica (Lubrica) was the winning
    bidder in the auction sale. Consequently, MERALCO cancelled petitioner's shares of stock and
    issued new certificates in favor of Lubrica.

    Consequently, MERALCO, in partial compliance to such Writ of Execution and Demand to


    Comply, delivered to petitioner 38,635,950 shares of stock, including cash dividends and
    property dividends consisting of shares of stock in Rockwell Land Corporation.

    MERALCO, however, failed to deliver to petitioner the remaining 3,366,800 shares of stock out
    of the 42,002,750, shares illegally transferred to Lubrica. In addition, MERALCO has not yet
    paid petitioner the dividends.

    For their part, respondents aver that the 3,366,800 shares have already been traded in the
    Philippine Stock Exchange (PSE) and settled through the Securities Clearing Corporation of the
    Philippines (SCCP). The 3,366,800 shares are now in the hands of the investing public and are
    no longer owned by Lubrica. Thus, MERALCO and its officers cannot be accused of deliberately
    refusing to return the 3,366,800 shares to petitioner. MERALCO and its officers have complied
    to the extent permitted by the facts and the law, as petitioner itself admits that MERALCO has
    caused the return to petitioner of 38,635,950 shares or 91.98% of all the shares previously
    transferred to Lubrica.

    Issue: Whether respondents are guilty of indirect contempt.

    Held: No. Petitioner admitted that of the total 42,002,750 shares transferred to Lubrica's name,
    38,635,950 shares were restored to petitioner. Only 3,366,800 shares were not transferred back
    to petitioner's account. This fact alone belies the imputation of disobedience, much less
    contemptuous acts, against the respondents. Moreover, MERALCO was unable to return to
    petitioner the 3,366,800 shares not because of plain stubborn refusal, but because these shares
    had been lodged with the PDTC, validly traded through the PSE, and settled by the SCCP even
    prior to the suspension of trading, with title over those shares passing to third persons. Hence,
    unlike the 37,233,200 lodged shares which remained in the brokers' account, as well as the
    1,402,750 shares not lodged with the PDTC, MERALCO could not have easily cancelled the
    certificates of stock pertaining to the 3,366,800 traded shares which could have already been
    passed on to several persons. In fact, petitioner itself recognized that the 3,366,800 shares
    were traded and settled. Under Section 46 of the Securities Regulation Code, "The registration
    of a transfer of a security into the name of and by a registered clearing agency or its name of or
    by a registered clearing agency or its nominee shall be final and conclusive unless the clearing
    agency had notice of an adverse claim before the registration was made."

    At any rate, whether or not respondents' action in complying with the Court's Decision was
    proper is not an issue in this contempt case. Contempt of court has been defined as
    a willful disregard or disobedience of a public authority. There is no question that in contempt
    the intent goes to the gravamen of the offense. Thus, the good faith, or lack of it, of the alleged
    contemnor should be considered. To constitute contempt, the act must be done willfully and for
    an illegitimate or improper purpose. Here, petitioner failed to show any circumstance which
    would lead the Court to believe that MERALCO willfully refused to turn over the remaining
    3,366,800 shares.

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