Professional Documents
Culture Documents
LBP vs. Reyes
LBP vs. Reyes
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.
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.
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.