G.R. No. 217428 - Land Bank of the Philippines vs. Reyes

Land Bank of the Philippines (petitioner) owned 42,002,750 shares in Manila Electric Company (MERALCO) that were acquired in its capacity as a financial institution distinct from its role as administrator of the Agrarian Reform Fund (ARF).
Executive Order No. 267 mandates the segregation of corporate funds from those earmarked for the ARF, which is designated solely for payment of just compensation for expropriated properties.
Respondents include Oscar S. Reyes (in his capacity as President and CEO of MERALCO), Simeon Ken R. Ferrer (as Corporate Secretary of MERALCO), and MERALCO itself in connection with the actions taken regarding the disputed shares.

To settle the payment for just compensation for the expropriated land owned by Federico Suntay, petitioner’s MERALCO shares were levied and sold at public auction.
The levy and subsequent sale were executed by the DARAB sheriffs under orders issued pursuant to:

The September 14, 2005 alias writ of execution.
The October 30, 2008 order issued by the former DARAB Regional Agrarian Reform Adjudicator, Conchita MiAas.

Josefina S. Lubrica emerged as the winning bidder, resulting in the cancellation of petitioner’s original share certificates and the issuance of new certificates in her name.

Petitioner challenged the auction sale and levy of its shares by filing a Petition for Review on Certiorari, which culminated in the Supreme Court’s Decision dated December 14, 2011.
In that decision, the Court held that the indiscriminate levy of the shares without ascertaining their classification as ARF assets disregarded petitioner’s proprietary rights.
The Court reiterated that, pursuant to Section 21 of Republic Act No. 9700 and Section 10, Rule 19 of the 2003 DARAB Rules, just compensation payments must exclusively be sourced from the ARF.
The dispositive portion of the decision directed:

The continuation of proceedings for determining just compensation in Agrarian Case No. R-1241.
The quashing and nullification of the orders and actions taken in DARAB Case No. V-0405-0001-00.
The affirmation of the order calling for the cancellation of the new stock certificates issued to Lubrica and the restoration of the shares to petitioner.
The recognition of petitioner’s entitlement to all dividends accruing as if no levy or auction had occurred.
The investigation of the conduct of the DARAB sheriffs and Atty. Conchita MiAas.

The Decision became final and executory on September 11, 2012.
Following the issuance of a writ of execution on April 1, 2013, and a subsequent Demand to Comply issued on April 12, 2013, MERALCO partially complied by returning:

38,635,950 shares along with associated cash dividends amounting to P1,206,955,617.77.
Property dividends in the form of 108,884,212 shares of Rockwell Land Corporation.

However, MERALCO did not restore the remaining 3,366,800 shares, nor did it release certain dividends due on these undelivered shares.
Respondents contend that:

The 3,366,800 shares had already been traded on the Philippine Stock Exchange (PSE) and settled through the Securities Clearing Corporation of the Philippines (SCCP), resulting in their transfer to the investing public.
Once traded, these shares were no longer available for unilateral cancellation and restoration to petitioner.

The facts show that petitioner’s own admission indicated that 91.98% (38,635,950 out of 42,002,750) of the disputed shares were returned, leaving only a fraction (3,366,800 shares) unreturned due to valid trading and settlement procedures.

Whether the respondents (MERALCO, its officers, and their successors) are guilty of indirect contempt for allegedly failing to comply with the Supreme Court’s Decision in LBP v. Suntay.

Whether the non-restoration of the 3,366,800 shares constitutes a willful disobedience or defiant act against a court order.
Whether the subsequent trading and settling of those shares, transferring them into the hands of third parties, remove the possibility of holding the respondents in contempt.
The appropriate interpretation of the relevant procedural orders and directives both from the Court and from DARAB authorities regarding the cancellation of share certificates.