Bank of the Philippine Islands vs. Calanza

Indirect contempt requires clear and contumacious disobedience of a lawful writ, process, order, or judgment; an erroneous writ of execution issued by a labor arbiter is grave abuse of discretion reviewable by certiorari, not contempt, and a sheriff who merely implements the writ absent any restraining order acts ministerially.

Enriquez and Sia were the branch manager and assistant branch manager, respectively, of BPI’s Bacolod-Singcang Branch. Under the labor law framework applied in the case, the reinstatement aspect of a labor arbiter’s decision is immediately executory during appeal, while the NLRC’s reversal of that decision becomes final after ten days from receipt.

Amelia Enriquez and Remo L. Sia were the branch manager and assistant branch manager, respectively, of BPI’s Bacolod-Singcang Branch. On September 3, 2003, BPI dismissed them from employment on grounds of breach of trust and confidence and dishonesty. The following day, they filed separate complaints for illegal dismissal against BPI before the NLRC, Regional Arbitration Branch No. VI, Bacolod City.

After the submission of their respective position papers, Executive LA Danilo C. Acosta rendered a decision on March 29, 2004, finding that Enriquez and Sia had been illegally dismissed. The LA ordered BPI to reinstate them to their former positions without loss of seniority rights and to pay full back wages inclusive of allowances and other benefits in the sum of ₱1,173,434.50. Pursuant to that decision, Enriquez and Sia were reinstated in BPI’s payroll. BPI appealed to the NLRC, which ruled that BPI had just cause to terminate them; the NLRC reversed and set aside the LA decision and, although it dismissed the complaint, ordered BPI to give the dismissed employees financial assistance equivalent to one-half month’s pay for every year of service. In view of this decision, BPI stopped the payroll reinstatement.

Enriquez and Sia elevated the matter to the CA, but on November 30, 2005, the CA affirmed in toto the NLRC decision. The case eventually reached the SC and was docketed as G.R. No. 172812. During the pendency of that petition, Enriquez and Sia filed a Motion for Partial Execution of the LA decision dated March 29, 2004. Citing Roquero vs. Philippine Airlines, they claimed that the reinstatement aspect of the LA decision was immediately executory during the entire period that the case was on appeal.

In an Order dated October 13, 2007, LA Calanza granted Enriquez and Sia’s motion despite BPI’s opposition. He opined that so long as there is no finality yet of the decision reversing a ruling of the lower tribunal awarding reinstatement, the same should be enforced; considering that the case was then pending before the SC, he sustained Enriquez and Sia’s claim by applying Roquero and Air Philippines Corporation vs. Zamora. The corresponding writ of execution was subsequently issued. Upon service of the writ, Sheriff Paredes served on BPI a notice of sale of a parcel of land owned by BPI to satisfy its obligation.

BPI immediately filed an Urgent Petition for Injunction with prayer for the issuance of a TRO and/or Writ of Preliminary Injunction with the NLRC, Fourth Division, Cebu City. On November 26, 2007, the NLRC issued a TRO. BPI then instituted the present petition for indirect contempt, averring that LA Calanza’s Order granting Enriquez and Sia’s motion for partial writ of execution preempted the SC’s decision and would eventually result in payment of claims that may be contrary to the SC’s conclusion; that respondents obstinately persisted in applying jurisprudence that was clearly inapplicable; and that the execution proceedings were done with undue haste, without giving BPI an opportunity to submit evidence in its defense to stop the execution.

Meanwhile, on February 12, 2008, the SC rendered a Decision in G.R. No. 172812, denying Enriquez and Sia’s petition and sustaining the NLRC and CA’s conclusion that they were validly dismissed from employment by BPI. In a decision dated June 30, 2008, the NLRC, Fourth Division, Cebu City, granted BPI’s petition for injunction, declared LA Calanza’s Order and the writ of execution null and void, directed LA Calanza and any person acting in his behalf to take no further action in pursuance of the Order and writ, and made the writ of preliminary injunction permanent. On October 27, 2008, LA Calanza issued an Order considering the case closed and terminated based on Enriquez and Sia’s manifestation and motion to dismiss in view of the satisfaction and full payment of their claims. The only issue left unsettled was whether respondents are guilty of indirect contempt.

• Preemption of SC Decision: Petitioner argued that LA Calanza’s Order granting Enriquez and Sia’s motion for partial writ of execution preempted the SC’s decision in G.R. No. 172812 and would eventually result in payment of claims that may be contrary to the SC’s conclusion.
• Inapplicable Jurisprudence: Petitioner argued that respondents obstinately persisted in applying jurisprudence that was clearly inapplicable.
• Undue Haste and Lack of Opportunity: Petitioner argued that the execution proceedings were done with undue haste and that it was not given an opportunity to submit evidence in its defense to stop the execution.
• Utter Disrespect: Petitioner argued that these acts indicated utter disrespect to the SC and were grounds to cite respondents in indirect contempt.

• Indirect Contempt — Enriquez and Sia: Whether Enriquez and Sia are guilty of indirect contempt under Section 3, Rule 71 for filing a motion for partial execution of the LA decision while the case was pending before the SC.
• Indirect Contempt — LA Calanza: Whether LA Calanza is guilty of indirect contempt under Section 3, Rule 71 for granting the writ of execution and applying or not applying established jurisprudence.
• Indirect Contempt — Sheriff Paredes: Whether Sheriff Paredes is guilty of indirect contempt under Section 3, Rule 71 for serving the notice of sale of BPI’s real property pursuant to the writ of execution.

• Indirect Contempt — Enriquez and Sia: No. Their motion was a bona fide attempt to implement what they believed they were entitled to under existing laws and jurisprudence, especially with their livelihood at stake, and was not contumacious.
• Indirect Contempt — LA Calanza: No. The erroneous issuance of the writ was grave abuse of discretion reviewable by certiorari, not indirect contempt; no clear and contumacious disobedience was shown.
• Indirect Contempt — Sheriff Paredes: No. He acted ministerially in enforcing the writ, and no court or tribunal had restrained him when he served the notice of sale.

• Indirect Contempt — Enriquez and Sia: The SC defined contempt as disobedience to a court by acting in opposition to its authority, justice, and dignity, including willful disregard or disobedience of a court’s order or conduct tending to bring the authority of the court and the administration of law into disrepute or to impede the due administration of justice. The power to punish for contempt is inherent and essential to preserve order in judicial proceedings and enforce judgments, orders, and mandates, but it must be exercised on the preservative, not vindictive, principle; only occasionally, and only in cases of clear and contumacious refusal to obey, because the power is drastic and extraordinary. At the time Enriquez and Sia filed their motion for partial execution, the LA decision had already been reversed by the NLRC and the reversal affirmed by the CA, and the case was on appeal to the SC via a petition for review on certiorari under Rule 45. Their motion was a bona fide attempt to implement what they might have genuinely believed they were entitled to under existing laws and jurisprudence, especially because their means of livelihood was at stake; any man in such an uncertain and economically threatened condition would be expected to take measures to ensure sustenance for himself and his family. They were merely pursuing a claim they honestly believed was due them, and their act was far from contumacious.
• Indirect Contempt — LA Calanza: LA Calanza issued the writ on Enriquez and Sia’s motion because, at the time of the application, the SC had not yet decided G.R. No. 172812. He opined that so long as there was no finality yet of the decision reversing the LA’s reinstatement award, the same should be enforced, and he interpreted Roquero and Air Philippines Corporation vs. Zamora to mean that even if the reinstatement order is reversed on appeal, the employer is obliged to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. But under Bago vs. National Labor Relations Commission, while the reinstatement aspect of the LA decision is immediately executory, the reversal thereof by the NLRC becomes final and executory after ten days from receipt by the parties; the CA’s taking cognizance of a petition for nullification of the NLRC decision on jurisdictional and due process considerations does not affect the statutory finality of the NLRC decision. At the time of the application for the writ, since the SC eventually sustained the NLRC and CA decisions in G.R. No. 172812, no issue of payroll reinstatement may be considered at all after the reversal of the LA decision by the NLRC. Still, the erroneous issuance of the writ can only be deemed grave abuse of discretion, which is more properly the subject of a petition for certiorari and not a petition for indirect contempt; no one called upon to try the facts or interpret the law in the process of administering justice can be infallible in his judgment.
• Indirect Contempt — Sheriff Paredes: In serving the notice of sale, Sheriff Paredes was only performing his duty pursuant to the writ of execution. No matter how erroneous the writ was, it was issued by LA Calanza and addressed to him as the sheriff, commanding him to collect from BPI the amount due Enriquez and Sia; if he failed to collect, he was authorized to cause satisfaction of the same on BPI’s movable and immovable properties not exempt from execution. Any act performed by Sheriff Paredes pursuant to the writ cannot be considered contemptuous. At the time of the service of the notice of sale, there was no order from any court or tribunal restraining him from enforcing the writ; it was a ministerial duty for him to implement it. To be considered contemptuous, an act must be clearly contrary to or prohibited by the order of a court or tribunal, and a person cannot be punished for contempt for disobedience unless the act forbidden or required to be done is clearly and exactly defined, so that there can be no reasonable doubt or uncertainty as to what specific act or thing is forbidden or required.

• Indirect contempt under Section 3, Rule 71 — After a written charge and an opportunity to comment and be heard, a person may be punished for indirect contempt for acts such as misbehavior of an officer of a court in the performance of official duties, disobedience of or resistance to a lawful writ, process, order, or judgment, abuse of or unlawful interference with court processes, improper conduct tending to impede, obstruct, or degrade the administration of justice, assuming to be an attorney or officer of a court without authority, failure to obey a subpoena, or rescue of a person or property in the custody of an officer. Applied: the SC measured the acts of Enriquez and Sia, LA Calanza, and Sheriff Paredes against the enumeration and found that none fell under it.
• Contempt power is preservative, not vindictive — The power to punish for contempt is inherent in all courts and essential to the preservation of order in judicial proceedings and the enforcement of judgments, orders, and mandates, but it should be exercised only occasionally and only for clear and contumacious refusal to obey; it is drastic and extraordinary and should not be resorted to unless necessary in the interest of justice. Applied: no clear and contumacious refusal was shown.
• Bona fide pursuit of a believed claim — A party’s motion for partial execution based on an honest belief of entitlement under existing laws and jurisprudence, especially where livelihood is at stake, is not contumacious. Applied to Enriquez and Sia.
• Erroneous writ as grave abuse of discretion — An erroneous issuance of a writ of execution by a labor arbiter is grave abuse of discretion reviewable by certiorari, not indirect contempt. Applied to LA Calanza.
• Sheriff’s ministerial duty under a writ — A sheriff who serves a notice of sale pursuant to a writ of execution, absent any restraining order, performs a ministerial duty and cannot be held in contempt even if the writ is erroneous. Applied to Sheriff Paredes.
• Clear and exact definition requirement — For disobedience to be punished as contempt, the act forbidden or required must be clearly and exactly defined so that there is no reasonable doubt or uncertainty. Applied to all respondents.
• Reinstatement pending appeal and finality of NLRC reversal — The reinstatement aspect of the LA decision is immediately executory, but the NLRC’s reversal becomes final and executory after ten days from receipt; CA review on jurisdictional and due process grounds does not affect the statutory finality of the NLRC decision; after reversal, no payroll reinstatement may be considered. Applied: LA Calanza’s writ was erroneous, but the error was grave abuse of discretion, not contempt.

• "Contempt of court is defined as a disobedience to the court by acting in opposition to its authority, justice, and dignity. It signifies not only a willful disregard or disobedience of the court’s order, but such conduct which tends to bring the authority of the court and the administration of law into disrepute or, in some manner, to impede the due administration of justice." — The SC uses this definition to frame the contempt inquiry before applying Section 3, Rule 71.
• "However, such power should be exercised on the preservative, not on the vindictive, principle. Only occasionally should the court invoke its inherent power in order to retain that respect, without which the administration of justice will falter or fail." — The SC limits the contempt power, explaining why it is not exercised for every erroneous act.
• "Still, the erroneous issuance of the writ of execution by LA Calanza can only be deemed grave abuse of discretion which is more properly the subject of a petition for certiorari and not a petition for indirect contempt." — The SC characterizes LA Calanza’s error and identifies the proper remedy.
• "To be considered contemptuous, an act must be clearly contrary to or prohibited by the order of the court or tribunal. A person cannot, for disobedience, be punished for contempt unless the act which is forbidden or required to be done is clearly and exactly defined, so that there can be no reasonable doubt or uncertainty as to what specific act or thing is forbidden or required." — The SC applies this requirement to Sheriff Paredes and the writ he enforced.

• Roquero vs. Philippine Airlines, 449 Phil. 437 (2003) — Cited by Enriquez and Sia and relied on by LA Calanza for the immediately executory nature of reinstatement; the SC clarified its application through Bago vs. National Labor Relations Commission.
• Air Philippines Corporation vs. Zamora, G.R. No. 148247, August 7, 2006, 498 SCRA 59 — Also relied on by LA Calanza for reinstatement pending appeal; clarified by Bago vs. National Labor Relations Commission.
• Bago vs. National Labor Relations Commission, G.R. No. 170001, April 4, 2007, 520 SCRA 644 — Controlling precedent: reinstatement aspect immediately executory, but NLRC reversal becomes final after ten days; after reversal, no payroll reinstatement.
• Lu Ym vs. Mahinay, G.R. No. 169476, June 16, 2006, 491 SCRA 253 — Cited for the definition of contempt and the rule that the forbidden or required act must be clearly and exactly defined.
• Bildner vs. Ilusorio, G.R. No. 157384, June 5, 2009, 588 SCRA 378 — Cited in support of treating the dismissed employees’ motion as a bona fide attempt to pursue a believed claim.
• Salvador vs. Court of Appeals, 387 Phil. 453 (2000) — Cited on the economically threatened condition of dismissed employees and the expectation that they take measures to secure sustenance.

• Section 3, Rule 71, Rules of Court — Governs indirect contempt after a written charge and an opportunity to comment and be heard; it enumerates the acts punishable as indirect contempt. Applied: the SC found that the acts of Enriquez and Sia, LA Calanza, and Sheriff Paredes did not fall under the enumeration and were not clearly and contumaciously disobedient.