GR 137326; (August, 2003) (Digest)
G.R. No. 137326 ; August 25, 2003
ROSARIO TEXTILE MILLS, INC., CORPORATE OFFICERS AND BOARD OF DIRECTORS OF ROSARIO TEXTILE MILLS, INC., and EDILBERTO YUJUICO, Petitioners, vs. COURT OF APPEALS, HONORABLE LUIS R. TONGCO, Presiding Judge, Branch 155, Regional Trial Court, Pasig City, PETER PAN CORP. and RMC GARMENTS, INC., Respondents.
FACTS
Respondent RMC Garments, Inc. leased properties from Peter Pan Corporation. Petitioner Rosario Textile Mills, Inc., claiming ownership of the leased premises through an assignment from a foreclosure purchaser, demanded RMC to vacate. In January 1987, Rosario Textile forcibly entered the premises, cut off utilities, and removed RMC’s sewing machines and other chattels. RMC and Peter Pan filed an injunction suit. The trial court, in a 1987 Order affirmed with finality by the Supreme Court, directed Rosario Textile to return the sewing machines.
Rosario Textile and its officers repeatedly failed to comply with the final order. In 1997, after years of non-compliance and contempt proceedings, petitioners manifested that the machines could no longer be returned as they were destroyed in a 1991 warehouse fire. The trial court, in its assailed Order, ruled that the obligation to return was not extinguished by the fire, as petitioners were already in default, and ordered the responsible corporate officers to make complete restitution of the machines’ value to RMC.
ISSUE
Whether the corporate officers of Rosario Textile can be held personally liable for the restitution of the value of the sewing machines they failed to return pursuant to a final court order.
RULING
Yes. The Supreme Court affirmed the rulings of the lower courts. The legal logic rests on the nature of contempt proceedings and the personal liability of corporate officers for defying court orders. The trial court’s directive for restitution was not a judgment on the merits declaring ownership but a sanction pursuant to Administrative Circular No. 22-95 (now incorporated in the Rules of Court) for contempt. Contempt power is remedial and preservative, aimed at compelling obedience to court orders and vindicating judicial authority.
Petitioners’ officers, having actual knowledge of the final and executory order to return the chattels, willfully refused to comply for years. Their default occurred long before the alleged fire. The destruction of the property did not extinguish their liability for defiance. Following precedent, corporate officers who knowingly disobey a final court order can be held personally liable. The sanction of requiring restitution of the value is a proper coercive measure to address the contumacious conduct and achieve the purpose of the original directive, which was to restore the removed property. The officers’ persistent disregard for judicial authority justified holding them personally accountable for the monetary equivalent.