G.R. No. 67125 - Philippine Veterans Bank Employees Union vs. Philippine Veterans Bank

The Philippine Veterans Bank was established in 1963 with the goal of ensuring the economic security and potential prosperity of hundreds of thousands of war veterans, who were to become its stockholders.
The special law (Republic Act No. 3518) creating the bank envisaged a contractual bond between the Government and the bank’s stockholders, providing certain inalienable benefits and privileges.

Over time, the bank encountered significant financial troubles that threatened its viability.
On April 10, 1983, the bank’s precarious financial condition led to its placement under receivership by virtue of Resolution No. 334 of the Monetary Board of the Central Bank.

The Philippine Veterans Bank Employees Union, on April 26, 1984, challenged the retrenchment and reorganization program on the ground of security of tenure and sought a temporary restraining order (docketed as G.R. No. 67125).
Despite the union’s intervention, the Monetary Board ordered the liquidation of the bank on June 7, 1985, after establishing that the bank had accrued liabilities exceeding P540 million.
Subsequent petitions and motions were filed by various parties:

The union filed a supplemental petition for prohibition with a preliminary injunction.
The Veterans Federation of the Philippines intervened on November 26, 1985, asserting plans for rehabilitation and preventing the liquidation process.
Ancillary petitions included one for the immediate payment of wage and salary increases and later requests by additional parties (e.g., the City Government of Davao and individual depositors) seeking withdrawal of deposits.

The government, through the Executive Department, initiated rehabilitation efforts via the Special Presidential Committee on the Philippine Veterans Bank, created and renewed by several Administrative Orders beginning on July 10, 1987.
Despite optimistic statements regarding the eventual reopening of the bank, these administrative efforts had not yet materialized into concrete rescue plans at the time of the decision.

51% of the bank’s capital stock was initially held by the Republic of the Philippines on behalf of the veterans and their beneficiaries, with the shares to eventually be turned over to them.
The remaining 49% consisted of preferred shares available for subscription by veterans or their kin, subject to specific conditions.

The charter also provided that the bank would be subject to regulation and inspection by the Department of Supervision and Examination of the Central Bank, embedding it within the regulatory framework applicable to commercial banks.

Petitioners argued that by accepting stocks granted under the special law, a contractual and vested relationship had been created that could not be unilaterally altered by the Central Bank’s liquidation order.
The petitioners further contended that such alteration would amount to a violation of the impairment clause, and that only the legislature, not a regulatory authority, had the power to revoke or modify the charter.
Additional issues arose regarding employee claims:

Claims for back wages by employees were raised under the premise that retrenchment and reorganization deprived them of their security of tenure.
Separate claims for retirement benefits by former board members (Marking and Mejia) were also raised.

Whether the Central Bank, based on the Central Bank Act and other pertinent laws, had the statutory power to liquidate the Philippine Veterans Bank.
Whether the special law creating the bank endowed it with certain immune contractual rights that could prevent such liquidation without explicit legislative action.

Whether the acceptance of stock and benefits under the bank’s charter created inalienable rights that could not be disturbed without violating the constitutional protection against impairment of contracts.
Whether the overriding public interest in preserving the national banking system justified state intervention in altering those contractual relations.

Whether back wages should be awarded to employees whose services were terminated due to the forced liquidation and reorganization of the bank.
Whether the retirement benefit claims of board members (Marking and Mejia) should be honored in light of existing laws and the bank’s retirement plan.

Whether the petitions, including those for restitution and mandamus-like relief, fell within the scope of the Supreme Court’s original or appellate jurisdiction.
Whether the actions sought by the petitioners improperly sought to override the procedural and administrative framework established for bank supervision and liquidation.