Case Summary (G.R. No. 212034)
Background and Facts
In 1985, the Central Bank of the Philippines initiated liquidation proceedings for the Philippine Veterans Bank (PVB) by filing a Petition for Assistance in Liquidation in Court Case No. SP-32311. The Philippine Veterans Bank Employees Union subsequently filed claims for unpaid employee wages and benefits but encountered delays in the court's process. On March 8, 1991, the petitioners sought the disqualification of the presiding judge due to perceived bias. In 1992, Congress enacted Republic Act No. 7169, which provided for the bank’s rehabilitation and reopening. Following this development, the Central Bank issued a certificate of authority to reopen the bank, but the respondent judge continued with liquidation proceedings, prompting the petitioners to file a petition for prohibition and a temporary restraining order.
Legal Issues Raised
The primary legal issue is whether the liquidation court retains the authority to continue liquidation proceedings for PVB following the enactment of Republic Act No. 7169, which mandates the bank's rehabilitation. The petitioners contend that the passage of the Act rendered the liquidation court functus officio, implying it no longer possesses jurisdiction over the liquidation matters of the bank.
Court Resolution and Rationale
The Supreme Court found in favor of the petitioners, elucidating that the enactment of Republic Act No. 7169 effectively terminated the liquidation proceedings. The law outlines provisions for the reopening of the bank within three years and mandates the establishment of a rehabilitation committee. Initial steps for rehabilitating PVB, including the submission of a rehabilitation plan to the Monetary Board, were fulfilled, further solidifying the argument that rehabilitation should take precedence over liquidation.
Contrasting Concepts of Liquidation and Rehabilitation
The Court distinguished between liquidation and rehabilitation, defining liquidation as a process winding up corporate operations, settling debts, and distributing remaining assets. Rehabilitation, in contrast, is characterized by efforts to restore the corporation to its operational status. The Court emphasized that both processes cannot coexist because pursuing liquidation would obstruct the goals of rehabilitation.
Effectivity of Republic Act No. 7169
The court dismissed the respondents’ claims regarding the effective
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Case Citation
- G.R. No. 105364
- Date of Decision: June 28, 2001
- Reported in: 412 Phil. 449
Parties Involved
- Petitioners: Philippine Veterans Bank Employees Union-N.U.B.E. and Perfecto V. Fernandez
- Respondents: Honorable Benjamin Vega (Presiding Judge of Branch 39 of the Regional Trial Court of Manila), the Central Bank of the Philippines, and the Liquidator of the Philippine Veterans Bank
Background of the Case
- In 1985, the Central Bank of the Philippines initiated liquidation proceedings for the Philippine Veterans Bank (PVB) by filing a petition in the Regional Trial Court of Manila.
- The Philippine Veterans Bank Employees Union, represented by Perfecto V. Fernandez, filed claims for unpaid wages and benefits during the liquidation process.
- Despite partial payments, many employees did not receive their due benefits due to the fragmented nature of hearings.
Legislative Developments
- On January 2, 1992, Congress enacted Republic Act No. 7169, mandating the rehabilitation of PVB.
- Following this, the employees submitted residual claims to labor tribunals for reinstatement and benefits upon the bank's reopening.
- In May 1992, the Central Bank issued a certificate allowing PVB to reopen.
Key Legal Issues
- The primary issue was whether the liquidation court could continue its proceedings after the enactment of R.A. 7169, which called for the bank’s rehabilitation and reopening.
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