Civil Law

Philippine Veterans Bank Employees Union vs Judge Benjamin Vega

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G.R. No. 105364 – 360 SCRA 32 – Civil Law – General Principles – Publication of Laws – Indispensability of Publication

Political Law – Municipal Corporations – Dissolution of Government Owned and Controlled Corporations

In 1985, the Central Bank of the Philippines filed a Petition for Assistance in the Liquidation of the Philippine Veterans Bank (PVB) in the RTC of Manila, Branch 39, presided by Judge Benjamin Vega. Thereafter, the PVB Employees Union (PVBEU) filed their claim for accrued and unpaid employee wages and benefits in the same proceeding.

On January 2, 1992 while the liquidation case was still pending, R.A. No. 7169 (An Act to Rehabilitate the PVB) was signed into law by then Pres. Corazon Aquino and was published in the Official Gazette on February 24, 1992.

In May 1992, due to rehabilitation efforts, the Central Bank allowed PVB to reopen.

However, the liquidation judge, Judge Benjamin Vega, did not immediately stop the liquidation proceeding. In fact he went on with it. As a result, PVBEU filed before the Supreme Court a Petition for Prohibition with Preliminary Injunction seeking to enjoin Judge Vega from proceeding with the liquidation case. The preliminary injunction was granted by the Supreme Court.

A motion for intervention was filed by the MOP Security & Detective Agency averring among others that R.A. 7169 did not immediately take effect and that it only took effect 15 days after publication in the Official Gazette or on March 10, 1992.

ISSUE: Whether or not R.A. No. 7169 needed publication to be effective.

HELD: No. R.A. 7169 provides in its effectivity clause that:

Sec. 10. Effectivity. – This Act shall take effect upon its approval.

As a rule, laws take effect 15 days after completion of their publication in the Official Gazette or in a newspaper of general circulation in the Philippines. However, the legislature has the authority to provide for exceptions as indicated in the clause unless otherwise provided. Hence, it is clear that the legislature intended to make the law effective immediately upon its approval. It is undisputed that R.A. No. 7169 was signed into law by President Corazon C. Aquino on January 2, 1992. Therefore, said law became effective on said date.

Assuming for the sake of argument that publication is necessary for the effectivity of R.A. No. 7169, then it became legally effective on February 24, 1992, the date when the same was published in the Official Gazette, and not on March 10, 1992.

The trial court also lost its jurisdiction over the case upon effectivity of R.A. No. 7169.

Liquidation, in corporation law, connotes a winding up or settling with creditors and debtors. It is the winding up of a corporation so that assets are distributed to those entitled to receive them. It is the process of reducing assets to cash, discharging liabilities and dividing surplus or loss. On the opposite end of the spectrum is rehabilitation which connotes a reopening or reorganization. Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. It is crystal clear that the concept of liquidation is diametrically opposed or contrary to the concept of rehabilitation, such that both cannot be undertaken at the same time. To allow the liquidation proceedings to continue would seriously hinder the rehabilitation of PVB.

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AUTHOR’S NOTE: Compare this case with Tañada vs Tuvera (1986) which ruled that publication is indispensable. The tenor of the Tañada Case was that laws must be published in order for them to be effective but in this case, the SC ruled that publication is not necessary and that laws may be effective upon approval.

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