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    Phil. Vet. Bank Employess Vs Phil. Vet. Bank Digest

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    Lennart Reyes
    The Central Bank liquidated the Philippine Veterans Bank claiming authority to regulate banking institutions. The employees disputed this, arguing that the bank's charter created a contractual relationship between the government and stockholders. However, the Supreme Court held that the Central Bank does have the power to liquidate the bank. While a charter may create a contract, that contract can be altered if required by public interest, such as maintaining stability of the banking system. The police power allows changes to contracts involving public interest to address needs like regulating monetary value.

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    Phil. Vet. Bank Employess Vs Phil. Vet. Bank Digest

    Uploaded by

    Lennart Reyes
    124 views1 page
    The Central Bank liquidated the Philippine Veterans Bank claiming authority to regulate banking institutions. The employees disputed this, arguing that the bank's charter created a contractual relationship between the government and stockholders. However, the Supreme Court held that the Central Bank does have the power to liquidate the bank. While a charter may create a contract, that contract can be altered if required by public interest, such as maintaining stability of the banking system. The police power allows changes to contracts involving public interest to address needs like regulating monetary value.

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    case digest

    Original Title

    676. Phil. Vet. Bank Employess vs Phil. Vet. Bank Digest

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    The Central Bank liquidated the Philippine Veterans Bank claiming authority to regulate banking institutions. The employees disputed this, arguing that the bank's charter created a contractual relationship between the government and stockholders. However, the Supreme Court held that the Central Bank does have the power to liquidate the bank. While a charter may create a contract, that contract can be altered if required by public interest, such as maintaining stability of the banking system. The police power allows changes to contracts involving public interest to address needs like regulating monetary value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    124 views1 page

    Phil. Vet. Bank Employess Vs Phil. Vet. Bank Digest

    Uploaded by

    Lennart Reyes
    The Central Bank liquidated the Philippine Veterans Bank claiming authority to regulate banking institutions. The employees disputed this, arguing that the bank's charter created a contractual relationship between the government and stockholders. However, the Supreme Court held that the Central Bank does have the power to liquidate the bank. While a charter may create a contract, that contract can be altered if required by public interest, such as maintaining stability of the banking system. The police power allows changes to contracts involving public interest to address needs like regulating monetary value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    676. Phil. Vet. Bank Employees v. Phil. Vet.

    Bank 189 SCRA 14


    (No law impairing the obligation of contracts shall be passed)
    FACTS:
    The petitioners in this case dispute the power of the Central Bank to liquidate
    PVB claiming that as the Bank was created by a special law, a contractual relationship
    now exists between the Government and the stockholders of the Bank that cannot be
    disturbed without violation of the impairment clause. The acceptance of the benefits of
    that law by the petitioners had conferred a vested right on them that cannot now be
    withdrawn without their consent as this would constitute a deprivation of their property
    without due process of law. Assuming that such benefits could be validly revoked, this
    cannot be done by the Central Bank only but by the legislature itself which conferred the
    franchise on the Bank in the first place. Moreover, that Central Bank cannot exercise
    any authority over the Bank because the latter is itself also a government bank. The
    Central Bank has no control over these government lending institutions.
    ISSUE:
    Whether the Central Bank has the power to liquidate the Philippine Veterans Bank.
    HELD:
    R.A. No. 3518 itself, which created the Philippine Veterans Bank, provides in its
    Section 14 that the Bank shall be subject to the authority of the Department of
    Supervision and Examination. The purpose of these provisions is to enable the Central
    Bank, as the entity charged with the responsibility of maintaining the stability of the
    banking and monetary systems of the country, to take the necessary steps against any
    banking institution whose continued operation may cause prejudice to its depositors and
    creditors, and the general public as well.
    Even if it be conceded that the charter of the Rank constitutes a contract
    between the Government and the stockholders of the Bank, it would not follow that the
    relationship cannot be altered without violating the impairment clause. This is a too
    simplistic conclusion that loses sight of the vulnerability of this "precious little clause," as
    it is called, to the inherent powers of the State when the public interest demands their
    exercise.
    It was then held that contract may be altered validly if it involves the public
    interest, to which private interests must yield as a postulate of the existing social order.
    Supreme Court stressed that every contract involving the public interest suffers a
    congenital infirmity, and that is its susceptibility to change whenever required by the
    public interest. The police power can be validly asserted to make that change to meet
    any one of the several great public needs, such as, in that case, regulation of the value
    of money.

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