EN BANC

January 10, 2018

G.R. No. 205813

ALFREDO F. LAYA, JR., Petitioner 

BERSAMIN, J.:

An employee in the private sector who did not expressly agree to the terms of an early retirement plan cannot be
separated from the service before he reaches the age of 65 years. The employer who retires the employee
prematurely is guilty of illegal dismissal, and is liable to pay his backwages and to reinstate him without loss of
seniority and other benefits, unless the employee has meanwhile reached the mandatory retirement age under
the Labor Code, in which case he is entitled to separation pay pursuant to theterms of the plan, with legal interest
on the backwages and separation pay reckoned from the finality of the decision.

The Case

The petitioner seeks the review and reversal of the adverse decision promulgated on August 31, 2012, whereby
the Court of Appeals (CA) upheld the ruling of the National Labor Relations Commission (NLRC) dated June 21,
2010 affirming the dismissal of his complaint for illegal dismissal by the Labor Arbiter.

According to the petitioner, he was made aware of the retirement plan of respondent Philippine Veterans Bank
(PVB) only after he had long been employed and was shown a photocopy of the Retirement Plan Rules and
Regulations, but PVB's President Ricardo A. Balbido, Jr. had told him then that his request for extension of his
service would be denied "to avoid precedence." He sought the reconsideration of the denial of the request for the
extension of his retirement, but PVB certified his retirement from the service as of July 1, 2007 on March 6, 2008.
On December 24, 2008, the petitioner filed his complaint for illegal dismissal against PVB and Balbido, Jr. in the
NLRC to protest his unexpected retirement. Ruling of the Labor Arbiter

On August 28, 2009, the Labor Arbiter rendered a decision dismissing the complaint for illegal dismissal, to wit:

WHEREFORE, the charge of illegal dismissal and money claims raised by the complainant, together with the
counterclaim raised by the respondents are DISMISSED for lack of merit but by reason of a flaw in the denial of
complainant's application for term extension as discussed above, the respondent bank is hereby ordered to pay
the complainant the amount of ₱200,000.00 by way of reasonble (sic) indemnity.

Ricardo Balbido, Jr., is hereby dropped as party respondent.

SO ORDERED.

After his motion for reconsideration was denied, the petitioner appealed to the NLRC.

Ruling of the NLRC

WHEREFORE, premises considered the appeal of the complainant is hereby DENIED for lack of merit. The appeal of
respondents is GRANTED. The Decision below is hereby AFFIRMED with MODIFICATION, deleting the award of
indemnity to complainant.

SO ORDERED.

The petitioner assailed the ruling to the CA through certiorari.

Ruling of the CA

On August 31, 2012, the CA promulgated the now assailed decision, holding that the petitioner's acceptance of his
appointment as Chief Legal Officer of PVB signified his conformity to the retirement program; that he could not
have been unaware of the retirement program which had been in effect since January 1, 1996; that the lowering of
the retirement age through the retirement plan was a recognized exception under the provisions of Article 287 of
the Labor Code;  that considering his failure to adduce evidence showing that PVB had acted maliciously in
applying the provisions of the retirement plan to him and in denying his request for the extension of his service,
PVB 's implementation of the retirement plan was a valid exercise of its management prerogative.

Issues

The following procedural and substantive issues are to be considered and resolved, namely: (1) whether or not the
Court could accept the petitioner's second motion for reconsideration; (2) whether PVB is a private entity or a
public instrumentality; and (3) whether the petitioner was validly retired by PVB at age 60.

Ruling of the Court

In light of pertinent laws and relevant jurisprudence, the Court has ascertained, after going over the parties'
arguments and the records of the case, that the reconsideration of the Court's resolutions promulgated on April 8,
2013 and August 28, 2013, and the lifting of the entry of judgment made herein are in order; and that the appeal
by the petitioner should be given due course.

1.

The Court En Banc properly accepted the petitioner's second motion for reconsideration.

As a general rule, second and subsequent motions for reconsideration are forbidden. Nevertheless, there are
situations in which exceptional circumstances warrant allowing such motions for reconsideration, and for that
reason the Court has recognized several exceptions to the general rule. We have extensively expounded on the
exceptions in McBurnie v. Ganzon, where we observed:

At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as a general
rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that "[n]o second motion for reconsideration of a
judgment or final resolution by the same party shall be entertained." The rule rests on the basic tenet of
immutability of judgments. "At some point, a decision becomes final and executory and, consequently, all
litigations must come to an end."
The general rule, however, against second and subsequent motions for reconsideration admits of settled
exceptions. For one, the present Internal Rules of the Supreme Court, particularly Section 3, Rule 15 thereof,
provides:

Sec. 3. Second motion for reconsideration. - The Court shall not entertain a second motion for reconsideration, and
any exception to this rule can only be granted in the higher interest of justice by the Court en bane upon a vote of
at least two-thirds of its actual membership. There is reconsideration "in the higher interest of justice" when the
assailed decision is not only legally erroneous, but is likewise patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by the Court's
declaration.

xxxx

In a line of cases, the Court has then entertained and granted second motions for reconsideration "in the higher
interest of substantial justice," as allowed under the Internal Rules when the assailed decision is "legally
erroneous," "patently unjust" and "potentially capable of causing unwarranted and irremediable injury or damage
to the parties."

In short, the Court may entertain second and subsequent motions for reconsideration when the assailed decision is
legally erroneous, patently unjust and potentially capable of causing unwarranted and irremediable injury or
damage to the parties. Under these circumstances, even final and executory judgments may be set aside because
of the existence of compelling reasons.

It is notable that the retirement program in question herein was established solely by PVB as the employer.
Although PVB could validly impose a retirement age lower than 65 years for as long as it did so with the
employees' consent, the consent must be explicit, voluntary, free, and uncompelled. In dismissing the petition for
review on certiorari, the Court's First Division inadvertently overlooked that the law required the employees'
consent to be express and voluntary in order for them to be bound by the retirement program providing for a
retirement age earlier than the age of 65 years. Hence, the Court deems it proper to render a fair adjudication on
the merits of the appeal upon the petitioner's second motion for reconsideration. Furthermore, allowing this case
to be reviewed on its merits furnishes the Court with the opportunity to re-examine the case in order to ascertain
whether or not the dismissal produced results patently unjust to the petitioner. These reasons do justify treating
this case as an exception to the general rule on immutability of judgments.

2.

The pronouncement of the Court in Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans
Bank is still doctrinal on the status of the Philippine Veterans Bank as a private, not a government, entity

In Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans Bank, we pertinently pronounced:

Coming now to the ownership of the Bank, we find it is not a government bank, as claimed by the
petitioners.1âwphi1 The fact is that under Section 3(b) of its charter, while 51 % of the capital stock of the Bank
was initially fully subscribed by the Republic of the Philippines for and in behalf of the veterans, their widows,
orphans or compulsory heirs, the corresponding shares of stock were to be turned over within 5 years from the
organization by the Bank to the said beneficiaries who would thereafter have the right to vote such common
shares. The balance of about 49% was to be divided into preferred shares which would be opened for subscription
by any recognized veteran, widow, orphans or compulsory heirs of said veteran at the rate of one preferred share
per veteran, on the condition that in case of failure of any particular veteran to subscribe for any preferred share
of stock so offered to him within thirty (30) days from the date of receipt of notice, said share of stock shall be
available for subscription to other veterans in accordance with such rules or regulations as may be promulgated by
the Board of Directors. Moreover, under Sec. 6(a), the affairs of the Bank are managed by a board of directors
composed of eleven members, three of whom are ex officio members, with the other eight being elected annually
by the stockholders in the manner prescribed by the Corporation Law. Significantly, Sec. 28 also provides as
follows:

Sec. 28. Articles of incorporation. - This Act, upon its approval, shall be deemed and accepted to all legal intents
and purposes as the statutory articles of incorporation or Charter of the Philippine Veterans' Bank; and that,
notwithstanding the provisions of any existing law to the contrary, said Bank shall be deemed registered and duly
authorized to do business and operate as a commercial bank as of the date of approval of this Act.

3.

Petitioner Alfredo Laya was not validly retired at age 60

Notwithstanding the rejection of the petitioner's insistence that PVB was a public corporation, we find and declare
that the petitioner was not validly retired at age 60.

Before going further, we clarify that the CA, in the exercise of its certiorari jurisdiction, is limited to determining
whether or not the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction. The
remedy is the special civil action for certiorari under Rule 65 of the Rules of Court brought in the CA, and once the
CA decides the case the party thereby aggrieved may appeal the decision of the CA by petition for review
on certiorari under Rule 45 of the Rules of Court.

However, rigidly limiting the authority of the CA to the determination of grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the NLRC does not fully conform with prevailing case law,
particularly St. Martin Funeral Home v. NLRC, where we firmly observed that because of the "growing number of
labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand
the case to the NLRC for resolution of unclear or ambiguous factual findings" the CA could more properly address
petitions for certiorari brought against the NLRC. Conformably with such observation made in St. Martin Funeral
Homes, we have then later on clarified that the CA, in its exercise of its certiorari jurisdiction, can review the
factual findings or even the legal conclusions of the NLRC, viz.:

In St. Martin Funeral Home[s] v. NLRC, it was held that the special civil action of certiorari is the mode of judicial
review of the decisions of the NLRC either by this Court and the Court of Appeals, although the latter court is the
appropriate forum for seeking the relief desired "in strict observance of the doctrine on the hierarchy of courts"
and that, in the exercise of its power, the Court of Appeals can review the factual findings or the legal conclusions
of the NLRC. The contrary rule in Jamer was thus overruled. There is now no dispute that the CA can make a
determination whether the factual findings by the NLRC or the Labor Arbiter were based on the evidence and in
accord with pertinent laws and jurisprudence.

The retirement of employees in the private sector is governed by Article 287 of the Labor Code:

Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an
employee's retirement benefits under any collective bargaining and other agreements shall not be less than those
provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay x x x x.

Under the provision, the employers and employees may agree to fix the retirement age for the latter, and to
embody their agreement in either their collective bargaining agreements (CBAs) or their employment contracts.
Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement
age of 65 years are not per se repugnant to the constitutional guaranty of security of tenure, provided that the
retirement benefits are not lower than those prescribed by law.

The CA concluded that the petitioner had agreed to be bound by the retirement plan of PVB when he accepted the
letter of appointment as its Chief Legal Counsel.

We disagree with the conclusion. We declare that based on the clear circumstances herein the CA erred in so
concluding.

The petitioner's letter of appointment pertinently stated:

3. As a Senior Officer of the Bank, you are entitled to the following executive benefits:

•Car Plan limit of ₱700,000.00, without equity on your part; a gasoline subsidy of 300 liters per month and
subject further to The Car Plan Policy of the Bank.

• Membership in a professional organization in relation to your profession and/or assigned functions in

• Membership in the Provident Fund Program/Retirement Program.

• Entitlement to any and all other basic and fringe benefits enjoyed by the officers; core of the Bank
relative to Insurance covers, Healthcare Insurance, vacation and sick leaves, among others.

Obviously, the mere mention of the retirement plan in the letter of appointment did not sufficiently inform the
petitioner of the contents or details of the retirement program. To construe from the petitioner's acceptance of his
appointment that he had acquiesced to be retired earlier than the compulsory age of 65 years would, therefore,
not be warranted. This is because retirement should be the result of the bilateral act of both the employer and the
employee based on their voluntary agreement that the employee agrees to sever his employment upon reaching a
certain age.

That the petitioner might be well aware of the existence of the retirement program at the time of his engagement
did not suffice. His implied knowledge, regardless of duration, did not equate to the voluntary acceptance required
by law in granting an early retirement age option to the employee. The law demanded more than a passive
acquiescence on the part of the employee, considering that his early retirement age option involved conceding the
constitutional right to security of tenure. In Cercado v. Uniprom, Inc., we have underscored the character of the
employee's consent in agreeing to the early retirement policy of the employer, viz.:

Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled.
While an employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor
Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan. In other words,
only the implementation and execution of the option may be unilateral, but not the adoption and institution of the
retirement plan containing such option. For the option to be valid, the retirement plan containing it must be
voluntarily assented to by the employees or at least by a majority of them through a bargaining representative.
(Bold emphasis supplied)

Furthermore, the petitioner's membership in the retirement plan could not be justifiably attributed to his signing
of the letter of appointment that only listed the minimum benefits provided to PVB's employees. Indeed,
in Cercado, we have declared that the employee's consent to the retirement plan that came into being two years
after the hiring could not be inferred from her signature on the personnel action forms accepting the terms of her
job description, and compliance with the company policies, rules and regulations, to wit:

We also cannot subscribe to respondent's submission that petitioner's consent to the retirement plan may be
inferred from her signature in the personnel action forms containing the phrase: "Employee hereby expressly
acknowledges receipt of and undertakes to abide by the provisions of his/her Job Description, Company Code of
Conduct and such other policies, guidelines, rules and regulations the company may prescribe."

It should be noted that the personnel action forms relate to the increase in petitioner's salary at various periodic
intervals. To conclude that her acceptance of the salary increases was also, simultaneously, a concurrence to the
retirement plan would be tantamount to compelling her to agree to the latter. Moreover, voluntary and equivocal
acceptance by an employee of an early retirement age option in a retirement plan necessarily connotes that her
consent specifically refers to the plan or that she has at least read the same when she affixed her conformity
thereto.

A perusal of PVB's retirement plan shows that under its Article III all the regular employees of PVB were
automatically admitted into membership, thus:

ARTICLE III
MEMBERSHIP IN THE PLAN

Section 1. Eligibility at Effective Date. Any Employee of the Bank as of January 1, 1996 shall automatically be a
Member of the Plan as of such date.

Section 2. Eligibility after Effective Date. Any person who becomes an Employee after January 1, 1996 shall
automatically become a Member of the Plan on the date he becomes a regular permanent Employee, provided he
is less than 55 years old as of such date.

Section 3. Continuation/Termination of Membership. Membership in the Plan shall be concurrent with

Having thus automatically become a member of the retirement plan through his acceptance of employment as
Chief Legal Officer of PVB, the petitioner could not withdraw from the plan except upon his termination from
employment.

It is also notable that the retirement plan had been in existence since January 1, 1996, or more than five years
prior to the petitioner's employment by PVB. The plan was established solely by the PVB, and approved by its
president.  As such, the plan was in the nature of a contract of adhesion, in respect to which the petitioner was
reduced to mere submission by accepting his employment, and automatically became a member of the plan. With
the plan being a contract of adhesion, to consider him to have voluntarily and freely given his consent to the terms
thereof as to warrant his being compulsorily retired at the age of 60 years is factually unwarranted.

To stress, company retirement plans must not only comply with the standards set by the prevailing labor laws but
must also be accepted by the employees as commensurate to their faithful services to the employer within the
requisite period. Although the employer could be free to impose a retirement age lower than 65 years for as long
its employees consented, the retirement of the employee whose intent to retire was not clearly established, or
whose retirement was involuntary is to be treated as a discharge. With the petitioner having been thus dismissed
pursuant to the retirement provision that he had not knowingly and voluntarily agreed to, PVB was guilty of illegal
dismissal as to him. Being an illegally dismissed employee, he was entitled to the reliefs provided under Article
279 of the Labor Code, to wit:

Article 279. Security of tenure. -In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.

Considering that the petitioner's reinstatement is no longer feasible because of his having meanwhile reached the
compulsory retirement age of 65 years by June 11, 2012, he should be granted separation pay. In this regard,
retirement benefits and separation pay are not mutually exclusive. The basis for computing the separation pay
should accord with Section 4, Article III of PVB's retirement plan. Hence, his full backwages should be computed
from July 18, 2007 - the date when he was illegally dismissed - until his compulsory retirement age of 65 years on
June 11, 2012. Such backwages shall all be subject to legal interest of 12% per annum from July 18, 2007 until June
30, 2013, and then to legal interest of 6% interest per annum from July 1, 2013 until full satisfaction, conformably
with Nacar v. Gallery Frames.