Laya, Jr. vs. Philippine Veterans Bank

An employer's imposition of an early retirement age (below the 65-year compulsory age under the Labor Code) is only valid if the employee's consent to such a plan is explicit, voluntary, free, and uncompelled; consent cannot be inferred from a general statement of "membership" in a retirement program in an appointment letter or from automatic membership in a plan that is essentially a contract of adhesion.

Alfredo F. Laya, Jr. was hired by Philippine Veterans Bank (PVB) as its Chief Legal Counsel with the rank of Vice President. The bank had an existing Retirement Plan, established years before Laya's employment, which set the normal retirement age for its members at 60. Upon reaching this age, PVB informed Laya of his retirement. Laya contested this, claiming he did not consent to be retired at an age earlier than the 65-year compulsory age provided by the Labor Code, leading him to file a case for illegal dismissal.

• On June 1, 2001, Alfredo F. Laya, Jr. was hired by Philippine Veterans Bank (PVB) as Chief Legal Counsel with the rank of Vice President.
• His letter of appointment stated that as a senior officer, he was entitled to benefits including "Membership in the Provident Fund Program/Retirement Program."
• PVB had a Retirement Plan, in effect since January 1, 1996, which provided that the normal retirement date for a member is the first day of the month following their 60th birthday.
• The same plan stipulated that membership was automatic for all regular employees of the bank.
• On June 14, 2007, PVB informed Laya of his retirement effective July 1, 2007, as he had reached the age of 60.
• Laya wrote to the bank's chairman requesting a two-year extension of his tenure, pursuant to the "Late Retirement" provision of the bank's plan, but this request was denied.
• Laya claimed he was only shown a photocopy of the Retirement Plan Rules and Regulations after he had been employed for a long time.
• On December 24, 2008, Laya filed a complaint for illegal dismissal against PVB.

• The petitioner argued that he was illegally dismissed because his retirement at age 60 was involuntary and lacked his express consent, which is required by law for retirement at an age earlier than the compulsory age of 65.
• He contended that the mere mention of a retirement program in his appointment letter did not constitute his informed and voluntary agreement to all its terms, especially the provision on early retirement.
• The petitioner asserted that PVB is a public instrumentality, not a private corporation, and therefore, the applicable retirement age should be 65 as stipulated under the GSIS Law.
• He posited that his second motion for reconsideration should be accepted by the Court due to exceptional circumstances and to prevent a patently unjust outcome.

• The respondents argued that the petitioner's acceptance of his appointment signified his conformity to all company policies, including the retirement program which had been in effect since 1996.
• They maintained that establishing a retirement age lower than 65 is a valid exercise of management prerogative and is a recognized exception under Article 287 of the Labor Code.
• The respondents pointed out that the petitioner's request for an extension under the plan's "Late Retirement" provision was an acknowledgment of the plan's validity and applicability to him.
• Procedurally, they contended that the Court should not entertain the second motion for reconsideration as the decision had already become final and executory, invoking the principle of immutability of judgments.
• Substantively, they insisted that PVB is a private entity, as previously settled by jurisprudence, and is therefore governed by the Labor Code.

• Procedural Issues:
  • Whether the Supreme Court may entertain a second motion for reconsideration after an entry of judgment has been issued.
• Substantive Issues:
  • Whether Philippine Veterans Bank is a private entity governed by the Labor Code or a public instrumentality subject to Civil Service laws.
  • Whether the petitioner was validly retired by PVB at the age of 60, which depends on whether he gave his explicit consent to the bank's early retirement plan.

• Procedural:
  • Yes, the Court can entertain a second motion for reconsideration in exceptional cases. The Court held that while the general rule is that such motions are forbidden to uphold the immutability of judgments, an exception can be made "in the higher interest of justice." This exception applies when the assailed decision is legally erroneous, patently unjust, and could cause irremediable injury. The Court found that the initial dismissal of the petition overlooked the crucial legal requirement of an employee's express consent for early retirement, resulting in a patently unjust outcome for the petitioner, thus justifying the relaxation of procedural rules.
• Substantive:
  • The Court ruled that PVB is a private entity. Reaffirming the doctrine in Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans Bank, the Court held that despite its creation by a special charter, PVB is not owned or controlled by the government. Consequently, its employer-employee relations are governed by the Labor Code, not the Civil Service Law.
  • The Court ruled that the petitioner was not validly retired and was, therefore, illegally dismissed. For an early retirement plan to be binding, the employee's consent must be explicit, voluntary, free, and uncompelled. The Court found that the petitioner's consent was not established, as the mere mention of the retirement program in his appointment letter did not sufficiently inform him of its terms, particularly the retirement age of 60. The plan, being a contract of adhesion and providing for automatic membership, could not be the basis for inferring voluntary consent. The burden was on the employer, PVB, to prove that Laya was fully apprised of and had agreed to the plan's terms, a burden which it failed to discharge.

• Employee's Consent to Early Retirement — An employer may implement a retirement plan with an age lower than 65, but for it to be valid, the employee's acceptance must be explicit, voluntary, free, and uncompelled. In this case, the Court found no such explicit consent from the petitioner, as passive acquiescence or automatic membership in a company plan is insufficient to prove voluntary agreement to waive one's right to security of tenure until the compulsory retirement age.
• Immutability of Judgments — As a general rule, a decision that has become final and executory can no longer be modified. The Court invoked the exception to this rule, holding that it may be relaxed "in the higher interest of substantial justice," particularly when the final decision is legally erroneous, patently unjust, and capable of causing unwarranted and irremediable injury.
• Contract of Adhesion — This is a contract prepared by one party and assented to by the other who has no opportunity to negotiate its terms. The Court characterized PVB's retirement plan as a contract of adhesion, which meant that the petitioner's automatic membership upon employment could not be considered a free and voluntary act of consent to its terms.
• Stare Decisis — The Court adhered to its previous ruling in Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans Bank, which established that PVB is a private commercial bank governed by the Labor Code, thereby rejecting the petitioner's argument that it was a public instrumentality.

• "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."

• Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans Bank — Cited as the controlling precedent establishing that PVB is a private entity whose employees are governed by the Labor Code, not the Civil Service Law.
• Cercado v. Uniprom, Inc. — Referenced as the primary authority for the rule that an employee's consent to an early retirement plan must be explicit and voluntary, and cannot be simply inferred from signing an employment contract that vaguely mentions a retirement program.
• McBurnie v. Ganzon — Cited to provide the legal basis and justification for the Court's exception to the rule against entertaining a second motion for reconsideration, specifically under the principle of "higher interest of justice."
• St. Martin Funeral Home v. NLRC — Referenced to affirm the broad scope of the Court of Appeals' certiorari jurisdiction, which includes the authority to review the factual findings and legal conclusions of the NLRC.

• Article 287 of the Labor Code (now Art. 302) — This provision governs retirement in the private sector. It was central to the case as it sets the compulsory retirement age at 65, unless a different age is validly agreed upon in a collective bargaining agreement or other applicable employment contract, which requires the employee's consent.
• Article 279 of the Labor Code (now Art. 294) — This article on security of tenure was applied to determine the reliefs (backwages and separation pay in lieu of reinstatement) granted to the petitioner after he was found to have been illegally dismissed.
• Section 3, Rule 15 of the Internal Rules of the Supreme Court — This rule, which prohibits second motions for reconsideration, was cited and discussed by the Court as the basis for the general rule from which it was creating an exception in this specific case.

• Justice Carpio — He concurred on the ground that the constitutional right to security of tenure requires any waiver, such as agreeing to an earlier retirement age, to be clear, categorical, knowing, and intelligent. He argued that PVB failed to present any evidence of the petitioner's actual intention to relinquish his right to work until the compulsory age of 65, and such a waiver cannot be presumed, especially against a fundamental constitutional right.

• Justice Leonen — He dissented, arguing that the Court should not have entertained the second motion for reconsideration as it violated the doctrine of immutability of judgments without sufficient compelling reason. On the merits, he argued that the petitioner, as the Chief Legal Counsel of the bank, was not an ordinary employee and could not claim ignorance of the company's retirement plan. His act of requesting an extension under the plan's provisions demonstrated his awareness and acceptance of it, and his subsequent claim of illegal dismissal should not be countenanced.