Almirante: PVB is a private corporation

PETITIONER Alfredo F. Laya Jr. filed a complaint for illegal dismissal against respondents Philippine Veterans Bank (PVB) and Ricardo A. Balbido Jr.

From an unfavorable resolution of the Supreme Court (First Division), petitioner filed a second motion for reconsideration where he expounded on the issues he was raising in his first motion for reconsideration. He urged the court to find and declare PVB as a public instrumentality, saying the law applicable to his case was Presidential Decree 1146 (Government Service Insurance System Law), which stipulated the compulsory retirement age of 65 years and that the compulsory retirement age for civil servants would not be “contracted out.”

Does the contention that PVB is a public instrumentality find merit?

Ruling: No.

Coming to the ownership of the bank, we find it is not a government bank, as claimed by the petitioners.

The fact is that under Section 3b of its charter, while 51 percent 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 five years from the organization by the bank to the said beneficiaries who would thereafter have the right to vote on such common shares. The balance of about 49 percent 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 30 days from the date of receipt of notice, said share of stock will 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. 6a, the affairs of the bank are managed by a board of directors composed of 11 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.

This point is important because the Constitution provides in its Article IX-B, Section 2(1) that “the Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.” As the bank is not owned or controlled by the government, although it does have an original charter in the form of Republic Act 3518, it clearly does not fall under the Civil Service and should be regarded as an ordinary commercial corporation. Section 28 of the law so provides. The consequence is that the relations of the bank with its employees should be governed by the labor laws, under which they have already been paid some of their claims.

Whether PVB was a government or a private entity, we declare that it is the latter. The foregoing jurisprudential pronouncement remains to be good law, and should be doctrinal and controlling. (Alfredo F. Laya, Jr. vs. Court of Appeals,, G.R. No. 205813, January 10, 2018 quoting Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans Bank, G.R. No. 67125, 82337, August 24, 1990, 189 SCRA 14).


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