University of the Philippines College of Law

JCAP

Topic Balancing of Interests

Case No. G.R. No. 208735 / July 19, 2017
Case Name BDO Unibank vs Nerbes
Ponente Tijam, J

RELEVANT FACTS

Respondents Nerbes (boy) and Suravilla (girl) were employees of Equitable PCI Bank (now BDO Unibank Inc.) (BDO) and
members of Equitable PCI Bank Employees Union (Union), a legitimate labor union and exclusive bargaining representative
of the rank and file employees of BDO

An election of officers was held under supervision of the Labor Relations Division of NCR Office of Dep’t of Labore and
Employment (DOLE-NCR)

Thru a Resolution issued by DOLE-NCR, Nerbes and Suravilla won as President and Vice President respectively. The
protest of the losing candidates were dismissed

After taking oath, both of them notified BDO of their decision to exercise their privilege under the terms of the
Collective Bargaining Agreement (CBA) which allows the President and Exec. Vice President to be on full-time
leave for the rest of their term of office to devote their time in maintaining industrial peace

They both anchored their right to immediately assume positions under Dep’t Order No. 9 and thereafter took their
leave.

Meanwhile, the losing candidates appealed the DOLE-NCR’s Resolution (March 19, 2004) to the Buraeu of Labor Relations
(BLR).
Because of the appeal’s pendency, BDO disapproved Nerbes and Suravilla’s union leaves and directed them to
report back to work; they failed to obey

BDO issued show cause Memoranda directing them to explain why no disciplinary action should be imposed against them
for violation of BDO’s code of conduct on attendance and punctuality, and obedience and coopration

Apparently, Nerbes filed a complaint for unfair labor practice (ULP) against BDO; BDO asked Nerbes to explain his
alleged falsification of public document and perjury regarding his position paper submitted in the ULP case
allegedly signed by Nebres’s lawyer who later denied signing it

After administrative hearings, BDO found Nebres and Suravilla guilty of SERIOUS MISCONDUCT and WILLFUL
DISOBEDIENCE and imposed the penalty of DISMISSAL; Nebres and Suravilla filed before the Labor Arbiter for ULP,
ILLEGAL DISMISSAL, and money claims

Meantime, BLR having acted on the appeal of the losing candidates, nullified the election and ordered a special election,
where Nerbes and Suravilla lost.

LA rendered a Decision in favour of Nebres and Suravilla, saying that although BDO validlt exercised its management
prerogative, Nerbes and Suravilla’s defiance was based on law. LA ordered the following:
1) orders BDO to reinstate them both w/ 1 yr backwages OR,
2) at the option of Nerbes and Suravilla, instead of reinstatement and backwages, a separation pay computed
accordingly OR avail of the applicable separation pay under the CBA, whichever is higher
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3) subject to final ruling of the admin body, BDO is to allow them to go on paid union leaves and exercise rights as
P and VP of the union

NLRC reversed the LA ruling and dismissed the Nerbes and Suravilla’s complaint. MR denied. They file for certiorari before
CA. CA annuls NLRC decision and reinstates decision of the LA (in favour of Nerbes and Suravilla). Thus, BDO filed the
instant petition.

Pending resolution of the instant petition, BDO moved for withdrawal of its petition regarding Suravilla in view of a
COMPROMISE AGREEMENT which pertains mainly to Suravilla’s undertaking to release BDO from claims related to the
instant petition in consideration of BDO’s release of Php3,487,512.77, plus other documents, to Suravilla.

LEG PROF topic:

Counsel for Nerbes and Suravila moved to intervene alleging that such agreement was made behind his back depriving him
of his professional fee. Counsel alleged contingent fee of 10% of all monetary claims. [SC mainly ruled that regardless of the
Compromise Agreement, Atty Jabla still offered legal services entitling him 10% of monetary claims of his clients]

ISSUE AND RATIO DECIDENDI

Issue
1) W/N Nerbes and Suravilla’s
refusal to report to work
constitutes disobedience of such
a wilful character as to justify
their dismissal? - NO
Ratio
NO; Refusal to return to work was not characterized by a wrongful and perverse
attitude to warrant dismissal
BDO’s defense:
-Valid dismissal because they committed serious misconduct when they
failed to report
-to work despite orders to do so

LA, CA, and Nerbes and Suravilla’s argument:

-Department Order 9 allowed for immediate assumption of VP and P
-Refusal to return to work then does not constitute serious misconduct

Under Article 282 (a), serious misconduct/wilful disobedience by employee regarding

his work is a just cause for dismissal. Misconduct is defined as wrong conduct; implies
wrongful intent. It must be related to one’s duty showing unfitness for continued
work under the employer.

Valid dismissal based on wilful disobedience requires concurrence of two things:

1) assailed conduct being intentional and,
2) order violated must be lawful, made known to employee and pertains to
his work

The return to work order by BDO was lawful and related to work. However, though
their refusal to do so may have been intentional, such was not characterized by a
wrongful and perverse attitude or with deliberate disregard of their duties
-Terms of the CBA allowed union officers to take union leaves
-failure to report for work can hardly be equated as a perverse defiance of
the bank's
-orders as they believed that such appeal could not have stayed their
immediate proclamation and assumption to office

Issue
2) W/N there is merit in the
bank’s motion to withdraw its
petition regarding Suravilla? YES
Issue
3) W/N an illegally dismissed
employee is entitled to
reinstatement and backwages?
YES
* Anent the charge of falsification of public document and perjury against Nerbes, the CA noted
that this was a mere retaliatory move on the part of the bank which had nothing to do with the latter's
work. In any case, the CA observed that Nerbes' counsel already acknowledged having notarized the
questioned document.
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Ratio
A client may enter into a compromise agreement with the adverse party to terminate
the litigation before a judgment is rendered
- if not contrary to law, morals, etc., its judicial approval is in order.
- there being no impediment to the court’s approval of the agreement, SC
approves of it too
Ratio
YES; An illegally dismissed employee is entitled to reinstatement and backwages;
but in lieu of reinstatement, separation pay is awarded
Having found that Nerbes was illegally dismissed, he is entitled to reinstatement to
former position without loss of seniority and payment of backwages under Sec 279 of
Labor Code (See Notes) Thus, illegally dismissed employees are entitled to full
backwages without conditions or limitations
- CA's award of backwages that is limited to only one (1) year is thus without
basis; and its award of separation pay instead of both reinstatement and
backwages is incorrect
Reinstatement and backwages are two separate reliefs available to an illegally
dismissed employee.
Payment of backwages = relief that restores the income that was lost by reason of
unlawful dismissal.
Separation pay = oriented towards the immediate future, the transitional period the
dismissed employee must undergo before locating a replacement job
The correct award is reinstatement and payment of full backwages from time of
dismissal until finality of decision
HOWEVER:
13 years had passed since Nerbes was dismissed and it is no longer reasonable to
direct him to return to work
What is equitable to do is award separation pay, in lieu of reinstatement, in the
amount equivalent to one month’s salary for every year of service, computed up to
the time of Nerbes’s dismissal
RULING
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WHEREFORE, the petition is DENIED. The Decision dated May 9, 2012 and Resolution dated August 15, 2013 of the Court of
Appeals in CA-G.R. SP No. 108317 are AFFIRMED insofar as it declared respondents Nestor N. Nerbes and Armenia F.
Suravilla to have been illegally dismissed.

The Compromise Agreement between petitioner BDO Unibank, Inc. (formerly Equitable PCI Bank) and respondent Suravilla
is APPROVED and the motion to withdraw petition with respect to respondent Suravilla is accordingly GRANTED.

Respondent Suravilla is ORDERED to pay to movant-intervenor Jabla Brigola Bagas & Sampior Law Offices, as represented
by Atty. Emmanuel R. Jabla, the attorney's fees equivalent to 10% of the amount received by respondent Suravilla, or PhP
348,751.27.

The Labor Arbiter is DIRECTED to recompute the proper amount of backwages and separation pay due to respondent
Nerbes in accordance with this decision.

NOTES

LABOR CODE:

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.