You are on page 1of 3

DARIO NACAR v.

GALLERY FRAMES
August 13, 2013 | Peralta, J. | Actual or Compensatory Damages Interest
Digester: Roa, Annamhel Monique C.
SUMMARY: Nacar was awarded separation pay and backwages
after a finding of illegal dismissal by the Labor Arbiter. His
employer assailed the finding of illegal dismissal up to the
Supreme Court. At all levels, the rulings were in favor of Nacar.

Nacar sought to have his separation and backwages recomputed


to include the period for which his case was pending on appeal i.
e. to be computed up to the finality of the SC decision.

Later on, he would argue the same with respect to the interest
that is due him.

Gallery Frames contends that the award to him should be limited


to that which has been determined by the LA, in keeping with the
Doctrine of Immutability of Judgment. SC rules in favor of Nacar.
DOCTRINE: . The recomputation of the consequences of illegal
dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented.
The illegal dismissal ruling stands; only the computation of
monetary consequences of this dismissal is affected, and this is not
a violation of the principle of immutability of final judgments. With
regard to an award of interest in the concept of actual and
compensatory damages, when the obligation is breached, and it
consists in the payment of a sum of money, the interest due In
the absence of stipulation shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the Civil
Code. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest shall be 6%
per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a forbearance
of credit.
FACTS:
Nacar filed a complaint for constructive dismissal before the
NLRC against Gallery Frames and/or Felipe Bordey.
Oct 1998 - LA rendered judgment in favor of him and granted
his prayer for the payments of separation pay in lieu of

reinstatement to his former position, computed only up to the


promulgation of the LA decision.
o SEPARATION PAY -- (Rate of pay x days worked in a
month) x Months between date of hiring and
promulgation of the LA decision = P41 184
o BACKWAGES -- (Rate of pay x days worked in a
month) x Months between date of hiring and
promulgation of the LA decision
Respondents appealed to the NLRC all the way up to the SC. At
each level, their appeal was dismissed.
May 2002 - Entry of Judgment was subsequently issued
certifying that the SC resolution had become final and
executory, following which the case was referred back to the
LA.
Nov 2002 Nacar filed a Motion for Correct Computation,
praying that his backwages be computed from the date of his
dismissal on Jan 24, 1997 up to the finality of the Resolution of
the SC decision (May 2002, see above). NLRC recomputed and
arrived at the sum of P471 320. Writ of execution was issued
by the LA ordering the Sheriff to collect from respondents such
amount.
Respondents filed Motion to Quash the Writ of Execution
o Argument: The LA decision already limited the
amount to be awarded as separation pay and
backwages; no more recomputation is required to be
made. After the same has become final and
executory, the same can no longer be altered or
amended.
o This was denied by the LA, but granted by the
NLRC.
Aug 2003 - Entry of Judgment was issued declaring this
resolution of the NLRC to be final and executory.
Meanwhile, Nacar moved that an Alias Writ of Execution be
issued to enforce the earlier recomputed judgment award of
P471 320. Case was again forwarded to the Computation and
Examination Unit for recomputation, where the award was
reassessed to be in the total amount of P147 560.19.
Nacar then moved that a writ of execution be issued ordering
respondents to pay him the original amount as determined by
the LA in his Decision dated October 15, 1998, pending the
final computation of his backwages and separation pay.
Jan 2003 - the LA issued an Alias Writ of Execution to satisfy
the judgment award that was due to petitioner in the amount
of P147,560.19, which petitioner eventually received.

Nacar then filed a Manifestation and Motion praying for the recomputation of the monetary award to include the appropriate
interests.
May 2005, the LA issued an Order granting the motion, but
only up to the amount of P11,459.73.
o It is the October 15, 1998 Decision that should be
enforced considering that it was the one that
became final and executory.
o However, since the decision states that the
separation pay and backwages are computed only up
to the promulgation of the said decision, it is the
amount of P158,919.92 that should be executed.
Thus, since petitioner already received P147,560.19,
he is only entitled to the balance of P11,459.73.
Nacars appeals to both the NLRC and CA were denied.
o CA - Since petitioner no longer appealed the October
15, 1998 Decision of the Labor Arbiter, which
already became final and executory, a belated
correction thereof is no longer allowed.

ARGUMENTS OF NACAR
Notwithstanding the fact that there was a computation of
backwages in the Labor Arbiters decision, the same is not final
until reinstatement is made or until finality of the decision, in
case of an award of separation pay.
Considering that the October 15, 1998 decision of the Labor
Arbiter did not become final and executory until the April 17,
2002 Resolution of the Supreme Court was entered in the Book
of Entries on May 27, 2002, the reckoning point for the
computation of the backwages and separation pay should be on
May 27, 2002 and not when the decision of the Labor Arbiter
was rendered on October 15, 1998.
Further, he is also entitled to the payment of interest from the
finality of the decision until full payment by the respondents.
RULING: WHEREFORE, premises considered, the Decision dated
September 23, 2008 of the Court of Appeals in CA-G.R. SP No.
98591, and the Resolution dated October 9, 2009 are REVERSED
and SET ASIDE. Respondents are Ordered to Pay petitioner:
(1) backwages computed from the time petitioner was
illegally dismissed on January 24, 1997 up to May 27, 2002,
when the Resolution of this Court in G.R. No. 151332
became final and executory;

(2) separation pay computed from August 1990 up to May


27, 2002 at the rate of one month pay per year of service;
and
(3) interest of twelve percent (12%) per annum of the total
monetary awards, computed from May 27, 2002 to June 30,
2013 and six percent (6%) per annum from July 1, 2013
until their full satisfaction.
The Labor Arbiter is hereby ORDERED to make another
recomputation of the total monetary benefits awarded and due to
petitioner in accordance with this Decision.
SO ORDERED.
Whether a recomputation of the award in accord with
Nacars arguments is proper YES.
Session Delights Ice Cream and Fast Foods v. CA The
employer in this case also did not immediately pay the awards
stated in the original labor arbiter's decision; it delayed
payment because it continued with the litigation until final
judgment at the CA level. Doctrinal pronouncements by the
Court in this case:
o A source of misunderstanding in implementing the
final decision in this case proceeds from the way the
original labor arbiter framed his decision. The
decision consists essentially of two parts:
1) that part of the decision that cannot now
be disputed because it has been confirmed
with finality -- the finding of the illegality of
the dismissal and the awards of separation
pay in lieu of reinstatement, backwages,
attorney's fees, and legal interests;
2) the computation of the awards made. On
its face, the computation the labor arbiter
made shows that it was time-bound as can be
seen from the figures used in the
computation. This part, being merely a
computation of what the first part of the
decision established and declared, can, by its
nature, be re-computed.
o No essential change is made by a recomputation as
this step is a necessary consequence that flows from
the nature of the illegality of dismissal declared by
the Labor Arbiter in that decision.
o A recomputation (or an original computation, if no
previous computation has been made) is a part of

the law xxx By the nature of an illegal dismissal


case, the reliefs continue to add up until full
satisfaction, as expressed under Article 279 of
the Labor Code. The recomputation of the
consequences of illegal dismissal upon execution of
the decision does not constitute an alteration or
amendment of the final decision being implemented.
The illegal dismissal ruling stands; only the
computation of monetary consequences of this
dismissal is affected, and this is not a violation of the
principle of immutability of final judgments.
That the amount respondents shall now pay has
greatly increased is a consequence that it cannot
avoid as it is the risk that it ran when it continued to
seek recourses against the Labor Arbiter's decision.
In allowing separation pay, the final decision
effectively declares that the employment
relationship ended so that separation pay and
backwages are to be computed up to that point.

Until what point should interest be awarded and at what


rate? UNTIL THE FINALITY OF THIS SUPREME COURT
DECISION, AT 12% WITH RESPECT TO THE YEARS PRIOR
TO JULY 1, 2013, AND AT 6% WITH RESPECT TO THE
YEARS AFTERWARDS.
Session Delights also cited Eastern Shipping Lines v CA with
respect to the computation of interest. The ESL Guidelines
II. With regard particularly to an award of interest in the
concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as
follows:
1. When the obligation is breached, and it consists in
the payment of a sum of money, i.e., a loan or forbearance
of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest
shall be 12% per annum to be computed from default, i.e.,

from judicial or extrajudicial demand under and subject to


the provisions of Article 1169 of the Civil Code.
xxx
3. When the judgment of the court awarding a sum
of money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of
credit.
However, in keeping with its authority to prescribe/set interest
rates, the Bangko Sentral ng Pilipinas Monetary Board (BSPMB), in its Resolution No. 796 dated May 16, 2013, approved
the amendment of Section 2 of Circular No. 905, Series of 1982
and, accordingly, issued Circular No. 799, Series of 2013,
effective July 1, 2013, the pertinent portion of which reads:
The Monetary Board, in its Resolution No. 796 dated 16
May 2013, approved the following revisions governing the
rate of interest in the absence of stipulation in loan
contracts, thereby amending Section 2 of Circular No. 905,
Series of 1982:
Section 1. The rate of interest for the loan or
forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of an express
contract as to such rate of interest, shall be six percent
(6%) per annum. Xxx
This Circular shall take effect on 1 July 2013.
Hence, interest is to be awarded in keeping with the guidelines
set by Eastern Shipping Lines, with the modification as to
interest rates prescribed by Circular No. 799, Series of 2013.
Nonetheless, with regard to those judgments that have become
final and executory prior to July 1, 2013, said judgments shall
not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein. The Circular is not
to be applied retroactively.

You might also like