NACAR v GALLERY FRAMES

Peralta, .J.
G.R. No. 189871. – August 13, 2013
FACTS & PROCEDURAL HISTORY
● Dario Nacar filed a complaint for constructive dismissal before the NLRC against Gallery Frames (GF) and/or
Felipe Bordey Jr.
● Oct. 15, 1998: LA ruled in favor of Nacar
 Found that he was dismissed from employment without a valid or just cause
 Awarded backwages and separation pay in lieu of reinstatement in the amount of P158,919.92,
computed only up to promulgation of this decision as follows:
SEPARATION PAY BACKWAGES
Date Hired August 1990 Date Dismissed Jan. 24, 1997
Rate per day P196.00
Rate 198/day Date of Decision Aug 18, 1998
Length of Service 8 years, and 1 month
Date of Decision Aug 18, 1998 a) 1/24/97-2/05/98 = 12.36 mos. P62,986
P196/day x 12.36 mos.
Length of Service 8 years, and 1 mo. b) 2/6/98-8/18/98 = 6.4 mos. P32,947
Prevailing Rate per day
P198.00 x 26 days 8 mos. P41,184 P198.00 x 26 days x 6.4 mos.
TOTAL P95,933
● Feb. 29, 2000: NLRC sustained the decision of LA
● Aug. 24, 2000: CA affirmed NLRC Decision
● GF filed a petition for review on certiorari with the SC
● April 17, 2002: SC denied the petition, finding no reversible error on the part of the CA
● May 27, 2002: An Entry of Judgment was issued, certifying that the resolution became final and executory
 The case was referred back to the LA

RECOMPUTATION #1: P158,919.92  P471,320.31

● Nov. 5, 2002: Nacar filed a Motion for Correct Computation
 Prayed 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 on May 27, 2002
 Upon recomputation, the Computation and Examination Unit of NLRC arrived at the sum of
P471,320.31
● Dec. 2, 2002: A Writ of Execution was issued by the LA, ordering the Sheriff to collect from GF P471,320.31
 GF filed a Motion to Quash the Writ of Execution, arguing that:
o Since LA awarded separation pay of P62,986.56 and backwages of P95,933.36, no more
recomputation is required to be made of said awards
o After the decision becomes final and executory, the same cannot be altered or amended anymore
 Jan. 13, 2003: LA issued an Order, denying the MTQ
 Jan. 14, 2003: An alias Writ of Execution was issued by the LA
o GF again appealed before the NLRC
● June 30, 2003: NLRC granted the appeal in favor of GF, and ordered the recomputation of the judgment award
● Aug. 20, 2003: An Entry of Judgment was issued declaring the Resolution of NLRC to be final and executory
 Nacar moved that an Alias Writ of Execution be issued to enforce the earlier recomputed judgment
award in the sum of P471,320.31
 NLRC again forwarded the records of the case to the Computation and Examination Unit for
recomputation

RECOMPUTATION #2: P471,320.31  P147,560.19 + interest in the amount of P11,459.73

● The Computation and Examination Unit of NLRC reassessed the award to be in the amount of only P147,560.19
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  Nacar moved that a Writ of Execution be issued ordering GF to pay him the original amount as
determined by the LA Decision dated Oct. 15, 1998 (P158,919.92), pending the final computation of his
backwages and separation pay
● Jan. 14, 2003: LA issued an Alias Warrant of Execution to satisfy the judgment award in the reassessed amount
of P147,560.19, which Nacar received
 Nacar filed a Manifestation and Motion praying for the recomputation of the monetary award to include
the appropriate interests
● May 10, 2005: LA issued an Order granting the motion, but only up to the amount of P11,459.73
 It is the Oct. 15, 1998 LA Decision that should be enforced, as it was the one that became final and
executory
 Since said 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
o Nacar already received P147,560.19, thus, he is only entitled to the balance of P11,459.73
● Sept. 27, 2006: NLRC denied Nacar’s appeal
● Sept. 23, 2008: CA denied Nacar’s appeal
 Since Nacar no longer appealed the Oct. 15, 1998 Decision of the LA, which already became final and
executory, a belated correction thereof is no longer allowed

PRESENT PETITION, ARGUMENTS, and COUNTERARGUMENTS

● Nacar filed a petition for review on certiorari with the SC, arguing that:
 Notwithstanding the fact that there was a computation of backwages in the LA’s 1998 decision, the
same is not final until:
o Reinstatement is made; or
o Finality of the decision, in case of an award of separation pay
 The reckoning point for the computation of the backwages and separation pay should be on May 27,
2002, not when the decision of the LA was rendered on October 15, 1998
o Considering that the 1998 LA Decision did not become final and executory until the April 17, 2002
Resolution of the SC was entered in the Book of Entries on May 27, 2002
 Moreover, he is also entitled to the payment of interest from the finality of the decision until full
payment by the respondents
● GF’s Counterarguments:
 Since only separation pay and limited backwages were awarded to Nacar by the 1998 LA Decision, no
more recomputation is required to be made of said award
 Nacar is only entitled to the award as computed by the LA in the total amount of P158,919.92
o 1998 LA Decision clearly stated that the separation pay and backwages are "computed only up to
[the] promulgation of this decision”
o Nacar no longer appealed said Decision
 It was only during the execution proceedings that Nacar questioned the award, long after the decision
had become final and executory
o To allow the further recomputation of the backwages to be awarded to petitioner at this point of
the proceedings would substantially vary the decision of the LA
o Violates the rule on immutability of judgments

ISSUES/HELD RATIO:
1. W/N the CA erred when it disallowed the recomputation of the award computed by the LA in its 1998 Decision,
as to include the separation pay and backwages up to the finality of the SC Decision – YES, CA erred, as it should
have allowed such recomputation
● The Court noted that the case at bar is similar to Session Delights Ice Cream v CA
 The issue was whether a recomputation is legally proper in the course of execution of the LA’s original
computations of awards, when such recomputation is made in order to include the separation pay and
the backwages due up to the finality of judgment at the CA level

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  In Session Delights, the SC held that the recomputation by the implementing LA of the award in the
original LA Decision is necessary
o In making the recomputation, the implementing LA essentially considered the original LA Decision,
which contains:
 Finding of illegality of the dismissal
 The computation of the awards resulting from the illegal dismissal
● In the case at bar, the LA:
 Already provided for the computation of the payable separation pay and backwages due
 Ordered that the money awards be computed only up to promulgation of the judgment
● The Court held that no essential change to the terms of the 1998 LA Decision, which is sought to be executed, is
made by a recomputation
 Such recomputation is:
o A necessary consequence that flows from the nature of the illegality of dismissal declared by the
LA in its Decision
o Not an alteration or amendment of the final decision being implemented  Therefore, NOT a
violation of the principle of immutability of final judgments
 Illegal dismissal ruling stands
 Only the computation of the monetary consequences of the illegal dismissal is affected
o Part of the law, specifically of Art. 279 of the Labor Code and jurisprudence
 As expressed in Art. 279 LC, the reliefs in an illegal dismissal case (e.g. backwages and
separation pay) continue to add up until full satisfaction
 The amount GF shall pay necessarily increased when it continued to seek recourses against the LA
decision (went all the way up to SC)
o The finality of the illegal dismissal decision becomes the reckoning point for the award when
separation pay in lieu of reinstatement is allowed
 In this case, the illegal dismissal decision of the LA in 1998 only became final on the date when
the SC Resolution became final and executory (May 27, 2002)
o Separation pay and backwages are to be computed only up to said reckoning point
 Therefore, in the case at bar, Nacar’s separation pay and backwages must be computed up to
May 27, 2002
2. What is the rate of interest that should govern in the case at bar?
● Eastern Shipping Lines v CA: In the absence of an express stipulation as to the rate of interest that would govern
the parties, the rate of legal interest for loans or forbearance of any money, goods or credits and the rate
allowed in judgments shall be twelve percent (12%) per annum
● However, BSP-MB Circular No. 799 amended the Manual of Regulations for Banks, such that the rate of interest
is reduced to six percent (6%) per annum effective July 1, 2013
● It should be noted, nonetheless, that the new rate could only be applied prospectively and not retroactively
 The twelve percent (12%) per annum legal interest shall apply only until June 30, 2013
 Come July 1, 2013 the new rate of six percent (6%) per annum shall be the prevailing rate of interest
when applicable
o 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
● Therefore, in the case at bar, GF must pay Nacar:
 Interest of twelve percent (12%) per annum of the total monetary awards, computed from May 27, 2002
to June 30, 2013; and
 Interest of six percent (6%) per annum of the total monetary awards from July 1, 2013 until their full
satisfaction

DISPOSITIVE PORTION

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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.