Nacar, Dario vs Gallery Frames

G.R. No. 189871

8/13/2013

Facts:
 Nacar filed a complaint for constructive dismissal before the NLRC-Arbitration Branch against Gallery Frames. He
was dismissed on January 24, 1997.
 On October 15, 1998, the Labor Arbiter (LA) ruled in favor of Nacar as he was dismissed w/o valid just cause. Nacar
was awarded backwages and separation pay in lieu of reinstatement of P158k.
 Gallery Frames appealed to the NLRC but was dismissed due to lack of merit as also their MR and sustained the LA’s
decision. They went to the CA but their petition and MR met the same fate.
 Gallery Frames went to the SC but was denied and the order was final and executory as said through a resolution
dated May 27, 2002 to which an Entry of Judgement was issued to certify that the order was final and executory.
The case was reverted to the LA. A pre-execution conference was scheduled but Gallery Frames did not show up.
 On November 5, 2002, Nacar moved for correct computation and prayed that his backwages be computed from his
dismissal up to the finality of the May 27, 2002 resolution. Upon computation, the NLRC arrived at an amount of
P471k.
 A writ of execution was issued by the LA which ordered the collection of the P471k from Gallery Frames. Gallery
Frames moved to quash the execution arguing no recomputation can be done on said awards (P62k for separation
pay; backwages of P95k) since the SC decision was final and executory hence the awards cannot be amended.
 The LA denied Gallery Frame’s motion to quash and the execution order was issued. Gallery Frames appealed to the
NLRC which was granted and ordered another recomputation of the judgement award. Said NLRC resolution was
final and executory. Another pre-execution meeting was scheduled but Gallery Frames was absent
 Nacar moved to execute the payment of the P471k but was only awarded P147k per NLRC resolution which he
received. Nacar moved to recomputed the award with the appropriate interest. This was granted by the LA but only
added P11k as the later NLRC order was enforced (147k award) and not the original order (471k award).
 Nacar appealed to the NLRC but was denied as well as his MR. He went to the CA but to no avail. It reasoned that
the said NLRC order was final and executory.
 Nacar argues that aside the fact that there was a computation of backwages in LA’s decision, the same is not final
until reinstatement is made or upon final decision in case of an award of separation pay. He claims that since LA’s
decision was not final and executor until SC’s decision on April 17, 2002, the reckoning point for computation of
backwages should be on May 27, 2002 (SC Resolution denying Gallery Frame’s relief) and not on October 15, 1998
(Original LA decision). Finally, he argues that he is also entitled to the payment of interest from the finality of the
decision until full payment by Gallery Frames.
 Gallery Frames countered that since only the separation pay and limited backwages were awarded to Nacar on
October 15, 1998, no recomputation is needed. They assert that the decision clearly said that separation pay and
backwages are computed only up to decision’s promulgation, and considering Nacar did not appeal, he is only
entitled to P158k award.

Issue: Whether Nacar is entitled to the payment of interest from the finality of SC decision. -

Ruling:
 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:
o The first is that part of the decision that cannot now be disputed because it has been confirmed with finality.
This is 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.
o The second part is the computation of the awards made. This part, being merely a computation of what the
first part of the decision established and declared, can, by its nature, be re-computed. This is the part, too,
that the petitioner now posits should no longer be re-computed because the computation is already in the
labor arbiter's decision that the CA had affirmed.
 SC saw no error in the CA decision confirming that a re-computation is necessary as it essentially considered the
labor arbiter's original decision in accordance with its basic component parts as we discussed above. To reiterate,
 the first part contains the finding of illegality and its monetary consequences; the second part is the computation of
the awards or monetary consequences of the illegal dismissal, computed as of the time of the labor arbiter's original
decision.
 A recomputation (or an original computation, if no previous computation has been made) is a part of the law –
specifically, Article 279 of the Labor Code and the established jurisprudence on this provision – that is read into the
decision. 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.
 As ruled in Eastern Shipping Lines vs CA, the SC made guidelines to compute the legal interest:
o 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 6% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of NCC 1169.
o When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand
can be established with reasonable certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (NCC
1169) But when such certainty cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the amount finally adjudged.
o 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.
 But in BSP Resolution which amended Sec. 2 of Circular No. 905 of 1982 which transformed into Circular No. 799 of
2013. This It provides:
o 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. (NOTE: Circular took effect on July 1, 2013, PROSEPECTIVE APPLICATION ONLY)
 To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines 42 are
accordingly modified to embody BSP-MB Circular No. 799, as follows:
o When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of
the Civil Code govern in determining the measure of recoverable damages.1âwphi1
o 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:
 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:
o (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;
o (2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month pay per year of
service; and
o (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.