DARIO NACAR, petitioner, vs. GALLERY FRAMES and/or FELIPE BORDEY, JR.

, respondents

Ponente: J. Peralta JTP

Nacar v Gallery Frames, 2013

SUBJECT MATTER: Usurious Transactions

CASE SUMMARY:

The Labor Arbiter (LA) ruled that Gallery frames dismissed without just or valid cause Dario Nacar,
PETITIONER. It ordered Gallery Frames to pay Nacar a total of PhP 158,920 for backwages and separation
pay (NOTE: computed: A. backwages (monthly wage * no. of months from date of dismissal (1997) to date
of LA decision 1998 and B. separation pay (monthly wage * no. of months from hiring (1990) to date of LA
decision (1998).

General frames appealed decision up to the SC. In 2002, SC ruled that 1998 decision is upheld and this
became final and executory. However, the award for damages also increased because multipler in the formula
changed (from 1998, reckoning point became 2005). General Frames appealed the increased award to Nacar
and argued that if 1998 decision is final and executor then the amount of monetary damages should also be the
same.

SC ruled that in labor cases, if they uphold lower court rulings they only uphold the issue of whether or not
there is illegal dismissal but they can modify the amount of damages. This does not violate finality of
decisions rule. (MOST Relevant) It also held that respondent should pay interest and because the parties did
not stipulate amount of interest, the SC stipulated the interest based on former court rulings and existing
guidelines by BSP.

DOCTRINES:

(until June 30, 2013) 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.

Above guideline changed by Monetary Board, amount of legal interest is only 6% (to be applied from July 1,
2013 onwards)

FACTS:

 Petitioner Dario Nacar filed a complaint for constructive dismissal before the National Labor relations
Commission (NLRC) against Gallery Frames.

Labor Arbiter (LA)

 In 1998, the Labor Arbiter (LA) ruled that Nacar was dismissed from employment without just or
valid cause. The LA also awarded him with backwages and separation pay with a total amount of PhP
158,919.92. The reckoning date for the computation was based on his date of hiring (for separation
pay) and date of dismissal (for backwages). It was computed thru monthly wage times no. months
month until the date of the promulgation of the decision which is OCTOBER 15, 1998.
 Gallery frames appealed. However, the NLRC sustained the decision of the LA. CA also upheld the
decision.
 SC

 Also dismissed the respondent’s appeal. Issued an entry of judgment that the decision became final
and executory on May 27, 2002. Referred back the case to the LA.

LA (Second time)

 Petitioner filed a petition to correct the computation arguing that he is entitled to wages until May
2002 (date of SC resolution) and not just until October 1998. Upon recomputation, he was awarded
PhP 471,320 (second amount). LA ordered Sheriff to collect this amount from Gallery Frames.
 Gallery frames argued that amount should no longer have been increased (i.e. amount should be based
on Oct 1998 decision as this was the reference of the SC decision that became final and executory.
This was denied by LA.

NLRC

 Ruled in favor of Gallery frames. Another recomputation ensued which arrived at an amount of PhP
147, 560 (third amount). LA issued a writ of execution. After this, petitioner received the 147k.
However, he then requested that he was entitled to receive interest payments.
 LA did not rule on interest payments but nonetheless awarded Nacar an additional 11k (difference
between first amount and third amount). Nacar was not contented and still appealed the decision
before the CA

CA

 Ruled that the 1998 Decision is already final and executor and its correction is no longer allowed.
Nacar appealed this decision before the SC.

ISSUE/S:

1. (NOT Relevant) What is reckoning point of computation: (a) 1998 decision of the LA or (b) SC
resolution in 2002? 2002 Decision. (REVERSED CA Decision)
2. WON he is entitled to payment of interest from finality of decision until full payment by the
respondents? YES

HOLDING:

1. General frames’ actions to appeal the 1998 LA decision also has some risks which is the
adjustment of the reckoning point for computation. Hence, since they continuously appealed the
decisions, Nacar also became entitled to backwages from the date of LA decision until the SC
decision. This does not violate the immutability or finality of decisions rule.

In illegal dismissal cases, if the SC holds that the ruling of lower courts stands or is final and
executory, what is upheld is whether or not there is illegal dismissal but the computation of monetary
awards in the original decision can still be recomputed and adjusted.

2. Guidelines for payment of interest as laid out in Eastern Shipping Lines v CA:

a. When obligation is breached and it is in nature a payment of money, e.g. loan- legal interest is
accrued from the time it is judicially demanded. In the absence of stipulated interest rate, default
is 12% per annum.
 b. When the nature of an obligation is unlike that in case A, interest on damages maybe imposed at
the discretion of the court but at 6% per annum. It shall start from time claim is made judicially or
extra judicially. If date of demand is not certain, it shall begin from date of judgment of the court.
c. When judgment of court awarding a sum of money becomes final and executor, legal interest is
12% either in Case A or B.

These guidelines were modified in June 30, 2013 by the Monetary Board (MB):

a. In the absence of a stipulated rate, default interest shall be 6% p.a.. This is to be applied in loans,
forbearance of money, goods or credits.

Kindly refer to the dispositive for amount of interest. MB guidelines applied prospectively.

DISPOSITIVE:

CA Decision Reversed. Petitioner entitled to backwages to be computed until 2002 SC Decision. Interest rate
is 12% for interest payment earned from 2002 until 2013 (MB Guidelines). For interest earned beyond July 1,
2013, rate to be applied is 6%.