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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
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
2
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
3
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.