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Dario Nacar filed a complaint for constructive dismissal before the NLRC against respondents Gallery Frames (GF) and/or Felipe Bordey, Jr. The Labor Arbiter rendered a Decision in favour of Nacar and was awarded back wages and separation pay in lieu of reinstatement in the amount of ₱158,919.92. After failing to get a favourable response from NLRC and CA, Gallery Frames sought relief before the Supreme Court but was also denied.
Hence, an Entry of Judgment was later issued certifying that the resolution became final and executory A pre-execution conference was consequently scheduled, but respondents failed to appear. Nacar filed a Motion for Correct Computation, praying that his backwages be computed from the date of his dismissal on January 24, 1997 up to the finality of the Resolution of the Supreme Court. Upon re-computation, the NLRC arrived at an updated amount in the sum of ₱471,320.31.
The said amount was rewarded to the Computation and Examination Unit for recomputation, where the judgment award of petitioner was reassessed to be in the total amount of only ₱147,560.19 which Nacar eventually received. Those judgments that have become final and executory prior to July 1, 2013. But, Nacar then filed a Manifestation and Motion praying for the re-computation of the monetary award to include the appropriate interests.
Whether or not back wages be computed from the time petitioner was illegally dismissed up to when the Resolution of the Court became final and executory and the appropriate interest be granted?
The Court held that backwages be computed from the time petitioner was illegally dismissed on January 24, 1997 up to May 27, 2002, when the Resolution of the Court became final and executor.
As to payment of interest, an 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
Citing the landmark case of Eastern Shipping Lines, Inc. v. Court of Appeals, the Court laid down the guidelines regarding the manner of computing legal interest, to wit:
1. 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.
2. 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:
2.1. When the obligation is breached, and it consists in the payment of a sum 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 Article 1169 of the Civil Code.
2.2. 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 (Art. 1169, Civil Code), 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.
2.3. 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 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. And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.