Case Digest: Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013

RELATED TOPIC: Modifying Eastern Shipping Guidelines on Interest. 

FACTS: On October 15, 1998, Labor Arbiter Lustria found Dario Nacar was illegally dismissed by Gallery Frames on January 24, 1997, and awarded him ₱158,919.92 in backwages and separation pay. Gallery Frames’ appeal to the NLRC was dismissed, and their further appeals to the CA and SC were also rejected. The SC’s decision became final and executory on May 27, 2002. Nacar then sought a re-computation of his backwages to cover the period from his dismissal to the SC’s final decision with interest, totaling ₱471,320.31. Despite a writ of execution being issued, Gallery Frames’ motion to quash it was denied, and a reduced recomputed amount of ₱147,560.19 was eventually paid to Nacar. Nacar later sought additional re-computation, which was partially granted (₱11,459.73 balance) but his further appeals to the NLRC and CA were denied, as the CA held that no further corrections were allowed due to the finality of the original decision. 

ISSUES: 

1. Whether or not the first re-computation of the LA is correct. 
2. Whether or not appropriate interests may be claimed by Nacar. 

RULING: 

            1. Yes. The SC ruled that the ₱471,320.31 re-computation is correct. According to Article 279 of the Labor Code, reliefs in illegal dismissal cases continue to add up until full satisfaction. That the amount respondents shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk that it ran when it continued to seek recourses against the Labor Arbiter’s decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the reinstatement that the law decrees. 

2.  Yes. SC ruled that the old case of Eastern Shipping Lines v. CA is already modified by the promulgation of the BSP Monetary Board Resolution No. 796 (July 1, 2013) which lowered the legal rate of interest from 12% to 6%. The interest shall be 12% per annum from May 27, 2002, to June 30, 2013, and 6% per annum from July 1, 2013, until their full satisfaction. 

Read the full case here.