Dario Nacar filed a labor case against Gallery Frames and its owner Felipe Bordey, Jr. Nacar alleged that he was
dismissed without cause by Gallery Frames. LA found Gallery Frames guilty of illegal dismissal hence the
Arbiter awarded Nacar P158,919.92 in damages consisting of backwages and separation pay.
Gallery Frames appealed all the way to the Supreme Court (SC). The Supreme Court affirmed the decision of
the Labor Arbiter and the decision became final on May 27, 2002.
After the finality of the SC decision, Nacar filed a motion before the LA for recomputation as he alleged that his
backwages should be computed from the time of his illegal dismissal (January 24, 1997) until the finality of the
SC decision (May 27, 2002) with interest. The LA denied the motion as he ruled that the reckoning point of the
computation should only be from the time Nacar was illegally dismissed (January 24, 1997) until the decision
of the LA (October 15, 1998). The LA reasoned that the said date should be the reckoning point because Nacar
did not appeal hence as to him, that decision became final and executory.
HELD: No. There are two parts of a decision when it comes to illegal dismissal cases (referring to cases where
the dismissed employee wins, or loses but wins on appeal). The first part is the ruling that the employee was
illegally dismissed. This is immediately final even if the employer appeals – but will be reversed if employer
wins on appeal. The second part is the ruling on the award of backwages and/or separation pay. For backwages,
it will be computed from the date of illegal dismissal until the date of the decision of the Labor Arbiter. But if
the employer appeals, then the end date shall be extended until the day when the appellate court’s decision
shall become final. Hence, as a consequence, the liability of the employer, if he loses on appeal, will increase –
this is just but a risk that the employer cannot avoid when it continued to seek recourses against the Labor
Arbiter’s decision. This is also in accordance with Article 279 of the Labor Code.
Anent the issue of award of interest in the form of actual or compensatory damages, the Supreme Court ruled
that the old case of Eastern Shipping Lines vs CA is already modified by the promulgation of the Bangko Sentral
ng Pilipinas Monetary Board Resolution No. 796 which lowered the legal rate of interest from 12% to 6%.
Specifically, the rules on interest are now as follows:
DECISION:
(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.