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Industrial Timber Corporation v. Ababon (G.R. No.


January 25, 2006 | Ynares-Santiago, J.


Petitioner Industrial Timber Corporation (ITC) was leased a plywood plant located at Butuan City for a
period of 5 years by Industrial Plywood Group Corporation (IPGC). Thereafter, ITC commenced operation
of the plywood plant and hired 387 workers. Sometime after, ITC notified DOLE and its workers of the
plant’s shutdown due to the non-renewal of the anti-pollution permit and the alleged lack of logs for
milling constrained ITC to lay off all its workers until further notice. A final notice of closure or cessation
of business operations followed advising the workers to collect the benefits due them under the law and
CBA. Later, IPGC took over the plywood plant and was issued a permit to operate coincidentally the
same day the ITC ceased operation of the plant. This prompted respondents to file a complaint for illegal
dismissal and unfair labor practice alleging that the cessation of ITC’s operation was intended to bust the
union and that both corporations are one and the same entity. LA dismissed the complaint. On appeal,
NLRC first ordered the reinstatement of employees but later on, ruled to dismiss herein respondent’s
complaints. CA set aside the decision.


Whether respondents were illegally dismissed due to the closure of ITC’s business.

Ruling: NO.

The right to close the operation of an establishment or undertaking is one of the authorized causes in
terminating employment of workers, the only limitation being that the closure must not be for the
purpose of circumventing the provisions on termination of employment embodied in the Labor Code.
Under Article 283 of the Labor Code, three requirements are necessary for a valid cessation of business
operations: (a) service of a written notice to the employees and to the DOLE at least one month before
the intended date thereof; (b) the cessation of business must be bona fide in character; and (c) payment
to the employees of termination pay amounting to one month pay or at least one-half month pay for
every year of service, whichever is higher.
We find that ITC’s closure or cessation of business was done in good faith and for valid reasons. The
records reveal that the decision to permanently close business operations was arrived at after a
suspension of operation for several months precipitated by lack of raw materials used for milling
operations, the expiration of the anti-pollution permit, and the termination of the lease contract with
IPGC over the plywood plant. Having established that ITC’s closure of the plywood plant was done in
good faith and that it was due to causes beyond its control, the conclusion is inevitable that said closure
is valid.

Although the closure was done in good faith and for valid reasons, we find that ITC did not comply with
the notice requirement. While an employer is under no obligation to conduct hearings before effecting
termination of employment due to authorized cause, however, the law requires that it must notify the
DOLE and its employees at least one month before the intended date of closure.

In the case at bar, ITC notified its employees and the DOLE of the ‘no plant operation’ due to lack of raw
materials. This was followed by a ‘shut down’ notice due to the expiration of the anti-pollution permit.
However, this shutdown was only temporary as ITC assured its employees that they could return to
work once the renewal is acted upon by the DENR. Then, ITC sent its employees a final notice of closure
or cessation of business operations to take effect on the same day it was released. We find that this falls
short of the notice requirement for termination of employment due to authorized cause considering
that the DOLE was not furnished and the notice should have been furnished both the employees and the
DOLE at least one month before the intended date of closure.

Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but the
employer failed to comply with the notice requirement, the sanction should be stiff as the dismissal
process was initiated by the employer’s exercise of his management prerogative, as opposed to a
dismissal based on a just cause under Article 282 with the same procedural infirmity where the sanction
to be imposed upon the employer should be tempered as the dismissal process was, in effect, initiated
by an act imputable to the employee.

WENPHIL Corporation vs. NLRC - GR No. 80587 Case Digest

G.R. No. 80587 February 8, 1989


Private respondent Mallare had an altercation with a co-employee. The following day, the Operations
Manager served them memorandum of suspension and in the afternoon of that same day, Mallare was
dismissed from work. Labor Arbiter dismissed Mallare’s petition for unfair labor practice for lack of
merit. NLRC reversed the decision and ordered the reinstatement of Mallare with full backwages of one
year without qualification and deduction.


Whether or not an employee dismissed for just cause but without due process be reinstated to work.


The basic requirement of due proves is that which hears before it condemns, proceeds upon inquiry and
renders judgment only after trial. The dismissal of an employee must be for a just cause and after due
process. Petitioner committed an infraction of the second requirement thus it must be imposed a
sanction for its failure to give a formal notice and conduct an investigation as required by law before
dismissing Mallare from employment. Petitioner must indemnify the dismissed employee which
depends on the facts of each case and the gravity of the omission committed by the employer.

Where the private respondent appears to be of violent temper, caused trouble during office hours and
even defied his supervisors as they tried to pacify him, he should not be rewarded with re-employment
and backwages. The dismissal of the respondent should be maintained.

Serrano vs. NLRC / ISETANN - GR No. 117040 Case Digest

January 27, 2000] MENDOZA, J.:


Serrano was a regular employee of Isetann Department Store as the head of Security Checker. In 1991,
as a cost-cutting measure, Isetann phased out its entire security section and engaged the services of an
independent security agency. Petitioner filed a complaint for illegal dismissal among others. Labor
arbiter ruled in his favor as Isetann failed to establish that it had retrenched its security section to
prevent or minimize losses to its business; that private respondent failed to accord due process to
petitioner; that private respondent failed to use reasonable standards in selecting employees whose
employment would be terminated. NLRC reversed the decision and ordered petitioner to be given
separation pay.


Whether or not the hiring of an independent security agency by the private respondent to replace its
current security section a valid ground for the dismissal of the employees classed under the latter.


An employer’s good faith in implementing a redundancy program is not necessarily put in doubt by the
availment of the services of an independent contractor to replace the services of the terminated
employees to promote economy and efficiency. Absent proof that management acted in a malicious or
arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.

If termination of employment is not for any of the cause provided by law, it is illegal and the employee
should be reinstated and paid backwages. To contend that even if the termination is for a just cause, the
employee concerned should be reinstated and paid backwages would be to amend Art 279 by adding
another ground for considering dismissal illegal.

If it is shown that the employee was dismissed for any of the causes mentioned in Art 282, the in
accordance with that article, he should not be reinstated but must be paid backwages from the time his
employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination without legal


December 24, 1964 | Zaldivar, J. | Retaliatory discharge/I direct discrimi atio

Respondent Itogon-Suyoc Mines, a mining corporation duly organized and existing under Philippine laws
fild its income tax return.
Fiscal year (1956-1960) paid PhP 13, 155.20 as the first installment of the income tax due. Then filed an
amended income tax return reporting a net loss of PhP 331,707.33

Fiscal year (1960-1961) setting forth its income tax liability of PhP 97.345 but deducting the amount of
PhP 13,155.20 representing alleged tax credit for over-payment of the preceding fiscal year 1959-1960.

Petitioner assessed against the respondent the amount of PhP 1,512.83 as 1% monthly interest. The
basis for such an assessment was the absence of legal right to deduct said amount before the refund or
tax credit thereof was approved by petitioner CIR.

ISSUE: WON respondent corporation is liable to pay the sum of PhP1,512.83 as 1% monthly interest for
delinquency in the payment of income tax.?


NIRC provides that interest upon the amount determined as a deficiency shall be assessed and shall be
paid upon notice and demand from the CIR at the specified. If in any preceding year the tax payer was
entitled to a refund of any amount due as tax, such amount, if not yet refunded, maybe deducted from
the tax to be paid.


[G.R. No. L-23357. April 30, 1974.]

NARDO DAYAO, Respondents.

Caparas & Ilagan, for Petitioners.

E. M. Banzali for Private Respondent.



Petitioners Mercury Drug Co., Inc. and Mariano Que, as manager, seek the reversal of the decision of
respondent Court of Industrial Relations dated January 17, 1964 and its order dated February 25, 1964
denying petitioners’ motion for reconsideration of the said decision.

Private respondent Nardo Dayao was employed on February 13, 1956 by the petitioners originally as
driver, later assigned as delivery man, then as checker and was last promoted to the position of assistant
chief checker in the checking department with the salary of P225.00 a month until his separation on
April 10, 1961.

Dayao’s appointment as checker states that his annual compensation was P2,400.00 ‘which includes the
additional compensation for work on Sundays and legal holidays. Our firm being a Service Enterprise,
you will be required to perform work every day in a year as follows: 8 hours work on regular days and all
special holidays that may be declared but with 25% additional compensation; 4 hours work on every
other Sunday of the month; 4 hours work on all legal holidays. For any work performed in excess of the
hours as above mentioned, you shall be paid 25% additional compensation per hour." (Exh 2, pp. 59-60,

Days before April 10, 1961, Dayao in vain urged herein petitioners to pay them overtime pay, criticized
their employees’ association for failing to protect the welfare of the employees by not securing such
additional compensation for overtime, and campaigned among his co-employees to organize another
labor union. Hearing of Dayao’s union activities, petitioner Mariano Que called for Dayao on April 10,
1961, told him to resign and persuaded him to accept the amount of P562.50 as termination pay and to
sign a clearance stating to the effect that he has no claims whatsoever of any kind and nature against
herein petitioners (Exh. 1).
On April 25, 1963, exactly two years and fifteen days from his separation on April 10, 1961, Dayao filed a
complaint for unfair labor practice against herein petitioners for dismissing him because of his having
campaigned among his co-employees to become members of a new labor union that he was then
organizing (Annex A, pp. 19-20, rec.).

In their answer dated May 10, 1963 to the ULP complaint, herein petitioners interposed as their only
defense that Dayao "was separated from the service for cause because of creating trouble with another
employee who was also dismissed and that even if the said complainant was separated for cause, he
received compensation pay and hereby relieved respondent from whatever claim or claims that he had
against respondents." Laches was not invoked by herein petitioners in their answer (Annex B, pp. 21-22,
rec.), nor in their memorandum dated October 28, 1963 (Annex C, pp 23-32, rec.), much less in their
arguments dated February 12, 1964 in support of their motion dated and filed on August 3, 1964 for the
reconsideration of the decision dated January 23, 1964. It is only in their instant petition for review filed
on August 28, 1964 that they relied on laches, aside from estoppel, to defeat herein private respondent
Dayao’s ULP charge, taking a cue from the dissent dated July 27, 1964 of Judge Emiliano R. Tabigne of
the herein respondent Court of Industrial Relations, from the resolution of February 25, 1964 of the
Presiding Judge and three Associate Judges of the respondent Court of Industrial Relations denying
herein petitioners’ motion for reconsideration of their decision dated January 17, 1964.

It is an established principle that the findings of fact of the Court of Industrial Relations, when supported
by substantial evidence, are conclusive and binding on this Court (Sec. 6, R.A. No. 875; Phil. Fiber
Processing Co., Inc. v. CIR, L-29770, July 19, 1973, 52 SCRA 110, 14; Bulakeña Rest. & Cat. v. CIR, L-26796,
May 25, 1972, 45 SCRA 87, 100; Compania Maritima v. Compania Maritima Labor Union, L-29504, Feb.
29, 1972, 43 SCRA 464, 468; Cruz v. Phil. Assn. of Free Labor Unions, L-26519, Oct, 29, 1971, 42 SCRA 68;
Phil. Eng. Corp. v. CIR, L-27880, Sept. 30, 1971, 41 SCRA 89; Castillo v. CIR, L-26124, May 29, 1971 39
SCRA 75, 83; Lakas ng Manggagawang Makabayan v. CIR, L-32178, Dec. 28, 1970, 36 SCRA 600).

If the respondent Court ignored the evidence adduced by herein petitioners, it would be guilty of grave
abuse of discretion to warrant a review by Us of the findings of fact (Caltex Filipino, etc. v. CIR, L-30632-
33, Apr. 11, 1972).
Contrary to the contention of herein petitioners, the finding of fact that herein private respondent
Nardo Dayao was dismissed from the service because of his union activities and that consequently
herein petitioners were guilty of unfair labor practice is amply substantiated by credible evidence. Thus,
the referee hearing officer, whose findings of fact and conclusions of law, were affirmed in toto by the
respondent Court to be "supported by the evidence and the law on the matter," stated in his

"Dayao testified that on April 10, 1961, respondent Que summoned him in the office and inquired why
he was organizing a new union in spite of the fact that there is already a labor organization existing in
the company and when he replied: ‘I did this thing because the company has not been paying us the
minimum wage and the company has not been paying us for four hours work rendered on Sundays and
also for four hours work rendered on special holidays’ (Tsn. pp. 8-9, July 10, 1963), respondent Que said:
‘Ah, ganoon pala. So you are Organizing a new union, if that is so, from now on I do not like to see you
any more in this office and you can no longer enter the service or work in the company, I don’t like
unionist’ (Tsn. pp. 10-11, ibid); that several minutes after he was told to wait, respondent Que brought
out an amount of money and a piece of paper which he was asked to sign before delivering to him the
money; that he told respondent Que: ‘I cannot sign this paper because in fact and in truth I am not
resigning from the company’ but respondent Que retorted: ‘whether you sign it or not, you could no
longer work so you better sign it; and that ‘after thinking about the matter that whether or not I sign the
paper I would be laid off and if I would be laid off I would have no money, so ultimately, I signed the
paper and received the amount of P562.50 stated in the paper.’ (Tsn. pp 11-12, ibid). The paper referred
to is a cash voucher (Exhibit ‘A’ and also Exhibit ‘4’) covering complainant’s separation pay of 15 days for
every year of service.

"Dayao also declared that the proximate or immediate cause why he made efforts to organize a
separate union which he actually began in February, 1961, was because the management, particularly
the manager, in spite of my several approaches to him, and in spite of my several representations made
to pay us the additional twenty-five percent and excess of the four hours work on Sundays and legal
holidays, did not like to give us such right or such payment’ and for the further reason that ‘our union
the Mercury Drug Company, Incorporated Employees’ Union, was anemic in that it did not do anything
towards the welfare and protection of its member-employees, like for example those employees who
were dismissed were not investigated and also I approached our president of the union bringing to his
attention my request to the manager about the payment of extra compensation for work on Sundays
and special holidays and our union president told me that he could not do anything about that.’ (Tsn. pp.
34-35, ibid). According to Dayao, among the employees he had convinced beginning February, 1961 and
who agreed with him to organize another union were Josias Fideras, Nestor Talampas, Armando de
Leon, Aladdin Dimagmaliw and Rogelio Orbeta.
"The testimonies of Josias Fideras and Nestor Talampas, assistant traffic supervisor and driver-delivery
man, respectively, substantially corroborated Davao’s declaration in material points, in that sometime in
February, 1961, the latter talked to them to joining a new labor union that he was organizing; that they
were convinced of Dayao’s explanations and agreed to go along with his activities because of the
management’s aversion to pay them overtime on Sundays and holidays and in view of the fact that their
Association in the company was not good or it was not doing anything for the interest and welfare of its
members; and that Dayao was not able to formally organize a separate union, as planned, because he
was discharged from the service of the corporation.

"On the other hand, testifying on the cause of complainant’s separation from the service, the president
and general manager of the corporation, respondent Mariano Que, declared: ‘I think he (Dayao)
quarreled with the president of their union, as a matter of fact he even have his head swollen, and he
also threatened, I think Ranin. He even threatened that he would kill Ranin so I called them to the office
to discuss the matter. I tried to pacify them, but they seem to be really very mad at each other and they
wanted to quarrel. So I told them if that is the case, that they want to create scandal in the office, I think
it would be better for them to resign. At that time actually they were in a furious mood that they could
not be pacified, so I requested that they resign from their job because I did not want to affect the office,
and they both agreed that they resign.’ (Tsn. pp. 7-8, September 21, 1963). According to respondent
Que, the quarrel between Dayao and Ranin happened on Saturday, April 8, 1961, in the Apollo
Restaurant. In other words, the alleged incident did not take place in the office or premises of the
respondent corporation.

"Jacinto Concepcion, personnel manager and also acting paymaster, stated that on Monday, April 10,
1961, upon instruction of Mariano Que, he prepared the cash voucher covering the separation pay of
Dayao of 15 days for every year of service, as well as the corresponding check thereof in the sum of
P562.50 and that after Dayao had signed the voucher, the check was delivered to him on that same day;
and that Dayao likewise received the amount of P140.58 representing his salary for a certain period not
shown in the records (Exhibit ‘3’), and also signed a clearance statement to the effect that he has no
claims of whatever kind and nature against the respondent (EXHIBIT ‘1). Concepcion, however,
confessed no personal knowledge of the alleged quarrel between Dayao and Ranin in the Apollo
Restaurant on the evening of April 8, 1961, except from what respondent Que told him on April 10,

"Romualdo Reyes, secretary and legal counsel of the corporation, among others, claimed that sometime
before the separation of complainant, the latter had consulted him outside of the office about the rale
system of the Association and asked his intercession so that said complainant could also get bigger rales
like the other officers of the Association but that he refused telling Dayao that the company has nothing
to do about the matter for that is the affair of the Association. Atty. Reyes was not present at the
conference between respondent Que and complainant Dayao on April 10, 1961, and, just like
Concepcion, he was only informed by Que of what transpired therein.

"In the examination in chief and in rebuttal, Dayao denied having had a quarrel with the Association
president, Apolinario Ranin, on any date before his dismissal and also asserted that he is not aware of
whether Ranin was also dismissed or not. Fideres and Talampas also professed no knowledge about the
alleged quarrel.

"There is no question that complainant herein received from the respondents the two sums of money
stated above, as well as having signed Exhibits ‘1’, ‘3’ and ‘4’. There is also no dispute that he was called
by respondent Que in the Office on April 10, 1961, and on that date was separated from employment.
The only question to be decided is whether Nardo Dayao was discharged due to union activities, as he
alleged, or for valid cause because of creating trouble with another employee, as claimed by the

"After carefully scrutinizing the records and evidence adduced in this case, the Court is not inclined to
believe the version given by the respondents. Be it noted that there is no clear and positive proof
establishing the fact that there really was a quarrel between Dayao and Ranin which allegedly happened
in the Apollo Restaurant on the night of April 8, 1961. Respondent Que’s declaration that ‘I think’ there
was such a quarrel and that he again ‘think’ that Dayao would inflict bodily harm to Ranin could not be
given credence as it was only based on surmise and belief. Likewise, the testimonies of Jacinto
Concepcion and Romualdo Reyes regarding the said incident could not be given probative weight
because the tales they narrated in Court relative thereto were just information they received from
respondent Que, who may be said is not a disinterested party if not biased. And while it is incumbent
upon Concepcion to make investigation of troubles among the company employees in view of his
position as personnel manager, as he admitted, no investigation was made in the case of Dayao and
Ranin even after he was so informed of such trouble. (Tsn. p. 69, J. Concepcion, August 31, 1963). It
must be noted that Dayao vehemently and steadfastly denied having had a quarrel with Ranin on any
given time and expressed no knowledge of whether Ranin was also discharged or is still in the employ of
the corporation. In this connection, it is significant that Ranin, then union President and one of the
alleged protagonists, who could very well corroborate respondent Que’s testimony on the incident and
thus overcome Dayao’s denial, was not presented by the respondents as a witness in this case, a
circumstance which strongly militates against their cause.

"But granting aruendo that the quarrel did really occur, the Court nevertheless is of the opinion that it
could not be a sufficient basis for discharging from employment complainant herein. The quarrel
admittedly took place in a restaurant far from the company premises and, therefore, did not and could
not have prejudiced and affected in any manner the normal course of business of the corporation nor,
to say the least, has it relevant bearing on the complainant’s employment as there is no showing that
the incident happened during complainant’s official working time. The added contention that the
complainant resigned when told to do so by respondent Que does not generate belief. It is worthy to
mention that the complainant had been continuously in the service of the corporation for more than
five years since February 23, 1956, working as a driver, a delivery man, a checker, and then as assistant
to the chief checker of the checking department. There is no doubt his promotions in positions were
with corresponding increase in pay. He is a family man. His employment in the corporation is his only
means of livelihood. This being so and taking into account the prohibitive prices of prime necessities in
life nowadays, the tightness of money and scarcity of employment opportunities being felt not only in
metropolitan areas but also in rural and urban places, it is hard to believe that Dayao would be so
irresponsible and reckless to resign his position. He never intended leaving the service of the
corporation but, as the records demonstrate the receipt of the money, execution of Exhibits ‘1’, ‘3’ and
‘4’, and consequent separation from employment were forced upon him. There was no actual physical
force employed by respondent Que upon the person of Dayao into making him sign the documents and
receive the termination pay. But the act of the president and general manager of the corporation in
telling complainant herein that whether or not he signs the documents he would be dismissed just the
same could be said a direct threat and a display of force and authority which afforded Dayao no
alternative but to obey as he was bided to do. While troubles among the employees, according to
personnel manager Concepcion, are investigated by him, no such investigation was conducted by him
regarding the alleged trouble between Dayao and Ranin ‘because I did not want to prejudice the general
manager inasmuch as he was personally handling the case.’ (Tsn. p. 69, August 31, 1963). If Concepcion,
who belongs to the managerial staff, was fearful of antagonizing the president and general manager of
the corporation, how much more of a minor employee like Dayao. Under such a situation, it is believed
that no reasonable person would do less than what Dayao did in signing the documents and receiving
the amount of his separation pay. But acceptance of termination pay does not divest a laborer the right
to prosecute his employer for unfair labor practice acts (PMC v. National Labor Union, 48 O.G. 2765;
Philippine Sugar Institute v. CIR, Et Al., G.R. No. L-13475, Sept. 29, 1960), much less for signing the
clearance paper, Exhibit ‘1’, considering the attendant circumstances surrounding the execution of the
same. (See also Sec. 5 [a], R.A. 875).

"The fact is that complainant herein was given the separation pay and told to leave the service of the
corporation because of his union activities. It has been shown that his efforts and representations made
to respondent Que for the payment of overtime compensation and for the excess hours of work
rendered on Sundays and holidays were of no avail. According to the respondents, such claims are not
tenable because they are fully covered by the contracts of employment. But, as the records will indicate,
Dayao believed otherwise and his stand was shared by the other employees, like Josias Fideres and
Ernesto Talampas. An examination of the employment or appointment paper of Nardo Dayao, dated
October 30, 1959 (Exh.’B’, also Exh.’2’) would show that the contents thereof may be subject to
interpretation, more particularly with respect to whether the employee is entitled to overtime or
additional compensation to the ‘4 hours work on every Sunday of the month’ and ‘4 hours work on all
legal holidays,’ or that the same is included in the basic pay. But the Court refrains from passing on the
matter because that is not the issue in this case. What is important to state is the fact that the
management had received same request from the employees for clarification on whether they should
be given additional compensation for four hours work on Sundays and holidays. Thus, Concepcion
declared —

‘HEARING OFFICER (To the witness)

On this particular matter of four hours work on every other Sunday of the month and four hours work
on legal holidays, have you received a request for clarification of such matter,


Yes, sir.’ (Tsn. p. 87, August 31, 1963)

"Moreover, according to Atty. Reyes, in a special meeting of the Mercury Drug Company, Inc.
Employees’ Association held on August 31, 1969. he took the opportunity to explain to those gathered
in the said meeting that the additional compensation for the four hours work on Sundays and holidays is
already included in their basic pay, which only demonstrate that there was already a clamor then for
such additional pay. The foregoing buttress the complainant’s assertion that on several occasions he had
requested respondent Que for the payment of such additional compensation, a fact not denied or
rebutted by the said Respondent.

It has also been established that Dayao brought to the attention of the president of the Association the
matter of additional compensation with the view to having their union make a concerted request from
management for the payment thereof but Apolinario Ranin, then the Association president, told him
that nothing could be done about his request. This piece of evidence remained unrebutted also because
Ranin was not called by the respondents to testify in this case. In relation thereto, there is reason to
believe that the Association had been less vigorous and potent as an existing labor organization because
before and after the present dispute arose, it had and still continues to have as its presidents persons
occupying managerial and high confidential positions, whose interests are evidently allied with that of
the management. This conclusion finds further support from the testimony of the present Association
president, Jacinto Concepcion, that he was unaware of any meeting held during the incumbency of his
predecessor, Apolinario Ranin, and that it was through his personal talks with management and not
through the representation of the Association that the employees have been granted each a sack of rice
or equivalent value of P25.00 a month and also the benefit of group insurance. What is even worse is
that Concepcion could not state the names of the other officers of the Association during his
incumbency, as well as during the term of office of Ranin.

"Considering the foregoing facts and circumstances, there is reason to believe complainant’s assertion
that due to the failure of the management to pay them the additional compensation for services on
Sundays and holidays and for the excess of the four hours work on said days and compounded by the
refusal of the then Association president to take common cause with his request for the payment of
such money claim, he did plan to form a separate union, no doubt, upon the hypothesis that in union
there is strength. The records show that beginning February, 1961, he put into effect his plan by
campaigning among his co-employees in the respondent corporation, like Josias Fideres, Nestor
Talampas, Armando de Leon, Aladdin Dimagmaliw and Regelio Orbeta. That he really exerted efforts
talking to, and convincing, the employees and laborers of the corporation to join with him in organizing
a new union was satisfactorily substantiated and corroborated by two witnesses, Fideres and Talampas,
whose presence in Court - it may be worth mentioning — was made possible by the complainant herein
only through the coercive processes of the Court. They, however, declared that the new union was
formally established, as planned, due to the complainant’s separation from the service.

"Be it emphasized that respondent Que never disclaimed knowledge of charging employee’s union
activity. In his testimony, he did not state or in any way insinuate that he was not aware of Dayao’s
union activity before April 10, 1961. It was Concepcion who expressed into the records no knowledge of
the activity of Dayao, but whose testimony to that effect, nevertheless, is of no moment considering
that he had no hand nor was he consulted by respondent Que in the punitive action taken against
Dayao. The evidence, therefore, of the complainant that respondent Que came to know of his activity of
trying to organize another union before his discharge remained unassailed.

"From all the foregoing discussion, it is clear that the preponderance of evidence sustains a finding in
favor of the complainant’s version of what occurred between him and respondent Que in the office of
the corporation on April 10, 1961, and the Court, therefore, holds that respondents have interfered with
complainant’s union activity and that his dismissal from employment was discriminatory." (Pp. 35-42,
The foregoing searching analysis by the hearing officer of the evidence submitted by the parties in the
hearing of the unfair labor practice charge, is so impressive and so logical that his findings of facts and
conclusions of law were unqualifiedly adhered to by the four members of the respondent Court of
Industrial Relations. WE can do no less.


The insistence on the part of petitioners that the acceptance by private respondent Dayao of a
separation pay and his signing a renunciation of any other claim against herein petitioners, militates
against the charge of unfair labor practice gets into the teeth of the principle that such waiver of the
rights of labor contravenes public policy and therefore null and void, more so in this case when the root
cause of the union activities of Dayao was precisely motivated by his campaign for additional
compensation for overtime pay under the Eight Hour Labor Law, against which claim estoppel or laches
is unavailing (see Manila Terminal Co., Inc. v. CIR, et. al., 91 Phil. 625); because acceptance of
termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice
acts (Cariño v. ACCFA, L-19808, Sept. 29, 1966, 18 SCRA 183, 190; DMC v. National Labor Union, 48 O.G.
2765; Phil. Sugar Institute v. CIR, et. al., L-13475, Sept. 29, 1960). As Mr. Justice Conrado Sanchez,
speaking for the Court in the Carino case, supra, stated: "Acceptance of those benefits would not
amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same
footing. The employer drove the employee to the wall. The latter must have to get hold of money.
Because, out of job, he had to face the harsh necessities of life. He thus found himself in no position to
resist money preferred him. His, then, in a case of adherence, not of choice. One thing sure, however, is
that petitioners did not relent on their claim. They pressed it. They are deemed not to have waived any
of their rights. Renuntiatio non praesumitur."cralaw virtua1aw library

As in the case at bar, private respondent has never relented in his claim. His filing was merely delayed
and he is pressing it.

From the time he was employed as checker, private respondent was made to waive his right for
additional compensation for overtime pay under the appointment extended to him (see pp. 59-60, rec.,
or pp. 14-15, Annex F). Said qualified appointment is clearly an exploitation of the employee who would
be compelled to work more than eight hours on Sundays and legal holidays without additional
compensation, since in his appointment additional compensation for work on Sundays and holidays was
deemed or expressly included in his annual salary of P2,400.00. Under such an appointment, he can be
required to work for four hours every Sunday and for four hours on every legal holiday without
additional pay.


It is true that unfair labor practice charge with the prayer for reinstatement with back wages should be
filed within a reasonable period of time. But laches, like estoppel, should also be alleged as a defense in
the answer, otherwise the same is considered renounced. Petitioners failed to expressly allege the same
in their answer to the ULP charge, in their memorandum and in their motion for reconsideration of the
CIR decision.

However, the lapse of two years and 15 days from the dismissal from the service to the filing of the ULP
charge is not an unreasonable period of time under the circumstances.

In this respect, the statute of limitations prescribed by the Civil Code of the Philippines should apply in
the absence of any other specific legal provision. Article 1146 of the Civil Code of the Philippines directs
that the action upon an injury to the rights of the plaintiff must be instituted within four years. An action
upon a contract should be filed within 10 years (Art. 1144, CCP). All other actions whose periods are not
fixed in the Civil Code or in other laws must be brought within five years from the time the right of
action accrues (Art. 1149, CCP). Whether the ULP charge is based on an injury to the rights of Dayao or
placed under the category of all other actions for which no law prescribes the time limit for their
institution, the filing by respondent Dayao of the ULP charge against herein petitioners was well within
either the prescriptive period. It should be stressed that the 1935 Constitution has been very solicitous
for the welfare of labor and expressly stated that the State shall afford protection to labor (Sec. 6, Art.
XIV, 1935 Constitution) and expressly committed itself to the promotion of social justice to insure the
well-being and economic security of all the people (Sec. 5, Art. II, 1935 Constitution). The 1973
Constitution expanded such guarantees and imposes upon the State the duty to "assure the rights of
workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of
work," after stipulating that the State "shall promote full employment and equality in employment,
insure equal work opportunities regardless of sex, race or creed" (Sec. 9, Art. II, 1973 Constitution). WE
would be denying such constitutional guarantees to herein private respondent Dayao, if the position of
herein petitioners were sustained.
Finally, if the dismissal of herein private respondent Dayao was for just cause, then there was no reason
for petitioners-employers to give him termination pay; because under the Termination Pay Law,
otherwise known as Republic Act No. 1052, as amended by Republic Act No. 1787, the employee whose
services are terminated for just cause is not entitled to termination pay (Sec. 1, Rep. Act No. 1052, as

Even under the Termination Pay Law, the alleged quarrel between private respondent Dayao and one
Ranin, the president of the labor union, in the presence of herein petitioner Mariano Que as manager of
petitioner corporation, is not one of the grounds justifying the dismissal of private respondent Dayao. It
is not even analogous to "serious misconduct or willful disobedience of the orders of his employer or its
representative in connection with his work." Even if it were conceded that private respondent Dayao
verbally quarrelled with the former president of their employees’ association in the presence of
manager Mariano Que and that both ignored the latter’s admonition for them to stop quarrelling, at
most the same was discourtesy which was not intended considering the origin of their quarrel - the
failure of Ranin, former president of the labor union, to fight for overtime pay for services rendered on
Sundays and holidays. Such discourtesy, at most, merits merely a reprimand or admonition but not
outright dismissal, since it did not involve the efficiency nor honesty of private respondent Dayao. The
fact that Dayao had been in the service for five years and ten months, during which period of time he
was promoted from driver to delivery man, to checker and finally to assistant chief checker in the
Checking Department with a salary of P225.00 a month demonstrates his efficiency, competence and

The remaining question is how much back wages shall be allowed private respondent Dayao.

While this case was submitted for decision on March 29, 1965, the delay in its resolution is not due to
the parties. However, it should be noted that private respondent Dayao filed his ULP charge with
reinstatement and back wages about two years and fifteen days after his separation on April 10, 1961.
As aforestated, the shortest prescriptive period for the filing of all other actions for which the statute of
limitations does not fix a period, is four years. The period of delay in instituting this ULP charge with
claim for reinstatement and back wages, although within the prescriptive period, should be deducted
from the liability of the employer to him for back wages. In order that the employee however should be
relieved from proving his income during the period he was out of the service and the employer from
submitting counter-proofs, which may delay the execution of the decision, the employer in the case at
bar should be directed to pay private respondent Dayao back wages equivalent to one year, eleven
months, and fifteen days without further disqualifications.
In fairness to the employer, he should not be compelled to reinstate an employee who is no longer
physically fit for the job from which he was illegally ousted.

virtual 1aw library





Makalintal, C J., Zaldivar, Castro, Fernando, Barredo, Antonio, Esguerra, Fernandez, Muñoz Palma and
Aquino, JJ., concur.

Separate Opinions

TEEHANKEE, J., concurring and dissenting:chanrob1es virtual 1aw library

I concur on the whole with the main opinion for the Court of Mr. Justice Makasiar affirming the
judgment of respondent court of industrial relations finding petitioner guilty of unfair labor practice in
wrongfully dismissing from its employ private respondent because of the latter’s just demands for the
payment of extra compensation for work done on Sundays and special holidays by him and his co-
employees and ordering the reinstatement of respondent upon certification of his physical fitness by a
government physician.
I particularly endorse the new formula reached by the Court in ordering that respondent be paid a fixed
amount of back wages (equivalent to 1 year, 11 months and 15 days in the case at bar) "without further
qualifications," that is to say, without having to determine and deduct earnings from the general award
of back wages from date of unlawful dismissal until actual reinstatement heretofore customarily made
in such unfair labor practice and reinstatement cases. Such general awards, as noted in the main
opinion, generally led to long delays in the execution of the decision for back wages and reinstatement,
due to protracted hearings and unavoidable delays and difficulties encountered in determining the
earnings of the laid-off employees during the pendency of the case. 1

As observed by the Court in another case 2 such general award for back wages tended to breed idleness
on the part of a discharged employee who would "with folded arms, remain inactive in the expectation
that a windfall would come to him" and therefore directed that "in mitigation of the damages that the
dismissed respondents (employees) are entitled to, account should be taken of whether in the exercise
of due diligence respondents might have obtained income from suitable remunerative employment.

On the other hand, it is to be noted that unscrupulous employers have with unrelenting attrition against
their unwanted employees who successfully obtained judgments For reinstatement with back wages
seized upon the further proceedings in the industrial court (to determine the actual earnings of their
wrongfully dismissed employees for purposes of deduction from the back wages award) to bold unduly
protracted and extended hearings for each and every employee found entitled to back wages and
thereby practically render nugatory such judgments and force the employees to agree to
unconscionable settlements of their judgment award. 3

This new principle formally adopted by the Court now in fixing the amount of back wages at a
reasonable level without qualification and deduction so as to relieve the employees from proving their
earnings during their lay-offs and the employer from submitting counter-proofs, and thus obviate the
twin evils of idleness on the part of the employees and attrition and undue delay in satisfying the award
on the part of the employer is thus to be hailed as a realistic, reasonable and mutually beneficial

I dissent, however, from the specific result in the judgment at bar of awarding respondent back wages
only in an amount equivalent to 1 year, 11 months and 15 days - which is apparently premised arbitrarily
on granting respondent back wages only for the remainder of the four-year prescriptive period after
deducting the 2 years and 15 days delay incurred by respondent after his discharge in filing his
complaint for unfair labor practice and reinstatement. The very same opinion found that such delay "is
not an unreasonable period of time under the circumstances" and it should follow that such delay
should in no manner prejudice the amount of the back wages award justly due respondent —
particularly, when it is considered that he pursued — with vigor his complaint after its filing on April 25,
1963 and obtained favorable judgment in the industrial court within a year as per said court’s decision
of January 17, 1964 and its en banc resolution of February 25, 1964 denying petitioner’s motion for

I believe that some ground rules should be laid down in implementing the new formula now adopted of
granting a fixed back wages award without further qualification and deduction of earnings during the
lay-off so as to expedite the immediate execution of judgment in satisfaction of the award and for
reinstatement of the wrongfully dismissed employee(s) (whose reinstatement, as stressed in East Asiatic
Co., supra, 4 should be immediately effected upon finality of the judgment without waiting for the
computation and determination of the back wages). Normally, the trial of the case and resolution of the
appeal should be given preference and terminated within a period of three years (one year for trial and
decision in the industrial court and two years for briefs, etc., and decision in this Court).

Hence, an award of back wages equivalent to three years (where the case is not terminated sooner)
should serve as the base figure for such awards without deduction, subject to deduction where there
are mitigating circumstances in favor of the employer but subject to increase by way of exemplary
damages where there are aggravating circumstances (e.g. oppression or dilatory appeals) on the
employer’s part. Here, where resolution of the case on appeal was delayed without fault of the parties
but the facts and circumstances clearly show the lack of merit in the appeal taken by the employer-
petitioner and its stubborn insistence on depriving respondent and his co-employees of the extra
compensation for Sunday and holiday work justly due them, I submit that the minimum award to which
respondent is entitled should be at the very least the equivalent of the proposed base figure of three
years pay. Employers should be put on notice as a deterrent that if they pursue manifestly dilatory and
unmeritorious appeals and thus delay satisfaction of the judgment justly due their employee(s), they run
the risk of exemplary and punitive damages being assessed against them by way of an increased award
of back wages to the wrongfully discharged employee(s) commensurate to the delay caused by the
appeal process.

I further submit that since the Court’s judgment dismiss the petition, the reinstatement of respondent
upon a finding of his physical fitness shall be "without loss of seniority rights and other privileges
appertaining thereto" to which he should have been entitled during the long period that he was
wrongfully dismissed from petitioner’s employ, as provided in the industrial court’s judgment as
affirmed in the case at bar.


PETITION for certiorari to reverse a resolution ofthe NLRC. Facts: Private respondents were all employed
as teachers on probationary basis by petitionerPines City Educational Center, represented in this
proceedings by its President, Eugenio Baltao. With the exception ofJane Bentrez who was hired as a
grade school teacher, the remaining privaterespondents were hired as college instructors. All the private
respondents, except Picart and Chan, signed contracts ofemployment with petitioner for a fixed
duration. On March 31, 1989, due to the expiration ofprivate respondents'contracts and their poor
performanceas teachers, they were notified of petitioners'decision not to renew theircontracts
anymore. Private respondents filed a complaint for illegal dismissal beforethe Labor Arbiter, alleging
that their dismissals werewithout cause and in violation ofdue process. Except for private respondent
Leila Dominguez who worked with petitioners for one semester, all other privaterespondents were
employedfor one to two years.They were never informed in writing by petitioners regarding the
standards or criteria ofevaluation so as to enable them to meet the requirements for appointment as
regular employees.They were merely notified in writing by petitioners, through its chancellor, Dra.
Nimia R. Concepcion, ofthe termination oftheir respectiveservices as on March 31, 1989, on account
oftheir below-par performance as teachers. Petitioners contended that privaterespondents'separation
from employment, apart from their poorperformance, was due to the expiration ofthe periods
stipulated in their respective contracts. In the case ofprivate respondent Dangwa Bentrez, the duration
ofhis employment contract was for one year, orbeginning June,1988 to March 1989 whereas in the case
ofthe other private respondents, the duration oftheir employment contracts was for one semester,or
beginning November, 1988 to March 1989. These stipulations werethe laws that governed
theirrelationships, and there was nothing in said contracts which was contrary to law, morals, good
customs and public policy. They argued further that they cannot be compelledo enter into new
contracts with private respondents.they concluded that the separation ofprivate respondents from the
service was justified. Labor Arbiter’s decision: the LaborArbiter rendered judgment in favor ofprivate
respondents, On appeal to the National Labor Relations Commission,the latteraffirmed in toto in its
resolution dated November 29, 1990,with the additional reasoning that "the stipulation in the contract
providing for a definite period in the employmentofcomplainantis obviously null and void, as such
stipulation directly assails the safeguards laid down in Article280 (ofthe Labor Code), which explicitly
abhors the consideration ofwritten or oral agreements pertaining to definite period in regular
employments. Hence, the present petition for certiorari with prayer for the issuance ofa temporary
SUPREME COURT . Ruling: In the present case, however, We have to make a distinction. Insofar as the
private respondents who knowingly and voluntarily agreed upon fixed periods of employment are
concerned, theirservices werelawfully terminated by reason ofthe expiration of the periods of their
respective contracts. These are Dangwa Bentrez, Apollo Ribaya, Sr., Ruperta Ribaya, VirginiaBoado,
Cecilia Emocling,Jose Bentrez, Leila Dominguez and Rose Ann Bermudez. Thus, public respondent
committed grave abuse of discretion in affirming the decision of the Labor Arbiter ordering the
reinstatement and payment of full backwages and other benefits and privileges. With respect to private
respondents Roland Picart and Lucia Chan, both ofwhom did not sign any contractfixing the periods of
their employment nor to have knowingly and voluntarily agreed upon fixed periods of employment,
petitioners had the burden of proving that the termination of their services was legal. As probationary
employees, they are likewise protected by the security of tenure provision of the Constitution.
Consequently, they cannot be removed from their positions unless for cause. We concur with these
factual findings, there being no showing that they were resolved arbitrarily. Thus, the order for their
reinstatement and payment offull backwages and other benefits and privileges from the time they were
dismissed up to their actual reinstatement is proper, conformably with Article 27 9 of the Labor Code, as
amended by Section 34 ofRepublic Act No. 6715, which took effect on March 21, 1989. It should be
noted that private respondents RolandPicart and Lucia Chan were dismissed illegally on March 31, 1989,
or after the effectivity of said amendatory law. However, in ascertaining the total amount of backwages
payable to them, we go back to the rule prior to the mercury drug rule that the total amount derived
from employment elsewhere by the employee from the date of dismissal up to the date
ofreinstatement, ifany, should be deducted therefrom. We restate the underlying reason that
employees should not be permitted to enrich themselves at the expense of their employer. In addition,
the law abhors double compensation. 19 to this extent, our ruling in Alex Ferrer, et al., v. NLRC, et al.,
G.R. No. 100898, promulgated on July 5, 1993, is hereby modified. Fallo: WHEREFORE, the resolution
ofpublic respondent National Labor RelationsCommission dated November 29, 1990 is hereby
MODIFIED. privaterespondents Roland Picart and Lucia Chan are ordered reinstated withoutloss of
seniority rights and other privileges and their backwages paid in full inclusive ofallowances, and to their
otherbenefits or their monetary equivalent pursuant to Article 279 ofthe Labor Code, as amended by
Section 34 ofRepublic ActNo. 67 15, subject to deduction ofincomeearned elsewhere during the period
ofdismissal, ifany, to be computed from the time they were dismissed up to the time oftheir actual
reinstatement. the rest ofthe Labor Arbiter's decision dat ed February 28, 1990, as affirmed by the
NLRCis set aside. The temporary restraining order issued on March 11,1991 is made permanent.


December 19, 2016 ~ vbdiaz

G.R. No. 111651 March 15, 1996



FACTS: Respondent company is engaged in the business of producing high grade bananas in its
plantation in Davao del Norte. Petitioners Paulino Bantayan, Fernando Bustamante, Mario Sumonod and
Osmalik Bustamante were employed as laborers and harvesters while petitioner Sabu Lamaran was
employed as a laborer and sprayer in respondent company’s plantation. All the petitioners signed
contracts of employment for a period of six (6) months from 2 January 1990 to 2 July 1990, but they had
started working sometime in September 1989. Previously, they were hired to do the same work for
periods lasting a month or more, from 1985 to 1989. Before the contracts of employment expired on 2
July 1990, petitioners’ employments were terminated on 25 June 1990 on the ground of poor
performance on account of age, as not one of them was allegedly below forty (40) years old.

Petitioners filed a complaint for illegal dismissal.

ISSUE: Whether or not private respondent exercises its power to terminate in good faith so as to make
the award of backwages improper in this case.

RULING: We do not sustain public respondent’s theory that private respondent should not be made to
compensate petitioners for backwages because its termination of their employment was not made in
bad faith. The act of hiring and re-hiring the petitioners over a period of time without considering them
as regular employees evidences bad faith on the part of private respondent. The public respondent
made a finding to this effect when it stated that the subsequent rehiring of petitioners on a
probationary status “clearly appears to be a convenient subterfuge on the part of management to
prevent complainants (petitioners) from becoming regular employees.”
In the case at bar, there is no valid cause for dismissal. The employees (petitioners) have not performed
any act to warrant termination of their employment. Consequently, petitioners are entitled to their full
backwages and other benefits from the time their compensation was withheld from them up to the time
of their actual reinstatement.

G.R. No. 172149 February 8, 2010



(Second Division) and ADONIS ARMENIO M. FLORA, Respondents.



Adonis Flora filed an illegal dismissal case against Session Delights and Fast Foods (Session Delights). In
February 2001, the labor arbiter, Monroe Tabingan, ruled in favor of Flora and ordered Session Delights
to pay Flora the following: P26k backwages, P2k 13th month pay, P4.4k separation pay, P5k damages,
and P3.7k attorney’s fees – a total of about P41k.

Instead of paying Flora, Session Delights appealed the decision of the arbiter. The National Labor
Relations Commission (NLRC) affirmed the decision of the arbiter. Unsatisfied, Session Delights appealed
to the Court of Appeals (CA). The CA affirmed the decision of the NLRC but deleted the award of 13th
month pay as well as the award of P5k in damages. The CA then ordered the labor arbiter to make a

The arbiter made the recomputation and so Session Delights was ordered to pay Flora the amount of
P253k. Session Delights again appealed, but this time it only appealed the recomputation as it avers that
the amount in the original decision of the Labor Arbiter should be controlling, in short, the period that
lapsed during the time of appeal should not be included in computing the backwages.

The CA ruled that other than the inclusion again of the 13th month pay and the P5k damages, the
computation made by the Labor Arbiter is correct.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: Yes. As a rule, backwages is computed from the time of the illegal dismissal up to the time of
actual reinstatement. If reinstatement is no longer possible, it is computed until the finality of the
decision. In this case, the decision became final when Session Delights no longer appealed the CA
decision affirming the finding of illegal dismissal against Session Delights or on July 29, 2003. Hence, the
original computation made by the labor arbiter in its February 2001 decision must be recomputed to
include the period until July 29, 2003. The fact that Session Delight’s liability increased from P41k to
P253k (less the erroneous inclusions) is but an unavoidable consequence of Session Delight’s appeal
since it lost on appeal.

But does this violate the principle of immutability of judgment considering the fact that the original
decision of the labor arbiter already provided for a computation?

No. In these types of cases, there are two parts of the decision issued by the arbiter. The first part is the
finding of illegal dismissal against the employer. The second part is the computation of whatever is due
to the employee who was illegally dismissed. The decision of the arbiter is immediately final and
executory subject to a timely appeal by the losing party. As a rule, if a decision is affirmed on appeal, the
dispositive portion of the original decision controls (subject of course to modifications made by the
appellate court). In this case, the finding of illegal dismissal stays, but the computation must be done
again pursuant to the rule that the end period must be until the finality of the decision. This does not
violate the principle of immutability of judgment.
G.R. No. 189871 August 13, 2013

DARIO NACAR, Petitioner,





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 on January 24, 1997. On October 15, 1998, the Labor
Arbiter (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
ISSUE: Whether or not the Labor Arbiter is correct.

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:

1. Monetary Obligations ex. Loans:

a. If stipulated in writing:

a.1. shall run from date of judicial demand (filing of the case)

a.2. rate of interest shall be that amount stipulated

b. If not stipulated in writing

b.1. shall run from date of default (either failure to pay upon extra-judicial demand or upon judicial
demand whichever is appropriate and subject to the provisions of Article 1169 of the Civil Code)
b.2. rate of interest shall be 6% per annum

2. Non-Monetary Obligations (such as the case at bar)

a. If already liquidated, rate of interest shall be 6% per annum, demandable from date of judicial or
extra-judicial demand (Art. 1169, Civil Code)

b. If unliquidated, no interest

Except: When later on established with certainty. Interest shall still be 6% per annum demandable from
the date of judgment because such on such date, it is already deemed that the amount of damages is
already ascertained.

3. Compounded Interest

– This is applicable to both monetary and non-monetary obligations

– 6% per annum computed against award of damages (interest) granted by the court. To be computed
from the date when the court’s decision becomes final and executory until the award is fully satisfied by
the losing party.

4. The 6% per annum rate of legal interest shall be applied prospectively:

– Final and executory judgments awarding damages prior to July 1, 2013 shall apply the 12% rate;

– Final and executory judgments awarding damages on or after July 1, 2013 shall apply the 12% rate for
unpaid obligations until June 30, 2013; unpaid obligations with respect to said judgments on or after July
1, 2013 shall still incur the 6% rate.