No. 44 Dario Nacar vs. Gallery Frames ( Sabuero) PDF

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DARIO NACAR vs. GALLERY FRAMESG. No. 189871, August 13, 2013TOPIC: Usury Law on Usurious TransactionsDOCTRINE:Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending...

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DARIO NACAR vs. GALLERY FRAMES G.R. No. 189871, August 13, 2013

TOPIC: Usury Law on Usurious Transactions

DOCTRINE: Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982: Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum. Section 2. In view of the above, Subsection X305.1 36 of the Manual of Regulations for Banks and Sections 4305Q.1, 37 4305S.3 38 and 4303P.1 39 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly. This Circular shall take effect on 1 July 2013. This rule does apply retroactively.

FACTS: On October 15, 1998, the Labor Arbiter rendered a Decision in favor of the petitioner and found that he was dismissed from employment without a valid or just cause. Thus, the petitioner was awarded back wages and separation pay in lieu of reinstatement in the amount of ₱158,919.92. Respondents appealed to the NLRC, but it was dismissed for lack of merit in the Resolution dated February 29, 2000. Accordingly, the NLRC sustained the decision of the Labor Arbiter. Respondents filed a motion for reconsideration, but it was denied. On November 5, 2002, petitioner 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 on May 27, 2002. Upon recomputation, the Computation and Examination Unit of the NLRC arrived at an updated amount in the sum of ₱471,320.31. Gallery frames argued that the amount should no longer have been increased and the amount should be based on Oct 1998 decision as this was the reference of the SC decision that became final and executory. This was denied by LA. NLRC Ruled in favor of Gallery frames. Another recomputation ensued which arrived at an amount of PhP 147, 560 (third amount). LA issued a writ of execution. After this, the petitioner received 147k. However, he then requested that he be entitled to receive interest payments. LA did not rule on interest payments but nonetheless awarded Nacar an additional 11k (difference between first amount and third amount). Nacar was not contented and still appealed the decision before the CA. CA ruled that the 1998 Decision is already final and executory and its correction is no longer allowed. Nacar appealed this decision before the SC.

ISSUE: Whether he is entitled to payment of interest from finality of the decision until full payment by the respondents?

HELD: Yes. In 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: 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: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance 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 12% 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. 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. 3. 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 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit....