FULL TITLE: DARIO NACAR VS.
GALLERY FRAMES AND/OR Supreme Court arguing that the computation of the backwages must be
FELIPE BORDEY, JR.,
STATEMENT OF FACTS Petitioner Dario Nacar filed a complaint before
the NLRC for constructive dismissal against respondents Gallery Frames
and/or Felipe Bordey, Jr. In 1998, the Labor Arbiter ruled in favor of Nacar
and ordered the respondents to pay backwages and separation pay in lieu of
reinstatement in the amount of P158,919.92. Upon appeal to the NLRC, the
decision of the Labor Arbiter was affirmed. Respondents thereafter filed a
petition for review on certiorari before the CA which dismissed the petition.
When the case was brought before the Supreme Court, the same was denied
and the decision became final and executory.
STATEMENT OF THE CASE In 2002, Nacar filed a motion for Correct
Computation praying that the award of backwages be computed from
January 24, 1997, when he was illegally dismissed, until the finality of the
judgment of the Supreme Court in May 27, 2002. The NLRC came up with
the amount of P471,320.31 but when a writ of execution was ISSUEd, the
respondents filed a Motion to Quash arguing that since the Labor Arbiter
awarded separation pay and backwages, and its decision has already attained
finality, it can no longer be amended or altered. The records of the case were
again forwarded to the Computation and Examination Unit for
recomputation, where the judgment award of petitioner was reassessed to be
in the total amount of only P147,560.19. On January 14, 2003, the Labor
Arbiter ISSUEd an Alias Writ of Execution to satisfy the judgment award
that was due to petitioner in the amount of P147,560.19. Petitioner then filed
a Manifestation and Motion praying for the re-computation of the monetary
award to include the appropriate interests. On May 10, 2005, the Labor
Arbiter ISSUEd an Ordergranting the motion, but only up to the amount of
P11,459.73. The Labor Arbiter reasoned that it is the October 15, 1998
decision that should be enforced considering that it was the one that became
final and executory. Petitioner then appealed before the NLRC,which appeal
was denied in its Resolutiondated September 27, 2006. Aggrieved, petitioner
then sought recourse before the CA but to no avail. It ruled that since
petitioner no longer appealed the October 15, 1998 Decision of the Labor
Arbiter, which already became final and executory, a belated correction
thereof is no longer allowed. Petitioner appealed the decision before the
reckoned from May 27, 2002, when the resolution of the Court was entered
into the Book of Entries, not when the decision of the Labor Arbiter was
promulgated. Petitioner further claims that respondents should pay interest
from the finality of the decision until full payment is made.
ISSUE/s Whether or not respondents are liable to pay interest.
RULING Yes. The respondents did not immediately pay or comply with the
decision of the Labor Arbiter and instead continued with the litigation until
the decision attained finality at the CA level. As a consequence, re-
computation became necessary in accordance with the Article 279 of the
Labor Code, by the very nature of an illegal dismissal case, the reliefs
continue to add up until finality of the decision. With regard to the payment
of interest, this shall now be governed by Circular No. 799, effective July 1,
2013, which provides that in the absence of stipulation of the parties
regarding the rate of interest for loans or forbearance of money, goods, and
credits the rate allowed shall now be 6% per annum – as opposed to the 12%
per annum which was provided for in previous circular ISSUEd by the BSP.
The following guidelines shall govern: “I. 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. The provisions
under Title XVIII on "Damages" of the Civil Code govern in determining the
measure of recoverable damages. “II. 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: “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 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. “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. “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.”
DISPOSITIVE PORTION WHEREFORE, premises considered, the
Decision dated September 23, 2008 of the Court of Appeals in CA-G.R. SP
No. 98591, and the Resolution dated October 9, 2009 are REVERSED and
SET ASIDE. Respondents are Ordered to Pay petitioner: (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. The
Labor Arbiter is hereby ORDERED to make another recomputation of the
total monetary benefits awarded and due to petitioner in accordance with this
Decision.
Advocates for Truth in Lending vs BSP
Facts: Petitioner "Advocates for Truth in Lending, Inc." (AFTIL) is a non-
profit, non-stock corporation organized to engage in pro bono concerns and
activities relating to money lending issues. It was incorporated on July 9,
2010,2 and a month later, it filed this petition, joined by its founder and
president, Eduardo B. Olaguer, suing as a taxpayer and a citizen. - R.A. No.
265, created the Central Bank on June 15, 1948, it empowers the CB-MB to
set the maximum interest rates which banks may charge for all types of loans
and other credit operations. - The Usury Law was amended by P.D.1684, it
gave the CB-MB authority to prescribe different maximum rates of interest
which may be imposed for a loan or renewal thereof or the forbearance of
any money, goods or credits, provided that the changes are effected gradually
and announced in advance. Section 1-a of Act No. 2655 now reads: - In its
Resolution No. 2224 dated December 3, 1982, the CB-MB issued CB
Circular No. 905, Series of 1982, effective on January 1, 1983. It removed
the ceilings on interest rates on loans or forbearance of any money, goods or
credits V. Statement of case Petitioner skipped the hierarchy of courts in
claim of transcendental importance · Petitioners contend that under Section
1-a of Act No. 2655, as amended by P.D. No. 1684, the CB-MB was
authorized only to prescribe or set the maximum rates of interest for a loan or
renewal thereof or for the forbearance of any money, goods or credits, and to
change such rates whenever warranted by prevailing economic and social
conditions, the changes to be effected gradually and on scheduled dates; that
nothing in P.D. No. 1684 authorized the CB-MB to lift or suspend the limits
of interest on all credit transactions, when it issued CB Circular No. 905.
They further insist that under Section 109 of R.A. No. 265, the authority of
the CB-MB was clearly only to fix the banks’ maximum rates of interest, but
always within the limits prescribed by the Usury Law. · CB Circular No.
905, which was promulgated without the benefit of any prior public hearing,
is void because it violated NCC 5 which provides that "Acts executed against
the provisions of mandatory or prohibitory laws shall be void, except when
the law itself authorizes their validity." · weeks after the issuance of CB
Circular No. 905, the benchmark 91-day Treasury bills shot up to 40% PA,
as a result. The banks followed suit and re-priced their loans to rates which
were even higher than those of the "Jobo" bills. · CB Circular No. 905 is also
unconstitutional in light of the Bill of Rights, which commands that "no
person shall be deprived of life, liberty or property without due process of
law, nor shall any person be denied the equal protection of the laws." · R.A.
No. 7653 did not re-enact a provision similar to Section 109 of RA 265, and
therefore, in view of the repealing clause in Section 135 of R.A. No. 7653,
the BSP-MB has been stripped of the power either to prescribe the maximum
rates of interest which banks may charge for different kinds of loans and
credit transactions, or to suspend Act No. 2655 and continue enforcing CB
Circular No. 905.

VI. Issues: - Does CB-MB has the appropriate statutory or constitutional

authority to prescribe the maximum rates of interest for all kinds of credit
transactions and forbearance of money, goods or credit beyond the limits
prescribed in the Usury Law; - If they do, whether the CB-MB exceeded its
authority when it issued CB Circular No. 905, which removed all interest
ceilings thus suspended Act No. 2655 as regards usurious interest rates; -
Whether under R.A. No. 7653, the new BSP-MB may continue to enforce
CB Circular No. 905.

Vll. Ruling CB-MB merely suspended the effectivity of the Usury Law when
it issued CB Circular No. 905.A Circular cannot repeal a law; that by virtue
of CB the Usury Law has been rendered ineffective; that the Usury has been
legally non-existent in our jurisdiction and interest can now be charged as
lender and borrow may agree upon. Circular upheld the parties’ freedom of
contract to agree freely on the rate of interest citing Art. 1306 under which
the contracting parties may establish such stipulations, clauses terms and
conditions as they may deem convenient provided they are not contrary to
law, morals, good customs, public order or public policy. BSP-MB has
authority to enforce CB Circular No. 905. RA 265 covered only banks while
Section 1-a of the Usury Law, empowers the Monetary Board, BSP for that
matter, to prescribe the maximum rate or rates of interest for all loans or
renewals thereof or the forbearance of any money, good or credits … The
Usury Law is broader in scope than RA 265, now RA 7653, the later merely
supplemented the former as it provided regulation for loans by banks and
other financial institutions. RA 7653 was not unequivocally repealed by RA
765. CB Circular 905 is essentially based on Section 1-a of the Usury Law
and the Usury Law being broader in scope than the law that created the
Central Bank was not deemed repealed when the law replacing CB with the
Bangko Sentral was enacted despite the non-reenactment in the BSP Law of
a provision in the CB Law which the petitioners purports to be the basis of
Circular 905.The lifting of the ceilings for interest rates does not authorize
stipulations charging excessive, unconscionable, and iniquitous interest.