Almirante: Interest on award

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By Dominador Almirante

Labor case Digest

Friday, March 14, 2014


PETITIONER Dario Nacar filed a complaint for constructive dismissal against respondents Gallery Frames (GF) and/or Felipe Bordey, Jr. On Oct. 15, 1998, the labor arbiter rendered a decision finding him dismissed from employment without a valid or just cause. He was awarded back wages and separation pay in the amount of P158,919.92, in lieu of reinstatement.

The petitioner prevailed in his case throughout the National Labor Relations Commission (NLRC), the Court of Appeals (CA) and the Supreme Court. At the execution stage, he filed a Motion for Correct Computation praying for, among others, the payment of interest on the award from the finality of the decision until full payment by respondents. Is the motion meritorious?

The Supreme Court En Banc ruling: Yes.

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To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines G.R. No. 97412, July 12, 1994, 234 SCRA 78, are accordingly modified to embody BSP-MB Circular No. 799, as follows:

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:

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 six percent 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. 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 six percent per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. (Dario Nacar vs. Gallery Frames and/or Felipe Bordey, Jr., G.R. No. 189871, Aug. 13, 2013).

Published in the Sun.Star Cebu newspaper on March 15, 2014.

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