Bangko Sentral ng Pilipinas, petitioner, vs. Jesus G.

Santamaria, doing buseiness

Facts
On March 13, 1993, BSP and respondent entered into a “Contract for the Project
Construction Management Services,” with the following pertinent provisions:
ARTICLE II- COMPENSATION AND MANNER OF PAYMENT
For services to be rendered by the PCM for ten (10) months, inclusive of the pre-
construction, construction and post-construction periods, the BANK shall pay the
amount of SIX HUNDRED SEVENTY SIX THOUSAND FORTY FOUR PESOS &
35/100 (P676,044) Philippine Currency, broken down as follows:
Pre-Construction Phase -P59,278 to be paid in two (2) equal payments: 1st payment to
be released after the opening of bids while the 2nd payment will be released after the
issuance of the Notice of Award (NOA)
Construction, Post-Construction & Project Close-out Phase -P616,765 to be paid as
progress billings on the value of work accomplished including cost of owner-furnished
materials.
Supervision of construction work beyond the original contract completion time, unless
officially authorized by the BANK, shall not entitle the PCM to additional compensation
and shall be undertaken by the PCM for his own account.
Contract completion time may, however, be extended only for the following reasons: -
Delay in delivery of owner-furnished materials
-Change in scope of work due to revisions
-Hold orders on areas requiring the decision of the BANK
-Unreasonably delayed payments
-Force majeure
Supervision by the PCM during duly authorized extensions of contract time shall be
compensated on the basis of actual man-months rendered and approved rates
multiplied by a factor of 1.
2. On November 12, 1997, respondent filed a Request for Adjudication before the CIAC to
demand payment from BSP of unpaid billings amounting to P746,867, inclusive of
interest and arbitration fees. CIAC found respondent’s claims to be valid, thus:
On the basis of the above findings, it is the conclusion of this Arbitrator that the claim of
JGS is valid. Accordingly, BSP is ordered to pay JGS its first billing in the amount of
P450,604, with interest at the rate of 6% per annum from February 23, 1996 until it is
fully paid; and its second billing for the amount of P62,451 with interest also at the rate
of 6% per annum from September 10, 1996 until it is fully paid.
In view of the long delay in the construction of the Project, the prices quoted by JGS are
no longer realistic. It would be unjust and inequitable for JGS to be required to complete
the balance of the work which is estimated to be 66% in accordance with the unit rates
made by JGS in his proposal. This Arbitrator would have no basis for determining the
appropriate adjustment taking into consideration cost escalation. The parties are,
therefore, directed to negotiate and determine the amount of cost escalation to be
allowed JGS for work already performed and for performing the balance of 66% of the
work....

Issue or Issues
Whether or not the Court of Appeals erred in holding that respondent is entitled to the
payment claimed for extended services under the PCM Contract.
Ruling
The Supreme Court ruled in favor of the respondents.
It was clearly specified in the law that only transportation, living and representation
allowances may be included in the computation of the first five-year lump sum
retirement benefits for members of the judiciary.
The provisions of Section 3, P. No. 1438, which are clear and unambiguous, should be
given their plain and natural meaning. Inasmuch as the law limits the computation of the
lump sum of 5 years’ gratuity to “ the highest monthly salary plus the highest monthly
aggregate of transportation, living and representation allowances that the judge was
receiving on the date of his retirement, ” it is understood that other allowances are
excluded.
The petitioner failed to prove that the P4,000 additional monthly allowance that he was
receiving from the Municipal Government of Muntinlupa was a representation, living or
transportation allowance, for as indicated in the sample disbursement voucher that he
used to fill up whenever he claimed such allowance, the amount was in the nature of
reimbursement for expenses which Judge Allarde certified “were incurred by me while
performing my duties.”
Further, Letter of Instruction No. 1418 which authorizes local governments to pay
additional allowances to judges of the courts within their territorial jurisdiction, limits the
amount of such allowance and does not provide that it shall be treated as part of the
judge’s remuneration in computing his retirement benefits. In the Letter of Instruction it
stated that, “allowances provided in this letter shall be borne exclusively by the National
Government. However, provincial, city, and municipal governments may pay additional
allowances to the members and personnel of the Judiciary assigned in their respective
areas out of available local funds but not to exceed P1,500; Provided, that in
Metropolitan Manila, the city and municipal governments therein may pay additional
allowances not exceeding P3,000.”
DARIO NACAR, PETITIONER, vs. GALLERY FRAMES AND/OR FELIPE BORDEY,
JR., RESPONDENTS.
G.R. No. 189871 August 13, 2013

FACTS

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 executory.

ISSUE:

Whether or not the Labor Arbiter is correct.

RULING

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:

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 stipulatedIf not stipulated in writing.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)

.2. rate of interest shall be 6% per annum

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

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

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.Compounded Interest This
is applicable to both monetary and non-monetary obligations6% 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.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.