Florendo v. Ruiz
REITERATIONFacts
The Antecedents: Petitioner Teodoro N. Florendo was employed by respondent Silliman University as an assistant in its legal counsel office on July 1, 1949, and was promoted to regular status and later became a faculty member and secretary of the college of law. For reasons unknown to him, he was relieved as college secretary on or before March 20, 1962, and his name did not appear in the list of teachers for the incoming school year. He protested his dismissal but to no avail. Procedural History: Petitioner filed a complaint for breach of contract. The Court of First Instance (CFI) found that petitioner was terminated without just cause and without due process, and awarded moral damages, exemplary damages, retirement and group annuity funds, and attorney's fees. Both parties appealed to the Court of Appeals (CA). The CA affirmed the CFI decision in all respects, with a modification that defendants-appellants, except Merton Munn, were ordered to pay jointly and severally the amounts stated in the CFI decision, including P1,400.00 as compensatory damages, with interest at the legal rate from the date of the complaint until fully paid. The private respondents' petition to the Supreme Court questioning the CA decision was denied. The records were transmitted to the CFI, and a writ of execution was issued by Judge Vamenta, ordering payment of the principal amounts plus interest at 6% per annum from September 3, 1962, up to July 28, 1974, and 12% per annum thereafter. Private respondents filed a motion for reconsideration. The case was re-raffled to Judge Ruiz, who modified the writ of execution, ordering that only compensatory damages should earn interest at 6% per annum. Petitioner's motion for reconsideration was denied. The Petition: Petitioner filed a petition for certiorari and mandamus, alleging that Judge Ruiz committed a grave abuse of discretion in modifying Judge Vamenta's order and in misinterpreting the dispositive portion of the CA decision regarding the payment of interest.
Issue(s)
Whether the dispositive portion of the Court of Appeals decision mandates the payment of interest on all amounts stated in the lower court's decision, including compensatory damages. Whether the legal rate of interest applicable to the case is 6% per annum or 12% per annum.
Ruling
The petition is granted. The Order of Judge Luis R. Ruiz dated March 22, 1983, is modified. All the amounts specified in the dispositive portion of the Court of First Instance decision, and the sum of P1,400.00 as compensatory damages, shall earn interest of six percent (6%) per annum from the time the complaint was filed until fully paid. The immediate execution of this Decision is ordered.
Ratio Decidendi
On the issue of which amounts should earn interest: The Court ruled in favor of the petitioner. A careful study of the dispositive portion of the Court of Appeals' decision revealed that the intention was to allow interest not only on compensatory damages but also on all the amounts specified in the lower court's decision. The wording "...are ordered to pay, jointly and severally, THE AMOUNTS STATED IN THE DISPOSITIVE PORTION OF THE DECISION, INCLUDING THE SUM OF P1,400.00 IN CONCEPT OF COMPENSATORY DAMAGES, WITH INTEREST AT THE LEGAL RATE FROM THE DATE OF THE COMPLAINT UNTIL FULLY PAID" explicitly orders the payment of legal interest on all specified amounts. The use of the word "including" and the placement of a comma before "with interest at the legal rate" indicate that the interest applies to both the original amounts and the additional compensatory damages. This interpretation is consistent with the principle that a comma can connect a subsequent phrase to preceding clauses, thereby extending its application. On the issue of the correct amount of interest: The Court agreed with Judge Ruiz that the legal rate of interest to be applied is 6% per annum as provided under Article 2209 of the Civil Code. Central Bank Circular No. 416, which fixes the legal rate of interest at 12% per annum, is not applicable here because it applies only to loans or forbearances of money, goods, or credits, and court judgments thereon. The present case is based on a breach of an employment contract, which does not fall within the scope of the circular. Therefore, the legal rate of interest for this type of monetary judgment remains at 6% per annum.
Main Doctrine
The dispositive portion of a Court of Appeals decision, when worded to include "the amounts stated in the dispositive portion of the Decision, including the sum of P1,400.00 in concept of compensatory damages, with interest at the legal rate from the date of the complaint until fully paid," mandates the payment of legal interest not only on the compensatory damages but also on all the amounts specified in the lower court's decision. The legal rate of interest applicable to a breach of employment contract case is 6% per annum, as provided by Article 2209 of the Civil Code, and not the 12% rate under Central Bank Circular No. 416, which applies only to loans or forbearances of money, goods, or credits.