Cases: Prescriptive Period for Illegal Dismissal

These are the related Labor Law Cases or Jurisprudence.

1. 4 years from accrual of cause of action

Arriola v. Pilipino Star Ngayon, Inc.
G.R. No. 175689, 13 August 2014
[BACKGROUND]
In July 1986, Pilipino Star Ngayon, Inc. employed [the employee] as correspondent assigned in Olongapo Cityand Zambales. [The employee] had held various positions in Pilipino Star Ngayon, Inc. before becoming a section editor and writer of its newspaper. He wrote “Tinig ng Pamilyang OFWs” until his column was removed from publication on November 15, 1999. Since then, [the employee] never returned for work.
In his reply, [the employee] denied that he abandoned his employment. He maintained that Pilipino Star Ngayon, Inc. ordered him to stop reporting for work and to claim his separation pay. To prove his allegation, [the employee] presented a statement of account allegedly faxed to him by Pilipino Star Ngayon, Inc.’s accounting head. This statement of account showed a computation of his separation pay as of November 30, 1999.
On November 15, 2002, [the employee] filed a complaint for illegal dismissal, non-payment of salaries/wages, moral and exemplary damages, actual damages, attorney’s fees, and full backwages with the National Labor Relations Commission. In his position paper, [the employee] alleged that Pilipino Star Ngayon, Inc. “arbitrarily dismissed” him on November 15, 1999. Arguing that he was a regular employee, [the employee] contended that his rights to security of tenure and due process were violated when Pilipino Star Ngayon, Inc. illegally dismissed him. Pilipino Star Ngayon, Inc. and [M. Belmonte] denied [the employee’s] allegations. In their position paper, they alleged that around the third week of November 1999, [the employee] suddenly absented himself from work and never returned despite Belmonte’s phone calls and beeper messages. After a few months, they learned that [the employee] transferred to a rival newspaper publisher, Imbestigador, to write “Boses ng Pamilyang OFWs.” Labor Arbiter [F. Jambaro-Franco] decided the case. At the outset, she ruled that laches had set in, emphasizing that Arriola took three years and one day to file his complaint. According to the Labor Arbiter, this was “contrary to the immediate and natural reaction of an aggrieved person” If [the employee] were indeed aggrieved, he would not have waited three years and one day to sue Pilipino Star Ngayon, Inc.
The Labor Arbiter found that [the employee] abandoned his employment with Pilipino Star Ngayon, Inc. to write for a rival newspaper publisher. She also noted Arriola’s admission that he did not contemplate the filing of an illegal dismissal complaint but nevertheless filed one upon his lawyer’s advice.
On [the employee]’s money claims, the Labor Arbiter ruled that they have already prescribed. She cited Article 291 of the Labor Code, which requires that all money claims arising from employer-employee relations be filed three years from the time the cause of action accrued. Since [the employee] filed his complaint on November 15, 2002, which was three years and one day from his alleged illegal dismissal on November 15, 1999,17 the Labor Arbiter ruled that his money claims were already barred.
[DECISION/RESOLUTION – BY THE SUPREME COURT]
The Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals all ruled that [the employee]’s claims for unpaid salaries, backwages, damages, and attorney’s fees have prescribed. They cited Article 291 of the Labor Code, which requires that money claims arising from employer-employee relations be filed within three years from the time the cause of action accrued:
Art. 291. MONEY CLAIMS. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.
Article 291 covers claims for overtime pay, holiday pay, service incentive leave pay, bonuses, salary differentials, and illegal deductions by an employer. It also covers money claims arising from seafarer contracts.
The provision, however, does not cover “money claims” consequent to an illegal dismissal such as backwages. It also does not cover claims for damages due to illegal dismissal. These claims are governed by Article 1146 of the Civil Code of the Philippines, which provides:
Art. 1146. The following actions must be instituted within four years:
(1) Upon injury to the rights of the plaintiff[.]
In Callanta v. Carnation Philippines, Inc., [V. Callanta] worked as a salesperson for Carnation Philippines, Inc. beginning in January 1974. On June 1, 1979, Carnation filed with the Regional Office No. X of the then Ministry of Labor and Employment an application for issuance of clearance to terminate Callanta. The application was granted, and Callanta’s employment was declared terminated effective June 1, 1979.
On July 5, 1982, Callanta filed a complaint for illegal dismissal with claims for backwages and damages. Inits defense, Carnation argued that Callanta’s complaint was barred by prescription.
Carnation stressed that Callanta filed his complaint three years, one month, and five days after his termination. Since illegal dismissal is a violation of the Labor Code, Carnation argued that Callanta’s complaint was barred by Article 290 of the Labor Code. Under Article 290, offenses penalized under the Code shall prescribe in three years.
As to Callanta’s claims for backwages and damages, Carnation contended that these claims arose from employer-employee relations. Since Callanta filed his complaint beyond the three-year period under Article 291 of the Labor Code, his claims for backwages and damages were forever barred.
This court ruled that Callanta’s complaint for illegal dismissal had not yet prescribed. Although illegal dismissal is a violation of the Labor Code, it is not the “offense” contemplated in Article 290. Article 290 refers to illegal acts penalized under the Labor Code, including committing any of the prohibited activities during strikes or lockouts, unfair labor practices, and illegal recruitment activities. The three-year prescriptive period under Article 290, therefore, does not apply to complaints for illegal dismissal.
Instead, “by way of supplement,” Article 1146 of the Civil Code of the Philippines governs complaints for illegal dismissal. Under Article 1146, an action based upon an injury to the rights of a plaintiff must be filed within four years. This court explained:
. . . when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one’s dismissal from employment constitutes, in essence, an action predicated “upon an injury to the rights of the plaintiff,” as contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years.
This four-year prescriptive period applies to claims for backwages, not the three-year prescriptive period under Article 291 of the Labor Code. A claim for backwages, according to this court, may be a money claim “by reason of its practical effect.” Legally, however, an award of backwages “is merely one of the reliefs which an illegally dismissed employee prays the labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act committed by the employer.” Though it results “in the enrichment of the individual [illegally dismissed], the award of backwages is not in redress of a private right, but, rather, is in the nature of a command upon the employer to make public reparation for his violation of the Labor Code.”
Actions for damages due to illegal dismissal are likewise actions “upon an injury to the rights of the plaintiff.” Article 1146 of the Civil Code of the Philippines, therefore, governs these actions.
Callanta filed his complaint for illegal dismissal with claims for backwages and damages three years, one month, and five days from his termination. Thus, this court ruled that Callanta filed his claims for backwages and damages well within the four-year prescriptive period.
This court applied the Callanta ruling in Texon Manufacturing v. Millena. In Texon, Marilyn and Grace Millena commenced work for Texon Manufacturing in 1990 until Texon terminated their employment. Texon first dismissed Grace on May 31, 1994 then dismissed Marilyn on September 8, 1995.
On August 21, 1995, Grace filed a complaint for money claims representing underpayment and non-payment of wages, overtime pay, and holiday pay with the National Labor Relations Commission. Marilyn filed her own complaint for illegal dismissal with prayer for payment of full backwages and benefits on September 11, 1995.
Texon filed a motion to dismiss both complaints on the ground of prescription.68 It argued that Grace and Marilyn’s causes of action accrued from the time they began working in Texon. Their complaints, therefore, were filed beyond the three-year prescriptive period under Article 291 of the Labor Code.
This court ruled that both complaints had not yet prescribed. With respect to Grace’s complaint for overtime pay and holiday pay, this court ruled that the three-year prescriptive period under Article 291 of the Labor Code applied. Since Grace filed her claim one year, one month, and 21 days from her dismissal, her claims were filed within the three-year prescriptive period. With respect to Marilyn’s complaint for illegal dismissal with claims for backwages, this court while citing Callanta as legal basis ruled that the four-year prescriptive period under Article 1146 of the Civil Code of the Philippines applied. Since Marilyn filed her complaint three days from her dismissal, she filed her complaint well within the four-year prescriptive period. Applying these principles in this case, we agree that [the employee’s] claims for unpaid salaries have prescribed. [The employee] filed his complaint three years and one day from the time he was allegedly dismissed and deprived of his salaries. Since a claim for unpaid salaries arises from employer-employee relations, Article 291 of the Labor Code applies. [The employee’s] claim for unpaid salaries was filed beyond the three-year prescriptive period.
However, we find that [the employee]’s claims for backwages, damages, and attorney’s fees arising from his claim of illegal dismissal have not yet prescribed when he filed his complaint with the Regional Arbitration Branch for the National Capital Region of the National Labor Relations Commission. As discussed, the prescriptive period for filing an illegal dismissal complaint is four years from the time the cause of action accrued. Since an award of backwages is merely consequent to a declaration of illegal dismissal, a claim for backwages likewise prescribes in four years.
The four-year prescriptive period under Article 1146 also applies to actions for damages due to illegal dismissal since such actions are based on an injury to the rights of the person dismissed. In this case, [the employee] filed his complaint three years and one day from his alleged illegal dismissal. He, therefore, filed his claims for backwages, actual, moral and exemplary damages, and attorney’s fees well within the four-year prescriptive period.
All told, the Court of Appeals erred in finding that [the employee]’s claims for damages have already prescribed when he filed his illegal dismissal complaint.

2. Prescriptive period of illegal dismissal over prescriptive period of money claim

PAN-FIL, Inc. v. Agujar, En Banc
(PAN-FIL, Inc. v. Agujar, En Banc, G.R. No. 81948, 09 November 1988)
[BACKGROUND]
This is a complaint for payment of salaries for the unexpired portion in two employment contracts and separation pay corresponding to [the employee’S] ten (10) years of service with [the employer]. [The employee] was hired as Able Seaman by [the employer], Pan-Fil Company, Inc., a licensed shipping agency from August 14, 1973 to June 21, 1983.
Complainant claims that he has worked as Able Seaman for ten years on board the vessels of Sanko Kisen (Cayman Ltd.) through its local manning agency Pan-Fil Co., Inc. Because he has worked for said period of (ten years) he wants to be paid separation pay as the possibility of his being able to re-board any vessel of Sanko Kisen through Pan-Fil Co., Inc. is already remote. Further, complainant is demanding that he be paid for the unexpired portion of his contract entered into in November 1981 because he was not able to finish it as he was made to disembark on April 17, 1982. Furthermore, he wants to be paid for the remainder of his contract entered into on November 21, 1982, as he was again made to disembark on June 23, 1983 allegedly due to the change from Panamanian to Japanese registry, leaving an unexpired portion of two months after (sic) this contract.
[The employer], on the other hand, put up the defense of prescription insofar as the cause of action under the contract where (sic) he boarded MT “VIRGINIA LILY” is concerned, because inasmuch as he was allegedly made to disembark on April 27, 1982 more than three years had already elapsed since the alleged cause of action occurred.
[DECISION/RESOLUTION – BY THE SUPREME COURT]
The Court agrees with the Solicitor General. In Callanta vs. Carnation Philippines, Inc., the Court ruled that actions based on injury to rights prescribe in four years under the aforequoted provision of the Civil Code rather than three years as prescribed by the Labor Code. We quote:
The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this Court had occasion to hold that an action for damages involving a plaintiff separated from his employment for alleged unjustifiable causes is one for “injury to the rights of the plaintiff, and must be brought within four (4) years.”
In Santos vs. Court of Appeals, … this Court, thru then Chief Justice Enrique M. Fernando, sustained the stand of the Solicitor General that the period of prescription mentioned under Article 281, now Article 292, of the Labor Code, refers to and “is limited to money claims, all other cases of injury to rights of a workingman being governed by the Civil Code.” Accordingly, this Court ruled that petitioner Marciana Santos, who sought reinstatement, had four (4) years within which to file her complaint for the injury to her rights as provided under Article 1146 of the Civil Code.
In the instant case, the claim was pursued on August 5, 1985, or less than four years from April 27, 1982 when the private [the employer] was off-loaded. Hence, it was filed on time.
x x x
As we said in Carnation, Article 292 of the Labor Code applies to purely money claims as a consequence of employer-employee controversies. Where the dispute involves, however, questions arising primarily from injury to one’s rights (under contract or substantive provisions of the Labor Code) other than sheer monetary demands, and in which such monetary claims are only coincidental to the main complaint, the pertinent provisions of the Civil Code, rather than the Labor Code, prevail.

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