Cases: Prescriptive period – monetary claims, illegal dismissal

What is a Labor Law Case or Labor Jurisprudence? A Labor Law Case or Labor Jurisprudence is a decision/resolution on a labor dispute by the Supreme Court of the Philippines. Per Article 8 of the Civil Code, judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines. 

Table of Contents

These are the related Labor Law Cases or Jurisprudence.

1. Prescription of monetary claims

a. 3 years from accrual of cause of action

Philippine Long Distance Telephone Company (PLDT) v. Pingol
G.R. No. 182622, 08 September 2010
[BACKGROUND]
In 1979, [the employee] [R. [the employee]] was hired by petitioner PLDT as a maintenance technician.
On April 13, 1999, while still under the employ of PLDT, [the employee] was admitted at The Medical City, Mandaluyong City, for “paranoid personality disorder” due to financial and marital problems. On May 14, 1999, he was discharged from the hospital. Thereafter, he reported for work but frequently absented himself due to his poor mental condition.
From September 16, 1999 to December 31, 1999, [the employee] was absent from work without official leave. According to PLDT, notices were sent to him with a stern warning that he would be dismissed from employment if he continued to be absent without official leave “pursuant to PLDT Systems Practice A-007 which provides that ‘Absence without authorized leaves for seven (7) consecutive days is subject to termination from the service.’” Despite the warning, he failed to show up for work. On January 1, 2000, PLDT terminated his services on the grounds of unauthorized absences and abandonment of office.
On March 29, 2004, four years later, [the employee] filed a Complaint for Constructive Dismissal and Monetary Claims against PLDT. In his complaint, he alleged that he was hastily dismissed from his employment on January 1, 2000. In response, PLDT filed a motion to dismiss claiming, among others, that [the employee’s] cause of action had already prescribed as the complaint was filed four (4) years and three (3) months after his dismissal.
[The employee], however, countered that in computing the prescriptive period, the years 2001 to 2003 must not be taken into account. He explained that from 2001 to 2003, he was inquiring from PLDT about the financial benefits due him as an employee who was no longer allowed to do his work, but he merely got empty promises. It could not, therefore, result in abandonment of his claim.
On July 30, 2004, the Labor Arbiter (LA) issued an order granting petitioner’s Motion to Dismiss on the ground of prescription…
[DECISION/RESOLUTION – BY THE SUPREME COURT]
With regard to the prescriptive period for money claims, Article 291 of the Labor Code states:
Article 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 barred forever.
The pivotal question in resolving the issues is the date when the cause of action of [the employee] accrued.
It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.
[The employee] asserts that his complaint was filed within the prescriptive period of four (4) years. He claims that his cause of action did not accrue on January 1, 2000 because he was not categorically and formally dismissed or his monetary claims categorically denied by petitioner PLDT on said date. Further, [the employee] posits that the continuous follow-up of his claim with petitioner PLDT from 2001 to 2003 should be considered in the reckoning of the prescriptive period.
Petitioner PLDT, on the other hand, contends that [the employee] was dismissed from the service on January 1, 2000 and such fact was even alleged in the complaint he filed before the LA. He never contradicted his previous admission that he was dismissed on January 1, 2000. Such admitted fact does not require proof.
The Court agrees with petitioner PLDT. Judicial admissions made by parties in the pleadings, or in the course of the trial or other proceedings in the same case are conclusive and so does not require further evidence to prove them. These admissions cannot be contradicted unless previously shown to have been made through palpable mistake or that no such admission was made. In Pepsi Cola Bottling Company v. Guanzon, it was written:
xxx that the dismissal of the private [the employee]’s complaint was still proper since it is apparent from its face that the action has prescribed. Private [the employee] himself alleged in the complaint that he was unlawfully dismissed in 1979 while the complaint was filed only on November 14, 1984. Xxx
In the case at bench, [the employee] himself alleged the date January 1, 2000 as the date of his dismissal in his complaint filed on March 29, 2004, exactly four (4) years and three (3) months later. [The employee] never denied making such admission or raised palpable mistake as the reason therefor. Thus, the petitioner correctly relied on such allegation in the complaint to move for the dismissal of the case on the ground of prescription.
The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code states:
Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought…
The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1, 2000 was the date that [the employee] was not allowed to perform his usual and regular job as a maintenance technician. [The employee] cited the same date of dismissal in his complaint before the LA. As, thus, correctly ruled by the LA, the complaint filed had already prescribed.
[The employee] claims that between 2001 and 2003, he made follow-ups with PLDT management regarding his benefits. This, to his mind, tolled the running of the prescriptive period.
The rule in this regard is covered by Article 1155 of the Civil Code. Its applicability in labor cases was upheld in the case of International Broadcasting Corporation v. Panganiban where it was written:
Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code provision for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied, to wit:
ART. 1155. The prescription of actions is interrupted when they are filed before the Court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.
In this case, [the employee] never made any written extrajudicial demand. Neither did petitioner make any written acknowledgment of its alleged obligation. Thus, the claimed “follow-ups” could not have validly tolled the running of the prescriptive period. It is worthy to note that [the employee] never presented any proof to substantiate his allegation of follow-ups.
Unfortunately, [the employee] has no one but himself to blame for his own predicament. By his own allegations in his complaint, he has barred his remedy and extinguished his right of action. Although the Constitution is committed to the policy of social justice and the protection of the working class, it does not necessary follow that every labor dispute will be automatically decided in favor of labor. The management also has its own rights. Out of Its concern for the less privileged in life, this Court, has more often than not inclined, to uphold the cause of the worker in his conflict with the employer. Such leaning, however, does not blind the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine.
Rivera v. United Laboratories, Inc.
G.R. No. 155639, 22 April 2009
[BACKGROUND]
[The employee] commenced employment with respondent United Laboratories, Inc. (UNILAB) on April 7, 1958 as senior manufacturing pharmacist. She later became Director of UNILAB’s Manufacturing Division.
In 1959, UNILAB adopted a comprehensive retirement plan (the plan or retirement plan) supported by a retirement fund, consisting of Trust Fund A where it would put in its contributions for the account of the member-employee (member) and Trust Fund B consisting of the contributions of the members themselves. The parties do not dispute that under the plan, a member is compulsorily retired upon reaching the normal retirement date which is the date when the member has reached age 60 or has completed 30 years of service, whichever comes first.
In 1988, [the employee] completed 30 years of service and UNILAB retired her pursuant to the terms of the plan effective December 31, 1988. Based on her monthly salary of ₱28,000.00 at that time, and at one month’s terminal basic salary for every year of service, [the employee’s] retirement benefits amounted to ₱860,473.12 from Trust Fund A and ₱186,858.21 from Trust Fund B, for a total of ₱1,047,331.33.
[The employee’s] accrued retirement benefits under Trust Fund A and Trust Fund B were withdrawn from the retirement fund and deposited in Trust Fund C, a special account from which she could make withdrawals as she pleased. A manual computation prepared by the company showed that the full amount of [the employee’s] retirement pay was transferred to Trust Fund C.
At [the employee’s] request, UNILAB allowed her to continue working for the company; she was even promoted to the position of Assistant Vice-President on January 1, 1989, with a basic monthly salary of ₱50,034.00, and a fixed monthly allowance of ₱8,900.00. She rendered service to the company in this capacity until the end of 1992, at which time, [the employee] retired from employment with the company (as distinguished from retirement from the plan), as UNILAB put it and as evidenced by a personnel action notice dated February 19, 1993.
From 1993 to 1994, [the employee] served as a personal consultant under contract with the Active Research and Management Corporation (ARMCO) in 1993 and with Fil-Asia Business Consultants (Fil-Asia) in 1994. These are UNILAB’s sister companies which assigned [the employee] to render service involving UNILAB. Submitted in evidence were [the employee’s] contracts with the two corporations.
On December 16, 1992, the company amended its retirement plan, providing, among others, for an increase in retirement benefits from one (1) month to one-and-a-half (1.5) months of terminal basic salary for every year of service. The amendment also provides that “[T]he effective date of normal or mandatory retirement from the Plan is 30 days after an employee reaches his/her 60th birthday. The effective date applies to all rank and file as well as KPs.”
In a letter dated January 7, 1995 to UNILAB,12 [the employee] asked that her retirement benefits be increased in accordance with the amended retirement program based on her December 31, 1992 terminal basic salary, multiplied by her thirty four (34) years of service with the company. UNILAB did not reply to this letter and [the employee] made two follow-up letters, one dated December 18, 199513 and the other, February 12, 1996,14 reiterating her demand for additional retirement benefits.
UNILAB denied [the employee’s] request in a letter dated February 26, 1996. The company explained that since the upgrade of the retirement benefit formula occurred in December 1992, the upgraded formula does not apply to her; what applied to her case is the formula that governed in 1988, the year she compulsory retired from the plan.
[The employee] sought legal assistance and in a letter dated July 24, 1996, lawyer [K.N.Tierra] demanded a recomputation of [the employee’s] retirement pay under the plan and under the retirement law. UNILAB again rejected the demand in its letter dated August 5, 1996.
On August 9, 1996, [the employee] sought relief from the NLRC in an action against UNILAB for recovery of unpaid retirement pay differential. In defense, UNILAB argued that the complaint was filed out of time as it was filed only on August 9, 1996. UNILAB prayed for the dismissal of the complaint on the ground of prescription. Invoking Article 291 of the Labor Code, it maintained that [the employee’s] cause of action accrued when the company’s retirement plan was amended considering that the action was triggered by the additional benefit provided by the amendment to the retirement plan on December 16, 1992.
[The employee] disagreed with UNILAB’s position, arguing that the three-year period within which to file her complaint should be counted, not from December 16, 1992, but from February 26, 1996 when the company had “categorically” denied her letter demanding payment of the unpaid balance of her retirement benefits.
[DECISION/RESOLUTION – BY THE SUPREME COURT]
The Prescription Issue.
We agree with the CA’s conclusion that [the employee’s] cause of action had not prescribed when she filed her claim with the Labor Arbiter on August 9, 1996. As UNILAB contended, [the employee’s] claim for retirement pay differential only accrued on January 15, 1993 when she received her retirement pay check. It could not have accrued on December 31, 1988 as what was clearly due her then was her retirement pay up to that date, a matter that is not disputed. On the other hand, the first opportunity for her to claim her retirement pay differential corresponding to her claimed continuous work up to December 31, 1992 came only on January 15, 1993 when she received her final pay that did not include her service after December 31, 1988. However, the running of the prescriptive period was effectively interrupted by her first letter to the respondent on January 7, 1995 when she demanded additional retirement benefits under the 1992 amended retirement plan.
It should be noted in this regard that Articles 1139 to 1155 of the Civil Code provide the general law on prescription of actions. Under Article 1139, actions prescribe by the mere lapse of time prescribed by law. That law may either be the Civil Code or special laws as specifically mandated by Article 1148. In labor cases, the special law on prescription is Article 291 of the Labor Code which provides:
Article 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 barred forever.
The Labor Code has no specific provision on when a monetary claim accrues. Thus, again the general law on prescription applies. Article 1150 of the Civil Code provides that –
Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought.
The day the action may be brought is the day a claim started as a legal possibility. For the petitioner in the present case, this date came when she learned that she was being paid on the basis of her December 31, 1988 retirement computations for the retirement that she claimed to have occurred on December 31, 1992.
How prescription operates is another matter that the general law, rather than the Labor Code, governs since the Labor Code is silent on the matter. Under Article 1155 –
The prescription of actions is interrupted when they are filed with the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.
In the present case, the earliest incident covered by Article 1155 is the extrajudicial demand which came on January 7, 1995. As the CA correctly computed, the period for prescription started to run on January 15, 1993, and was interrupted on January 7, 1995. UNILAB only answered the petitioner’s January 7, 1995 letter on February 26, 1996, with a categorical denial of the petitioner’s demand; the running of the prescription period re-started on the date of this denial, but again stopped again on August 9, 1996, when the complaint before the NLRC was filed. Adding all the running periods yields a total of less than three (3) years; hence, the petitioner seasonably filed her monetary claim when she filed her complaint before the NLRC.
In ruling on the prescription issue, the CA cited De Guzman v. Court of Appeals where we ruled that based on Article 1155, the three-year prescriptive period can be interrupted by a claim filed at the proper judicial or quasi-judicial forum, an extra-judicial demand on the employer or the employer’s acknowledgment of its debt or obligation. De Guzman, in turn, cited the case of Manuel L. Quezon University Association v. Manuel L. Quezon Educational Institution (MLQU) which UNILAB argues to be a mere obiter dictum. Whether or not the MLQU decision controls is a non-issue as the above discussion of the applicable laws shows and as confirmed by the CA in De Guzman:
Thus, contrary to respondent’s contention that such a pronouncement in the MLQU case was merely an obiter dictum, this judicial declaration that the prescriptive period for labor-related money claims can be interrupted by an extra-judicial demand on the employer is indeed a controlling principle as confirmed in the aforesaid De Guzman case.
Therefore, when petitioner made that extra-judicial demand upon respondent via her January 7, 1995 letter. The running of the filing period was stopped until February 26, 1996 when answered petitioner’s demand such that she was left with one year and eight days more of the three-year period of up to about March 5, 1997 within which to file her claim.
When petitioner then brought her case to the NLRC on August 9, 1996 it was well within the prescriptive period.
De La Salle Araneta University v. Bernardo
G.R. No. 190809, 13 February 2017
[BACKGROUND]
On February 26, 2004, [the part-time employee] filed a complaint against DLS-AU and its owner/manager, Dr. Oscar Bautista (Dr. Bautista), for the payment of retirement benefits. [the employee] alleged that he started working as a part-time professional lecturer at DLS-AU (formerly known as the Araneta University Foundation) on June 1, 1974 for an hourly rate of ₱20.00. [The employee] taught for two semesters and the summer for the school year 1974-1975. [The employee] then took a leave of absence from June 1, 197 5 to October 31, 1977 when he was assigned by the Philippine Government to work in Papua New Guinea. When [the employee] came back in 1977, he resumed teaching at DLS-AU until October 12, 2003, the end of the first semester for school year 2003-2004. [The employee’s] s teaching contract was renewed at the start of every semester and summer. However, on November 8, 2003, DLS-AU informed [the employee] through a telephone call that he could not teach at the school anymore as the school was implementing the retirement age limit for its faculty members. As he was already 75 years old, [the employee] had no choice but to retire. At the time of his retirement, [the employee] was being paid ₱246.50 per hour.
x x x
On December 13, 2004, the Labor Arbiter rendered its Decision dismissing [the employee’s] complaint on the ground of prescription, thus:
[T]he age of sixty-five (65) is declared as the compulsory retirement age under Article 287 of the Labor Code, as amended. When the compulsory retirement age is reached by an employee or official, he is thereby effectively separated from the service (UST Faculty Union v. National Labor Relations Commission, University of Santo Tomas, G.R. No. 89885, August 6, 1990). As mentioned earlier, [[the employee]] is already seventy-five (75) years old, and is way past the compulsory retirement age. If he were indeed entitled to receive his retirement pay/benefits, he should have claimed the same ten (10) years ago upon reaching the age of sixty-five (65).
[DECISION/RESOLUTION – BY THE SUPREME COURT]
[The employee]’s employment was extended beyond the compulsory retirement age and the cause of action for his retirement benefits accrued only upon the termination of his extended employment with DLS-AU.
Article 306 [291] of the Labor Code mandates:
Art. 306 [291]. Money claims. – All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three years from the time the cause of action accrued; otherwise they shall be forever barred.
DLS-AU invokes UST Faculty Union v. National Labor Relations Commission, wherein it was held that when an employee or official has reached the compulsory retirement age, he is thereby effectively separated from the service. And so, DLS-AU maintains that [the employee’s] cause of action for his retirement benefits, which is patently a money claim, accrued when he reached the compulsory retirement age of 65 years old, and had already prescribed when [the employee] filed his complaint only 10 years later, when he was already 75 years old.
We are not persuaded.
The case of UST Faculty Union is not in point as the issue involved therein was the right of a union to intervene in the extension of the service of a retired employee. [Prof. Marilio] already reached the compulsory retirement age of 65 years old, but was granted by the University of Sto. Tomas (UST) an extension of two years tenure. We ruled in said case that UST no longer needed to consult the union before refusing to further extend Prof. Marilio’s tenure.
A cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.
[The employee’s] right to retirement benefits and the obligation of DLS-AU to pay such benefits are already established under Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641. However, there was a violation of [the employee’s] right only after DLS-AU informed him on November 8, 2003 that the university no longer intended to offer him another contract of employment, and already accepting his separation from service, [the employee] sought his retirement benefits, but was denied by DLSAU. Therefore, the cause of action for [the employee]’s retirement benefits only accrued after the refusal of DLS-AU to pay him the same, clearly expressed in Dr. Bautista’s letter dated February 12, 2004. Hence, [the employee’s] complaint, filed with the NLRC on February 26, 2004, was filed within the three-year prescriptive period provided under Article 291 of the Labor Code.
Even granting arguendo that [the employee’s] cause of action already accrued when he reached 65 years old, we cannot simply overlook the fact that DLS-AU had repeatedly extended [the employee’s] employment even when he already reached 65 years old. DLS-AU still knowingly offered [the employee], and [the employee] willingly accepted, contracts of employment to teach for semesters and summers in the succeeding 10 years. Since DLS-AU was still continuously engaging his services even beyond his retirement age, [the employee] deemed himself still employed and deferred his claim for retirement benefits, under the impression that he could avail himself of the same upon the actual termination of his employment…
x x x
DLS-AU, in this case, not only kept its silence that [the employee] had already reached the compulsory retirement age of 65 years old, but even continuously offered him contracts of employment for the next 10 years. It should not be allowed to escape its obligation to pay [the employee’s] retirement benefits by putting entirely the blame for the deferred claim on [the employee’s] shoulders.

b. Interruption

Like other causes of action, the prescriptive period for money claims under Article 291 of the Labor Code is subject to interruption. And, in the absence of an equivalent Labor Code provision for determining whether Article 291’s three-year prescriptive period may be interrupted, Article 1155 of the Civil Code may be applied. (NUWHRAIN-APL-IUF v. Philippine Plaza Holdings, Inc., G.R. No. 177524, 23 July 2014)

The period of prescription of money claims under Article 291 is interrupted by:
1) The filing of an action;
2) A written extrajudicial demand by the creditor; and
3) A written acknowledgment of the debt by the debtor. (Ibid.)

c. Inapplicable if money claim is only incidental to an illegal dismissal case

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.

2. Prescription of illegal dismissal

a. 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.

Table of Contents

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