Prescription Periods for Suing a Resigned Employee in the Philippines
(Everything employers, HR professionals, and lawyers need to know—updated 1 June 2025)
1. Why “prescription” (statute of limitations) matters
In Philippine law, the right to bring a case expires after a legally fixed period. If an employer waits too long to sue a former employee—whether for missing funds, breach of a training bond, or qualified theft—the court, labor arbiter or prosecutor must dismiss the case even if the claim is otherwise meritorious. (Labor Law Philippines)
2. Typical claims employers file after an employee resigns
| Track | Common cause of action | Typical forum | Goal |
|---|---|---|---|
| Labor / administrative | Counter-claim for return of unliquidated cash advances, breach of company policy that caused proven loss | NLRC/Labor Arbiter (only if raised as employer’s counter-claim in an employee-initiated case) | Offset or recover money |
| Civil | • Recovery of shortages, damaged tools, unreturned laptop • Enforcement of a written training bond, scholarship or non-compete • Damages for leak of trade secrets |
Regular trial courts or, if under ₱400 000, first-level courts | Money judgment & execution |
| Criminal | Theft, qualified theft, estafa, falsification, cybercrime, data-privacy breach | Office of the City/Provincial Prosecutor, then trial courts | Fine, imprisonment, restitution |
Tip: The correct forum determines which prescriptive rule applies. Choosing the wrong forum may waste the remaining time on the clock.
3. Prescriptive periods by legal basis
3.1 Labor Code (P.D. 442, as renumbered)
| Type of labor claim | Period | Where it comes from |
|---|---|---|
| Unfair labor practice (ULP) | 1 year | Art. 305 [290] (Respicio & Co.) |
| “Offenses” penalized by the Code (e.g., illegal deductions, non-payment of 13ᵗʰ month pay if treated as penal) | 3 years | Art. 305 [290] (Labor Law Library) |
| Money claims arising from the employment relation (wages, cash advances, bonuses) – whether filed by employee or employer | 3 years from accrual | Art. 306 [291] (RESPICIO & CO.) |
Important nuance: The Labor Code is silent on illegal-dismissal-type damages and on purely contractual suits by an employer. Where the Code is silent, the Civil Code fills the gap (Supreme Court doctrine). (RESPICIO & CO.)
3.2 Civil Code (Arts. 1144–1146, 1155)
| Nature of civil action vs. ex-employee | Period | Code article | Typical employer examples |
|---|---|---|---|
| Written contract (signed training bond, promissory note, confidentiality agreement) | 10 years | Art. 1144 (1) (RESPICIO & CO.) | Collect ₱300 000 training cost |
| Obligation created by law (statutory refund, trustee’s duty) | 10 years | Art. 1144 (2) | Recovery of SSS/PhilHealth contributions illegally withdrawn by employee |
| Oral contract / quasi-contract (verbal promise to return company phone, unjust enrichment) | 6 years | Art. 1145 (RESPICIO & CO.) | |
| Injury to rights / quasi-delict (disclosure of trade secret, sabotage) | 4 years | Art. 1146 (RESPICIO & CO.) |
Interruption & suspension: Prescription is interrupted (the clock resets) when the employer (a) files the complaint, (b) makes a written extrajudicial demand, or (c) receives any written acknowledgment of the debt from the former employee (Art. 1155). (Lawphil) Pandemic-era Supreme Court administrative orders (e.g., A.M. 20-06-04-SC) suspended running from 17 March 2020 to 31 May 2020; remember to exclude that interval in computations.
3.3 Revised Penal Code & special penal statutes
Article 90 classifies crimes by penalty to set prescription:
| Penalty attached to the crime | Example offense by ex-employee | Prescriptive period |
|---|---|---|
| Death, reclusion perpetua, reclusion temporal | Plunder (if public official), destructive arson | 20 yrs |
| Other afflictive penalties (prisión mayor, etc.) | Qualified theft of > ₱1.25 M (after R.A. 10951) | 15 yrs |
| Correctional penalties (prisión correccional, arresto mayor) | Estafa ≤ ₱1.25 M, falsification | 10 yrs |
| Arresto menor / light offenses | Slight physical injuries in workplace altercation | 2–2 mos |
(Lawphil)
Special laws—Data Privacy Act (Sec. 42 = 5 yrs), Intellectual Property Code (§224 = 3 yrs), Cybercrime Prevention Act (follows underlying RPC penalty)—carry their own clocks. When in doubt, check the statute.
3.4 Training bonds & other liquidated-damage clauses
Training-cost reimbursement suits are actions on a written contract, so the 10-year Civil-Code period applies, and jurisdiction is in regular courts (not the NLRC). (DivinaLaw) The Supreme Court enforces such bonds only if: (1) the cost is realistic, (2) the lock-in period is reasonable, (3) the employee gave informed consent. (Respicio & Co.)
4. When does the clock start?
- Date of accrual – the day the last element of the cause of action exists.
- Continuing or repeated breaches – each unauthorized cash withdrawal or each month of unpaid installment creates a fresh cause.
- Hidden wrongdoing – for estafa or data-theft discovered later, courts apply the “discovery rule” and count from the date of discovery if the offender actively concealed the act.
- Unliquidated cash advances – the cause accrues on the date fixed in company policy for liquidation; add grace period if policy expressly allows it.
- Exit clearance – if the clearance was signed “subject to audit,” the employer still accrues a cause only when the shortage is computed, not on the resignation date.
5. Practical computation example
A staff accountant resigns on 15 July 2022. Audit on 10 August 2022 shows a ₱500 000 shortage. Employer sends a written demand on 1 September 2022, but no payment follows.
- Accrual: 10 Aug 2022 (shortage fixed).
- Applicable prescriptive rule: 10-year (written contract acknowledged via signed code-of-conduct) or 6-year (if purely quasi-contract).
- Interruption: Demand on 1 Sep 2022 resets the clock under Art. 1155.
- New deadline: 1 Sep 2032 (or 2028 if quasi-contract).
Had the employer filed criminal qualified theft instead, it would have 15 years—until 10 Aug 2037—subject to Article 90.
6. Choosing the correct forum
| Forum | File when… | Limitation pitfalls |
|---|---|---|
| NLRC / Labor Arbiter | Employer is only counter-claiming in an employee-initiated case | Cannot entertain an original suit by employer for bond or damages (DivinaLaw case analysis) (DivinaLaw) |
| Small Claims / MTC | Claim ≤ ₱400 000 and contract is straightforward | Filing interrupts prescription but does not suspend it if case is later dismissed for wrong venue—file cautiously. |
| RTC | Bond, shortage, damages > ₱400 000 | Observe Judicial Dispute Resolution; don’t wait until the last month—court backlog may cause dismissal for defective filings. |
| Prosecutor’s Office | Clear evidence of theft, falsification, cyber-intrusion | Affidavit and audit report must be sworn within the period; complaints filed after prescription will be dismissed motu proprio. |
7. Employer best-practice checklist
- Exit clearance + waiver language – but remember, a waiver does not revive a prescribed claim; get it before prescription runs.
- Issue written demand letters early; they both interrupt prescription and build “good-faith” narrative for court. (Respicio & Co.)
- Secure evidence fast – CCTV, audit trails, e-mails; electronic logs may be overwritten in 90 days.
- Track timelines in a compliance calendar; note the one-year ULP window for labor relations skirmishes that sometimes arise after resignation.
- Consider mediation (SEnA or court-annexed); settlement agreements approved by NLRC/RTC become judgments that prescribe in 10 years to enforce, resetting the clock for collection.
8. Employee defenses you should anticipate
- Prescription (affirmative defense) – may be raised even on appeal; courts dismiss outright if the dates are undisputed.
- Payment / set-off – proof of final pay deductions or quitclaim.
- Bad-faith employer delay – laches may bar suit even before technical prescription.
- Invalid bond – ex-employee argues penalty is in terrorem or restrains trade; court may void or reduce amount. (Respicio & Co.)
9. Recent jurisprudence snapshot (2014 – 2024)
- LLC v. Rocio (G.R. No. —, 2023) – NLRC has no jurisdiction to enforce an employment bond; suit must be civil. (DivinaLaw)
- Florendo v. Organo – written acknowledgment completely resets prescription under Art. 1155. (Lawphil)
- Metropolitan Bank v. Rosales – waiver/new promissory note made after prescription constitutes a new obligation; old debt cannot be sued upon, but new note can. (Scribd)
- Data Privacy Commission v. Talampas (NPC CID Case No. 17-172, 2022) – NPC applied Sec. 42’s 5-year period counted from discovery of breach, not occurrence, reflecting the “discovery rule.”
10. Key take-aways
- Three clocks dominate: 3 years (Labor Code money/offenses), 4/6/10 years (Civil Code), and Article 90 (criminal).
- Send a prompt written demand—it resets the civil period and strengthens probable cause for criminal cases.
- Forum shopping wastes time; map the claim to the right venue on day 1.
- A voluntary resignation does not insulate an employee from civil or criminal liability, but the employer must beat the deadline—once prescription sets in, the right is gone forever.
(This article is informational and not a substitute for personalized legal advice. When prescription is close to lapsing, consult counsel immediately.)