Prescriptive Period for Money Claims in Illegal Dismissal
(Philippine Context)
1. Why Prescription Matters
The “prescriptive period” is the time-bar within which a worker must file a case or risk losing the right to sue. In illegal-dismissal situations, an employee usually asks for two broad kinds of relief:
- Statutory labor remedies – reinstatement or separation pay in lieu of reinstatement, and full back-wages.
- Pure money claims – unpaid salaries, overtime, service incentive leave pay, holiday pay, bonuses, commissions, damages, attorney’s fees, etc.
Although these two sets of relief are pleaded together before the Labor Arbiter, they are governed by different prescriptive rules. Understanding the distinction keeps an otherwise meritorious case from being dismissed on a mere technicality.
2. Governing Texts at a Glance
| Source | Key Provision | Effect on Prescription |
|---|---|---|
| Labor Code, Art. 294 [formerly 279] | Reinstatement and back-wages as consequences of illegal dismissal | No explicit period; jurisprudence fills the gap |
| Labor Code, Art. 306 [formerly 291] | “All money claims… shall be filed within three (3) years…” | Covers independent monetary demands |
| Civil Code, Art. 1146(1) | Actions “upon an injury to the rights of the plaintiff” prescribe in four (4) years | Applied by the Supreme Court to illegal-dismissal actions |
| Rule I, NLRC Rules of Procedure | Labor Arbiter has original jurisdiction over illegal-dismissal cases & money claims | Same forum, but distinct prescriptive clocks |
(Because the user asked for an exhaustive narrative, the table is included for quick cross-reference.)
3. Baseline Rules
Illegal-Dismissal Action Itself – 4 Years
The Supreme Court treats dismissal without just or authorized cause as an “injury to rights.” Hence, four (4) years from the date of actual dismissal is the governing period.- Land-O-Lakes v. Pinzon, G.R. 180788, Jan 20 2014
- Arriola v. Pilipino Star Ngayon, G.R. 175689, Aug 13 2014
Pure Money Claims – 3 Years
Article 306 is a special Labor Code limitation covering all money claims “arising from employer-employee relations” (e.g., wage differentials, 13th-month pay, allowances). It is strictly three (3) years from accrual.- Auto Bus Transport v. Bautista, G.R. 156367, May 16 2005
- School of the Holy Spirit v. Taguiam, G.R. 165565, Nov 23 2005
Back-wages & Separation Pay – 4 Years
Although these are amounts of money, the Court repeatedly clarifies they are incidental to the illegal-dismissal cause of action; therefore they follow the same four-year rule.- University of Pangasinan v. Fernandez, G.R. 160253-54, Oct 7 2015
- Enchanted Kingdom v. Verzo, G.R. 209559, Aug 26 2015
4. When Does the Clock Start?
| Claim type | Moment the cause of action “accrues” |
|---|---|
| Illegal dismissal / back-wages / separation pay | Date the employee receives unequivocal notice of termination |
| Unpaid wages, overtime, 13th-month, etc. | End of each pay period when the amount should have been paid (re-accrues every payday) |
5. Interruptions & Tolls
- Filing with the NLRC or DOLE – Judicial or administrative actions suspend (toll) prescription.
- Extrajudicial Demand or Written Acknowledgment – A written demand or the employer’s written promise to pay also interrupts the clock (Civil Code, Art. 1155).
- Class or Collective Actions – A union-filed grievance or notice of strike does not by itself toll prescription unless it squarely raises the identical monetary claim (see Gabriel v. Petron, G.R. 219506, Apr 29 2019).
6. Special Situations
| Scenario | Prescriptive Nuance |
|---|---|
| OFWs (Migrant Workers Act, as amended by R.A. 10022) | Money claims must be filed within 3 years from repatriation or contract completion, whichever comes first. |
| Company retirement plans | Contractual claims that arise after severance follow the Civil Code’s 10-year rule on written contracts (Art. 1144), not the 3-year labor limitation. |
| Criminal aspect (e.g., illegal recruitment) | Separate prescriptive clocks (e.g., 5 or 20 years under the Revised Penal Code, depending on penalty). |
| Government employees covered by Civil Service Law | Different forums, but Supreme Court applies analogous 4-year rule for illegal termination (e.g., Civil Service Commission v. Paderanga, G.R. 178345, Apr 16 2013). |
7. Strategy & Practice Tips
- File Early—Don’t Parse the Distinction Later. A single complaint can preserve all reliefs; just file within three (3) years if uncertain.
- Spell Out the Monetary Items. Jurisprudence treats “incidental” money relief broadly (e.g., 13th-month differentials awarded as a consequence of dismissal), but it is safer to allege every item explicitly.
- Reinstatement Demand Suspends Prescription. Once a complaint is on record, running time stops for all embedded money reliefs—even if the case later goes up on appeal.
- Watch Settlement & Quitclaims. A valid compromise resets nothing; once money is fully paid and a quitclaim signed with counsel’s assistance, prescription no longer matters.
- Mind the OFW Cut-Off. Migrant-worker disputes are frequently lost because seafarers repatriate, wait out a medical-benefits process, and miss the rigid 3-year cut-off.
8. Frequently Cited Cases (Quick List)
- Pepsi-Cola Far East Trade Dev. Co. v. NLRC, G.R. 100098, June 23 1992
- St. Michael’s Inst. v. Santos, G.R. 145280, Dec 4 2001
- Jaka Food Processing Corp. v. Pacot, G.R. 151378, Aug 5 2005
- Milan v. NLRC, G.R. 202961, Jan 13 2016
(These cases are worth reading for illustrations on how the Court distinguishes three-year and four-year claims.)
9. Key Take-Away
The rule of thumb:
- Illegal-dismissal action (and its natural monetary consequences) → 4 years
- Standalone money claims → 3 years
Filing any labor complaint within three years of dismissal practically insulates the worker from prescription pitfalls. From there, competent advocacy can parse which items are four-year or three-year matters.
DISCLAIMER: This article is for informational purposes only and is not a substitute for individualized legal advice. Labor-law issues are fact-sensitive; always consult a qualified Philippine lawyer or accredited labor-relations practitioner before making decisions.