Prescription Period for Illegal Dismissal: The 4-Year Rule in Philippine Labor Law

The Supreme Court’s 2012 ruling in Teekay Shipping Phils., Inc. v. Concha (G.R. No. 185463) settled a recurring question in Philippine labor law: how long does an employee have to file an illegal dismissal case? The answer—four years, not three—protects workers who might otherwise lose their claims by a single year. The ruling also clarifies how filing a case, even one dismissed without prejudice, can stop the clock on prescription.

The Facts of the Case

Ramier C. Concha was hired as an Able Seaman by Teekay Shipping in November 2000 under an eight-month contract. Barely a month into his deployment, a foreign particle entered his eye during deck work. He was diagnosed with iritis and repatriated to the Philippines on 6 December 2000.

On 28 May 2001, Concha filed a complaint for illegal dismissal with the NLRC. The Labor Arbiter dismissed it without prejudice on the same day. Over three years later, on 13 December 2004, Concha filed a second complaint seeking disability benefits, damages, and attorney’s fees.

The company moved to dismiss, arguing the claim had prescribed. It pointed to the Labor Code’s three-year prescriptive period for money claims and to the POEA Standard Employment Contract, which also provides a three-year period for claims arising from the contract. The Labor Arbiter agreed and dismissed the case. The NLRC reversed, and the Court of Appeals affirmed the NLRC. The company appealed to the Supreme Court.

The Issue

The sole question was whether Concha’s illegal dismissal claim had prescribed by the time he filed his second complaint on 13 December 2004.

The Ruling: Four Years, Not Three

The Supreme Court denied the company’s petition and affirmed the lower courts. The Court held that an illegal dismissal case is not a mere money claim governed by the Labor Code’s three-year period. Instead, it is an action “upon an injury to the rights of the plaintiff,” which under Article 1146 of the Civil Code must be brought within four years.

The Court explained that one’s employment is a “property right,” and wrongful interference with it is an actionable wrong. When an employee is arbitrarily deprived of a job or means of livelihood, the action to contest the dismissal is essentially one for injury to rights. The money claims in such a case are merely incidental to the main cause of action—the illegal dismissal itself.

This reasoning traces back to Callanta v. Carnation Philippines, Inc. (229 Phil. 279 [1986]), which the Court applied here. The POEA contract’s three-year period, the Court implied, cannot override this substantive rule for illegal dismissal claims.

The Interruption of Prescription

The Court also addressed how the first complaint affected the timing. Under Article 1155 of the Civil Code, prescription is interrupted when an action is filed in court. The Court applied this rule to labor cases, noting the absence of an equivalent provision in the Labor Code.

Concha filed his first complaint on 28 May 2001. That filing tolled the running of the prescriptive period. When the case was dismissed without prejudice, the NLRC Rules of Procedure allowed him to re-file. His second complaint on 13 December 2004 was therefore timely.

Practical Takeaways

• Illegal dismissal claims prescribe in four years under Article 1146 of the Civil Code, not three years under the Labor Code’s money claim provision.
• Filing a complaint interrupts prescription. Even if a case is dismissed without prejudice, the time spent before dismissal does not count against the employee.
• Re-filing is permitted. Under the NLRC Rules, a dismissed-without-prejudice case may be re-filed in the arbitration branch of origin.
• Seafarers are not exempt. The POEA contract’s three-year period does not apply to illegal dismissal claims, which remain governed by the four-year rule.
• Act promptly anyway. While the rule is four years, delays can complicate evidence gathering and witness availability. Do not treat the extended period as a reason to procrastinate.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.