Dear PAO,

I have a question regarding the money claims of my brother against the company where he worked for almost 20 years. He resigned involuntarily because the president and CEO told him that the company had suffered losses due to a lack of market demand and significant debts caused by a market downturn. At the time of his resignation, he had unpaid salaries and an unpaid 13th-month pay. He was also not paid his separation pay. After his resignation in November 2019, he immediately demanded the money he was owed, but the company informed him that they would first settle the claims of rank-and-file employees, and his claims would be paid afterward. Until now, the company has not paid my brother, so he filed a complaint against them. The company is arguing that the said money claims have already prescribed and are forever barred because the complaint was not filed within three years from the time the cause of action accrues. Can you enlighten me on this matter?

Warren

Dear Warren,

The Labor Code of the Philippines provides a comprehensive framework for the protection of workers’ rights, including provisions for the settlement of money claims that arise from employment relationships. These claims may involve unpaid wages, benefits, and other compensation owed to employees.

Under Article 306 [291] of the said Code:

“ARTICLE 306. [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.

“All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with the implementing rules and regulations of the Code; otherwise, they shall be forever barred.”

It is clear under the said provision that money claims under the Labor Code shall be filed within three years from the time the cause of action accrued. However, there is a Supreme Court decision, penned by Associate Justice Antonio Eduardo Nachura, wherein it recognized an exception. It explained the principle of promissory estoppel, viz.:

“In light of these circumstances, we can apply the principle of promissory estoppel, which is a recognized exception to the three-year prescriptive period enunciated in Article 291 of the Labor Code. Promissory estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise should be relied upon, as in fact it was relied upon, and if a refusal to enforce it would virtually sanction the perpetration of fraud or would result in other injustice. Promissory estoppel presupposes the existence of a promise on the part of one against whom estoppel is claimed. The promise must be plain and unambiguous and sufficiently specific so that the court can understand the obligation assumed and enforce the promise according to its terms. In order to make out a claim of promissory estoppel, a party bears the burden of establishing the following elements: (1) a promise was reasonably expected to induce action or forbearance; (2) such promise did, in fact, induce such action or forbearance; and (3) the party suffered detriment as a result.

“All the requisites of promissory estoppel are present in this case. Jones relied on the promise of ASI that he would be paid as soon as the claims of all the rank-and-file employees had been paid. If not for this promise that he had held on to until the time of his death, we see no reason why he would delay filing the complaint before the LA. Thus, we find ample justification not to follow the prescriptive period imposed under Article 291 of the Labor Code.” (Accessories Specialist, Inc. v. Alabanza, GR 168985, July 23, 2008)

In the situation of your brother, the principle of promissory estoppel may be applied. According to you, he relied on the promise of their company that he would be paid as soon as the claims of all the rank-and-file employees had been paid, similar to the above-quoted case. If not for this promise, there appears to be no other reason why he would delay the filing of his complaint. Lastly, he suffered the loss of his claim due to such promise. Hence, there is an ample justification not to follow the prescriptive period under the Labor Code.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected].