Illegal Dismissal Case and its Prescriptive Period
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Illegal dismissal arises when the employee is dismissed without just cause or authorized cause.
Just causes are those listed under Article 297 of the Labor Code, as amended. Bear in mind that the list is general in scope. Thus, one must be aware of the decisions of the Supreme Court on interpretation of each of the paragraphs in said provision.
See the digest of the Critical Supreme Court Decisions here.
On the other hand, authorized causes are those listed in Article 298. An illegal dismissal act of the employer gives the right to file action on the part of the employee. However, such right is not infinite since it is subject to prescription.
Unlike for money claims where the prescriptive period is provided under Article 306 of the Labor Code, the prescriptive period for illegal dismissal is set forth in the Civil 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. (Arriola vs. Pilipino Star Ngayon, G.R. No. 175689, August 13, 2014)
In Callanta vs. Carnation Philippines, Inc., (229 Phil. 279, 288 (1986).) the Supreme Court ruled that actions based on injury to rights prescribe in four (4) years under Article 1146 of the Civil Code rather than three (3) years as provided for the Labor Code. 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.”
Under Article 1146 of the Civil Code the following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;
Thus, in Callanta case, the SC pronounced that it is a principle in American jurisprudence which, undoubtedly, is well-recognized in this jurisdiction that one’s employment, profession, trade or calling is a “property right,” and the wrongful interference therewith is an actionable wrong. The right is considered to be property within the protection of a constitutional guaranty of due process of law.
Clearly then, 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.
As in other causes of action, the prescriptive period for money claims is subject to interruption, and in view of the absence of an equivalent Labor Code provision for determining when said period may be interrupted, Article 1155 of the Civil Code is applicable.
It states that he prescription of actions is interrupted when they are filed before the Court, when there is written extra-judicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.
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