Callanta v. Carnation Philippines, Inc.
REITERATIONFacts
The Antecedents: Petitioner Virgilio Callanta was employed by respondent Carnation Philippines, Inc. as a salesman. Five years later, on June 1, 1979, Carnation filed an application for clearance to terminate Callanta's employment on grounds of serious misconduct and misappropriation of company funds amounting to P12,000.00. The clearance was approved, and Callanta's employment was terminated effective June 1, 1979. Procedural History: On July 5, 1982, Callanta filed a complaint for illegal dismissal with claims for reinstatement, backwages, and damages. Respondent Carnation argued that the complaint was barred by prescription, having been filed more than three years after dismissal. The Labor Arbiter found the termination to be without valid cause and ordered reinstatement with backwages. The National Labor Relations Commission (NLRC) set aside the Labor Arbiter's decision, ruling that the complaint had prescribed under Articles 291 and 292 of the Labor Code. The Petition: Petitioner contends that an action for illegal dismissal does not fall under 'offenses' or 'money claims' in the Labor Code and should be governed by Article 1146 of the Civil Code, which provides a four-year prescriptive period for actions based on 'injury to the rights of the plaintiff'.
Issue(s)
Whether an action for illegal dismissal prescribes in three (3) years under Articles 291 and 292 of the Labor Code, or in four (4) years under Article 1146 of the Civil Code. Whether the dismissal of petitioner Virgilio Callanta was illegal.
Ruling
The Supreme Court granted the petition, reversed the decision of the NLRC, and ordered respondent Carnation Philippines, Inc. to pay petitioner Virgilio Callanta backwages for three (3) years without qualification and deduction. The decision was declared immediately executory.
Ratio Decidendi
On the prescriptive period for illegal dismissal: The Court held that an action for illegal dismissal does not fall under the definition of 'offenses' as contemplated in Article 291 of the Labor Code. An 'offense' in this context refers to violations specifically declared unlawful or penal in nature by the Code, which carry penalties of fine or imprisonment. Illegal dismissal, while a violation of the Labor Code, does not inherently carry such penalties; the primary reliefs sought are reinstatement and backwages. Furthermore, while backwages may be considered a 'money claim,' it is not the principal cause of action but a consequence of the unlawful deprivation of employment. The Court reiterated the ruling in Valencia v. Cebu Portland Cement, et al. and Santos v. Court of Appeals, stating that an action for illegal dismissal is an action for 'injury to the rights of the plaintiff' under Article 1146 of the Civil Code, which prescribes in four (4) years. The petitioner's complaint, filed on July 5, 1982, for a dismissal effective June 1, 1979, was within this four-year period. On the legality of the dismissal: Although the NLRC dismissed the case solely on the issue of prescription, the Supreme Court, in resolving the issue to put an end to the matter, found the dismissal to be arbitrary. The Court noted that the alleged shortage in petitioner's accountabilities should have been impartially investigated, especially given the admitted enmity between the petitioner and the auditor. The outright dismissal was deemed too severe a penalty for a first offense, particularly since the shortage was explained. The subsequent filing of an estafa charge, which was provisionally dismissed, and the eventual takeover of Carnation's business by FILIPRO, Inc., were considered. While loss of trust and confidence can be a ground for dismissal, it cannot be used as a shield for arbitrary dismissal. Due to the supervening event of FILIPRO, Inc. taking over the business, direct reinstatement was deemed difficult to enforce. Therefore, the Court ordered the payment of three (3) years' worth of backwages as a measure of social justice.
Main Doctrine
An action for illegal dismissal, which principally seeks reinstatement and backwages, is not an 'offense' under Article 291 of the Labor Code nor a mere 'money claim' under Article 292. It is an action predicated upon an 'injury to the rights of the plaintiff' under Article 1146 of the Civil Code, and thus prescribes in four (4) years.