**Laureano v. Court of Appeals and Singapore Airlines Limited**
### Facts:
Menandro B. Laureano, formerly Director of Flight Operations and Chief Pilot at Air Manila, sought employment with Singapore Airlines Limited in 1978. Following an interview, he was offered and accepted a two-year contract as a B-707 captain, beginning January 20, 1979. His contract was extended to five years on July 21, 1979, after a successful probation period. Laureano encountered several professional incidents, including a noise violation in 1980 at Zurich Airport and a tail scraping incident, resulting in temporary suspension and reprimand.
In 1982, facing economic challenges, Singapore Airlines decided to reduce its workforce, affecting 17 expatriate Airbus captains, including Laureano. Despite evaluating the possibility of reassignment, Laureano was among those not selected for retention. On October 5, 1982, he was informed of his termination effective November 1, 1982, with three months’ salary as compensation. Laureano requested an extended notice period to make arrangements for his family, but was only given two months’ notice and one month’s salary.
Laureano initially filed a case for illegal dismissal with the Labor Arbiter in 1983, which was withdrawn, and then filed a case for damages due to illegal termination of contract services in the civil court in 1987. Singapore Airlines motioned to dismiss based on jurisdictional grounds, arguing the civil courts of the Philippines lacked jurisdiction due to the employment relationship being tied to Singapore. The motion was denied, leading to a trial wherein Laureano was victorious. However, upon Singapore Airlines’ appeal, the Court of Appeals reversed the decision, citing the action had prescribed. Laureano then sought review under Rule 45 at the Supreme Court.
### Issues:
1. Whether Laureano’s action is based on contract, which prescribes in ten years, or on damages arising from injury, which prescribes in four years under the New Civil Code of the Philippines.
2. Whether an employee under a fixed-term employment contract can be retrenched by the employer.
3. The validity of retrenchment solely based on unmet expected profits rather than actual losses.
### Court’s Decision:
The Supreme Court affirmed the decision of the Court of Appeals, holding that Laureano’s action had indeed prescribed. It clarified that neither Article 1144 (ten-year prescriptive period) nor Article 1146 (four-year prescriptive period) of the Civil Code was applicable, but rather Article 291 of the Labor Code, which sets a three-year limit for filing money claims arising from employer-employee relations, was pertinent. The Court agreed that the Regional Trial Court had jurisdiction but found that Laureano’s damages claim due to illegal termination filed over four years after his dismissal had already prescribed.
Regarding the issues of retrenchment and contractual obligations, the Supreme Court sided with the appellate court’s findings that the termination was authorized under the employment contract and for an authorized cause, and hence, was valid. It ruled that contractual obligations were clear and that Laureano was bound by these, including provisions for mutual termination.
### Doctrine:
The Supreme Court reiterated the doctrine that in cases of illegal dismissal and related money claims, the specific three-year prescriptive period outlined in Article 291 of the Labor Code takes precedence over the general ten-year period provided in the Civil Code. Additionally, it underscored the principle that contracts have the force of law between the parties and must be complied with in good faith.
### Class Notes:
– **Prescriptive Periods**: Article 291 of the Labor Code specifically governs money claims arising from employer-employee relations, setting a three-year limit for filing these claims.
– **Contractual Obligations**: Parties to a contract are bound not only by its express terms but also by the implications of good faith, usage, and law. Mutual termination provisions and agreed terms in an employment contract are binding.
– **Retrenchment Validity**: An employer can lawfully terminate employees for authorized causes such as redundancy or economic downturn, provided due process is observed and the terms of the employment contract permit such action.
### Historical Background:
This case illustrates the complexities of transnational employment relationships and the jurisdictional challenges in legal claims arising from them. It underscores the necessity of understanding both the specific legal statutes governing employment issues, like the Labor Code’s prescriptive periods, and the general principles underpining contractual obligations and labor relations in the Philippines.
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