JANUARIA A. RIVERA, PETITIONER, VS. UNITED LABORATORIES, INC., RESPONDENT.

Rivera versus United Laboratories

The Case

This is the case of Januaria A. Rivera, a retired employee who continued working for United Laboratories, Incorporated after her compulsory retirement, and who later claimed a differential in her retirement pay for that subsequent service. She sues her former employer, United Laboratories, for recovery of unpaid retirement pay differential. The case matters because it settles two questions every labor practitioner must know: when a money claim arising from employer-employee relations accrues and prescribes, and whether an extrajudicial demand interrupts that prescriptive period. It also teaches the limits of a petition for review on certiorari, which may raise only questions of law.

Procedural History

Rivera filed her complaint for recovery of unpaid retirement pay differential before the Labor Arbiter. The Labor Arbiter dismissed the complaint for lack of merit, holding that her cause of action accrued on January 15, 1993 when she received her retirement pay check, and that it had already prescribed. Rivera appealed to the National Labor Relations Commission, which denied the appeal and affirmed the Labor Arbiter. Her motion for reconsideration was likewise denied.

Rivera then elevated the case to the Court of Appeals by a petition for certiorari. The Court of Appeals ruled in her favor. It set aside the decision and resolution of the National Labor Relations Commission, found that her claim had not prescribed because her extrajudicial demand interrupted the prescriptive period, but remanded the case to the Labor Arbiter for hearing on the merits rather than deciding it. Both parties moved for reconsideration, and the Court of Appeals denied both motions.

Rivera came to the Supreme Court by a petition for review on certiorari under Rule 45 of the Rules of Court, asking the Court to decide the case on the merits instead of remanding it. United Laboratories opposed the petition, arguing that it raised questions of fact and that a remand was proper.

Facts

Rivera began working for United Laboratories on April 7, 1958 as a senior manufacturing pharmacist, and later became Director of its Manufacturing Division. In 1959, the company adopted a comprehensive retirement plan supported by a retirement fund, with Trust Fund A holding the employer's contributions and Trust Fund B holding the members' contributions. Under the plan, a member is compulsorily retired upon reaching the normal retirement date, which is when the member reaches age 60 or completes 30 years of service, whichever comes first.

In 1988, Rivera completed 30 years of service, and the company retired her effective December 31, 1988. Based on her monthly salary of 28,000 pesos at that time, and at one month's terminal basic salary for every year of service, her retirement benefits totaled 1,047,331.33 pesos, drawn from Trust Fund A and Trust Fund B. These amounts were transferred to Trust Fund C, a special account from which she could withdraw as she pleased.

At Rivera's request, the company allowed her to continue working, and she was even promoted to Assistant Vice-President on January 1, 1989, with a basic monthly salary of 50,034 pesos and a fixed monthly allowance of 8,900 pesos. She served in that capacity until the end of 1992. From 1993 to 1994, she served as a personal consultant under contract with two sister companies of United Laboratories, which assigned her to render service involving the company.

On December 16, 1992, the company amended its retirement plan, increasing retirement benefits from one month to one and a half months of terminal basic salary for every year of service. In a letter dated January 7, 1995, Rivera asked that her retirement benefits be increased under the amended plan based on her December 31, 1992 terminal basic salary and her 34 years of service. The company denied her request, explaining that the upgraded formula did not apply to her because she had compulsorily retired from the plan in 1988. After further demands and rejections, Rivera filed her complaint on August 9, 1996.

Issues

• Whether or not the petition complies with the requirement of Section 1, Rule 45 of the Rules of Court, that it shall raise only questions of law.
• Whether or not the Court of Appeals erred in ruling that Rivera's claim for additional retirement benefits had not prescribed.
• Whether or not the Court of Appeals erred in remanding the case to the Labor Arbiter for hearing on the merits.

Applicable Provisions

Article 291 of the Labor Code provides:

Article 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 barred forever.

This is the special law on prescription in labor cases, and it fixes the three-year period within which Rivera had to file her money claim.

Article 1150 of the Civil Code provides:

Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought.

Because the Labor Code has no specific provision on when a monetary claim accrues, this general rule supplies the reckoning point, which is the day the action may be brought.

Article 1155 of the Civil Code provides:

Article 1155. The prescription of actions is interrupted when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.

This is the basis for the Court of Appeals' holding, affirmed by the Supreme Court, that Rivera's written extrajudicial demand interrupted the running of the three-year period.

Ruling

On the first issue, the Court held that the petition raises a question of law. The issue of whether the Court of Appeals erred in remanding the case can be resolved by looking only at the pleadings and the parties' submissions, without reviewing or evaluating the evidence. The Court restated the test: a question of law exists when the doubt arises as to what the law is on a certain state of facts, while a question of fact exists when the doubt arises as to the truth or falsity of the alleged facts. The test is not the label a party gives the question, but whether the appellate court can determine the issue without reviewing or evaluating the evidence.

On the second issue, the Court agreed with the Court of Appeals that Rivera's cause of action had not prescribed. Her claim for retirement pay differential accrued only on January 15, 1993, when she received her retirement pay check that did not include her service after December 31, 1988. However, the running of the prescriptive period was effectively interrupted by her first letter to the company on January 7, 1995, when she demanded additional retirement benefits under the amended plan. The Court applied Article 1155 of the Civil Code, which interrupts prescription upon a written extrajudicial demand by the creditor.

On the third issue, the Court held that the Court of Appeals did not err in remanding the case to the Labor Arbiter for hearing on the merits. The remand was proper because the factual issues, including the crucial question of when Rivera retired for purposes of determining her coverage under the amended plan, had not yet been heard and resolved.

Doctrine

A money claim arising from employer-employee relations must be filed within three years from the time the cause of action accrued, as required by Article 291 of the Labor Code. The cause of action accrues on the day the action may be brought, following Article 1150 of the Civil Code, since the Labor Code has no specific provision on accrual. The three-year prescriptive period is interrupted by a written extrajudicial demand by the creditor, by a claim filed before the proper judicial or quasi-judicial forum, or by the employer's written acknowledgment of the debt, under Article 1155 of the Civil Code. A petition for review on certiorari under Rule 45 of the Rules of Court may raise only questions of law, and the test is whether the appellate court can resolve the issue without reviewing or evaluating the evidence.

Disposition

The Supreme Court denied the petition for lack of merit, thereby affirming the decision and resolution of the Court of Appeals, which had set aside the rulings of the National Labor Relations Commission and remanded the case to the Labor Arbiter for hearing on the merits.

Remember This

Remember that a written extrajudicial demand interrupts the three-year prescriptive period for money claims under Article 291 of the Labor Code, by operation of Article 1155 of the Civil Code. Examiners use this case to test prescription of labor money claims and the question-of-law requirement under Rule 45.