G.R. No. 172342 ; July 13, 2009
LWV CONSTRUCTION CORPORATION, Petitioner, vs. MARCELO B. DUPO, Respondent.

FACTS

Petitioner LWV Construction Corporation, a domestic recruitment agency, hired respondent Marcelo B. Dupo for deployment to its Saudi Arabian principal, Mohammad Al-Mojil Group (MMG). Respondent executed six successive one-year employment contracts from 1992 to 1998. His final contract ended when he left the worksite on April 30, 1999. Upon returning to the Philippines, respondent eventually resigned in July 1999. He subsequently filed a complaint before the NLRC on December 11, 2000, claiming entitlement to a “service award” or longevity pay under Article 87 of the Saudi Labor Law, amounting to US$12,640.33 for his over seven years of service.
Petitioner contested the claim, arguing that under the Saudi Labor Law, the service award is paid at the end of each specific-period contract and that respondent had already received his severance pay for his last contract. Petitioner further asserted that the claim had prescribed, as Article 13 of the Saudi Labor Law requires such actions to be filed within one year from the contract’s termination. Respondent’s complaint was filed over one year and seven months after his last contract ended on April 30, 1999.

ISSUE

The primary issue is whether respondent’s claim for a service award under Saudi law has prescribed.

RULING

The Supreme Court ruled in favor of the petitioner and dismissed the complaint. The Court held that the applicable prescriptive period is governed by the Saudi Labor Law, specifically Article 13, which mandates that claims must be filed within twelve months from the date of the contract’s termination. Respondent’s cause of action accrued upon the termination of his last employment contract on April 30, 1999. His complaint filed on December 11, 2000, was clearly beyond the one-year prescriptive period.
The Court rejected the application of Article 1155 of the Philippine Civil Code on interruption of prescription. The principle of lex loci contractus (the law of the place of the contract) applies. The employment was performed in Saudi Arabia under contracts subject to Saudi law. Therefore, the substantive and prescriptive aspects of the claim are governed exclusively by Saudi law. The respondent’s written claim made to MMG in July 1999 did not constitute a valid interruption under Saudi law, as the provision does not recognize such an act as interrupting the prescriptive period. Consequently, the claim was time-barred. The decisions of the Labor Arbiter, NLRC, and Court of Appeals were reversed and set aside.