G.R. No. 86523 -24; August 19, 1991
International Harvester Macleod, Inc. vs. The National Labor Relations Commission, et al.

FACTS

Petitioner International Harvester Macleod Inc. (IHM), a ship agent, and respondent Waterfront Employees Union (WEU), a union of checkers, had a series of Collective Bargaining Agreements, the last effective until 31 December 1979. On 20 December 1984, WEU and 89 members filed a complaint against IHM for illegal dismissal and monetary claims. They alleged employment from the 1950s until their illegal termination in 1979, when the Ben Santos Checkers Agency took over. They contended their cause of action accrued only on 2 April 1982, after a Supreme Court Resolution in a related case (G.R. No. 57880) became final, arguing the prescriptive period was interrupted and should be construed in labor’s favor.
The Labor Arbiter ruled for the respondents, finding an employer-employee relationship and illegal dismissal. The NLRC affirmed. IHM petitioned for certiorari, arguing the claims had prescribed, being filed four years after the alleged dismissal, and that a prior Supreme Court ruling (G.R. No. 51311) had already definitively settled the absence of an employer-employee relationship between the parties.

ISSUE

Whether the private respondents’ claims for illegal dismissal and monetary benefits had already prescribed.

RULING

Yes, the claims had prescribed. The Supreme Court granted the petition and annulled the NLRC Resolutions. The legal logic rests on prescription and the conclusive effect of a prior final judgment. Article 291 of the Labor Code establishes a three-year prescriptive period for money claims arising from employer-employee relations. The alleged illegal dismissal occurred at the end of 1979 when IHM terminated its contract with WEU. The complaint was filed only in December 1984, clearly beyond the three-year period. The Court rejected the argument that the prescriptive period only began in 1982 after G.R. No. 57880 was resolved. That case pertained to a certification election issue and a different factual milieu post-dating the 1979 termination; it did not involve the instant claims for illegal dismissal and could not suspend the running of prescription for those claims.
Crucially, the Court emphasized that its prior Decision in G.R. No. 51311 (promulgated 3 September 1979) had already attained finality and conclusively ruled that no employer-employee relationship existed between IHM and the individual checkers, characterizing their CBA as a mere trade agreement. This doctrine of conclusiveness of judgment, or res judicata, bars the re-litigation of that settled issue. Therefore, the Labor Arbiter and NLRC committed grave abuse of discretion in disregarding this final ruling and entertaining a time-barred complaint attempting to re-open a conclusively decided matter.