Promissory estoppel

Under Article 291 of the Labor Code, all money claims arising from employer-employee relationship like recovery of unpaid wages, separation pay and 13th month pay must be filed within three years from the time the cause of action accrued, otherwise they shall forever be barred. This case of Anne and her late husband Joey is an exception.

Joey was employed by a company specializing in accessories known as Aseana since 1975. On October 17, 1997 however or after more than 21 years of service, Joey was asked by Morimoto the Aseana owner, to file his involuntary resignation on the ground that Aseana had suffered losses and incurred several debts due to a slump in the market. At that time, Joey had unpaid salaries for 18 months equivalent to P396,000 and $38,880. He was likewise not paid his separation pay commensurate to his 21 years of service in the amount of P462,000 and $45,360 as well as 13th month pay of P33,000.

Hence when Joey was constrained to resign he demanded payment of his money claims. But Aseana informed him that it would just settle first the money claims of the rank and file employees and promised him that his claims will be paid thereafter.  Knowing the predicament of Aseana Joey patiently waited for his turn to be paid. Several demands were made by Joey but Aseana just kept assuring him that he will be paid. Unfortunately he died on August 5, 2002 without his claims being paid.

So, on September 27, 2002, Joey’s wife, Anne filed for and in behalf of her husband before the Labor Arbiter (LA) of the National Labor Relations Commission (NLRC) a complaint against Aseana and Morimoto for non-payment of salaries, separation pay and 13th month pay.

Aseana and Morimoto on the other hand contended that since the complaint was filed only on September 27, 2002 or almost five years from the date he voluntarily resigned, Anne’s complaint is already barred under Article 291 of the LC providing that money claims shall be filed within 3 years only from the time the cause of action accrues.

The LA however rendered a decision in favor of Anne ordering Aseana and Morimoto to pay her a total of P4,765,200 representing her husband’s unpaid salaries, 13th month pay, separation pay and 5 percent attorney’s fees.

Since Aseana and Morimoto failed to pay the necessary appeal bond to the NLRC, the appeal was dismissed and the LA issued a writ of execution. Aseana and Morimoto questioned the writ, reiterating their stand that the action of Anne was already barred under Article 291 of the Labor Code. Were they correct?

No. Aseana was responsible for the delay in the institution of the complaint. While Joey filed his resignation, he immediately asked for payment of his money claims. However Aseana management merely promised him that he would be paid immediately after the rank and file employees had been paid. Joey relied on this representation. Unfortunately the promise was never fulfilled even until the time of his death. In the light of these circumstances, the principle of promissory estoppel, which is a recognized exception to the three-year prescriptive period enunciated in Article 291 of LC, can be applied.

Promissory estoppel may arise from the making of a promise, even without consideration, it  was intended that the promise should be relied upon, as in fact it was relied upon, and if refusal to enforce it would virtually sanction the perpetration of fraud or would result in other injustice. It presupposes the existence of a plan and specific promise on the part of one against whom the estoppel is claimed.  Its elements are: (1) a promise reasonably expected to induce action or forbearance, (2) such promise did in fact induce such action or forbearance; and (3) the party suffered detriment as a result.

All the elements of promissory estoppel are present in this case. Joey relied on the promise of Aseana that he would be paid as soon as the claims of the rank and file employees had been paid. If not for this promise that he had held on to until the time of his death, he would not have delayed filing of the complaint before the L.A.  Thus there is ample justification not to follow the prescriptive period imposed under Article 291 of the LC. Great injustice will be committed if Anne’s claim will be brushed aside on a mere technicality, especially when it was Aseana and Morimoto’s own action that prevented Anne from filing the claim within the required period (Accessories Specialists Inc. etc. vs. Alabanza etc. G.R.  168985, July 23, 2008).

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