Fernandez v. Cuerva & Co.
REITERATIONFacts
The Antecedents: Plaintiff Federico Fernandez was employed as a salesman by defendant P. Cuerva & Co. from March 1949 to October 1959. During his employment, a verbal understanding existed that P100.00 monthly salary increases and a 10% commission on sales would be retained by the company as a bond or deposit for goods handled by Fernandez. Upon his separation from service in October 1959, Fernandez sought to recover these retained amounts (P5,300.00 for monthly deductions and P4,770.00 for commissions) and P1,500.00 as separation pay. Procedural History: On July 26, 1960, Fernandez filed a claim with Regional Office No. 4 of the Department of Labor for unpaid salaries, commissions, and separation pay. Subsequently, on December 17, 1962, he filed a similar complaint with the Court of First Instance of Manila. The defendant moved to dismiss, arguing prescription for the first two causes of action and lack of jurisdiction for the third. The trial court dismissed the complaint, holding that the claims for deductions and commissions had prescribed under Section 17 of Republic Act No. 602 (Minimum Wage Law) as they were not filed within three years, and that the claim for separation pay was below the court's original jurisdiction. The Petition: The plaintiff appealed directly to the Supreme Court, arguing that filing the claim with the Department of Labor regional office suspended the prescriptive period for his claims for unauthorized deductions and withheld commissions.
Issue(s)
Whether the filing of a claim with the Regional Office of the Department of Labor suspends the running of the prescriptive period. Whether the Court of First Instance erred in dismissing the complaint on grounds of prescription and lack of jurisdiction.
Ruling
The Supreme Court set aside the order of dismissal and remanded the case to the lower court for further proceedings. The Court ruled that the filing of the claim with the Regional Office of the Department of Labor interrupted the prescriptive period, and that the Court of First Instance had original and exclusive jurisdiction over the case.
Ratio Decidendi
On the suspension of the prescriptive period: The Court held that the filing of a claim with the Regional Office of the Department of Labor, pursuant to Section 25 of Reorganization Plan No. 20-A, had the attributes of a judicial demand and thus interrupted the running of the prescriptive period. Although Reorganization Plan No. 20-A was later declared unconstitutional in Corominas, et al. v. The Labor Standards Commission, et al., the Court applied the doctrine that the actual existence of a statute or executive act prior to its declaration of unconstitutionality is an operative fact that can have legal consequences. The plaintiff filed his claim on July 26, 1960, approximately one year before Section 25 was declared unconstitutional on June 30, 1961. Therefore, his action in filing with the Department of Labor was in accordance with the procedure prescribed at the time and should be given effect for the purpose of tolling prescription. The Court reasoned that the purpose of prescription is to protect diligent litigants, and it cannot be said that the plaintiff slept on his rights when he filed his claim with the agency then clothed with exclusive authority. On the jurisdiction of the Court of First Instance: The Court found that the trial court erred in dismissing the complaint. Considering that the plaintiff's claim for unauthorized deductions and withheld commissions, amounting to P10,070.00, when added to the separation pay of P1,500.00, exceeded P10,000.00, the Court of First Instance had original and exclusive jurisdiction over the case under the prevailing rules. The Court calculated that from the plaintiff's separation in October 1959 to the filing of the claim with the Department of Labor on July 26, 1960, only eight months had elapsed. From July 26, 1960, to the filing of the complaint in the Court of First Instance on December 17, 1962, the prescriptive period was deemed interrupted. Thus, only about nine months of the three-year period provided by Section 17 of Republic Act No. 602 had lapsed, meaning the action was not yet barred by the statute of limitations when filed in the lower court.
Main Doctrine
The filing of a claim before an administrative agency vested with exclusive authority to decide said claim, such as a Regional Office of the Department of Labor under Reorganization Plan No. 20-A, produces the effect of a judicial demand for the purpose of interrupting the running of the period of prescription, even if the administrative agency's authority is later declared unconstitutional, provided the claim was filed during the period of its operative existence.