FEDERICO FERNANDEZ, PLAINTIFF-APPELLANT, VS. P. CUERVA & CO., DEFENDANT-APPELLEE.

This is an appeal from the order of the Court of First Instance
of Manila, dated January 29, 1963,
in its Civil Case No. 52946, dismissing the complaint upon the ground that the
action in the first two causes of action had prescribed and that it had no
jurisdiction over the third cause of action.

It appears that plaintiff Federico Fernandez was employed as salesman by defendant
P. Cuerva & Co. from March, 1949 to October,
1959.  After his separation from the
service, plaintiff filed a claim, on
July 26, 1960, before
Regional Office No. 4 of the Department of Labor,^[1] docketed as L. S. Case No. 2940, to
recover un­paid salaries and commissions, and separation pay.

During the pendency of said case, or on
December 17, 1962, plaintiff
again instituted a similar complaint against the same defendant with the Court
of First Instance of Manila (Civil Case No. 52946) alleging, among others, that
he was employed by defendant company as salesman in March, 1949 with a salary
of P200.00 per month; that beginning June, 1955 until the termination of his
services in October, 1959, his salary was in­creased to P300.00 monthly and was
given, in addition, a commission of 10% on his sales; that the increase of
P100.00 a month
and the 10% commission were not actually
received by him as there was a verbal understanding be­tween him and defendant
company that the same would be retained
by the latter as bond or deposit for the goods being handled by the
former; and that because plaintiff was separated from service in October, 1959,
he sought to recover the sum of P5,300.00 representing the P100.00 monthly
deductions from his salary; P4,770.00 cor­responding to his 10% commissions
that were withheld, and P1,500.00 as separation
pay, or the total sum of P11,570.00. 
These three items were respectively the subject mat­ter of the first,
second and third causes of action of the complaint.

On January 2, 1963,
defendant filed a motion to dismiss the complaint upon the grounds that the
actions had prescribed and that
the court had no jurisdiction over the case. 
The court below, after allowing the par­ties to submit their respective
memorandum on the ques­tions of prescription and jurisdiction, dismissed the case, in an order issued on January 29,
1963, holding that because the claim of plaintiff in the first two causes of action amounting to P10,070.00
represented the sum total of unauthorized deductions from
his salaries and withheld commissions, under Section 10, paragraph (f) of
Republic Act No. 602, otherwise known as the Mini­mum Wage Law, the action to
recover the same was already barred under Section 17 of said Act inasmuch as it
was not brought within three years from the time the right of action accrued;
and that because the remaining claim of plaintiff was limited to his separation
pay amounting only to P1,500.00, the action to collect the same was not within
the original jurisdiction of the court.

On February 1, 1963, plaintiff moved to reconsider the
above-mentioned order, advancing as his
main argument the fact that his having filed a similar claim with Regional
Office No. 4 of the Department of Labor had sus­pended the running of the
prescriptive period insofar as his claim for refund of unauthorized deductions
and with­held commissions was concerned – which were the subject matters of the
first and second causes of action that were dismissed by the court.  The defendant filed an opposition to the
motion for reconsideration.  In an order
dated February 15, 1963,
the court denied plaintiff’s motion for reconsideration.  Hence this appeal by the plaintiff direct to this Court on
purely questions of law.

We are in accord with the court a quo that the law
applicable to the case at bar is Republic Act 602 because the bond or deposit
sought to be recovered by
appellant was actually the sum total of the unauthorized deductions from his
salaries and withheld commissions under Section 10 thereof.  Under Section 17 of said law, “any action * * * to enforce any cause of
action under this Act may be commenced within three years after the cause of action accrued, and every
such action shall be for­ever barred unless commenced within three years after the cause of action
accrued.” Since a right of action ac­crues only from the moment the right to commence the
ac­tion comes
into existence, and prescription begins to run from that time,^[2]
the question to be resolved is:  When did
the right of action of plaintiff accrue?

To answer the foregoing query, it is meet to recall that while the amounts withheld by defendant were actually deductions
from plaintiff’s salaries and un­paid commissions, they were, however,
constituted as a bond or a deposit to answer for any liability that he might
incur in connection with the goods handled by him.  The bond and/or deposit was
thus answerable for mer­chandise entrusted to plaintiff during the period of
his employment with defendant.  It was,
therefore, not fea­sible for plaintiff to demand every month or every payday,
or during the period of his employment with the com­pany the return or refund
of those amounts withheld as contended by defendant, because the undertaking
for which the bond or deposit was constituted was still subsisting.  And so the right of plaintiff to commence an
action for the return or refund of the amounts representing such bond or
deposit would accrue only when the same was
no longer needed, and the time when it was no longer needed only came in
October, 1959 when plaintiff was separated from the service.  Having
ceased to be employed by the defendant, the bond put up by plaintiff thereby
became unnecessary or useless.

It would seem, however, that even if We
count from October, 1959 in computing the prescriptive period, plain­tiff’s
action to recover the amount held by defendant as bond is already barred
because more than three years had elapsed by the time plaintiff instituted the
present case in the court below on December
17, 1962.  The record, how­ever,
shows that on July 26, 1960,
plaintiff filed a si­milar claim against the defendant with Regional Office No.
4 of the Department of Labor.

At this juncture, the question posed is:  Did the filing by
plaintiff of that claim with the
regional of­fice of the Department of Labor suspend the running of the
period of prescription?

Defendant answers the
question in the negative.  While
defendant does not question the applicability to the case at bar of
Article 1155 of the Civil Code, which provides that the “prescription of
actions is interrupted when they are filed before the Court,”
nevertheless, it contends that inasmuch as plaintiff’s claim was lodged with
the regional office of the Department of Labor, which is not a court, the same
could not be considered a judi­cial demand that would suspend the running of the pres­criptive
period.

We do not agree
with defendant.  It is true that the claim filed by
plaintiff with the regional office of the Department of Labor is not a judicial
demand in the strict sense of the term “judicial demand” because the
same was not instituted in a court of justice. 
Judicial notice, however, should be taken that on December 10, 1956,
Reorganization Plan No. 20-A was promulgated pursuant to Republic Act 997, and
under Section 25 of said reorganiza­tion plan each regional office of the
Department of Labor was vested
with original and exclusive jurisdiction over all cases affecting all money
claims arising from viola­tions of labor standards on working conditions such as unpaid wages, underpayment,
overtime and separation pay, etc., to the exclusion of courts.^[3]  Consequently, when plaintiff wanted to
enforce his claim after his dismissal from the service in October, 1959, he had
no choice but to file the same with regional Office No. 4 of the Department of
Labor which was the agency then empowered to take cognizance of the claim.  He could not institute the action to recover
his claim in the court of justice because of the provisions of Reorganization
Plan No. 20-A.  At least it may be said
that on July 26, 1960, when
plaintiff filed his claim with Regional Office No. 4 of the Department of
Labor, he acted in accordance with the procedure that was then prescribed under
authority of law.  Under the
circumstances, We believe that the filing by plaintiff
of his claim before the regional office of the Department of La­bor had the
attributes of a judicial demand.  And We
say this because under the provisions of Section 25 of Reorganization Plan No.
20-A each regional office of the Department of Labor was invested with
jurisdiction, similar to that of a court, to receive, determine, and adjudicate
money claims arising out of employer-employee relations as specified in said
section.  We quote Section 25 of
Reorganization Plan No. 20-A:

“Each Regional Office shall have original and exclusive
jurisdiction over all cases affecting all money claims arising from violations of labor standards on
working conditions, including but not restrictive to:  unpaid wages, underpayment, overtime,
separation pay, and maternity leave of employees/laborers, and unpaid wages,
overtime, separa­tion pay, vacation pay, and payment for medical services of
domestic held.” (Em­phasis supplied)

It can be gathered from a reading of the above-quoted Section 25
of Reorganization Plan No. 20-A that some sort of judicial powers was conferred
upon the regional offices of the Department of Labor over money claims
mentioned in said section.  Certainly, it
can be considered that filing a money claim before a regional office of the
Department of Labor pursuant to Section 25 of Reorganization Plan No. 20-A is
like filing a complaint in court to enforce said money claim.  We believe that the filing of a claim before
an administrative agency which is vested with authority to decide said claim
would pro­duce the effect of a judicial demand for the purpose of interrupting
the running of the period of prescription. 
The purpose of the law on prescription and the statute of limitations is to protect the person who is diligent and vigilant in asserting
his right, and conversely to punish the person who sleeps on his right.^[4]
Indeed, it cannot be said that in the case before Us the plaintiff had slept on
his right, because shortly after he was separated from the service by the
defendant he filed his claim before
the agency of the government that was at the time clothed with exclusive authority to pass upon his claim.

We have taken note of the fact that on June 30, 1961, Section 25 of Reorganization
Plan No. 20-A had been declared unconstitutional by this Court in the case of Corominas, et al. v.
The Labor Standards Commission, et al., supra.  It appears, however, that the plaintiff had
filed his claim before Regional Office No. 4 of the Department of Labor on July 26, 1960, or about one year before
said Section 25 had been declared unconstitutional.  The circumstance that Section 25 of Reorganization Plan No. 20-A had been
declared unconstitutional should not be counted against the defendant in the
present case.  In the case of Manila
Motor Co., Inc. v. Flores, 99 Phil., 738,
this Court upheld the right of a party under the Moratorium Law which had
accrued in his favor before said law was declared unconstitutional by
this Court in the case of Rutter v. Esteban, 93 Phil., 68.  This Court, in its decision in the Manila
Motor case, quoted the following doctrine:

“[t]here are several instances wherein
courts, out of equity, have relaxed its operation (cf. notes in Cooley’s Consti­tutional
Limitations 8th ed., p. 383 and Notes 53 A.L.R., 273) or qualified its effects ‘since the actual
existence of a statute prior to such declaration is an operative fact, and may
have consequences which cannot justly be ignored’ (Chicot County vs. Baster, 308 U.S., 371) and a realistic approach is eroding
the general doctrine (Warring vs. Colpoys, 136 Am.
Law Rep., 1025, 1030).”

We believe that it is only fair and just
that the fore­going doctrine should be applied in favor of the plain­tiff in
the present case.

We have noted in the record that it was precisely because Section
25 of Reorganization Plan No. 20-A was declared unconstitutional by this Court
on June 30, 1961 that the plaintiff, without awaiting the action of Region­al
Office No. 4 of the Department of Labor on the claim that he filed on July 26,
1960, instituted his action in the present case in the court below on December
17, 1962.  The move of plaintiff was
precisely intended to protect his right of action from the adverse effect of
the deci­sion of this Court.  The
Regional Office No. 4 of the Department of Labor dismissed plaintiff’s claim on
Jan­uary 16, 1963 upon the ground that it had no more juris­diction to pass
upon the claim as a result of the ruling of this Court in the Corominas case.

Considering that from October, 1959 when plaintiff was separated
from the service up to July 26, 1960 when he filed his claim with Regional
Office No. 4 of the De­partment of
Labor only eight months had
elapsed, and that since July 26, 1960 until the filing of the complaint in the
court below on December 17, 1962 the running of pres­criptive period was deemed
interrupted, it is clear that
plaintiff’s action to enforce his claim was not yet bar­red by the statute of
limitations when he filed his com­plaint in the court below.  Plaintiff’s action may be considered as
brought before the court still within the period of three years from the time
his right of ac­tion accrued in accordance with the provisions of Sec­tion 17
of Republic Act 602 (Minimum Wage Law). 
Only about nine months of the three-year period provided in Section 17
of Republic Act 602 may be considered as hav­ing lapsed when plaintiff
commenced his action in the court below. 
And considering further that the amount sought to be recovered in the
complaint is more than P10,000.00, it follows that the court a quo
has the exclusive and original jurisdiction to entertain the action of the
plaintiff.  The lower court, therefore,
erred when it dismissed plaintiff’s complaint.

WHEREFORE, the order appealed from is set aside, and this
case is remanded to the court below for further proceedings, with costs against
the defendant-appellee.

IT IS SO ORDERED.

Dizon, Acting C.J., Makalintal, Bengzon, Castro, and Angeles, JJ., concur.

Concepcion, C.J., and Reyes, J., on
official leave of absence.

Sanchez, J., in the result.

Fernando, J., concurs in a
separate opinion.

^[1]
This claim was dismissed by Regional Office No. 4 of the Department of Labor
only on January 16, 1963 due to the decision of the Supreme Court
in Corominas, et al. v. The Labor Standards Commission, et al., G.R.
Nos. L-14837, L-15483,
L-13940, and L-15015, promulgated on June 10, 1961, declaring Section 25 of Reorganization Plan
No. 20-A un­constitutional insofar as it vests on the Regional Office of the
Department of Labor the original and exclusive juris­diction over money
claims for wages, back wages, underpayment
of wages, overtime and separation pay, etc.

^[2]
Barles, et al. v. Ponce
Enrile, 109 Phil. 522.

^[3]
See Corominas, et al. v. The Labor Standards
Com­mission, et al., supra.

^[4]
Togarao v. Garcia, 61 Phil., 5.

Normal
150
Clean
Clean

6 pt
6 pt
0
3

MicrosoftInternetExplorer4

st1:*{behavior:url(#ieooui) }

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:”Times New Roman”;}