Title
Saladas vs. Franklin Baker Co.
Case
G.R. No. L-13419
Decision Date
May 30, 1960
Employee dismissed in 1952 sought overtime pay; claim initially dismissed, refiled in 1957. Court ruled statute of limitations interrupted by prior demand and filing, allowing timely claim under amended law.
overtime compensation
statute of limitations
limitation of actions
A

Case Summary (G.R. No. L-13419)

Factual Background

Saladas alleged that he was entitled to overtime pay for the period spanning from December 7, 1949 to June 2, 1952. After his dismissal, he filed a claim with the Wage Administration Service of the Department of Labor. On August 4, 1953, that office found him entitled to collect P3,799.52. In a letter dated October 27, 1954, the office demanded payment from Franklin Baker Company. The company did not pay. Consequently, on November 23, 1954, Saladas instituted Civil Case No. Q-1299 before the Court of First Instance of Rizal for recovery of the same overtime compensation.

During the proceedings, Saladas filed a motion for continuance on January 5, 1956, through the Chief of the Prosecution Panel, Regional Office No. 1, Department of Labor, on the ground that the assigned prosecutor had departed for the Visayas and would not be available on or before January 15, 1956. The motion was denied. On January 9, 1956, the trial court dismissed the case, “presumably without prejudice.” About a year and a half later, on July 18, 1957, Saladas filed the present action to recover the overtime compensation already claimed.

Trial Court Proceedings and Issue on Appeal

In its amended answer filed seasonably, Franklin Baker Company raised as a special defense that Saladas’ cause of action had prescribed. After a preliminary hearing on that defense, the trial court dismissed the case on the ground that the claim was barred by the statute of limitations. Saladas appealed, and the Supreme Court framed the core issue as whether his claim for overtime services allegedly rendered from December 7, 1949 to June 2, 1952 was barred by the applicable statute of limitations.

The Parties’ Contentions

Saladas relied on Flores vs. San Pedro, 102 Phil. 44, which the parties treated as establishing a prescriptive period of six (6) years from the accrual of the cause of action, premised on the overtime claim being rendered under an oral contract. He further asserted that any prescription should have been suspended during the period spanning from October 27, 1954 (the written demand letter) until February 9, 1956 (the finality of the dismissal of Civil Case No. Q-1299), a period he characterized as lasting one (1) year, three (3) months and fourteen (14) days.

Franklin Baker Company contended that Republic Act No. 1993—which amended Commonwealth Act No. 444 by introducing Section 7-A—reduced the prescriptive period for actions under the Eight Hour Labor Law from six (6) years to three (3) years after the cause of action accrued, and that Saladas’ suit was filed after the period had expired. The company also argued, consistent with Flores vs. San Pedro, that the cause of action for overtime compensation accrued “at the end of each regular pay period,” and that because Saladas worked on a monthly salary basis, prescription ran from the end of the months when the overtime was allegedly performed. On the effect of Civil Case No. Q-1299, Franklin Baker Company invoked Peralta vs. Alipio, 97 Phil. 719, to support the view that the filing of that action did not interrupt or suspend the running of prescription.

Statutory Change: Republic Act No. 1993 and Its Effect on Prescription

The Supreme Court noted that, at the time the overtime services were rendered and for years thereafter, the applicable understanding of the prescriptive period for overtime under an oral contract had been six years, as reflected in Flores vs. San Pedro. It then addressed the statutory change: on June 22, 1957, the President approved House Bill No. 6718, which became Republic Act No. 1993, amending Commonwealth Act No. 444. The law introduced Section 7-A providing that actions to enforce causes of action under the Act must be commenced within three years after the cause of action accrued, otherwise they would be forever barred. The same section included a proviso that “actions already commenced before the effective date of this Act shall not be affected” by the period prescribed.

Saladas argued that Republic Act No. 1993 should be construed prospectively and should not apply because his cause of action accrued before the enactment. The Court rejected that position and focused on the text of the proviso excluding only “actions already commenced before the effective date.” The Court read this as evidencing legislative intent to apply the shorter limitation to all actions instituted thereafter, even if the cause of action accrued earlier, such as the suit then before the Court.

Saladas further maintained that applying Republic Act No. 1993 to his already accrued cause of action would be unconstitutional. He invoked the idea that such application would deny due process and impair contractual obligations because it would allegedly strip him of an existing remedy. The Court addressed this constitutional claim by discussing the general rule that when limitation statutes shorten existing periods, the law must allow a reasonable time for affected parties to assert their rights before the bar becomes effective. It cited general American jurisprudential principles regarding the validity of shortened limitation periods and the requirement of reasonableness.

Franklin Baker Company argued that Saladas had a reasonable time because Republic Act No. 1993 was passed on May 7, 1957 and took effect on June 22, 1957, which it said gave the creditor forty-five (45) days to file. The Court corrected the premise, stating that Congress passed House Bill No. 6718, not Republic Act No. 1993, on May 7, 1957. Republic Act No. 1993 came into existence only on June 22, 1957 upon presidential approval. The Court explained that the constitutionally required reasonable time must be afforded by the statute itself, not by a bill that has not yet become law. It further held that reasoning based on “passage” of an antecedent bill is irrelevant where the statute’s effectivity is simultaneous with its legal coming into force.

Applying this framework, the Court considered the date of filing of the present action—July 18, 1957, less than a month after the approval and effectivity of Republic Act No. 1993—and concluded that Saladas had acted with reasonable diligence in pursuing judicial enforcement. Accordingly, it held that the present action should not be deemed barred solely by the introduction of Republic Act No. 1993.

Interruption or Suspension of Prescription: Civil Case No. Q-1299 and Article 1155

The Court then addressed the more specific question raised by the parties: whether Saladas could benefit from prescription interruption or suspension during the pendency of Civil Case No. Q-1299 and in light of Article 1155 of the Civil Code.

Franklin Baker Company relied on Peralta vs. Alipio, contending that Civil Case No. Q-1299 did not interrupt prescription. The Court distinguished Peralta. It observed that Peralta was decided under the Code of Civil Procedure (Act 190), with no specific provision akin to Article 1155 on interruption through filing suit, written extrajudicial demand, or written acknowledgment. In Peralta, the Court inferred that interruption principles were not adopted in Act 190, drawing support from the rule in Section 49 of that Code. Under such framework, the filing of an action within the prescriptive period, followed by dismissal without sustaining a judgment on the merits, did not suspend the running of prescription.

By contrast, the Court held that Saladas’ case fell under the regime of the Civil Code of the Philippines, because the dismissal in Civil Case No. Q-1299 occurred after the Civil Code’s effectivity and the Civil Code expressly provided for interruption of prescription under Article 1155. The Court further clarified that its recognition of interruption depended on the applicable law governing the specific facts and time periods in question.

The Court then considered whether Saladas could invoke Article 1155 not only for overtime performed after the Civil Code’s effectivity, but also for overtime allegedly performed earlier, beginning December 7, 1949. It noted that the Civil Code had been approved on June 18, 1949 and became effective later, and that the critical issue was how to apply Article 1155’s interruption provisions to causes of action that had “come into being” before the Civil Code’s effectivity but had not been “exercised” before that date. The Court referred to Article 2258, which provides that actions and rights that came into being but were not exercised before the effectivity of the Civil Code remain in full force but that their exercise, duration, and procedure to enforce them are regulated by the Civil Code and the Rules of Court.

The Court held that Saladas’ right of action for overtime services from December 7, 1949 to August 30, 1950 had “come into being” but was not exercised before the Civil Code’s effectivity. It also reasoned that Civil Case No. Q-1299 was not “pending on the date” of effectivity in a way that made the parties’ procedural option applicable, nor was it “commenced under the old laws.” Therefore, under Article 2258, the interruption provisions under Ar

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