Article 95: Service Incentive Leave

Auto Bus Transport Systems, Inc.

vs Bautista
FACTS:
Antonio
Bautista
was
employed by Auto Bus Transport
Systems, Inc. in May 1995. He was
assigned to the Isabela-Manila route
and he was paid by commission (7% of
gross income per travel for twice a
month). In January 2000, while he was
driving his bus he bumped another
bus owned by Auto Bus. He claimed
that he bumped the he accidentally
bumped the bus as he was so tired
and that he has not slept for more
than 24 hours because Auto Bus
required him to return to Isabela
immediately after arriving at Manila.
Damages were computed and 30% or
P75,551.50 of it was being charged to
Bautista. Bautista refused payment.
Auto Bus terminated Bautista after
due hearing as part of Auto Bus
management prerogative. Bautista
sued Auto Bus for Illegal Dismissal.
The Labor Arbiter Monroe Tabingan
dismissed Bautistas petition but ruled
that Bautista is entitled to P78,117.87
13th month
pay payments and
P13,788.05 for his unpaid service
incentive leave pay. The case was
appealed before the National Labor
Relations Commission. NLRC modified
the LAs ruling. It deleted the award
for 13th Month pay. The court of
Appeals affirmed the NLRC. Auto Bus
averred
that
Bautista
is
a
commissioned employee and if that is
not reason enough that Bautista is

also a field personnel hence he is not

entitled to a service incentive leave.
They invoke: Art. 95. RIGHT TO
SERVICE INCENTIVE LEAVE (a) Every
employee who has rendered at least
one year of service shall be entitled to
a yearly service incentive leave of five
days with pay; and (d) Field personnel
and
other
employees
whose
performance is unsupervised by the
employer including those who are
engaged on task or contract basis,
purely commission basis, or those who
are paid in a fixed amount for
performing work irrespective of the
time consumed in the performance
thereof; .
ISSUE: Whether or not Bautista is
entitled to Service Incentive Leave. If
he is, Whether or not the three (3)year prescriptive period provided
under Article 291 of the Labor Code,
as
amended,
is
applicable
to
respondents claim of service incentive
leave pay.
HELD: Yes, Bautista is entitled to
Service Incentive Leave. The Supreme
Court emphasized that it does not
mean that just because an employee
is paid on commission basis he is
already barred to receive service
incentive leave pay.
The question actually boils down to
whether or not Bautista is a field
employee.
According to Article 82 of the Labor
Code, field personnel shall refer to
non-agricultural
employees
who
regularly perform their duties away

from the principal place of business or

branch office of the employer and
whose actual hours of work in the field
cannot be determined with reasonable
certainty.
As a general rule, field personnel are
those whose performance of their
job/service is not supervised by the
employer or his representative, the
workplace being away from the
principal office and whose hours and
days of work cannot be determined
with reasonable certainty; hence, they
are paid specific amount for rendering
specific service or performing specific
work. If required to be at specific
places at specific times, employees
including drivers cannot be said to be
field personnel despite the fact that
they are performing work away from
the principal office of the employee.

credits. His cause of action to claim

the payment of
his
accumulated
service incentive leave thus accrued
from the time when his employer
dismissed him and failed to pay his
accumulated leave credits.
Therefore, the prescriptive period with
respect to his claim for service
incentive leave pay only commenced
from the time the employer failed to
compensate his accumulated service
incentive leave pay at the time of his
dismissal. Since Bautista had filed his
money claim after only one month
from the time of his dismissal,
necessarily, his money claim was filed
within the prescriptive period provided
for by Article 291 of the Labor Code.

Art. 97 Wages
Certainly, Bautista is not a field
employee. He has a specific route to
traverse as a bus driver and that is a
specific place that he needs to be at
work. There are inspectors hired by
Auto Bus to constantly check him.
There are inspectors in bus stops who
inspects the passengers, the punched
tickets, and the driver. Therefore he is
definitely supervised though he is
away from the Auto Bus main office.
On the other hand, the 3 year
prescriptive period ran but Bautista
was able to file his suit in time before
the prescriptive period expired. It was
only upon his filing of a complaint for
illegal dismissal, one month from the
time of his dismissal that Bautista
demanded from his former employer
commutation of his accumulated leave

Songco et al vs NLRC
Facts: Zuellig (M) Inc. filed with the
Department of Labor (Regional Office
No. 4) a clearance to terminate the
services of petitioners Jose Songco,
Romeo Cipres and Amancio Manuel
due to alleged financial losses.
However, the petitioners argued that
the company is not suffering any
losses and the real reason for their
termination was their membership in
the union. At the last hearing of the
case, the petitioner manifested that
they no longer contesting their
dismissal, however, they argued that
they should be granted a separation
pay. Each of the petitioners was
receiving a monthly salary of P40,
000.00 plus commissions for every

sale they made. Under the CBA

entered by the Zuellig Inc. and the
petitioners, in Article XIV, Section 1(a),
Any employee, who is separated from
employment due to old age, sickness,
death or permanent lay-off not due to
the fault of said employee shall
receive
from
the
company
a
retirement gratuity in an amount
equivalent to one months salary per
year of service. One month of salary
as used in this paragraph shall be
deemed equivalent to the salary at
date
of
retirement;
years
of service shall be deemed equivalent
to total service credits, a fraction of at
least six months being considered one
year,
including
probationary
employment.
Other
basis
for
petitioners contention are Article 284
of the Labor Code with regards to
reduction of personnel and Sections
9(b) and 10 of Rule 1, Book VI of the
Rules Implementing the Labor Code.
The Labor Arbiter rendered his
decision directing the company to pay
the complainants separation pay
equivalent to their one month salary
(exclusive of commissions, allowances,
etc.) for every year of service that
they have worked with the company.
The petitioners appealed to the NLRC
but it was denied. Petitioner Romeo
Cipres filed a Notice of Voluntary
Abandonment and Withdrawal of
petition contending that he had
received, to his full and complete
satisfaction, his separation pay. Hence,
this petition.

Issue: Whether or not earned sales

commissions and allowances should
be included in the monthly salary of
petitioners
for
the
purpose
of computation of
their
separation
pay.
Held: The
petition
is
granted.
Petitioners contention that in arriving
at the correct and legal amount of
separation pay due to them, whether
under the Labor Code or the CBA, their
basic
salary,
earned
sales
commissions and allowances should
be added together. Insofar as whether
the allowances should be included in
the monthly salary of petitioners for
the purpose of computation of their
separation pay is concerned, this has
been settled in the case of Santos vs.
NLRC, 76721, in the computation of
backwages
and
separation
pay,
account must be taken not only of the
basic salary of petitioner but also of
her transportation and emergency
living allowances. In the issue of
whether
commission
should
be
included in the computation of their
separation pay, it is proper to define
first
commission.
Blacks
Law
Dictionary defined commission as the
recompensed, compensation or reward
of an agent, salesman, executor,
trustees, receiver, factor, broker or
bailee, when the same is calculated as
a percentage on the amount of his
transactions or on the profit to the
principal. The nature of the work of a
salesman and the reason for such type
of remuneration for services rendered
demonstrate
clearly
that
the

commission are part of petitioners

wage and salary. Some salesmen do
not receive any basic salary but
depend
on
commission
and
allowances or commissions alone, are
part of petitioners wage and salary.
Some salesman do not received any
basic
salary
but
depend
on
commission
and
allowances
or
commissions alone, although an
employer-employee relationshipexist.
In Soriano v. NLRC, it is ruled then
that, the commissions also claimed by
petitioner (override commission plus
net deposit incentive) are not properly
includible in such base figure since
such commissions must be earned by
actual
market
transactions
attributable to petitioner. Applying this
by analogy, since the commissions in
the present case were earned by
actual
market
transactions
attributable to petitioners, these
should be included in their separation
pay. In the computation thereof, what
should be taken into account is the
average commissions earned during
their last year of employment.
DOUGLAS MILLARES and ROGELIO
LAGDA, vs. NATIONAL LABOR
RELATIONS COMMISSION, TRANSGLOBAL MARITIME AGENCY, INC. and
ESSO INTERNATIONAL SHIPPING CO.,
LTD.,
Facts: Petitioners Douglas Millares and
Rogelio Lagda seek the nullification of
the decision, dated June 1, 1993, of
the public respondent National Labor
Relations
Commission
(NLRC)
dismissing for lack of merit petitioners'
appeal and motion for new trial and
affirming the decision, dated July 17,

1991, rendered by the Philippine

Overseas Employment Administration
(POEA). Petitioner Douglas Millares
and Lagda were employed by private
respondent
ESSO
International
Shipping
Company
Ltd.
(Esso
International, for brevity) through its
local
manning
agency,
private
respondent
Trans-Global
Maritime
Agency, Inc. Petitioner Millares applied
for a leave of absence and Michael J.
Estaniel,
President
of
private
respondent Trans-Global, approved the
request
for
leave
of
absence.
Subsequently, informing him of his
intention to avail of the optional
retirement plan under the Consecutive
Enlistment
Incentive
Plan
(CEIP)
considering that he had already
rendered more than twenty (20) years
of continuous service but denied
petitioner Millares' request for optional
retirement on the following grounds,
to wit: (1) he was employed on a
contractual basis; (2) his contract of
enlistment (COE) did not provide for
retirement before the age of sixty (60)
years; and (3) he did not comply with
the requirement for claiming benefits
under the CEIP, i.e., to submit a
written advice to the company of his
intention to terminate his employment
within thirty (30) days from his last
disembarkation
date.
Petitioner
Millares requested for an extension of
his leave of absence and C. Palomar,
Crewing Manager, Ship Group A, TransGlobal,
wrote
petitioner
Millares
advising him that respondent Esso
International
"has
corrected
the
deficiency
in
its
manpower
requirements specifically in the Chief
Engineer rank by promoting a First
Assistant Engineer to this position as a
result of (his) previous leave of
absence which expired last August 8,
1989. The adjustment in said rank was
required in order to meet manpower
schedules as a result of (his) inability."
Personnel
Administrator,
advised

petitioner Millares that in view of his

absence without leave, which is
equivalent to abandonment of his
position, he had been dropped from
the roster of crew members effective
September 1, 1989. On October 5,
1989, petitioners Millares and Lagda
filed a complaint-affidavit, docketed as
POEA (M) 89-10-9671, for illegal
dismissal
and
non-payment
of
employee benefits against private
respondents Esso International and
Trans-Global, before the POEA. On July
17, 1991, the POEA rendered a
decision dismissing the complaint for
lack of merit. 12Petitioners appealed
the decision to the NLRC dismissing
petitioners' appeal and denying their
motion for new trial for lack of merit.
Hence, the instant petition for
certiorari.
Issue:
Whether or not the public respondent
gravely abused its discretion in ruling
that petitioners were not regular
employees, the termination of the
petitioners were valid and failing to
rule that even in the absence of an
optional
early retirement policy,
petitioners were still entitled to
receive 100% of their total credited
contributions to the CEIP as expressly
provided in paragraph 2 (g) and (h) of
the letter memorandum.
Held:
The definition of regular and casual
employment in Art 280 of the labor
code provides that the primary
standard to determine a regular
employment
is
the
reasonable
connection between the particular
activity performed by the employee in
relation to the usual business or trade
of the employer. The test is whether
the former is usually necessary or
desirable in the usual business or
trade of the employer.

In the case at bar, it is undisputed that

petitioners were employees of private
respondents until their services were
terminated. They served in their
capacity
as
Chief
Engineers,
performing activities which were
necessary and desirable in the
business of private respondents Esso
International, a shipping company;
and Trans-Global, its local manning
agency which supplies the manpower
and crew requirements of Esso
International's vessels. Verily, as
petitioners had rendered 20 years of
service, performing activities which,
were necessary and desirable in the
business
or
trade
of
private
respondents, they are, by express
provision of Article 280 of the Labor
Code, considered regular employees.
Petitioners may not be dismissed
except for a valid or just cause under
Article 282 of the Labor Code. In the
instant case, clearly, there was no
valid cause for the termination of
petitioners. It will be recalled, that
petitioner Millares was dismissed for
allegedly having "abandoned" his
post; and petitioner Lagda, for his
alleged "unavailability for contractual
sea service." However, that petitioners
did not abandon their jobs such as to
justify the unlawful termination of their
employment is borne out by the
records. Furthermore, the absence of
petitioners was justified by the fact
that they secured the approval of
private respondents to take a leave of
absence after the termination of their
last
contracts
of
enlistment.
Subsequently, petitioners sought for
extensions of their respective leaves
of absence. Granting arguendo that
their
subsequent
requests
for
extensions were not approved, it
cannot be said that petitioners were
unavailable or had abandoned their
work when they failed to report back
for assignment as they were still
questioning the denial of private

respondents of their desire to avail of

the optional early retirement policy,

which they believed in good faith to

exist.