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16 May 2005 l Labor Standards
Service Incentive Leave Pay

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
Bautista’s petition but ruled that Bautista is entitled to P78,1117.87 13 th 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
LA’s ruling. It deleted the award for 13 th 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


(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.


SECTION 1. Coverage. ' This rule shall apply to all employees except:

(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 respondent's 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.

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 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.

Definition of Service Incentive Leave

Service incentive leave is a right which accrues to every employee who has served within 12
months, whether continuous or broken reckoned from the date the employee started working,
including authorized absences and paid regular holidays unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment contracts, is
less than 12 months, in which case said period shall be considered as one year. It is also
commutable to its money equivalent if not used or exhausted at the end of the year. In other
words, an employee who has served for one year is entitled to it. He may use it as leave days or
he may collect its monetary value.