Auto Bus Transport v. Bautista (2005): Service Incentive Leave

Antonio Bautista worked for Auto Bus Transport Systems from May 24, 1995 as a driver-conductor on routes between Manila, Baguio, Tuguegarao and Tabuk. He was paid on commission: 7% of the total gross income of each trip, twice a month.

On January 3, 2000, the bus he was driving bumped the rear of another company bus that had stopped suddenly at a sharp curve. Antonio said he had been made to drive back although he had not slept for almost 24 hours. He said he was not allowed to work until he paid P75,551.50, which was 30% of the cost of repairing the buses. A month later he received a letter of termination. The company said his record showed repeated offenses and that he had been given a chance to explain.

On February 2, 2000, Antonio filed a complaint for illegal dismissal, with claims for 13th month pay and service incentive leave pay. The Labor Arbiter dismissed the illegal dismissal complaint but ordered the company to pay his 13th month pay and his service incentive leave pay for all his years of service. The NLRC deleted the 13th month pay, because the rules implementing the 13th month pay law exclude employers of workers paid on a purely commission basis, but kept the service incentive leave pay. The Court of Appeals affirmed. The company went to the Supreme Court on the leave pay only.

Is a driver-conductor paid on commission entitled to service incentive leave? And does the three-year limit on money claims cut down how many years of leave pay he can recover?

The Supreme Court denied the company's petition.

Commission pay alone does not remove the right. The Labor Code article on service incentive leave, numbered Article 95 in the decision, gives every employee who has rendered at least one year of service "a yearly service incentive leave of five days with pay." The Implementing Rules exclude "[f]ield personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis" and similar workers. The Court read the words about commission and task workers as limited by "field personnel." So employees paid on commission are excluded only if they are field personnel.

Field personnel means unsupervised work. Field personnel are non-agricultural employees who regularly work away from the employer's main place of business and whose actual hours of work in the field cannot be determined with reasonable certainty. The Court said where the work is done is not enough; the question is whether the employer supervises the employee's time and performance. The bus company had inspectors who boarded buses along the routes, a weekly shop day for each bus, and dispatchers who saw to it that buses left and arrived at set times. Antonio was "under constant supervision," so he was not field personnel and was entitled to the leave.

When the three years start. Article 306 [291] of the Labor Code, cited in the decision as Article 291, requires money claims to be filed within three years from the time the cause of action accrued. For most benefits, only the amounts withheld within the three years before the complaint can be recovered. But the Court called service incentive leave "a curious animal": the employee may use it, convert it to cash at the end of the year, or let it accumulate and have it converted to cash on resignation or separation.

So the three-year period starts "not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employee's services, as the case may be."

Applied to Antonio. He never used his leave or asked for its cash value while employed. He claimed it one month after his dismissal, when the company had not paid it. His claim was filed well within three years, so he was entitled to the leave pay for all his years of service, as the Labor Arbiter had ordered.

Employees paid on task, contract or commission basis are excluded from service incentive leave only if they are field personnel, whose actual hours of work cannot be determined with reasonable certainty; and the three-year prescriptive period for service incentive leave pay runs from the employer's refusal to pay its money equivalent on demand or upon the end of employment, not from the end of each year.

Auto Bus is the leading case on two questions workers often ask about the five-day service incentive leave: whether being paid on commission or per trip removes the right, and how many years back a worker can claim. Under Auto Bus, supervision decides the first question, and unused leave claimed at the end of employment can cover all the years of service, as long as the claim is filed within three years from the employer's refusal or the end of the job.

Here is a made-up illustration, with invented names. Dodong drives a shuttle van for a company for six years and is paid per trip. The company sets his schedule, checks his departures and has a dispatcher at each terminal. He never uses or converts his service incentive leave. When he resigns, the company refuses to pay it. Under the reasoning in Auto Bus, he may not be field personnel, and his claim for the accumulated leave would start running from that refusal.

The 13th month pay claim was not decided by the Supreme Court in this case. For plain answers, read Service incentive leave and How long do you have to file a labor money claim?. For a case of your own, see where to find legal help.