Service incentive pay

Dear Atty. Vlad,

I am an office staff in a restaurant in Malolos City, Bulacan. I was employed there for five years. During my entire stay, I neither used any of my leaves nor was my unused leaves monetized. Last 15 January 2024, I resigned from my work as I found a better paying job in San Fernando, Pampanga. When I went to my employer to ask for my service incentive leave pay, I was only given the equivalent of three years because according to my employer, prescription has already set in. Is my employer correct? Please guide me. Myra

Dear Myra,

Contrary to your employer’s assertion, prescription has not yet set in.

In the case of Lourdes C. Rodriguez vs. Park N Ride, Inc. Nicest (Phils.) Inc.,/Grand Leisure Corp./ Sps. Vicente & Estelita B. Javier, March 20, 2017, G.R. No. 222980 (citing the case of Auto Bus Transport System, Inc. vs. Bautista; 497 Phil. 863, 2005), the Court explained, as follows:

“However, Auto Bus Transport System, Inc. v. Bautista clarified the correct reckoning of the prescriptive period for service incentive leave pay: x x x

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three-year prescriptive period commences, 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.

The above construal of Art. 291, vis-a-vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman’s welfare should be the primordial and paramount consideration. The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. (Emphasis supplied).

From the above-cited Decision of the Court, your employer is wrong in stating that prescription has already set in. The three-year prescriptive period sets in only from the time of demand. Since you made the demand immediately after your resignation, your right to receive your service incentive leave was within the three-year prescriptive period. In addition, since you were already paid the equivalent of three years of service incentive leave pay you are still entitled to an additional Service Incentive Leave Pay equivalent to two years or 10 days of Service Incentive Leave Pay.

I hope that I was able to guide you based on what you shared with me. Atty. Vlad del Rosario