Retirement Benefits and Service Incentive

FIVE (5) DAYS OF SERVICE INCENTIVE LEAVE

The five (5) days of service incentive leave provided under Article 287 as part of the retirement benefit of one-half (½) month salary for every year of service should be paid in full. It should not be computed on the basis of 1/12 of the 5-day service incentive leave.

1/12 OF 13TH MONTH PAY AND 5 DAYS OF SERVICE INCENTIVE LEAVE (SIL) SHOULD NOT BE INCLUDED IF THE EMPLOYEE WAS NOT ENTITLED TO 13TH MONTH PAY AND SIL DURING HIS EMPLOYMENT
Supposing the retiring employee, by reason of the nature of his work, was not entitled to 13th month pay or to the SIL pay pursuant to the exceptions mentioned in the 13th Month Pay Law and the Labor Code, should he be paid upon retirement, in addition to the salary equivalent to fifteen (15) days, the additional 2.5 days representing one-twelfth (1/12) of the 13th month pay as well as the five (5) days representing the service incentive leave for a total of 22.5 days?

This question was answered in the negative in R & E Transport, Inc. v. Latag, The Supreme Court in this case ruled that employees who are not entitled to 13th month pay and SIL pay while still working should not be paid the entire “22.5 days” but only the fifteen (15) days salary. In other words, the additional 2.5 days representing one-twelfth (1/12) of the 13th month pay and the five (5) days of SIL should not be included as part of the retirement benefits.

The employee in this case was a taxi driver who was being paid on the “boundary” system basis. It was undisputed that he was entitled to retirement benefits after working for fourteen (14) years with R & E Transport, Inc. However, he was not entitled to the 13th month pay since Section 3 of the Rules and Regulations Implementing P.D. No. 851 exempts from its coverage employers of those who are paid on purely boundary basis. He was also not entitled to the 5-day service incentive leave pay pursuant to the Rules to Implement the Labor Code which expressly excepts field personnel and other employees whose performance is unsupervised by the employer.

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