Prescriptive Period to Claim Service Incentive Leave (SIL) Commences from the Time of Entitlement of Demand for Commutation Upon Termination of Employment
Prescriptive period for money claims is three (3) years. To fully appreciate the rule on the reckoning of prescriptive period on SIL claims, a discussion on general rules on prescription of action in Article 291 of the Labor Code should be made.
Prescription pertains to the time within which a claim has to be filed. A prescriptive period of three (3) years for example means that an action should be filed within three years. After such period, the action is barred by prescription.
Employees aggrieved on payment of their salaries and other benefits except SIL, have a period of three (3) years within which to file an action. Specifically, the Labor Code provides that: (See page 283, Guide on Employee Compensation and Benefits Vol. 1, 2nd Edition, by Atty. Elvin B. Villanueva)
“Article 291. Money claims.—All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three years from the time the cause of action accrued, otherwise they shall be forever barred.”
The important points to be considered in this provision are:
- The money-claims must arise from employer- employee relations;
- It shall be filed within three (3) years; and
- Filing shall be made from the time the cause of action accrued.
Usual problems in this case arise on the aspect of accrual of cause of action. When does it accrue? From the time of engagement of the employee? Or from the time of his filing of action?
In one case, the company asserted that when the employee filed the case in the summer of 1995 for money claims, prescription already set in because the cause of action arose from her hiring in the summer of 1991 and 1992. Counting from the latter period, more than three (3) years had passed when the claim was filed. But the Supreme Court did not agree stating that the accrual of such cause of action does not reckon from point of engagement but from the time of refusal of the employer to pay such monetary benefits. (Page 284, Guide on Employee Compensation and Benefits Vol. 1, 2nd Edition, by Atty. Elvin B. Villanueva, citing Texon Manufacturing vs. Millena, G.R. No. 141380, April 14, 2004.)
Since a cause of action requires, as essential elements, not only a legal right of the plaintiff and a correlative obligation of the defendant but also an act or omission of the defendant in violation of said legal right, the cause of action does not accrue until the party obligated refuses, expressly or impliedly, to comply with its duty. (Page 284, Guide on Employee Compensation and Benefits Vol. 1, 2nd Edition, by Atty. Elvin B. Villanueva, citing Baliwag Transit, Inc. vs. Ople, G.R. No. 57642, March 16, 1999, 171 SCRA 250, cited in Serrano vs. Court of Appeals, G.R. No. 139420, August 15, 2001, 363 SCRA 223, 230)
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It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff. (Ibid.)
In the January 2020 case of Naren Villanueva vs. Ganco Resort and Recreation, Inc. (G.R. No. 227175, January 8, 2020) the Supreme Court, citing Auto Bus Transport Systems, Inc. vs. Bautista (497 Phil. 863 (2005).), held 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 only from the time the employee becomes entitled to the commutation of his service incentive leave, i.e., from the time he demands its commutation or upon termination of his employment, as the case may be. This pronouncement has also been affirmed by the Court in Rodriguez vs. Park N Ride, Inc. (807Phil.747(2017).)
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