ART.
95 the employees, to prove that there are less than 10
1. RIGHT TO SERVICE INCENTIVE LEAVE (SIL)
1.1. Meaning of One Year of Service
 service within 12 months whether continuous or
broken, reckoned from the date the employee started
working, including authorized absences and paid
regular holiday
 UNLESS the number of working days as a matter of
practice/policy or provided in the employment contract
is less than 12 months, then said period shall be
considered one year for the purpose of determining
entitlement to the service incentive leave.
1.2. Part-time Workers
 Advisory Opinion of the Bureau of Working
Conditions of DOLE: part-time workers are entitled to
the full benefit of the yearly 5 days incentive leave with
pay.
Art. 95 speaks of the number of months in a year for
entitlement to said benefit (and not the number of
hours worked in a day etc). Part-time are entitled to the
full five days and not on a pro-rata basis.
 But DOLE’s Explanatory Bulletin on Part-time
Employment allows proportionate availment and
commutation of the SIL. To quote:”xxx The availment
and commutation of the same can be proportionate to
the daily work rendered and the regular daily salary,
respectively.”
1.3 “On Contract” Workers
 Teachers (Cebu Institute of Technology vs. Ople): The
phrase “those who are engaged on task or contract
basis should however be related with “field personnel”
applying the rule on ejusdem generic that general and
unlimited terms are restrained and limited by the
particular terms that they follow. The petitioner’s
teaching personnel cannot be deemed doing field
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.
1.4 Piece-Rate Workers
 Makati Haberdashery ruled that piece-rate
employees are not entitled to service incentive leave
pay. But the SC appears to have changed its mind in
the later LABOR CONGRESS case. (Read comments in
Art. 101 regarding workers paid by result).
1.5. Excluded Employer; Burden of Proof
 Establishments regularly employing less than 10
employees.
When an employer claims that it falls within the
exception, it is incumbent upon such employer to show
that he belongs to a class excepted by the law from the
general rule. Specifically, it is the employer’s duty, not
employees in the company.
2. COMMUTATION OF SIL
 The Code has no provision on the commutation or
the conversion to cash of unused service incentive
leave. But the IRR by DOLE requires it.
 The law and the rules both state that the SIL need
not be given to employees already enjoying VLs with
pay of at least 5 days.
Questions:
If a company grants 15 days VL, is the company
obliged to pay the cash equivalent of at least 5 days VL
unused at the end of the year? If 5 of the 15 VL is SIL,
does it follow that at least 5 of the 15 days VL must be
converted to cash if unused at year’s end? If the
employer does not do so, does the employer violate
the law on SIL?
2.1 Basis of Computation
Salary rate at the date of commutation. May be on a
pro-rata basis.
Ex.
Hired: January 1, 1989
Separated: March 1, 1990
SIL earned as of Dec. 31 1989 = 5 days
Proportionate SIL for Jan and Feb 1990 =
(2/12 x 5 days) = 0.833 day
Total accrued SIL as of Separation date = 5.833
Thus if base pay is P10,000, what shall be the amount
of the conversion?
3. SICK LEAVE AND VACATION LEAVE AS VOLUNTARY
BENEFITS
 Five-day service incentive leave is mandatory
 Vacation and Sick Leaves are voluntary.
Discretionary policy of the employer or from CBA
 SLs, VLs, Maternity leaves, etc are in intended to be
replacements for regular income which otherwise
would not be earned because an employee is not
working during the period of said leaves. They are
intended to alleviate the economic conditions of the
workers.
 VL’s purpose: Not merely to give employee
additional salary or bounty but to afford the laborer a
chance to get a much needed rest to replenish his worn
out energies and acquire new vitality to enable him to
efficiently perform his duties. If an employee allows the
years to go by in silence and did not avail VLs, he
waives it. It is thus a mere concession or act of grave of
the employer.
 The employer may impose certain conditions for
other voluntary benefits. Ex is the case of SMB where it
made a regulation stating that “if an employee does
not choose to enjoy his yearly sick leave of thirty days,
he may accumulate such leave up to a maximum of six
months and enjoy his six months sick leave at the end
of the sixth year but may not commute it to cash.

3.1. Commutation of Sick Leave
 If the company, for three years, has granted and
paid the cash equivalent of unenjoyed portion of the
SL, it may be deemed to have ripened into company
practice or policy which cannot be peremptorily
withdrawn.
Bottomline: SL/VLs and their conversion to cash are
voluntary, not statutory in character. Entitlement to
them, especially by a corporate executive, must be
proved. In cases of a corporation, Board resolution
must approve such grant before it can be taken into
effect.
3.2. Rationale for accumulation and
conversion
 In CBAs, the rationale for the accumulation of leave
credits and their conversion to cash is aimed primarily
at encouraging workers to work continuously and with
dedication for the company. It is also to lure the
employees to stay with the company. The basis of the
conversion must be the LAST PREVAILING SALARY
received by the employee.
4. PATERNITY AND MATERNITY LEAVE
 RA 8187 grants paternity leave of 7 days (not 7
working days) with full day to all MARRIED male
employees in the private and public sectors.
 Available only for the first four deliveries of the
LEGITIMATE spouse with whom the husband is
COHABITING.
 Delivery: childbirth, miscarriage and abortion
 Purpose: To enable the husband to lend support to
his wife during the period of recovery and/or in the
nursing of the newly born child.
 IRR sets conditions to make one entitled to such
paternity leave benefit (sec. 3 of the IRR of RA 8187).
a. Employee at the time of delivery
b. Is cohabiting with spouse at the time of
delivery (birth or miscarriage but abortion is
not mentioned)
c. Applied for paternity leave in accordance with
Sec 4
d. His wife has given birth or suffered a
miscarriage
 Not convertible to cash when unused
 Maternity leave benefit is granted under the social
security law in relation to Art. 133 of the LC.
5. PARENTAL (SOLO PARENT) LEAVE
 RA 8972 Solo Parents’ Welfare Act
 not more than 7 working days every year and to
solo parent employee who has rendered at least 1 year
of service
 not more than 7 means that one-day leave is legal
compliance
 cumulative total each year cannot exceed seven
days
 it is in addition to the legally mandated leaves = SIL,
SSS Maternity Leave, Paternity Leave
 Conditions are also set to make one entitled to such
benefit.
a. Rendered at least 1 year of service, continuous
or broken at the time of the effectivity of this
act
b. Notified employer of availment within
reasonable time
c. Present a Solo Parent ID to employer
 not convertible to cash unless otherwise stipulated.
Non-compliance of employer=damages
 Other than the paid leave, the law grants other
benefits such as educational benefit, flexible work
schedule, and housing benefits.
5.1. “Solo Parent” Defined
a. Woman who gives birth as a result of rape or
crimes against chastity even without final
conviction. But the mother should keep and
raise the child
b. Left solo or alone with the responsibility due to
death of spouse
c. While the spouse is detained or serving
sentence for a criminal conviction for at least 1
year
d. Physical and/or mental incapacity of spouse as
certified by public medical practitioner
e. Legal separation or de facto separation from
spouse for at least 1 year. But he/she must be
entrusted with the custody of the children
f. Declaration of nullity or annulment of marriage
as decreed by a Court or by a church. But
he/she must be entrusted with the custody of
the children.
g. Abandonment of spouse for at least 1 year
h. Unmarried mother/father who has preferred to
keep and rear his/her child/ren instead of giving
them up to welfare institutions or to others
i. Any other person who solely provides parental
care and support to a child/ren provided he/she
is duly licensed as a foster parent by the DSWD
or duly appointed legal guardian by the court
j. Any family member who assumes the
responsibility of head of family as a result of
death, abandonment, disappearance or
prolonged absence of the parents or solo
parent. But such circumstances should last for
at least 1 year
 Children- living with and dependent upon the solor
parent for support who are unmarried, unemployed and
below 18 years old, or even 18 years old and above but
are incapable of self-support because of mental and/or
physical defect or disability.
6. BATTERED WOMAN LEAVE
 for female employees only. For discussion, see Art.
133 discussion.
ART. 96
1. COVERAGE AND DISTRIBUTION
 Apply only to establishments collecting service
charges including those entities operating primarily as
private subsidiaries of the government.
 Rule applies to all employees of covered employers,
regardless of their positions, designations or
employment status. 85% shall be distributed to the
covered employees except managerial employees
while the remaining 15% shall be retained by
management to answer for losses and breakages and
for distribution to managerial employees at the
discretion of management in the latter case.
 Shares shall be distributed and paid to the
employees not less than once every 2 weeks or twice a
month at intervals not exceeding 16 days.

2. RULE IF COLLECTION OF SERVICE CHARGE IS

ABOLISHED

 In case the service charge is abolished, the share of

covered employees shall be considered integrated in
their wages. The basis of the amount to be integrated
shall be the average monthly share of each employee
for the past 12 months immediately preceding the
abolition or withdrawal of such charges.

3. TIPS

 if not collective service charges but has practice or

policy of monitoring and pooling of tips given
voluntarily by customers, same manner of distribution
as the service charge.