FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA MERCADO, JULIANA CABRAL, GUADA…

Mercado versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Fortunato Mercado, Senior, Rosa Mercado, Fortunato Mercado, Junior, Antonio Mercado, Jose Cabral, Lucia Mercado, Asuncion Guevara, Anita Mercado, Marina Mercado, Juliana Cabral and others against the National Labor Relations Commission and their former employers, Aurora Cruz, Francisco Borja, Leticia Borja and Sto. Niño Realty Incorporated. The petitioners were farm workers who sued for illegal dismissal, underpayment of wages, unpaid overtime, holiday pay, service incentive leave, emergency cost of living allowances and thirteenth month pay. The case matters because it is the Supreme Court's clearest teaching on the second paragraph of Article 280 of the Labor Code: the proviso that counts a year of service as regular employment applies only to casual workers, and never to seasonal or project employees.

Procedural History

The complaint was filed with the Regional Arbitration Branch of the National Labor Relations Commission in San Fernando, Pampanga. Labor Arbiter Luciano Aquino ruled for the employers, finding the petitioners were not regular and permanent workers, and held that only the money claims for the last three years survived, the rest having prescribed. On grounds of equity, however, he awarded ten thousand pesos in financial assistance, to be divided among the petitioners except Fortunato Mercado, Junior, who had manifested his disinterest. Both sides appealed to the National Labor Relations Commission. The Commission affirmed the Labor Arbiter in all respects but deleted the award of financial assistance. The petitioners moved for reconsideration, and the Commission denied the motion. The petitioners then came to the Supreme Court on certiorari, and the Court gave due course to the petition and required the parties to submit their memoranda.

Facts

The petitioners claimed they were agricultural workers employed in all phases of work on seven and one half hectares of rice land and ten hectares of sugar land owned by the private respondents. Fortunato Mercado, Senior and Leon Santillan allegedly worked on the farm since 1949, Fortunato Mercado, Junior and Antonio Mercado since 1972, and the rest since 1960, until April 1979, when they were all dismissed. They claimed daily wages that began at one peso and fifty centavos and rose over the years to seven pesos.

Aurora Cruz answered that the petitioners were never her regular employees. She said she engaged their services through the spouses Fortunato Mercado, Senior and Rosa Mercado, her mandarols, meaning the persons who supplied the number of workers needed by farm owners, but only for a particular phase of agricultural work, after which the workers were free to serve other farm owners. The other private respondents denied any employment relationship and said they were merely the registered owners of the land.

The Labor Arbiter found that the petitioners were hired only as casuals, on an on and off basis, and that their claim of working twelve hours a day the whole year round was an exaggeration, since rice and sugar cane planting does not entail a whole year of operation on so small an area. He also found that the real cause of the complaint was the criminal complaint for theft filed against Reynaldo Mercado, the son of the older Mercado spouses, and that a local zone chairman had sworn the petitioners were never regularly employed but were hired only when needed.

Issues

• Whether or not the petitioners were regular and permanent farm workers of the private respondents under Article 280 of the Labor Code.
• Whether or not the proviso in the second paragraph of Article 280, counting an employee who has rendered at least one year of service as regular, applies to the petitioners.
• Whether or not the petitioners were illegally dismissed.

Applicable Provisions

Article 280 of the Labor Code provides:

Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

This first paragraph supplies the exception for seasonal work on which the entire ruling turns.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.

This second paragraph and its proviso are the provisions the petitioners invoked, and the Court construes them narrowly.

Ruling

On the first issue, the Court held that the findings of the Labor Arbiter, affirmed by the Commission, were supported by substantial evidence, and that findings of fact of administrative agencies are respected so long as they rest on substantial evidence, even if not overwhelming or preponderant. It is not for the reviewing court to weigh conflicting evidence or substitute its judgment, and an administrative decision may be set aside only upon proof of gross abuse of discretion, fraud, or error of law. None of these was shown.

On the second issue, the Court clarified Article 280. The first paragraph defines regular employees and excepts project employees, which include one whose work or service is seasonal in nature and whose employment is for the duration of the season, as in this case. The second paragraph marks as casual all other employees who do not fall under the first. The petitioners argued that the proviso made them regular after one year of service. The Court disagreed, holding that the office of a proviso is to qualify or modify only the phrase immediately preceding it, or to restrain or limit the generality of the clause it immediately follows, and that it is construed with reference to the immediately preceding part of the provision, not to the statute or other sections, unless the clear legislative intent is otherwise. The proviso therefore applies only to employees deemed casual, and not to project or seasonal employees nor to the regular employees treated in the first paragraph.

On the third issue, the Court held that the petitioners, being seasonal employees, legally ceased to be employed upon completion of the season, and that the termination of their employment could not and should not constitute illegal dismissal.

Doctrine

An employee is regular where he is engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, regardless of any written or oral agreement to the contrary, except where the employment is fixed for a specific project or undertaking, or where the work is seasonal in nature and the employment is for the duration of the season. The proviso in the second paragraph of Article 280, deeming an employee regular after at least one year of service whether continuous or broken, applies only to casual employees, not to project or seasonal employees. A proviso qualifies or modifies only the phrase immediately preceding it, and is construed with reference to the immediately preceding part of the provision to which it is attached. The termination of a seasonal employee upon completion of the season is not illegal dismissal.

Disposition

The petition was dismissed, and the decision of the National Labor Relations Commission affirming that of the Labor Arbiter was affirmed, with no pronouncement as to costs.

Remember This

Memorize the line that the proviso on one year of service applies only to casuals, never to seasonal or project employees. Examiners use this case to test the construction of a proviso and the distinction between regular, casual and seasonal employment under Article 280.