Fishermen are NOT ‘Field Personnel’: Ensuring Service Incentive Leave Rights for Sea-Based Workers in the Philippines

TLDR: This Supreme Court case clarifies that fishermen working on vessels are not considered ‘field personnel’ under Philippine labor law because their work is supervised by the vessel’s master. This means they are entitled to service incentive leave pay, just like other regular employees, protecting their rights and ensuring fair compensation for their work at sea.

G.R. No. 112574, October 08, 1998: MERCIDAR FISHING CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION AND FERMIN AGAO, JR.

INTRODUCTION

Imagine spending weeks, even months, at sea, braving unpredictable weather and arduous labor, all to bring food to our tables. Fishermen are the backbone of the Philippine fishing industry, yet their labor rights are often overlooked. The case of Mercidar Fishing Corporation v. National Labor Relations Commission shines a light on these rights, specifically addressing whether fishermen are considered ‘field personnel’ and thus excluded from crucial benefits like service incentive leave pay. This case arose when Fermin Agao, Jr., a ‘bodegero’ (ship’s quartermaster), was allegedly constructively dismissed by Mercidar Fishing Corporation and denied his service incentive leave. The central legal question was whether fishermen, working away from the company’s main office, fall under the ‘field personnel’ exemption in the Labor Code, or if they are entitled to the same labor protections as other employees.

LEGAL CONTEXT: FIELD PERSONNEL AND SERVICE INCENTIVE LEAVE

Philippine labor law, as enshrined in the Labor Code, aims to protect the rights and welfare of employees. Article 82 of the Labor Code defines the scope of working conditions and rest periods, specifying exemptions for certain categories of employees. Crucially, it excludes ‘field personnel’ from these provisions. The Labor Code defines ‘field personnel’ as:

“non-agricultural employees who regularly perform their 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.”

This definition is critical because ‘field personnel’ are generally not entitled to benefits like overtime pay, holiday pay, and, most relevant to this case, service incentive leave pay. Service incentive leave, as mandated by Article 95 of the Labor Code, grants employees who have rendered at least one year of service, five days of paid leave annually. This leave is intended to provide employees with rest and recuperation, promoting work-life balance and overall well-being.

The interpretation of ‘field personnel’ hinges on the phrase ‘whose actual hours of work in the field cannot be determined with reasonable certainty.’ The Supreme Court, in previous cases like Union of Filipro Employees (UFE) v. Vicar, clarified this phrase. The court emphasized that it’s not merely about working outside the office, but about the employer’s ability to supervise and control the employee’s time and performance. The Implementing Rules of the Labor Code further elaborate that field personnel are those “whose time and performance is unsupervised by the employer.” This means that if an employer can effectively supervise and determine an employee’s working hours, even in the field, the ‘field personnel’ exemption should not apply.

CASE BREAKDOWN: AGAO’S FIGHT FOR HIS RIGHTS

Fermin Agao, Jr. worked as a ‘bodegero’ for Mercidar Fishing Corporation since February 1988. In April 1990, Agao took a month-long leave due to illness. Upon his return with a clean bill of health on May 28, 1990, Mercidar Fishing refused to reinstate him immediately, repeatedly telling him to return later. Eventually, they stopped giving him work altogether. Feeling constructively dismissed, Agao requested a certificate of employment in September 1990. However, Mercidar Fishing allegedly refused to issue it unless Agao resigned, which he declined without separation pay.

Mercidar Fishing presented a different version of events, claiming Agao abandoned his job by not returning after his leave and being absent without leave for three months. They further claimed they tried to reassign him but he was left behind on September 1, 1990. They stated Agao only asked for a certificate of employment to seek work elsewhere and then demanded separation pay upon picking it up.

The case went through the following stages:

1. Labor Arbiter Level: Labor Arbiter Arthur L. Amansec sided with Agao in February 1992. He found Mercidar Fishing guilty of constructive dismissal and ordered them to reinstate Agao with backwages, 13th-month pay, and service incentive leave pay for 1990.
2. National Labor Relations Commission (NLRC): Mercidar Fishing appealed to the NLRC, arguing that fishermen are ‘field personnel’ and not entitled to service incentive leave. The NLRC dismissed the appeal in August 1993, affirming the Labor Arbiter’s decision. The NLRC emphasized that fishermen are under the control and supervision of the vessel’s master, thus not fitting the ‘field personnel’ exemption.
3. Supreme Court: Mercidar Fishing elevated the case to the Supreme Court via a petition for certiorari. They reiterated their argument that fishermen’s working hours are impossible to determine, making them ‘field personnel.’

The Supreme Court, however, upheld the NLRC’s decision. Justice Mendoza, writing for the Second Division, stated:

“In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner’s business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel’s patron or master as the NLRC correctly held.”

The Court emphasized that the crucial factor is the employer’s control and supervision. Even though fishermen work away from the main office, they are constantly supervised by the vessel’s master, who represents the employer. Therefore, their working hours are, in fact, determinable. The Supreme Court also affirmed the finding of constructive dismissal, highlighting that Agao’s filing of a complaint seeking reinstatement was inconsistent with the idea of job abandonment. The Court gave weight to the factual findings of the Labor Arbiter and NLRC, as they were supported by evidence, including Agao’s medical certificate.

PRACTICAL IMPLICATIONS: PROTECTING SEA-BASED WORKERS’ RIGHTS

This Supreme Court decision has significant implications for businesses in the fishing industry and for sea-based workers in general. It establishes a clear precedent that fishermen and similar sea-based employees are not automatically classified as ‘field personnel’ simply because they work away from the employer’s office. The ruling underscores the importance of control and supervision in determining ‘field personnel’ status. Employers cannot simply claim ‘field personnel’ status to avoid granting benefits to employees whose work is actually supervised, even if remotely.

For Businesses:

• Compliance is Key: Fishing corporations and similar businesses must review their employment practices and ensure compliance with labor laws regarding service incentive leave and other benefits for sea-based workers.
• Proper Classification: Accurately classify employees based on the nature of their work and the level of supervision, not just the work location.
• Avoid Constructive Dismissal: Ensure fair treatment of employees returning from leave and avoid actions that could be construed as forcing them to resign.

For Employees:

• Know Your Rights: Sea-based workers, including fishermen, should be aware of their right to service incentive leave and other labor protections.
• Document Everything: Keep records of employment, leave requests, medical clearances, and any communication with employers regarding work assignments and benefits.
• Seek Legal Help: If you believe your labor rights have been violated, consult with a labor lawyer to understand your options and pursue appropriate action.

Key Lessons from Mercidar Fishing Corp. v. NLRC:

• Supervision Defines ‘Field Personnel’: The critical factor in determining ‘field personnel’ status is whether the employee’s time and performance are effectively unsupervised by the employer. Working outside the office is not the sole determinant.
• Fishermen are Supervised: Fishermen on vessels are under the supervision of the vessel’s master, representing the employer, thus they are not ‘field personnel’ and are entitled to service incentive leave.
• Constructive Dismissal Protects Employees: Refusing to reinstate an employee after leave, especially with a health clearance, can be considered constructive dismissal, entitling the employee to remedies like reinstatement and backwages.

FREQUENTLY ASKED QUESTIONS (FAQs)

Q1: What exactly are ‘field personnel’ under Philippine Labor Law?

A: ‘Field personnel’ are non-agricultural employees who regularly work away from the main office and whose working hours cannot be precisely determined because their time and performance are unsupervised by the employer. Examples might include traveling sales agents with complete autonomy over their schedules.

Q2: Are all employees who work outside the office considered ‘field personnel’?

A: No. The key is the lack of supervision and the inability to determine working hours with certainty. If an employer can supervise the employee’s work, even remotely, and track their hours, they are likely not ‘field personnel’.

Q3: What is service incentive leave pay?

A: Service incentive leave pay is a benefit under Philippine law granting employees five days of paid leave each year after one year of service. It’s meant to provide employees with rest and time off.

Q4: Are ‘field personnel’ entitled to service incentive leave pay?

A: Generally, no. ‘Field personnel’ are exempted from the provisions of the Labor Code regarding working conditions and rest periods, which include service incentive leave. However, this case clarifies that this exemption is narrowly construed.

Q5: What constitutes constructive dismissal?

A: Constructive dismissal occurs when an employer’s actions create a hostile or unbearable work environment, forcing an employee to resign involuntarily. Refusal to reinstate an employee after leave, as in Agao’s case, can be considered constructive dismissal.

Q6: Does this ruling apply to all sea-based workers, or just fishermen?

A: While this case specifically involves fishermen, the principle of supervision and control can extend to other sea-based workers who are similarly supervised during their work, such as crew members on cargo ships or passenger vessels.

Q7: What should employers in the fishing industry do to comply with this ruling?

A: Fishing companies should ensure they are granting service incentive leave to their fishermen and other sea-based employees who are under the supervision of vessel masters. They should also review their policies to avoid constructive dismissal and ensure fair treatment of all employees.

Q8: What can employees do if they believe they have been misclassified as ‘field personnel’ or denied service incentive leave?

A: Employees should first try to discuss the issue with their employer. If that doesn’t resolve the problem, they can file a complaint with the National Labor Relations Commission (NLRC) to assert their rights. Seeking legal advice from a labor lawyer is also recommended.

ASG Law specializes in Labor Law and Employment Litigation. Contact us or email hello@asglawpartners.com to schedule a consultation.