G.R. No. 204684 , October 05, 2020
Allan Regala, Petitioner, vs. Manila Hotel Corporation, Respondent.

FACTS

Petitioner Allan Regala was hired by respondent Manila Hotel Corporation (MHC) in February 2000 as a waiter/cook helper in its Food and Beverage Department. He worked six days a week, was paid a daily salary, and MHC remitted SSS and PhilHealth contributions on his behalf. His duties included preparing mise en place, taking orders, and serving food and beverages across various hotel dining establishments. From October 2008 to May 2009, he attended hotel trainings on food safety and customer service. Regala claimed that starting December 2, 2009, MHC reduced his regular work days from five to two days a week, diminishing his salary, which he alleged constituted constructive dismissal. He also sought regularization.
MHC contended Regala was not a regular employee but a freelance or “extra waiter” engaged on a short-term, fixed-period basis to meet temporary spikes in business volume, a common industry practice. MHC presented sample fixed-term service contracts and specific “Department Outlet Services Contracts for Extra Waiters/Cocktail Attendants” (Service Agreements) covering periods like March 1 to 3, 2010. These agreements stated the engagement was strictly for a specified date/duration, terminated upon completion of the function, and that the signatory was not considered an employee of the company.
The Labor Arbiter dismissed Regala’s complaint, finding him a fixed-term employee who voluntarily executed the Service Agreements and was not constructively dismissed as he continued reporting for work. The National Labor Relations Commission (NLRC) reversed this decision, declaring Regala a regular employee because MHC failed to present his original 2000 employment contract, and his duties as a waiter were necessary and desirable to MHC’s business. The NLRC ruled that reducing his work days constituted constructive dismissal and ordered his reinstatement with backwages. The Court of Appeals set aside the NLRC decision, reinstating the Labor Arbiter’s ruling, finding that Regala was a fixed-term employee based on the series of Service Agreements he signed, and that no constructive dismissal occurred.

ISSUE

The primary issue is whether petitioner Allan Regala is a regular employee or a fixed-term employee of respondent Manila Hotel Corporation. A corollary issue is whether he was constructively dismissed.

RULING

The Supreme Court ruled that Allan Regala is a regular employee of Manila Hotel Corporation. The Court emphasized that the determination of regular employment status is governed by Article 295 (formerly 280) of the Labor Code, which provides two kinds of regular employees: (1) those engaged in activities necessary or desirable in the usual business of the employer, and (2) those who have rendered at least one year of service, whether continuous or broken. The Court found Regala falls under the first category, as his duties as a waiter/cook helper were clearly necessary and desirable to MHC’s hotel and restaurant business. His long period of service from 2000, his attendance at company trainings, and the payment of statutory benefits supported this status.
The Court rejected MHC’s claim that Regala was a fixed-term employee. It held that the series of short-term Service Agreements presented by MHC, which Regala was made to sign periodically, did not convincingly prove a fixed-term arrangement. The Court noted the absence of the original employment contract from 2000 and found that the subsequent contracts were a convenient afterthought designed to prevent Regala from attaining regular status. The Court reiterated that fixed-term employment is the exception, not the rule, and is valid only under certain circumstances, such as for specific projects or seasonal work. MHC failed to prove that Regala was hired for a specific undertaking with a clear completion date. The nature of a waiter’s work in a hotel is part of its regular and permanent operational needs, not a specific, time-bound project.
On the issue of constructive dismissal, the Supreme Court ruled that Regala was constructively dismissed. Constructive dismissal exists when an act of clear discrimination, insensibility, or disdain by the employer renders the employee’s continued work intolerable, forcing them to resign. The Court found that MHC’s act of unilaterally reducing Regala’s work schedule from five or six days a week to just two days a week, resulting in a significant diminution of his pay and benefits, constituted constructive dismissal. This action was tantamount to a termination of his employment without just or authorized cause and without due process.
The Supreme Court granted the petition, reversed the Court of Appeals Decision, and reinstated the NLRC Decision with modification. MHC was ordered to reinstate Regala to his former position without loss of seniority rights and to pay him full backwages, inclusive of allowances and other benefits, computed from December 2, 2009 until his actual reinstatement.