Presumption of Regular Employment and Acceptability of Fixed Term Engagement

The employment status of a person is defined and prescribed by law and not by what the parties say it should be. (Regala vs. Manila Hotel Corporation, G.R. No. 204684, October 05, 2020)

In this regard, the Supreme Court (SC) heldin Regala that, Article 295 of the Labor Code provides for two types of regular employees, namely:

(a) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer (first category); and

(b) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed (second category).”

The hotel / employer (MHC) has not categorically denied in its pleadings before the labor tribunals that Regala was employed by it as early as February 2000. On this point, the records of the case are bereft of evidence that Regala was duly informed of the nature and status of his engagement with the hotel.

Notably, in the absence of a clear agreement or contract, whether written or otherwise, which would clearly show that Regala was properly informed of his employment status with MHC, Regala enjoys the presumption of regular employment in his favor.

Regala is performing activities which are necessary and desirable, if not indispensable, in the business of MHC. Moreover, Regala has been working for MHC for several years since February 2000.

First, Regala is performing activities which are usually necessary or desirable in the business or trade of MHC. This connection can be determined by considering the nature of the work performed by Regala and its relation to the nature of the particular business or trade of MHC in its entirety.

Being part of the hotel and food industry, MHC, as a service-oriented business enterprise, depends largely on its manpower complement to carry out or perform services relating to food and beverage operations, event planning and hospitality. As such, it is essential, if at all necessary, that it retains in its employ waiting staff, such as Regala, specifically tasked to attend to its guests at its various dining

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establishments.

Notably, the desirability of his functions is bolstered by the fact that MHC retains in its employ regular staff of waiters charged with like duties or functions as those of Regala’s.

Second, the fact alone that Regala was allowed to work for MHC on several occasions for several years under various Service Agreements is indicative of the regularity and necessity of his functions to its business. Moreover, it bears to emphasize that MHC has admitted, albeit implicitly, that it renewed Regala’s Service Agreements on various occasions, i.e., during temporary spikes in the volume of its business since February 2000.

Thus, the continuing need for his services for the past several years is also sufficient evidence of the indispensability of his duties as waiter to MHC’s business. Additionally, Regala has already been working with the hotel for many years when he was supposedly constructively dismissed from employment on December 2, 2009.

In any event, it is worth noting that MHC failed to deny that Regala’s work as waiter is necessary and desirable to its business.

While it does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities, the courts can still review the circumstances of the case to determine whether the period was merely used to preclude acquisition of tenurial security of the employee.

In the Regala case, the SC held that the Service Agreements and fixed-term service contracts executed between MHC and Regala are invalid and are not true fixed-term employment contracts.

As proof of Regala’s fixed-term employment status, MHC depended heavily on Regala’s Service Agreements covering the periods of his supposed temporary engagement with MHC, or from March 1, 2010 to March 3, 2010.

MHC then asserted that the Service Agreements entered into by and between MHC and Regala are valid for the following reasons: (1) the terms thereof are clear and bereft of ambiguity; (2) the duration or terms of Regala’s employment as indicated in the Service Agreements were determined and made known to him before each engagement; and (3) the Service Agreements were freely entered into by both parties.

A fixed-term employment, while not expressly mentioned in the Labor Code, has been recognized by this Court as a type of employment “embodied in a contract specifying that the services of the employee shall be engaged only for a definite period, the termination of which occurs upon the expiration of said period irrespective of the existence of just cause and regardless of the activity the employee is called upon to perform.”

Along the same lines, it has been held that “[t]he fixed-term character of employment essentially refers to the period agreed upon between the employer and the employee.” Accordingly, “the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship. Specification of the date of termination is significant because an employee’s employment shall cease upon termination date without need of notice.

In other words, a fixed-term employment contract which otherwise fails to specify the date of effectivity and the date of expiration of an employee’s engagement cannot, by virtue of jurisprudential pronouncement, be regarded as such despite its nomenclature or classification given by the parties. The employment contract may provide for or describe some other classification or type of employment depending on the circumstances, but it is not, properly speaking, a fixed-term employment contract.

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