Title
Regala vs. Manila Hotel Corp.
Case
G.R. No. 204684
Decision Date
Oct 5, 2020
Allan Regala, a long-term MHC employee, claimed constructive dismissal after workdays were reduced. SC ruled him a regular employee, ordered reinstatement and backwages.

Case Summary (G.R. No. 204684)

Antecedent employment facts material to status

Regala worked for MHC starting February 2000 as a waiter and later as a cook helper; he performed core customer-service tasks (mise en place, taking orders, serving guests) across multiple hotel outlets, worked six days per week at times, received daily wages and had SSS and PhilHealth contributions remitted by MHC. MHC presented short-duration “Service Agreements” for selected dates (e.g., March 1–3, 2010) and asserted Regala was an “extra waiter” engaged informally and on a fixed-term basis to meet temporary spikes in business.

Labor Arbiter’s findings and rationale

The Labor Arbiter concluded Regala was a fixed-term employee who voluntarily signed Service Agreements and therefore his cessation of engagement was not illegal dismissal. The Arbiter also found that Regala continued to report for work at the time of filing and denied claims for paternity leave and backwages, absolving MHC and the named officers of liability.

NLRC’s reversal and its grounds

The NLRC reversed the Labor Arbiter, holding that Regala was a regular employee. It emphasized the absence of a written contract at the time of initial engagement (February 2000) establishing a fixed period, and applied the presumption in favor of regular employment where evidence of a fixed-term arrangement is lacking. The NLRC also found the duties performed were necessary and desirable to MHC’s business, and concluded that the reduction of work days beginning December 2, 2009 constituted constructive dismissal, ordering reinstatement and backwages.

Court of Appeals disposition and reasoning

The CA granted MHC’s certiorari petition, concluding the Service Agreements were valid fixed‑term contracts, that there was no proof of coercion, and that seasonal/temporary hiring practices in the hotel industry justified MHC’s engagement of extra waiters. The CA held that the expiration of such contracts did not constitute illegal dismissal and dismissed the complaint for lack of merit.

Supreme Court: inadmissibility of belated evidence and change of theory

The Supreme Court refused MHC’s late submission of additional documentary evidence (DTRs and payroll journals presented for the first time to the Court) and rejected MHC’s inconsistent new theory that no actual dismissal occurred. The Court stressed the rule against raising new issues or submitting new evidence for the first time on appeal, the need for fairness and due process, and the lack of justification for the seven-year delay in presenting such documents.

Presumption of regular employment and evidentiary burden

The Supreme Court emphasized that, absent clear proof that an engagement was fixed-term from the outset, an employee like Regala enjoys the presumption of regular employment. The Court applied the dual criteria in Article 295 (activities usually necessary or desirable to the trade/business and longevity of service) and found that Regala performed functions indispensable to MHC’s core food-and-beverage operations and had a long tenure beginning in 2000, supporting regular status.

Invalidity of the Service Agreements as true fixed-term contracts

The Court analyzed the Service Agreements MHC relied upon and found them deficient as fixed-term contracts. The agreements only listed specific dates of engagement (e.g., March 1–3, 2010) without clearly specifying the date of termination or reflecting an objectively determinable fixed period covering Regala’s long tenure since 2000. The Court invoked jurisprudence requiring a day-certain commencement and termination to establish a valid fixed-term engagement and concluded the documents did not meet that standard.

Brent criteria and contracts of adhesion

Applying the Brent School criteria for valid term employment, the Court found the requisite conditions were not satisfied: there was no evidence that Regala knowingly and voluntarily agreed to a fixed period from the start of his employment, and the parties did not deal on equal terms. The Court characterized the Service Agreements as contracts of adhesion prepared by MHC’s Personnel Department, affording Regala no realistic opportunity to negotiate—factors that vitiate the validity of purported fixed-term arrangements.

Industry practice and entrepreneurial risk not a lawful pretext

The Supreme Court rejected MHC’s argument that industry practice justifies fixed-term engagement as a blanket defense. It held that commercial fluctuations inherent in the hotel industry cannot be used to circumvent labor laws and deny workers the opportunity to acquire regular status when their functions are necessary and their services continuous over years. The Court reiterated that entrepreneurial risk is not license to evade security of tenure.

Constructive dismissal: legal test and application to facts

The Court reviewed constructive dismissal doctrine: employer acts that make continued employment unreasonable or tantamount to dismissal (e.g., demotion, diminution in pay) constitute constructive dismissa

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