Regular Employment by Operation of Law: The PLDT v. Arceo Case

The distinction between regular and casual employment determines what benefits a worker is entitled to receive. In Philippine Long Distance Telephone Company, Inc. v. Arceo (G.R. No. 149985, May 5, 2006), the Supreme Court clarified when a casual employee becomes regular by operation of law and what this means for the payment of benefits.

The Facts of the Case

Rosalina Arceo applied for a telephone operator position with PLDT in May 1990 but failed the qualifying examination. She requested permission to work without pay, and PLDT assigned her to its commercial section where she performed tasks like photocopying documents and sorting telephone bills. After two weeks, PLDT decided to pay her the minimum wage.

In February 1991, PLDT terminated her services, but through the intervention of a supervisor, she was recommended for on-the-job training. She later failed the pre-qualifying exams for telephone operator two more times. On October 13, 1991, PLDT discharged her from employment.

Arceo filed an illegal dismissal case, and the labor arbiter ruled in her favor, ordering her reinstatement to her former or equivalent position. She was reinstated on June 9, 1993 as a casual employee earning P106 per day.

More than three years after reinstatement, Arceo filed a complaint for unfair labor practice, underpayment of salary, and other monetary claims. She alleged that she had yet to be regularized and had yet to receive the benefits due to a regular employee.

The Issue

The central question was whether Arceo was eligible to become a regular employee of PLDT despite having failed the qualifying exams for the telephone operator position.

The Ruling

The Supreme Court ruled in favor of Arceo, confirming her status as a regular employee.

Under Article 280 of the Labor Code, an employment is regular where the employee has been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer. The provision also states that any employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed.

The Court applied both criteria. First, Arceo's work of photocopying documents and sorting telephone bills was "necessary or desirable" to PLDT's business. Second, even if her work were considered casual, she had rendered more than one year of service, making her eligible for regularization under the second criterion.

The Court rejected PLDT's argument that her position had been abolished. The reinstatement order included the alternative of reinstatement to an equivalent position. Moreover, PLDT failed to prove that the activity Arceo performed no longer subsisted.

The Court also dismissed PLDT's argument that Arceo could not be regularized as a telephone operator because she failed the qualifying exams. The regularization applied to the position she held prior to filing her complaint, or an equivalent position — not the telephone operator position.

When Benefits Accrue

The Court held that since Arceo had already worked for more than one year at the time of her reinstatement, she was entitled to all the benefits of a regular employee from June 9, 1993 — the day of her actual reinstatement.

Practical Takeaways

• Regular status arises by operation of law. An employee who performs work necessary or desirable to the employer's business is regular, regardless of what the employment contract says.
• One year of service converts casual to regular. A casual employee who renders at least one year of service, continuous or broken, becomes a regular employee with respect to that activity.
• The employer bears the burden of proof. To avoid regularization, the employer must prove that the activity has been discontinued or that the employment falls under an exception.
• Reinstatement orders include equivalent positions. If the former position no longer exists, the employer must reinstate the employee to an equivalent position.
• Benefits run from actual reinstatement. A regularized employee is entitled to regular employee benefits from the date of actual reinstatement, not from a later date.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.