UST v. Samahang Manggagawa ng UST: When Repeated Hires Make Workers Regular Employees

The Supreme Court’s 2017 ruling in University of Santo Tomas v. Samahang Manggagawa ng UST clarifies a recurring question in Philippine labor law: when does an employer’s repeated hiring of a worker on fixed-term contracts cross the line into regular employment? The case involved maintenance workers hired year after year by the University of Santo Tomas (UST) under “Contractual Employee Appointments” (CEAs). The Court’s answer — that these workers were regular employees entitled to security of tenure — offers important guidance for both employers and workers.

The Facts

From 1990 to 1999, UST repeatedly hired Fernando Pontesor, Rodrigo Clacer, Santiago Buisa, Jr., and Jimmy Nazareth as laborers, masons, tinsmiths, painters, electricians, welders, and carpenters. Each hire was covered by a CEA that described the worker’s task as “to assist” in various carpentry, electrical, or masonry work, with a specified term. UST argued that the workers were project employees whose employment automatically ended upon project completion or term expiration.

The workers, through their union, filed a complaint for regularization and illegal dismissal. The Labor Arbiter ruled in their favor, but the NLRC reversed, classifying them as fixed-term casual employees. The Court of Appeals reinstated the Labor Arbiter’s ruling, and UST appealed to the Supreme Court.

The Issue

The sole issue was whether the workers were regular employees of UST and, consequently, illegally dismissed.

The Ruling

The Supreme Court denied UST’s petition and affirmed the Court of Appeals. The Court applied Article 295 (formerly Article 280) of the Labor Code, which recognizes two categories of regular employees: (1) those engaged to perform activities usually necessary or desirable in the employer’s usual business or trade, and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.

The Court found that the workers’ maintenance tasks were not necessary or desirable to UST’s usual business of providing education, so they did not fall under the first category. However, their cumulative periods of employment each exceeded one year, placing them squarely within the second category. They were therefore regular employees — but only with respect to the activities for which they were hired and for as long as those activities existed.

Why the CEAs Did Not Create Valid Project Employment

The Court also rejected UST’s claim that the workers were project employees. Citing Gadia v. Sykes Asia, Inc., the Court explained that a valid project employment requires that the employee be assigned to a specific project or undertaking whose duration and scope were determined at the time of engagement. The employer must prove not only that the duration and scope were specified, but also that there was indeed a project.

Here, the project descriptions in the CEAs were too vague — they merely said the workers would “assist” in various tasks. When pieced together, the CEAs showed that the workers were engaged to perform all-around maintenance services across UST’s campus for nearly a decade. The Court concluded that UST had simply compartmentalized the workers’ tasks into purported “projects” to avoid hiring permanent employees, a practice the Court refused to countenance.

The Court acknowledged that fixed-term contracts can be valid when knowingly and voluntarily agreed upon without coercion. But when the periods are imposed to preclude the acquisition of security of tenure, as here, the contracts are disregarded as contrary to public policy.

Practical Takeaways

• One year of service can create regular status. Under Article 295 of the Labor Code, an employee who has rendered at least one year of service, whether continuous or broken, is considered regular with respect to the activity in which he or she is employed.
• Project employment requires a real project. Employers claiming project status must prove that the employee was assigned to a specific, identifiable project with a determined duration and scope at the time of hiring. Vague descriptions will not suffice.
• Repeated rehiring for the same type of work signals regular employment. When an employer repeatedly hires a worker for similar maintenance or support tasks over many years, the law may treat the worker as regular, not project-based.
• Fixed-term contracts cannot defeat security of tenure. Contracts designed merely to prevent workers from acquiring tenurial security are void as against public policy.
• The nature of the work matters. Work that is not central to the employer’s main business can still lead to regular status under the second category of Article 295, so long as the one-year service requirement is met.

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