G.R. Nos. 82643-67 August 30, 1990
PHILIPPINE GEOTHERMAL, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, TEODULO C. CUEBILLAS, ARMANDO CILOT, MARIANO CORULLO, YOLANDA CAL, EFREN CLERIGO, FELICISSIMO VARGAS, et al., respondents.

FACTS

Petitioner Philippine Geothermal, Inc., a contractor for the National Power Corporation, engaged the services of private respondents under individual contracts categorized as contractual employment, with terms ranging from fifteen days to three months. These contracts were regularly renewed, resulting in the employees rendering continuous service for three to five years until their employment was terminated in 1983 and 1984 via non-renewal of their contracts. The employees, who held various positions from carpenter to Clerk II, subsequently organized a labor union after being excluded from the existing bargaining unit. Following this, they filed a petition for certification election and were later replaced by workers supplied through a job contractor.
The employees filed consolidated cases for illegal dismissal, unfair labor practice, and claims for reinstatement and back wages. The Labor Arbiter ruled in their favor, declaring them regular employees and ordering their reinstatement with one year of back wages. The National Labor Relations Commission (NLRC) affirmed this decision on appeal. Petitioner company sought review via certiorari, arguing the employees were merely contractual workers whose engagements had simply expired.

ISSUE

Whether private respondents, hired on a repeatedly renewed contractual basis for several years, are regular employees entitled to security of tenure.

RULING

The Supreme Court affirmed the NLRC’s decision, ruling that the private respondents are regular employees. The legal logic hinges on Article 280 of the Labor Code, which defines regular employment. The Court applied the principle that an employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed, shall be considered a regular employee. Here, the employees had worked for three to five years, performing tasks necessary and desirable to petitioner’s usual business of geothermal energy development.
The Court rejected the petitioner’s claim that the employment was legitimately project-based or that termination resulted merely from contract expiration. It emphasized that the repeated and successive renewal of short-term contracts over several years indicated that the employees’ services were indispensable to the company’s ordinary operations, not merely for a specific project with a predetermined end. To uphold such a contractual arrangement would allow employers to circumvent security of tenure by indefinitely keeping employees on a temporary status, which is precisely what Article 280 seeks to prevent. Consequently, their dismissal without just or authorized cause was illegal. The grant of reinstatement with back wages was therefore proper.