G & S TRANSPORT CORPORATION, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, 7TH DIVISION, CEBU CITY, ALEXANDER D. ROSALES, JUANITO S. MAGSILONG, JR. AND ALFONSO E. ARROGAN…

G and S Transport Corporation versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by G and S Transport Corporation, a rent-a-car business, against the National Labor Relations Commission, its Seventh Division in Cebu City, and three of its drivers, Alexander Rosales, Juanito Magsoling, Jr., and Alfonso Arrogante. The company asks the Supreme Court to annul the Commission's ruling that declared the three drivers regular employees, deleted an award of salary differentials, and denied their claim for overtime pay. The case matters because it gathers in one decision the working rules every labor lawyer must know: how a project employee becomes a regular employee through continuous rehiring, how the failure to file termination reports betrays the project label, and who carries the burden of proving overtime.

Procedural History

The drivers first filed a complaint with the Department of Labor and Employment. A labor inspector examined the company's Lapu-Lapu City branch and noted a violation on nonpayment of overtime. The Regional Director endorsed the matter to the Regional Arbitration Branch of the National Labor Relations Commission, where the drivers filed complaints for unfair labor practice, overtime pay, and regularization. The Labor Arbiter declared them project employees but awarded salary differentials totaling 28,128 pesos and dismissed all other claims. Both sides appealed. The National Labor Relations Commission reversed, declaring the drivers regular employees, deleting the salary differentials for having been granted beyond the Labor Arbiter's jurisdiction, and denying overtime pay. The company's motion for partial reconsideration was denied. The company then came to the Supreme Court on a petition for certiorari under Rule 65, and the Court denied the petition and affirmed the Commission.

Facts

The three respondents worked as drivers for the company's rent-a-car business for several years. Alexander began in February 2003, Alfonso in May 2003, and Juanito in July 2007. Their tour of duty was divided into three nine-hour shifts, and they asked management either to shorten the working time or to pay them for the hour beyond eight hours of work each day. The manager, Cherry Bennish, told them she had no authority to change company policy, and the company refused to pay the excess hour.

After the labor inspection and the endorsement to the arbitration branch, the company insisted the drivers were project employees, pointing to appointment papers they signed as project employees and to a contract for the Shangri-la Mactan International Resort project that began in May 2008 for Rosales and Arrogante and in July 2008 for Magsoling. No other employment contracts were offered, and the company never submitted the service contract itself between Shangri-la and the company.

The drivers, for their part, claimed they were regular employees, that they had to stay in the waiting area ready to answer dispatches and could not leave for more than five minutes, and that the excess hour was compensable overtime even while they merely waited for customers.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion in entertaining the complaints for regularization and in declaring the private respondents regular employees rather than project employees.
• Whether or not a complaint for regularization can be the principal cause of action under the Labor Code.
• Whether or not the private respondents are entitled to overtime pay for the excess hour of daily work.
• Whether or not the Labor Arbiter validly awarded salary differentials that the drivers never pleaded.

Applicable Provisions

Article 280 of the Labor Code, as quoted in the decision, provides:

A project employee is one whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

This is the test the Court applied in deciding whether the drivers were project or regular employees.

Section 7, Rule V of the 2005 Revised Rules of Procedure of the National Labor Relations Commission, quoted by the Commission, provides:

The position papers of the parties shall cover only those claims and causes of action raised in the complaint or amended complaint, excluding those that may have been amicably settled, and accompanied by all supporting documents, including the affidavits of witnesses, which shall take the place of their direct testimony.

This provision is the basis for deleting the salary differentials, because the drivers never raised underpayment of wages in their complaint or position paper.

Ruling

On the first issue, the Court held that the Commission did not commit grave abuse of discretion. Although the drivers signed project employment contracts, the company proved only the 2008 contracts and never produced the Shangri-la service contract. More importantly, the drivers had been continuously rehired for years to perform tasks that are necessary and desirable in the rent-a-car business. Citing Maraguinot, the Court ruled that once a project employee is continuously rehired for the same tasks, and those tasks are vital, necessary, and indispensable to the employer's usual business, the employer must be deemed a regular employer. The Court also noted that the company never filed termination reports with the Department of Labor and Employment upon completion of any project, which, following Ochoco, is proof that the workers were not project employees.

On the second issue, the Court sustained the Commission's declaration of regular status, recognizing the employment status of the drivers as a fait accompli, that is, a thing already done, given their continuous rehiring.

On the third issue, the Court denied overtime pay. The burden of proving entitlement rests on the employee, because overtime is not incurred in the normal course of business. Absent concrete proof of additional service beyond normal hours, the claim must fail, for each party must prove his affirmative allegation.

On the fourth issue, the Court held that the Labor Arbiter exceeded her jurisdiction in awarding salary differentials. The drivers never identified underpayment of wages as a cause of action, so the Commission correctly deleted the award.

Doctrine

A project employee who is continuously, as opposed to intermittently, rehired by the same employer for the same tasks, where those tasks are vital, necessary, and indispensable to the employer's usual business, becomes a regular employee. The failure of the employer to file a termination report with the nearest public employment office after each project's completion is an indication that the workers are not project employees. The burden of proving entitlement to overtime pay rests on the employee, who must prove the claim by competent evidence and not upon the weakness of the opponent. Finally, a labor arbiter cannot award a claim, such as salary differentials, that was never pleaded or proved in the complaint or position paper, for to do so is to act in excess of jurisdiction.

Disposition

The petition was denied, and the Commission's decision and resolution were affirmed, so the drivers won as regular employees but without overtime pay or salary differentials.

Remember This

Memorize this line: continuous rehiring for tasks vital to the business converts a project employee into a regular employee, and the missing termination reports seal it. Examiners use this case to test project employment versus regularization, the evidentiary weight of termination reports, and the rule that overtime pay must be proved by the employee.