CASE DIGEST: Allied Banking Corp. v. Calumpang



ALLIED BANKING CORPORATION, now merged with PHILIPPINE NATIONAL BANK, petitioner
 vs. REYNOLD CALUMPANG, respondent
G.R. No. 219435                |              January 17, 2018

 

TOPIC: Contracting and Subcontracting of Labor

FACTS:

Petitioner Allied Banking Corporation and Race Cleaners, Inc. entered into a Service Agreement whereby RCI will provide Allied with messengerial, janitorial, communication, and maintenance services.

On Sept. 28, 2003, respondent Reynold Calumpang was hired as a janitor by RCI and was assigned at the bank’s Tanjay City Branch.

Petitioner observed that whenever respondent went out on errands, it takes a long time for him to return to the branch. It was eventually discovered that during these times, respondent was also plying his pedicab and ferrying passengers. The Bank Manager also found out that respondent has been borrowing money from several clients of the branch. He was then told by the Bank Manager that his services was no longer needed.

Thereafter, respondent filed a complaint for illegal dismissal and underpayment of wages against petitioner before the NLRC.

In his position paper, respondent asserted that the four-fold test of employer-employee relationship is present between him and the bank. He averred that he was a regular employee of the Bank assigned as a janitor of the branch with a salary P4,200 payable every 15 days each month, and assigned such other tasks essential and necessary for the Bank’s business.

He alleged that petitioner engaged his services and exercised direct control and supervision over him, through the Branch Head, not only as to the result of his work but also as to the means and methods by which the same was to be accomplished. As regards the payment of salary, respondent claimed that it was the Branch that directly paid his salaries and wages. As for the power of dismissal, respondent further alleged that it was petitioner Bank, through its Branch Head, who terminated his services.

Pettitioner denied the existence of any employer-employee relationship between itself and respondent. It asserted that respondent was clearly an employee of RCI by virtue of the Service Agreement which clearly indicated in Article XI thereof that there would be no employer-employee relationship between RCI’s employees and the Bank. It further averred that RCI is a qualified job contractor because of its capitalization and the fact that it exercised control and supervision over its employees deployed at the branches of the petitioner in accordance with Rule VIII-A, Sec. 4, pars. (d) & (e) of the Omnibus Rules Implementing the Labor Code.

ISSUE:

1.       Whether RCI is a labor-only contractor

2.       Whether there exists an employer-employee relationship between the Bank and the respondent

RULING:

Permissible job contracting or subcontracting has been distinguished from labor-only contracting such that permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal, while labor-only contracting, on the other hand, pertains to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal.

As a general rule, a contractor is presumed to be a labor-only contractor, unless such contractor overcomes the burden of proving that it has the substantial capital, investment, tools and the like.

In the present case, petitioner failed to establish that RCI is a legitimate labor contractor as contemplated under the Labor Code. Except for the bare allegation of petitioner that RCI had substantial capitalization, it presented no supporting evidence to show the same. Aside from this, petitioner’s claim that RCI exercised control and supervision over respondent is belied by the fact that petitioner admitted that its own Branch Manager had informed respondent that his services would no longer be required at the Branch. Moreover, respondent’s work is related to petitioner’s business and is characterized as part of or in pursuit of its banking operations.

A finding that a contractor is a labor-only contractor, as opposed to permissible job contracting, is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the labor-only contractor is considered as a mere agent of the principal, the real employer.

In this case, petitioner bank is the principal employer and RCI is the labor-only contractor. Accordingly, petitioner and RCI are solidarily liable for the rightful claims of respondent.

 

Comments