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Allied Banking Corp. Vs - Calumpang, G.R. No. 219435, Jan. 17, 2018)

The case involved determining whether Race Cleaners Inc. (RCI) was a labor-only contractor in its employment of respondent Calumpang. Allied Banking Corp. argued that RCI was an independent business with substantial capitalization and control over its personnel. However, the Supreme Court ruled that RCI was a labor-only contractor. It did not have substantial capital or investment, the respondent's job was directly related to Allied Banking's principal business, and Allied Banking had direct control over the respondent. The Secretary of Labor can determine the type of contracting and ensure the rights and safety of employees.

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Michelle Villamora
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192 views1 page

Allied Banking Corp. Vs - Calumpang, G.R. No. 219435, Jan. 17, 2018)

The case involved determining whether Race Cleaners Inc. (RCI) was a labor-only contractor in its employment of respondent Calumpang. Allied Banking Corp. argued that RCI was an independent business with substantial capitalization and control over its personnel. However, the Supreme Court ruled that RCI was a labor-only contractor. It did not have substantial capital or investment, the respondent's job was directly related to Allied Banking's principal business, and Allied Banking had direct control over the respondent. The Secretary of Labor can determine the type of contracting and ensure the rights and safety of employees.

Uploaded by

Michelle Villamora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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NAME: Michelle C.

Llaneta-Villamora YEAR/COURSE/SECTION: JD-2A

Case No. 28.


Allied Banking Corp.  vs. Calumpang, G.R. No. 219435, Jan. 17, 2018)

ISSUE: Is Race Cleaners Inc. (RCI) a labor-only contractor.

ARGUMENT OF THE PETITIONER (Allied Banking Corp): RCI is an independent


business as reflected in the Service Agreement, which the petitioner has entered into,
and it has substantial capitalization. It also exercises control and supervision to all its
personnel deployed at its branches. Moreover, the respondent’s job is not essential in the
performance of its principal business. Likewise, they do not have the power to dismiss
the respondent because the performance of his job is dependent upon the Service
Agreement with RCI.

ARGUMENT OF THE RESPONDENT (CA/Calumpang): RCI is a labor-only contractor, it


merely served as an agent of the petitioner bank, and that Calumpang is an employee of
Allied Banking Corporation

SC RULING: Yes. It is a labor-only contractor.

RATIO: Article 106 of the Labor Code specifies the relations between an employer, a contractor
and the contractor’s employee. The Secretary of Labor and Employment through
appropriate regulations may provide distinctions between the types of contracting to
prevent violations of the provisions of the Labor Code as well as for proper
determination of the real employer among the parties involved. As laid-out in the
Omnibus Rules Implementing the Labor Code, RCI falls on the distinction under the
labor-only contracting. It does not have any substantial capital or investment in the form
of tools, machineries and other materials, the respondent, which they placed in petitioner
bank, is performing activities directly related to its principal business or operations, in
which they merely acted as agent of the petitioner bank. As such, there existed an
employer-employee relationship because the petitioner bank is the principal employer
and RCI is the labor-only contractor. Further, petitioner bank has direct control over
respondent through its Branch Manager who gave direct orders as to what work to be
done and the means and methods by which it should be accomplished.

INSTRUCTION LEARNED: The Secretary of Labor and Employment by appropriate orders,


determine whether the employment contract is permissible in the light of the
circumstances of each case and after considering the operational needs of the employer
and the rights of the workers concerned. It can prescribe conditions and restrictions to
ensure the safety and well-being of employees.

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