Allan Bazar, petitioner vs. Carlos A.

Ruizol, respondent

Facts:
Norkis Distributors Inc. (NDI) - engaged in sale, wholesale and retail of
Yamaha motorcycle units
Bazar- New manager Norkis Distributors Inc. (NDI) Surigao City Branch
Ruizol complainant
o mechanic at Norkis Surigao
o was terminated
o receiving a monthly salary of P2050
o working from 8-5 for with 1hr meal break time for six days in a week
o Felt that he was illegally dismissed by Bazar due to alleged protige
mechanic to replace him. Hence the complaint before the Regional
Arbitration of illegal dismissal and monetary claims

Bazar counter to Ruizol

o Ruizon not an employee of NDI but a franchised mechanic
o Ruizol an owner of a motor cycle repair shop with retainership
agreement with NDI performing service warranty
o Retainership agreement terminated because they were no more satisfied
with the latters services

1. LA Ruling: decision in favor of Ruizol declaring him as regular employee and

that he was illegally dismissed
2. NLRC on appeal: reversed the ruling of LA no ER-EE relationship in favor of
Bazar
3. CA on petition for Certiorari:
a. granted the petition (Ruizol), that Bazar has no legal personality to
represent NDI. Held the LA decision final.
b. Bazar sought reconsideration but was denied
c. Hence the petition (SC)

*Legal Personality- is a prerequisite to legal capacity, the ability of any legal

person to amend rights and obilgations.
* Legal person- is capable of holding rights and obligations within certain legal
system, such as entering into contracts, suing and being sued.

Issues:
1. WON there is an ER-EE relationship
2. WON Ruizol were illegally dismissed
3. WON Bazar be held personally liable

Four Fold Test- used in determining the ER-EE

o In the case at bar
Selection and Engagement- services of Ruizol as the mechanic was
indisputably present
Payment of Wages- Ruizol was paid a monthly retainer fee
 Power to Dismiss- the non-renewal of contract with Ruizol
Power to Control (most significant)- services are in accordance
with the manual of the unit, subject to the standards set by the
company. Also toolkits were furnished to the mechanics used for
repairs.

Discussion Note 1: (though not included in the case)

The doctrine of Piercing the Veil of Corporate Fiction

- means that while the corporation cannot be generally held liable for acts or
liabilities of its stockholders or members, and vice versa because a corporation
has a personality separate and distinct from its members or stockholders,
however, the corporate existence is disregarded under this doctrine when the
corporation is formed or used for illegitimate purposes, particularly, as a shield to
perpetuate fraud, defeat public convenience, justify wrong, evade a just and valid
obligation or defend a crime.

Circumstances that may indicate that the piercing doctrine should be applied:
1. The parent corporation owns all or most of the capital of the subsidiary.
2. The parent and subsidiary corporations have common directors or officers.
3. The parent company finances the subsidiary.
4. The parent company subscribed to all the capital stock of the subsidiary or
otherwise causes its incorporation.
5. The subsidiary has grossly inadequate capital.
6. The subsidiary has substantially no business except with the parent corporation or
no assets except those conveyed to or by the parent corporation.
7. The papers of the parent corporation or in the statements of its officers, the
subsidiary is described as a department or division of the parent corporation, or its
business or financial responsibility is referred to as the parent corporations own.
8. The parent corporation uses the property of the subsidiary as its own.
9. The directors or executives of the subsidiary do no act independently in the
interest of the subsidiary but take their orders from the parent corporation.
10. The formal legal requirements of the subsidiary are not observed.
(Phil. National Bank v. Ritratto Group, Inc., 362
SCRA 216 [2001]

Ruling:

SC: Petition is Partly Granted

o Carlos Ruizol (respondent) was declared illegally dismissed

1. Entitled to backwages
2. Reinstatement or Separation pay (if reinstatement is no longer an
option due to strained relationship)
o Allan Bazar is found not personally liable
o NDI bears the liability for the illegal dismissal and monetary claims
 1. A director or officer shall not be personally liable for the obligations
of the corporation if the following conditions occur:
That the director or officer assented to patently unlawful acts
of the corp. or that the officer is guilty of gross negligence or
bad faith
The complainant clearly and convincingly proved such unlawful
acts, negligence or bad faith.

Discussion Note 2:
Art. 279 Security of Tenure- In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.

Discussion Note 3:
Twin Notice Rule for Just Causes:
- written notices before termination of employment can be legally effected:
1. notice which apprises the employee of the particular acts or omissions
for which his dismissal is sought; and
2. the subsequent notice which informs the employee of the employers
decision to dismiss him

opep7/24/17