Allan Bazar vs Ruizol

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

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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

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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

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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 employer’s decision to dismiss him

opep7/24/17