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10. Bazar v.

Ruizol AUTHOR: Gojar


G.R. No. 198782, October 19, 2016 Notes:
TOPIC: ER-EE relationship; 4-fold test ER – employer
EE- employee
CASE LAW/ DOCTRINE:
4 -fold test:
a. Selection & engagement of EE
b. Payment of wages
c. Power of dismissal
d. ER’s power of control the EE as to the means & method by which the work is to be accomplished.
 This is the most crucial & determinative factor of the presence/absence of an ER-EE relationship.
 Control test: The person for whom the services are performed reserves the right to control not only the end achieved
but also the manner & means to be used in reaching that end/
EMERGENCY RECIT: Respondent Ruiz is a mechanic at NDI and repairs the Yamaha units of NDI. He was terminated and filed an
illegal dismissal. Petitioner argues that Ruiz is not their employee since they don’t have a power of control over him because he is
free to use his own means & methods to get the job done and that the Yamaha manual they gave to him was only to guide Ruiz in
repairing the units. SC held there is an ER-EE relationship. There was power of control exercised by NDI over Ruiz because the
contract stated that Ruiz should repair the units in accordance w/ the manual of the unit, subject to the minimum standards set by
NDI and tool kits were provided to Ruiz which he would use in fixing/repairing the units. The manner & means in achieving the end
(to fix the Yamaha motorcycle) were evidently present in this case. Hence, there exists an ER-EE. Ruiz was illegally dismissed.
FACTS:

 Ruiz was a mechanic at Norkis Distributors, Inc. He filed for an illegal dismissal before the Regional Arbitration Branch (RAB)
claiming that petitioner Bazar, who was a branch manager of the company, terminated his services since Bazar wanted to
appoint his protégé as a mechanic.
 Bazar claimed that: Ruiz is not an employee but a franchised mechanic of NDI pursuant to a retainership agreement; that
Ruiz owns a motor repair ship, performed repair warranty service, back repair of Yamaha units & ordinary repair at his own
shop; and that they weren’t longer satisfied with his services
 LA: There is an ER-EE relationship & the unsworn contract of retainership is a clear circumvention of respondent’s security
of tenure. Ruiz is a regular EE & he was illegally dismissed.
 NLRC: Reversed the LA ruling. NDI had NO power of control & supervision over the means & method by w/c Ruiz performed
job as mechanic. Ruiz failed to refute petitioner’s allegation that Ruiz personally owns a motor shop offering repair & check-
up services to other customers & that he worked on the units referred by NDI either at his own motor ship or at NDI’s
service shop. Ruiz is bound to adhere & respect the retainership contract wherein he declared & acknowledged that he is
NOT an EE of NDI.
 CA: Reversed the NLRC ruling. There exists an ER-EE relationship and awarded Ruiz separation pay in lieu of reinstatement.
 Petitioner argues:
a. NDI is only interested in the OUTCOME of Ruiz’ work
b. NDI has no power of control over Ruiz since he is free to use his own means & methods to accomplish his work
c. The manual of the Yamaha motorbike unit is necessary in order to merely guide Ruiz in the repairs of the
motorbikes

ISSUE(S): Was there an ER-EE relationship b/w Ruiz & NDI? YES. Ruiz was illegally dismissed.
RATIO:
4 -fold test:
a. Selection & engagement of EE
b. Payment of wages
c. Power of dismissal
d. ER’s power of control the EE as to the means & method by which the work is to be accomplished.
 This is the most crucial & determinative factor of the presence/absence of an ER-EE relationship.
 Control test: The person for whom the services are performed reserves the right to control not only the end achieved
but also the manner & means to be used in reaching that end/

 1st: Services of Ruiz was engaged by NDI without the help of a 3rd person.

 2nd: Just because he was paid a retainer fee & on per diem basis doesn’t mean that there was no more ER-EE relationship b/w
Ruiz & NDI since that agreement only provided for the breakdown of Ruiz’ monthly income. ALSO, NDI didn’t present its payroll,
which it could easily show to disprove the claim of Ruiz that he was their EE.
o Also, the monthly retainer’s fee is covered by the term “wages” (remuneration or earnings, however designated, capable of being
expressed in terms of money, whether· fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten contract 'of employment for work done or to be done, or for service rendered or to
be rendered). In here, the services rendered by Ruiz to NDI, he receives the corresponding compensation.

 3rd: Power of dismissal can be seen from the termination of Ruiz under the guise of NON-RENEWAL of his contract.
o Although the retainership contract states that “5. That the franchised mechanic, though not an employee of the NDI agrees to
observe and abide by the rules and regulations by the NDI aims to maintain a good quality and efficient service to customer.” such
provision is a clear circumvention of the security of tenure.
o It is the law that defines & governs an employment relationship. The terms of employment is NOT restricted by what is
fixed in the written contract since other factors such as nature of the work of the EE should also be considered. Any
stipulation can be ignored when the ER uses such stipulation to deprive the EE of his security of tenure.

 4th: The contract stated that the service by Ruiz to the Yahama motorbikes brought to the NDI service shop should be done in
accordance with the MANUAL of the unit and subject to the MINIMUM standards SET by the company. Also, tool kits were
provided to Ruiz, which he should use in repairing & checking the units conducted inside or in front of the Norkis Display Center.

Ruiz is entitled to security of tenure and can only be dismissed for just / authorized cause. He was illegally dismissed for failure to
comply with the twin notice rule in termination cases. (He was dismissed thru a letter informing him of the termination of the contract of
retainership)

An illegally dismissed EE has 2 reliefs: backwages & reinstatement (both are separate & distinct). Also, if reinstatement is no longer
possible due to strained relations, separation pay is granted. Hence, reinstatement should be done if still possible, or separation pay
if reinstatement is no longer viable, AND backwages.

Other matters, just in case she asks:


Petitioner was asserting in here that no summons was served on NDI and that he can’t be made personally liable for the monetary awards since he
has a personality separate from NDI. SC held that there was jurisdiction acquired over NDI since the summons were served to petitioner in his
capacity as branch manager of NDI, hence, LA acquired jurisdiction over the juridical person of NDI. Petitioner can’t be held solidarily liable w/ NDI
since for such liability to attach, there must be bad faith on the part of the officer of the company, which was not proved with certainty in this case.