Case Digest: ALPS Transportation v. Rodriguez

ALPS TRANSPORTATION and/or ALFREDO E. PEREZ, Petitioners, vs. ELPIDIO M. RODRIGUEZ, Respondent.

G.R. No. 186732               June 13, 2013

SERENO, CJ.:

Respondent Elpidio Rodriguez (Rodriguez) was previously employed as a bus conductor. He entered into an employment contract with Contact Tours Manpower and was assigned to work with the bus company ALPS Transportation, owned by Alfredo Perez as a sole proprietor.

During the course of his employment, Rodriguez was found to have committed irregularities on 26 April 2003, 12 October 2003, and 26 January 2005. The latest irregularity report dated 26 January 2005 stated that he had collected bus fares without issuing corresponding tickets to passengers. The report was annotated with the word "Terminate."

Rodriguez alleged that he was dismissed from his employment on 27 January 2005, or the day after the issuance of the last irregularity report. However, he did not receive any written notice of termination. He went back to the bus company a number of times, but it refused to readmit him.

Rodriguez then filed before the labor arbiter a complaint for illegal dismissal.

In response to the complaint, ALPS and Perez stated that they did not have any prerogative to dismiss Rodriguez, as he was not their employee, but that of Contact Tours.

ISSUES:

1. Whether Rodriguez was illegally dismissed;

2. Assuming Rodriguez was illegally dismissed, whether ALPS Transportation and/or Alfredo E. Perez is liable for the dismissal.

RULING:

1.     Yes

2.     Yes.

For a dismissal to be valid, the rule is that the employer must comply with both substantive and procedural due process requirements. Substantive due process requires that the dismissal must be pursuant to either a just or an authorized cause under the Labor Code. Procedural due process, on the other hand, mandates that the employer must observe the twin requirements of notice and hearing before a dismissal can be effected.

Evidence must, therefore, be substantial and not based on mere surmises or conjectures for to allow an employer to terminate the employment of a worker based on mere allegations places the latter in an uncertain situation and at the sole mercy of the employer. An accusation that is not substantiated will not ripen into a holding that there is just cause for dismissal. A mere accusation of wrongdoing or a mere pronouncement of lack of confidence is not sufficient cause for a valid dismissal of an employee. Thus, the failure of the petitioners to convincingly show that the respondent misappropriated the bus fares renders the dismissal to be without a valid cause. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

Turning to the issue of procedural due process, both parties agree that Rodriguez was not given a written notice specifying the grounds for his termination and giving him a reasonable opportunity to explain his side.

As to the contention of ALPS that Rodriguez is an employee of Contact Tours, the presumption is that a contractor is a labor-only contractor unless he overcomes the burden of proving that it has substantial capital, investment, tools, and the like. While ALPS Transportation is not the contractor itself, since it is invoking Contact Tours status as a legitimate job contractor in order to avoid liability, it bears the burden of proving that Contact Tours is an independent contractor.

However, aside from making bare assertions and offering the Kasunduan between Rodriguez and Contact Tours in evidence, ALPS Transportation has failed to present any proof to substantiate the former's status as a legitimate job contractor. Hence, the legal presumption that Contact Tours is a labor-only contractor has not been overcome.

As a labor-only contractor, therefore, Contact Tours is deemed to be an agent of ALPS Transportation. Thus, the latter is responsible to Contact Tours' employees in the same manner and to the same extent as if they were directly employed by the bus company.

Finally, since ALPS Transportation is a sole proprietorship owned by Perez, it is he who must be held liable for the payment of backwages to Rodriguez. A sole proprietorship does not possess a juridical personality separate and distinct from that of the owner of the enterprise. Thus, the owner has unlimited personal liability for all the debts and obligations of the business, and it is against him that a decision for illegal dismissal is to be enforced.

Case Digest: Mangila v. Guina

ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.

G.R. No. 125027. August 12, 2002

CARPIO, J.:

Petitioner Anita Mangila, a resident of Pampanga, is a single proprietor exporting sea foods and doing business under the name and style of Seafoods Products. Private respondent Loreta Guina is single proprietor providing freight forwarding service doing business as Air Swift International, with office address in Pasay.

Mangila contracted the freight forwarding services of Guina for shipment of sea food products to Guam where Mangila maintains an outlet. Mangila agreed to pay Guina cash on delivery. 

On the first shipment, Mangila requested for seven days within which to pay Guina. However, for the next three shipments, Mangila failed to pay Guina the shipping charges.

Despite several demands, Mangila never paid Guina. Thus, Guina filed before the Regional Trial Court of Pasay City a case for collection of sum of money.

Mangila filed a Motion to Dismiss on the ground of improper venue. Guina’s invoice for the freight forwarding service stipulates that if court litigation becomes necessary to enforce collection, the agreed venue for such action is Makati.

Guina filed an Opposition asserting that although Makati appears as the stipulated venue, the same was merely an inadvertence by the printing press. Moreover, Guina claimed that Mangila knew that Guina was holding office in Pasay City and not in Makati.

The trial court, finding credence in private respondents assertion, denied the Motion to Dismiss and allowed the case to proceed.

The trial court thereafter ruled in favor of Guina, ordering Mangila to pay her outstanding balance.

ISSUE: W/N there was improper venue.

RULING: Yes.

The case should be dismissed for improper venue, but not for the reason stated by Mangila.

Mangila raised the issue of improper venue due to the stipulation in the invoice that any litigation’s agreed venue is Makati. However,  the stipulation does not limit the venue exclusively to Makati.

Nevertheless, Pasay is not the proper venue for this case.

Under the Rules of Court, venue in personal actions is where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. The exception to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as discussed, this exception is not applicable in this case. Hence, following the general rule, the case may be brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff.

In the instant case, the residence of Guina was not alleged in the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air Swift International. It was only during trial that she mentioned her residence to be in Paranaque City.  

In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga while private respondent resides in Paranaque City. However, this case was brought in Pasay City, where the business of Guina is found. This would have been permissible had Guina’s business been a corporation. However, as Guina admitted in her Complaint in the trial court, her business is a sole proprietorship, and as such, does not have a separate juridical personality that could enable it to file a suit in court. In fact, there is no law authorizing sole proprietorships to file a suit in court.

A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government. The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court.^[42]

Thus, not being vested with legal personality to file this case, Air Swift International is not the plaintiff in this case but rather Loreta Guina in her personal capacity.

Case Digest: S.C. Megaworld v. Parada

S.C. MEGAWORLD CONSTRUCTION and DEVELOPMENT CORPORATION, Petitioner,  vs. ENGR. LUIS U. PARADA, represented by ENGR. LEONARDO A. PARADA of GENLITE INDUSTRIES, Respondent.

G.R. No. 183804               September 11, 2013

REYES, J.:

S.C. Megaworld Construction and Development Corporation (Megaworld) bought electrical lighting materials from Gentile Industries, a sole proprietorship owned by Engineer Luis U. Parada. Megaworld was unable to pay for the above purchase on due date, but blamed it on its failure to collect under its sub-contract with the Enviro KleenTechnologies, Inc. (Enviro Kleen). It was however able to persuade Enviro Kleen to agree to settle its above purchase, but after paying the respondent P250,000.00 once, Enviro Kleen stopped making further payments, leaving an outstanding balance of P816,627.00. It also ignored the various demands of the Parada, who then filed a suit in the RTC, to collect from the petitioner the said balance, plus damages, costs and expenses.

Megaworld denied liability by saying that it was released from its indebtedness to the Parada due to the novation of their contract, which. There was allegedly novation when the Parada accepted the partial payment of Enviro Kleen in its behalf, and thereby acquiesced to the substitution of Enviro Kleen as the new debtor in Megaworld’s place. 

The Regional Trial Court ruled in favor of Parada.

On appeal, Megaworld argued that the trial court should have dismissed the complaint for failure of the respondent to implead Genlite Industries as "a proper party in interest."

The sales invoices and receipts show that the respondent is the sole proprietor of Genlite Industries, and therefore the real party.

On the issue of novation, the Court of Appeals ruled that by retaining his option to seek satisfaction from the petitioner, any acquiescence which the respondent had made was limited to merely accepting Enviro Kleen as an additional debtor from whom he could demand payment, but without releasing the petitioner as the principal debtor from its debt to him.

ISSUE: W/N Genlite Industries should have been impleaded as a party-plaintiff.

RULING: No.

Only natural or juridical persons or entities authorized by law may be parties in a civil case.

A sole proprietorship has no juridical personality separate and distinct from that of its owner, and need not be impleaded as a party-plaintiff in a civil case.

Genlite Industries is merely the DTI-registered trade name or style of Parada by which he conducted his business. As such, it does not exist as a separate entity apart from its owner, and therefore it has no separate juridical personality to sue or be sued. As the sole proprietor of Genlite Industries, there is no question that the Parada is the real party in interest who stood to be directly benefited or injured by the judgment in the complaint below. There is then no necessity for Genlite Industries to be impleaded as a party-plaintiff, since the complaint was already filed in the name of its proprietor, Engr. Luis U. Parada. To heed the Megaworld’s sophistic reasoning is to permit a dubious technicality to frustrate the ends of substantial justice.

ISSUE: W/N there is novation of the contract.

RULING: None.

Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. It is "the substitution of a new contract, debt, or obligation for an existing one between the same or different parties."

The settled rule is that novation is never presumed, but must be clearly and unequivocally shown.  In order for a new agreement to supersede the old one, the parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one.

The trial court found that the respondent never agreed to release the petitioner from its obligation, and this conclusion was upheld by the CA.

Case Digest, Juasing Hardware v. Mendoza

JUASING HARDWARE, petitioner, vs. THE HONORABLE RAFAEL T. MENDOZA, Judge of the Court of First Instance of Cebu, and PILAR DOLLA, respondents.

G.R. No. L-55687 July 30, 1982

GUERRERO, J.:

Juasing Hardware, alleging to be a single proprietorship duly organized and existing under and by virtue of the laws of the Philippines and represented by its manager Ong Bon Yong, filed a complaint for the collection of a sum of money against Pilar Dolla. 

In her Answer, Dolla stated that she has no knowledge about Juasing Hardware's legal personality and capacity to sue as alleged in the complaint. 

After Juasing Hardware had completed the presentation of its evidence and rested its case, Dolla filed a Motion for Dismissal of Action for Juasing Hardware’s lack of legal capacity to sue. Dolla contended that Juasing Hardware is a single proprietorship, not a corporation or a partnership duly registered in accordance with law, and therefore is not a juridical person with legal capacity to bring an action in court. Juasing Hardware filed an opposition and moved for the admission of an Amended Complaint to change the name.

Respondent Judge issued an Order dismissing the case and denying admission of the Amended Complaint.

ISSUE: W/N the Court properly dismissed the case filed by Juasing Hardware.

RULING: No.

Juasing Hardware is definitely not a natural person; nor is it a juridical person as defined in the New Civil Code of the Philippines thus:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law;

(3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member.

There is no law authorizing sole proprietorships like Juasing Hardware to bring suit in court. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in court.

Thus, the complaint in the court should have been filed in the name of the owner of Juasing Hardware. The allegations in the body of the complaint would show that the suit is brought by such person as proprietor or owner of the business conducted under the name and style “Juasing Hardware.” The descriptive words "doing business as Juasing Hardware' " may be added in the title of the case, as is customarily done.

Be that as it may, Juasing Hardware's contention that respondent judge erred in not allowing the amendment of the complaint to correct the designation of the party plaintiff in the lower court, is impressed with merit. The defect of the complaint in the instant case is merely formal, not substantial. Substitution of Juasing Hardware would not constitute a change in the Identity of the parties. No unfairness or surprise to Dolla would result by allowing the amendment, the purpose of which is merely to conform to procedural rules or to correct a technical error.