Sarona v NLRC

G.R. No. 185280               January 18, 2012

WHO SHALL BE LIABLE TO THE OBLIGATIONS OF A SOLE PROPRIETOR AFTER THE

DEATH OF THE OWNER

Royale is a continuation or successor of Sceptre.

A corporation is an artificial being created by operation of law. It possesses the right of succession
and such powers, attributes, and properties expressly authorized by law or incident to its existence.
It has a personality separate and distinct from the persons composing it, as well as from any other
legal entity to which it may be related. This is basic.45

Equally well-settled is the principle that the corporate mask may be removed or the corporate veil
pierced when the corporation is just an alter ego of a person or of another corporation. For reasons
of public policy and in the interest of justice, the corporate veil will justifiably be impaled only when it
becomes a shield for fraud, illegality or inequity committed against third persons. 46

Hence, any application of the doctrine of piercing the corporate veil should be done with caution. A
court should be mindful of the milieu where it is to be applied. It must be certain that the corporate
fiction was misused to such an extent that injustice, fraud, or crime was committed against another,
in disregard of rights. The wrongdoing must be clearly and convincingly established; it cannot be
presumed. Otherwise, an injustice that was never unintended may result from an erroneous
application.47

Whether the separate personality of the corporation should be pierced hinges on obtaining facts
appropriately pleaded or proved. However, any piercing of the corporate veil has to be done with
caution, albeit the Court will not hesitate to disregard the corporate veil when it is misused or when
necessary in the interest of justice. After all, the concept of corporate entity was not meant to
promote unfair objectives. 48

The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of
public convenience as when the corporate fiction is used as a vehicle for the evasion of an existing
obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or
defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter
ego or business conduit of a person, or where the corporation is so organized and controlled and its
affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of
another corporation. 49

In this regard, this Court finds cogent reason to reverse the CA’s findings. Evidence abound showing
that Royale is a mere continuation or successor of Sceptre and fraudulent objectives are behind
Royale’s incorporation and the petitioner’s subsequent employment therein. These are plainly
suggested by events that the respondents do not dispute and which the CA, the NLRC and LA
Gutierrez accept as fully substantiated but misappreciated as insufficient to warrant the use of the
equitable weapon of piercing.

As correctly pointed out by the petitioner, it was Aida who exercised control and supervision over the
affairs of both Sceptre and Royale. Contrary to the submissions of the respondents that Roso had
been the only one in sole control of Sceptre’s finances and business affairs, Aida took over as early
as 1999 when Roso assigned his license to operate Sceptre on May 3, 1999. As further proof of
50 

Aida’s acquisition of the rights as Sceptre’s sole proprietor, she caused the registration of the
business name "Sceptre Security & Detective Agency" under her name with the DTI a few months
after Roso abdicated his rights to Sceptre in her favor. As far as Royale is concerned, the
51 

respondents do not deny that she has a hand in its management and operation and possesses
control and supervision of its employees, including the petitioner. As the petitioner correctly pointed
out, that Aida was the one who decided to stop giving any assignments to the petitioner and
summarily dismiss him is an eloquent testament of the power she wields insofar as Royale’s affairs
are concerned. The presence of actual common control coupled with the misuse of the corporate
form to perpetrate oppressive or manipulative conduct or evade performance of legal obligations is
patent; Royale cannot hide behind its corporate fiction.

Aida’s control over Sceptre and Royale does not, by itself, call for a disregard of the corporate
fiction. There must be a showing that a fraudulent intent or illegal purpose is behind the exercise of
such control to warrant the piercing of the corporate veil. However, the manner by which the
52 

petitioner was made to resign from Sceptre and how he became an employee of Royale suggest the
perverted use of the legal fiction of the separate corporate personality.  It is undisputed that the
lavvphil

petitioner tendered his resignation and that he applied at Royale at the instance of Karen and Cesar
and on the impression they created that these were necessary for his continued employment. They
orchestrated the petitioner’s resignation from Sceptre and subsequent employment at Royale, taking
advantage of their ascendancy over the petitioner and the latter’s lack of knowledge of his rights and
the consequences of his actions. Furthermore, that the petitioner was made to resign from Sceptre
and apply with Royale only to be unceremoniously terminated shortly thereafter leads to the
ineluctable conclusion that there was intent to violate the petitioner’s rights as an employee,
particularly his right to security of tenure. The respondents’ scheme reeks of bad faith and fraud and
compassionate justice dictates that Royale and Sceptre be merged as a single entity, compelling
Royale to credit and recognize the petitioner’s length of service with Sceptre. The respondents
cannot use the legal fiction of a separate corporate personality for ends subversive of the policy and
purpose behind its creation or which could not have been intended by law to which it owed its
53 

being.54

For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole proprietorship. As ruled
in Prince Transport, Inc., et al. v. Garcia, et al., it is the act of hiding behind the separate and distinct
55 

personalities of juridical entities to perpetuate fraud, commit illegal acts, evade one’s obligations that
the equitable piercing doctrine was formulated to address and prevent:

A settled formulation of the doctrine of piercing the corporate veil is that when two business
enterprises are owned, conducted and controlled by the same parties, both law and equity will, when
necessary to protect the rights of third parties, disregard the legal fiction that these two entities are
distinct and treat them as identical or as one and the same. In the present case, it may be true that
Lubas is a single proprietorship and not a corporation. However, petitioners’ attempt to isolate
themselves from and hide behind the supposed separate and distinct personality of Lubas so as to
evade their liabilities is precisely what the classical doctrine of piercing the veil of corporate entity
seeks to prevent and remedy. 56

Also, Sceptre and Royale have the same principal place of business. As early as October 14, 1994,
Aida and Wilfredo became the owners of the property used by Sceptre as its principal place of
business by virtue of a Deed of Absolute Sale they executed with Roso. Royale, shortly after its
57 

incorporation, started to hold office in the same property. These, the respondents failed to dispute.

The respondents do not likewise deny that Royale and Sceptre share the same officers and
employees. Karen assumed the dual role of Sceptre’s Operation Manager and incorporator of
Royale. With respect to the petitioner, even if he has already resigned from Sceptre and has been
employed by Royale, he was still using the patches and agency cloths of Sceptre during his
assignment at Highlight Metal.

Royale also claimed a right to the cash bond which the petitioner posted when he was still with
Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre should have released the
petitioner’s cash bond when he resigned and Royale would have required the petitioner to post a
new cash bond in its favor.

Taking the foregoing in conjunction with Aida’s control over Sceptre’s and Royale’s business affairs,
it is patent that Royale was a mere subterfuge for Aida. Since a sole proprietorship does not have a
separate and distinct personality from that of the owner of the enterprise, the latter is personally
liable. This is what she sought to avoid but cannot prosper.

Effectively, the petitioner cannot be deemed to have changed employers as Royale and Sceptre are
one and the same. His separation pay should, thus, be computed from the date he was hired by
Sceptre in April 1976 until the finality of this decision. Based on this Court’s ruling in Masagana
Concrete Products, et al. v. NLRC, et al., the intervening period between the day an employee was
58 

illegally dismissed and the day the decision finding him illegally dismissed becomes final and
executory shall be considered in the computation of his separation pay as a period of "imputed" or
"putative" service:

WHO HAS STANDING IN COURT ON BEHALF OF THE SOLE PROPRIETORSHIP

STANLEY FINE FURNITURE, ELENAAND CARLOS WANG, Petitioners,

vs.
VICTOR T. GALLANO AND ENRIQUITO SIAREZ, Respondents.

G.R. No.190486               November 26, 2014

On this issue, petitioners claimed that Elena Briones is not the real party-in-interest; hence, the
decision of the Court of Appeals is final and executory since the petition for review was not properly
filed.
50

In her reply, Elena argued that she is the sole proprietor of Stanley Fine, a fact known to
respondents.  As the sole proprietor, she has standing to file this petition.
51 52

Respondents cannot deny Elena Briones’ standing to file this petition considering that in their
amended complaint filed before the Labor Arbiter, they wrote "Stanley Fine Furniture, Elina [sic]
Briones Wang as ownerand Carlos Wang" as their employers. 53

Also, respondents did not refute Elena’s allegation that Stanley Fine is a sole proprietorship. In
Excellent Quality Apparel, Inc. v. Win Multi-Rich Builders, Inc.,  this court stated that:
54

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.  (Emphasis supplied) Thus, Stanley
55

Fine, being a sole proprietorship, does not have a personality separate and distinct from its owner,
Elena Briones. Elena, being the proprietress of Stanley Fine, can be considered as a real party-in-
interest and has standing to file this petition for review.

VENUE OF THE CASE

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

G.R. No. 125027            August 12, 2002

In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged
in the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air
Swift International. It was only when private respondent testified in court, after petitioner was
declared in default, that she mentioned her residence to be in Better Living Subdivision, Parañaque
City.

In the earlier case of Sy v. Tyson Enterprises, Inc.,34 the reverse happened. The plaintiff in that case
was Tyson Enterprises, Inc., a corporation owned and managed by Dominador Ti. The complaint,
however, did not allege the office or place of business of the corporation, which was in Binondo,
Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The
case was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident
purpose of alleging the address of the corporation’s president and manager was to justify the filing of
the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that
venue was improperly laid in that case and held that the place of business of Tyson Enterpises, Inc.
is considered as its residence for purposes of venue. Furthermore, the Court held that the residence
of its president is not the residence of the corporation because a corporation has a personality
separate and distinct from that of its officers and stockholders.

In the instant case, it was established in the lower court that petitioner resides in San Fernando,
Pampanga35 while private respondent resides in Parañaque City.36 However, this case was brought
in Pasay City, where the business of private respondent is found. This would have been permissible
had private respondent’s business been a corporation, just like the case in Sy v. Tyson Enterprises,
Inc. However, as admitted by private respondent in her Complaint 37 in the lower 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.38 In fact, there is no law authorizing sole proprietorships to file a suit in court. 39

A sole proprietorship does not possess a juridical personality separate and distinct from the
personality of the owner of the enterprise. 40 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.41 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, the sole proprietorship is not the
plaintiff in this case but rather Loreta Guina in her personal capacity. In fact, the complaint in the
lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina and Anita
Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita
Mangila v. Air Swift International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the
residence of private respondent Guina, the proprietor with the juridical personality, which should be
considered as one of the proper venues for this case.

All these considered, private respondent should have filed this case either in San Fernando,
Pampanga (petitioner’s residence) or Parañaque (private respondent’s residence). Since private
respondent (complainant below) filed this case in Pasay, we hold that the case should be dismissed
on the ground of improper venue.

A SOLE PROPRIETORSHIP HAS NO JURIDICAL CAPACITY TO DEFEND AND SUE

BERMAN MEMORIAL PARK, INC.1 and LUISA CHONG, petitioners,
vs.
FRANCISCO CHENG, respondent.

G.R. No. 154630             May 6, 2005

Before resolving the merits of the petition, however, we have to address and resolve the issue as to
whether or not the IMP has the capacity to sue as petitioner and be sued as defendant in the RTC;
and whether or not BMPI is an indispensable party in the RTC, and in this case.

The rule is that only natural or juridical persons or entities authorized by law may be parties in a civil
case.39 A sole proprietorship is not vested with juridical personality and cannot sue or file or defend
an action. There is no law authorizing sole proprietorship to file a suit. A sole proprietorship does not
possess a judicial personality separate and distinct from the personality of the owner of the
enterprise.40

In this case, the IMP is not a corporation and does not have a juridical personality that could enable
it to be a party defendant in the RTC. It is only a business name used by BMPI for the memorial park
it owned and operated. In fact, it is clearly indicated in the At-Need Purchase Agreement and Pre-
Need Purchase Agreement dated January 20 and May 11, 1994, respectively, that the seller of the
lots is BMPI, and that the IMP is owned and operated by it. It is BMPI which has the juridical
personality to be sued by the respondent as the plaintiff in the RTC. Indeed, the real party-in-interest
as party-defendant in the RTC is BMPI, the signatory to the said agreements which the respondent
sought to enforce therein. Since a contract may be enforced only by the parties thereto as against
each other, the real parties-in-interest, either as plaintiff or defendant in an action based on the said
contract, must be the parties to the said contract. If the real party-in-interest as defendant is not
impleaded as such, then the complaint must be dismissed on the ground that it states no cause of
action, unless the complaint is later amended to implead the said party-defendant in substitution. In
this case, petitioner Chong did not pursue the issue in the RTC and in the CA. In fact, she
erroneously declared in her answer to the complaint that the IMP was a corporation. However, it is
not too late for the Court to order the impleading of the BMPI as party-defendant in the RTC, and
party-petitioner in this case, conformably with the following ruling:

The complaint then should have been amended to implead Yao Ka Sin as plaintiff in
substitution of Yao Ka Sin Trading. However, it is now too late in the history of this case to
dismiss this petition and, in effect, nullify all proceedings had before the trial court and the
respondent Court on the sole ground of petitioner’s lack of capacity to sue. Considering that
private respondent did not pursue this issue before the respondent Court and this Court;
 that, as We held in Juasing, the defect is merely formal and not substantial, and an
amendment to cure such defect is expressly authorized by Section 4, Rule 10 of the Rules of
Court which provides that "[a] defect in the designation of the parties may be summarily
corrected at any stage of the action provided no prejudice is caused thereby to the adverse
party;" and that "[a] sole proprietorship does not, of course, possess any juridical personality
separate and apart from the personality of the owner of the enterprise and the personality of
the persons acting in the name of such proprietorship," We hold and declare that Yao Ka Sin
should be deemed as the plaintiff in Civil Case No. 5064 and the petitioner in the instant
case. As this Court stated nearly eighty (80) years ago in Alonso v. Villamor:

No one has been misled by the error in the name of the party-plaintiff. If we should,
by reason of this error, send this case back for amendment and new trial, there
would be on the retrial the same complaint, the same answer, the same defense, the
same interests, the same witnesses, and the same evidence. The name of the
plaintiff would constitute the only difference between the old trial and the new. In our
judgment, there is not enough in a name to justify such action. 41

Resultably, then, the complaint in the RTC and the petition at bench are amended to implead BMPI
as party-defendant/respondent in substitution of the IMP.

LEGAL PERSONALITY OF THE SUCCESSOR-IN-INTEREST

EXCELLENT QUALITY APPAREL, INC., Petitioner,

vs.
WIN MULTI RICH BUILDERS, INC., represented by its President, WILSON G. CHUA
G.R. No. 175048               February 10, 2009

The original petition was instituted by Win, which is a SEC-registered corporation. It filed a collection
of sum of money suit which involved a construction contract entered into by petitioner and Multi-
Rich, a sole proprietorship. The counsel of Win wanted to change the name of the plaintiff in the suit
to Multi-Rich. The change cannot be countenanced. The plaintiff in the collection suit is a
corporation. The name cannot be changed to that of a sole proprietorship. Again, a sole
proprietorship is not vested with juridical personality to file or defend an action. 34

Petitioner had continuously contested the legal personality of Win to institute the case. Win was
given ample opportunity to adduce evidence to show that it had legal personality. It failed to do
so. Corpus Juris Secundum, notes:

x x x where an individual or sole trader organizes a corporation to take over his business and all his
assets, and it becomes in effect merely an alter ego of the incorporator, the corporation, either on
the grounds of implied assumption of the debts or on the grounds that the business is the same and
is merely being conducted under a new guise, is liable for the incorporator's preexisting debts and
liabilities. Clearly, where the corporation assumes or accepts the debt of its predecessor in business
it is liable and if the transfer of assets is in fraud of creditors it will be liable to the extent of the assets
transferred. The corporation is not liable on an implied assumption of debts from the receipt of
assets where the incorporator retains sufficient assets to pay the indebtedness, or where none of his
assets are transferred to the corporation, or where, although all the assets of the incorporator have
been transferred, there is a change in the persons carrying on the business and the corporation is
not merely an alter ego of the person to whose business it succeeded. 35
In order for a corporation to be able to file suit and claim the receivables of its predecessor in
business, in this case a sole proprietorship, it must show proof that the corporation had acquired the
assets and liabilities of the sole proprietorship. Win could have easily presented or attached any
document e.g., deed of assignment which will show whether the assets, liabilities and receivables of
Multi-Rich were acquired by Win. Having been given the opportunity to rebut the allegations made
by petitioner, Win failed to use that opportunity. Thus, we cannot presume that Multi-Rich is the
predecessor-in-business of Win and hold that the latter has standing to institute the collection suit.

CIAC’S JURISDICTION

EXCELLENT QUALITY APPAREL, INC., Petitioner,

vs.
WIN MULTI RICH BUILDERS, INC., represented by its President, WILSON G. CHUA
G.R. No. 175048               February 10, 2009

Contract has : Article XIX : ARBITRATION CLAUSE

Should there be any dispute, controversy or difference between the parties arising out of this
Contract that may not be resolved by them to their mutual satisfaction, the matter shall be submitted
to an Arbitration Committee of three (3) members; one (1) chosen by the OWNER; one (1) chosen
by the CONTRACTOR; and the Chairman thereof to be chosen by two (2) members. The decision of
the Arbitration Committee shall be final and binding on both the parties hereto. The Arbitration shall
be governed by the Arbitration Law (R.A. [No.] 876). The cost of arbitration shall be borned [sic]
jointly by both CONTRACTOR and OWNER on 50-50 basis

Section 4 of E.O. No. 100836 provides for the jurisdiction of the Construction Industry Arbitration
Commission, to wit:

Section 4. Jurisdiction.—The CIAC shall have original and exclusive jurisdiction over disputes arising
from, or connected with, contracts entered into by parties involved in construction in the Philippines,
whether the disputes arises before or after the completion of the contract, or after the abandonment
or breach thereof. These disputes may involve government or private contracts. For the Board to
acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials
and workmanship; violation of the terms of agreement; interpretation and/or application of
contractual time and delays; amount of damages and penalties; commencement time and delays;
maintenance and defects; payment, default of employer or contractor and changes in contract cost.

Excluded from the coverage of this law are disputes from employer-employee relationships which
shall continue to be covered by the Labor Code of the Philippines.

There is nothing in the law which limits the exercise of jurisdiction to complex or difficult
cases. E.O. No. 1008 does not distinguish between claims involving payment of money or
not.37 The CIAC acquires jurisdiction over a construction contract by the mere fact that the
parties agreed to submit to voluntary arbitration. 38 The law does not preclude parties from
stipulating a preferred forum or arbitral body but they may not divest the CIAC of jurisdiction as
provided by law.39 Arbitration is an alternative method of dispute resolution which is highly
encouraged.40 The arbitration clause is a commitment on the part of the parties to submit to
arbitration the disputes covered since that clause is binding, and they are expected to abide by it in
good faith.41 Clearly, the RTC should not have taken cognizance of the collection suit. The presence
of the arbitration clause vested jurisdiction to the CIAC over all construction disputes between
Petitioner and Multi-Rich. The RTC does not have jurisdiction. 42

CIAC JURISDICTION

G.R. No. 129169 November 17, 1999

NATIONAL IRRIGATION ADMINISTRATION (NIA), petitioner,

vs.
HONORABLE COURT OF APPEALS (4th Division), CONSTRUCTION INDUSTRY
ARBITRATION COMMISSION, and HYDRO RESOURCES CONTRACTORS CORPORATION,

“Stated differently, the jurisdiction of CIAC is over the dispute, not the contract”

SOLE PROPRIETOR’S REAL PARTY IN INTEREST

G.R. No. 160854             March 3, 2006

BIG AA MANUFACTURER, Petitioner,
vs.
EUTIQUIO ANTONIO, JAY ANTONIO, FELICISIMO ANTONIO, and LEONARDO ANTONIO, SR.,*

Lastly, we note the silence of the decisions below with respect to Enrico Alejo, in whose name
petitioner is registered as a sole proprietorship. Alejo as the sole proprietor is liable to respondents
for backwages and separation pay. We also note that Enrico is consistently represented as
petitioner’s sole-proprietor in its pleadings including this petition. Therefore, respondents properly
sought the inclusion of Enrico Alejo as a proper or indispensable party to this case. Strictly speaking,
he is the proper party in this case and the one liable to respondents, for petitioner has no juridical
personality to defend this suit. We have held that:

a sole proprietorship … 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.31

WHEREFORE, the petition is DENIED for lack of merit. Petitioner thru its sole proprietor, Enrico
Alejo, is ordered (1) to reinstate the four respondents to their former positions without loss of
seniority rights and other privileges or to pay them separation pay in case reinstatement is no longer
possible and (2) to pay them full backwages, in either case, computed from the time their
compensation was withheld from them up to the time of their actual reinstatement or up to the time it
is determined that reinstatement is no longer possible. The NLRC is also ordered
to RECOMPUTE respondents’ backwages and separation pay, as aforementioned, and execute the
payments to respondents. Costs against the petitioner.

PROPER IMPLEADING OF RESPONDENT

G.R. No. 172595             April 10, 2008

BIENVENIDO EJERCITO and JOSE MARTINEZ, petitioners,

vs.
M.R. VARGAS CONSTRUCTION, BRION, MARCIAL R. VARGAS, Sole Owner, RENATO
AGARAO**, respondents.

A sole proprietorship does not possess a juridical personality separate and distinct from the
personality of the owner of the enterprise. The law does not vest a separate legal personality on the
sole proprietorship or empower it to file or defend an action in court. 34 Only natural or juridical
persons or entities authorized by law may be parties to a civil action and every action must be
prosecuted and defended in the name of the real parties-in-interest. 35

The records show that respondent enterprise, M.R. Vargas Construction Co., is a sole proprietorship
and, therefore, an entity without juridical personality. Clearly, the real party-in-interest is Marcial R.
Vargas who is the owner of the enterprise. Thus, the petition for injunction should have impleaded
him as the party respondent either simply by mention of his name or by denominating him as doing
business under the name and style of "M.R. Vargas Construction Co." It was erroneous to refer to
him, as the petition did in both its caption and body, as representing the enterprise. Petitioners
apparently realized this procedural lapse when in the petition for certiorari filed before the Court of
Appeals and in the instant petition, M.R. Vargas Construction, Marcial R. Vargas and Renato Agaro
were separately named as individual respondents.

Since respondent enterprise is only a sole proprietorship, an entity without juridical personality, the
suit for injunction may be instituted only against its owner, Marcial Vargas. Accordingly summons
should have been served on Vargas himself, following Rule 14, Sections 6 36 and 737 of the Rules of
Court on personal service and substituted service. In the instant case, no service of summons,
whether personal or substituted, was effected on Vargas. It is well-established that summons upon a
respondent or a defendant must be served by handing a copy thereof to him in person or, if he
refuses to receive it, by tendering it to him. Personal service of summons most effectively ensures
that the notice desired under the constitutional requirement of due process is accomplished. If
however efforts to find him personally would make prompt service impossible, service may be
completed by substituted service, i.e., by leaving copies of the summons at his dwelling house or
residence with some person of suitable age and discretion then residing therein or by leaving the
copies at his office or regular place of business with some competent person in charge thereof. 38
The modes of service of summons should be strictly followed in order that the court may acquire
jurisdiction over the respondents, and failure to strictly comply with the requirements of the rules
regarding the order of its publication is a fatal defect in the service of summons. It cannot be
overemphasized that the statutory requirements on service of summons, whether personally, by
substituted service or by publication, must be followed strictly, faithfully and fully, and any mode of
service other than that prescribed by the statute is considered ineffective. 39

Agarao was not a party respondent in the injunction case before the trial court. Certainly, he is not a
real party-in-interest against whom the injunction suit may be brought, absent any showing that he is
also an owner or he acts as an agent of respondent enterprise. Agarao is only a foreman, bereft of
any authority to defend the suit on behalf of respondent enterprise. As earlier mentioned, the suit
against an entity without juridical personality like respondent enterprise may be instituted only by or
against its owner. Impleading Agarao as a party-respondent in the suit for injunction would have no
legal consequence. In any event, the petition for injunction described Agarao only as a
representative of M.R. Vargas Construction Co., which is a mere inconsequentiality considering that
only Vargas, as its sole owner, is authorized by the Rules of Court to defend the suit on behalf of the
enterprise.

DETERMINATION OF ESTATE, ASSETS OF SOLE PROP

[ G.R. No. 197310, June 23, 2021 ]

DANIEL RIVERA AND ELPIDIO RIVERA, PETITIONERS, VS. FLORA P. VILLANUEVA,

RUPERTO PACHECO, VIRGILIO PACHECO AND THE HEIRS OF DONATO PACHECO, JR.,
NAMELY, ESTELITA PACHECO, ROLAND PACHECO, DANILO PACHECO, AND EDMOND
PACHECO, RESPONDENTS.

On February 20, 1964, Glorificador, Emerenciana's husband, filed a petition for issuance of letters of
administration in the Court of First Instance (CFI) of Manila, Branch IV, in the special proceedings for
the settlement of the estate of Emerenciana. Glorificador moved ex parte to be appointed special
administrator, which was vehemently opposed by Milagros. Glorificador, likewise, petitioned the trial
court to be allowed to perform acts of preservation over the D.R. Pacheco Private Detective and
Special Watchman Agency, likewise owned by the late Donato, Sr.1

RTC: As to the agency (Donato R. Pacheco Private Detective and Watchmen Agency), Judge
Mariano held that it was Donato, Sr. who operated the same during his lifetime as sole proprietor
thereof. Said business which he left behind after his death could never be inherited by his heirs, and
its assets consisting of assorted guns have been surrendered to the Philippine Constabulary. 19

[[[[NB: No more assets to inherit yung heirs kasi na-surrender na sa PC. Pero Court did not
discuss if pano kung may assets. Pwede bang ma inherit?]]]]