FIRST DIVISION
[G.R. No. 225675. June 23, 2021.]
JOCELYN QUIÑONES y CONDE, 1petitioner, vs.ORTOFON TELECOM, MICHAEL CHUA TAN, JOCELYN TAN and LEONCIO GABAT DAMEZ, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJune 23, 2021which reads as follows: HTcADC
"G.R. No. 225675(Jocelyn Quiñones y Conde, Petitioner, v. Ortofon Telecom, Michael Chua Tan, Jocelyn Tan and Leoncio Gabat Damez, Respondents.) — This Petition for Review on Certiorari2 (petition) seeks to reverse and set aside the Amended Decision 3 dated 22 March 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 128935, modifying its Decision 4 dated 18 June 2015.
Antecedents
Jocelyn Quiñones (petitioner) claimed that she was hired by Michael Chua Tan (Michael) in May 2001 to work as sales clerk in his cellphone shops at Raon Shopping Center. In February 2009, she was assigned to Ortofon General Merchandise. Petitioner further alleged that during her tenure, she was not paid her overtime pay, holiday pay, service incentive leave pay, and 13th month pay.
On 26 November 2010, petitioner was granted a leave of absence, as she was suffering from dysmenorrhea. After recovering therefrom, or on 02 December 2010, she filed a labor standards case against Michael and his wife, Jocelyn. She then called Michael to tell him that she was reporting for work the following day. However, Michael responded, "Magkita [na lang] tayo sa Labor." This prompted petitioner to amend her cause of action from "underpayment" to "illegal dismissal." 5
Michael and Jocelyn countered that Ortofon Telecom (Ortofon), a business enterprise engaged in the sale of mobile phones and accessories, was under the sole proprietorship of Leoncio Gabat Damez (Damez). 6 While Michael served as the store manager, Jocelyn had no part in the business operations.
According to Michael and Jocelyn, sometime in November 2010, petitioner suddenly failed to report for work. Michael sent her several text messages and called her but she did not answer his calls. Thus, on 01 December 2010, Michael issued a memorandum directing petitioner to report for work and explain her absence. When this proved futile, he issued another memorandum terminating petitioner's employment due to abandonment. Respondents added that petitioner elevated her action for underpayment to illegal dismissal when they failed to settle amicably. 7
Ruling of the Labor Arbiter
In his Decision 8 dated 30 September 2011, the Labor Arbiter (LA) ruled that petitioner was illegally dismissed from her employment. The LA observed that respondents failed to prove abandonment on the part of petitioner. However, since the relationship between the parties had become strained, the LA held that reinstatement was no longer feasible and awarded the corresponding employment benefits and separation pay, plus backwages. 9 Thus:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered, as follows:
1. Declaring the dismissal of complainant as unjust and illegal;
2. Ordering respondents Ortofon Telecom, Michael Tan[,] and Jocelyn Tan in solidum to pay complainant separation pay x x x;
3. Ordering respondents Ortofon Telecom, Michael Tan[,] and Jocelyn Tan in solidum to pay complainant backwages x x x;
4. Ordering respondents Ortofon Telecom, Michael Tan[,] and Jocelyn Tan in solidum to pay complainant salary differentials from June 1, 2007 to December 3, 2010 x x x.
SO ORDERED.10
Aggrieved, petitioner appealed to the National Labor Relations Commission (NLRC).
Ruling of the NLRC
In its Decision 11 dated 22 October 2012, the NLRC affirmed the LA decision as to petitioner's illegal dismissal, but Michael and Jocelyn were deleted as party respondents. The NLRC found that they were not owners of Ortofon, hence, should not have been adjudged solidarily liable with it for the payment of petitioner's separation pay, backwages, and salary differentials. Based on the records, the real owner of Ortofon was Damez. Michael was merely the store manager, as evidenced by cash vouchers issued by the company. 12
Dissatisfied with the ruling of the NLRC, petitioner filed her motion for reconsideration, which was denied in a Resolution 13 dated 27 December 2012. Petitioner, thereafter, sought recourse to the CA by filing a petition for certiorari.
Michael and Jocelyn, in their motion to reduce appeal bond 14 averred that Ortofon closed shop sometime in July 2011. Allegedly, Damez had, since his receipt of the LA decision, stopped supporting them in the defense of the instant case. Since they were both unemployed and relying on the help of their parents for their needs, they could only post a bond in the amount of Php100,000.00, not the full amount of Php409,538.03. 15
The NLRC, in its Order dated 27 February 2012, denied the motion to reduce bond. The allegations of Michael and Jocelyn were self-serving, as they were not supported by any evidence.
Ruling of the CA
In its Decision 16 dated 18 June 2015, the CA modified the decision of the NLRC and held that Michael is solidarily liable with Ortofon and Damez for the monetary judgment of Php409,539.03, plus moral and exemplary damages of Php20,000.00, and ten (10%) percent attorney's fees. 17
Even though the CA took note of Ortofon being a single proprietorship, with Damez as its true owner, it considered Michael as petitioner's employer within the broad definition of the term under Article 219 18 of the Labor Code. The CA arrived at this conclusion because it was Michael who oversaw the day-to-day operations of the business, supervised the conduct and duties of the employees, exercised the power to assign and reassign the employees, apportioned and disbursed their salaries, imposed disciplinary measures on erring employees, such as dismissal from service, and allowed his 19 mother to interview petitioner for the job vacancy. Meanwhile, Jocelyn was not found to have taken part in the business operation. 20
Both parties subsequently moved for reconsideration. On 22 March 2016, the CA issued its Amended Decision, 21 the dispositive portion of which states:
WHEREFORE, premises considered[,] the Motion for Partial Reconsideration filed by private respondent Michael Chua Tan is given due course. Accordingly, Our Decision dated June 18, 2015 is hereby MODIFIED insofar as to release him from his solidary liability with Ortofon Telecom and Leoncio Damez in the payment of the judgment money. It is likewise directed that the appeal bond he posted with the NLRC be DISCHARGED. Meanwhile, the Motion for Partial Reconsideration filed by petitioner is DENIED for lack of merit.
SO ORDERED. 22
The CA ruled that Michael was merely doing his job as a manager. Overseeing the day-to-day operations of the store did not ipso facto make him petitioner's employer, but simply put him under the category of a manager. The CA likewise pointed out that petitioner failed to prove her claim that Damez was a dummy of respondents. Even though she had never seen Damez in the store, this situation did not make respondents her employers. 23
Hence, the filing of the instant petition before this Court.
Issue
The sole issue in this case is whether or not Michael and Jocelyn should be held solidarily liable with Damez for the payment of petitioner's separation pay, backwages, and salary differentials, moral and exemplary damages as well as attorney's fees.
Ruling of the Court
The petition is without merit.
A sole proprietorship is the oldest, simplest, and most prevalent form of business enterprise. It is defined as an unorganized business owned by one person. The sole proprietor is personally liable for all the debts and obligations of the business. 24 In Mangila v. Court of Appeals, 25 the Court elucidates:
x x x 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.
To prove that it is indeed Damez who is the sole proprietor or owner of Ortofon, respondents presented Certificates of Business Name Registration issued by the Department of Trade and Industry and the Bureau of Internal Revenue on 09 February 2009 and 10 March 2009, respectively, and the Business Information-Business Record issued by the City of Manila on 15 February 2010, which all show that Damez is the real owner of Ortofon. 26 As found by the CA, Damez was the one who paid the income and percentage taxes for the business. 27 Since a sole proprietorship does not have a separate and distinct personality from that of the owner of the enterprise, it is the latter who is personally liable for all the debts and obligations of the business. 28
As correctly observed by both the NLRC and the CA, respondents Michael and Jocelyn are not the owners of Ortofon. Michael is merely the store manager, while Jocelyn had no participation in the affairs of Ortofon. 29 Article 82 of the Labor Code defines managerial employees as those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. The Implementing Rules of the Labor Code state that managerial employees are those who meet the following criteria:
(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. 30
The foregoing requisites are met by Michael: he manages Ortofon, directs the work of petitioner and her co-worker, and was conferred with the authority to hire and fire employees.
Petitioner is adamant that Michael and Jocelyn should be held solidarily liable with Damez, as Ortofon Marketing has ceased its operations. She insists that the pronouncement in Restaurante Las Conchas v. Llego31 applies. In that case, the Court held that when the employer corporation was no longer existing and the judgment rendered in favor of the employees could not be satisfied, the officers of the corporation should be held liable for acting on behalf of the corporation. 32
The Restaurante Las Conchas case finds no application in the instant case since the factual milieux of the two cases are different from each other. For one thing, the Restaurante Las Conchas case pertained to a corporation and the liability of corporate officers, whereas the instant case is about sole proprietorship and the liability of a sole proprietor. But if We are to consider Restaurante Las Conchas a sole proprietorship, it should be pointed out that the spouses David and Elizabeth Ann Gonzales were held liable for the money claims of their employees being owners thereof. On this matter, there is a similarity between the two cases as Damez, the owner of Ortofon, a sole proprietorship, was also held liable for the payment of the awards to petitioner. As the Court explained in Restaurante Las Conchas:
"Records reveal that the Restaurant Services Corporation was not a party respondent in the complaint filed before the Labor Arbiter. The complaint was filed only against the Restaurante Las Conchas and the spouses David Gonzales and Elizabeth Anne Gonzales as owner, manager and president. The Restaurant Services Corporation was mentioned for the first time in the Motion to Dismiss filed by petitioners David Gonzales and Elizabeth Anne Gonzales who did not even bother to adduce any evidence to show that the Restaurant Services Corporation was really the owner of the Restaurante Las Conchas. On the other hand, if indeed, the Restaurant Services Corporation was the owner of the Restaurante Las Conchas and the employer of private respondents, it should have filed a motion to intervene in the case. The records, however, show that no such motion to intervene was ever filed by the said corporation. The only conclusion that can be derived is that the Restaurant Services Corporation, if it still exists, has no legal interest in the controversy. Notably, the corporation was only included in the decision of the Labor Arbiter and the NLRC as respondent because of the mere allegation of petitioners David Gonzales and Elizabeth Gonzales, albeit without proof, that it is the owner of the Restaurante Las Conchas. Thus, petitioners David Gonzales and Elizabeth Anne Gonzales cannot rightfully claim that it is the corporation which should be made liable for the claims of private respondents.
Assuming that indeed, the Restaurant Services Corporation was the owner of the Restaurante Las Conchas and the employer of private respondents, this will not absolve petitioners David Gonzales and Elizabeth Anne Gonzales from their liability as corporate officers. Although as a rule, the officers and members of a corporation are not personally liable for acts done in the performance of their duties, this rule admits of exceptions, one of which is when the employer corporation is no longer existing and is unable to satisfy the judgment in favor of the employee, the officers should be held liable for acting on behalf of the corporation. Here, the corporation does not appear to exist anymore.
xxx xxx xxx
In the present case, the employees can no longer claim their separation benefits and 13th month pay from the corporation because it has already ceased operation. To require them to do so would render illusory the separation and 13th month pay awarded to them by the NLRC. Their only recourse is to satisfy their claim from the officers of the corporation who were, in effect, acting in behalf of the corporation. It would appear that, originally, Restaurante Las Conchas was a single proprietorship put up by the parents of Elizabeth Anne Gonzales, who together with her husband, petitioner David Gonzales, later took over its management. Private respondents claim, and rightly so, that the former were the real owners of the restaurant. The conclusion is bolstered by the fact that petitioners never revealed who were the other officers of the Restaurant Services Corporation, if only to pinpoint responsibility in the closure of the restaurant that resulted in the dismissal of the private respondents from employment. Petitioners David Gonzales and Elizabeth Anne Gonzales are, therefore, personally liable for the payment of the separation and 13th month pay due to their former employees." 33
To reiterate in a sole proprietorship, the sole proprietor is personally liable for all the debts and obligations of the business. 34 Since it has been established that Damez is the sole proprietor of Ortofon, only he shall be liable for the payment of petitioner's monetary awards. aScITE
WHEREFORE, premises considered, the instant Petition for Review on Certiorari is hereby DENIED. Accordingly, the Amended Decision dated 22 March 2016 of the Court of Appeals in CA-G.R. SP No. 128935, is hereby AFFIRMED.
SO ORDERED."
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1. Petitioner's married name at the time of the filing of the petition; Jocelyn Conde in many parts of the record.
2.Rollo, pp. 9-29.
3.Id. at 42-45. Penned by Associate Justice Stephen C. Cruz and concurred in by Associate Justices Fernanda Lampas-Peralta and Ramon Paul L. Hernando (now a Member of this Court) of the Sixth (6th) Division of the Court of Appeals, Manila.
4.Id. at 30-41.
5.Id. at 31, 106-107.
6.Id. at 11. Even though petitioner had been informed on 03 March 2011, during the mediation hearing before the LA, that Damez was the owner of Ortofon, decided not to implead him as a party respondent.
7.Id. at 31-32.
8.Id. at 106-110. Penned by Labor Arbiter Arden S. Anni.
9.Id. at 108-109.
10.Id. at 110.
11.Id. at 171-180. Penned by Presiding Commissioner Raul T. Aquino and concurred in by Commissioner Teresita D. Castillon-Lora of the Second (2nd) Division of the National Labor Relations Commission, Quezon City.
12.Id. at 178-180.
13.Id. at 30, 33.
14.Id. at 111-113.
15.Id. at 112.
16.Id. at. 30-41.
17.Id. at 41.
18. ARTICLE 219. [212] Definitions. — x x x
xxx xxx xxx
(e) "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.
19.Rollo, p. 19.
20.Id. at 37-38, 41.
21.Id. at 42-45.
22.Id. at 45.
23.Id. at 43-44.
24.Excellent Quality Apparel, Inc. v. Win Multi Rich Builders, Inc., 598 Phil. 94 (2009), G.R. No. 175048, 10 February 2009 [Per J. Tinga]. Emphasis supplied.
25. 435 Phil. 870, G.R. No. 125027, 12 August 2002 [Per J. Carpio].
26.Rollo, pp. 33, 178.
27.Id. at 44.
28.Sarona v. National Labor Relations Commission, 679 Phil. 394 (2012), G.R. No. 185280, 18 January 2012 [Per J. Reyes].
29.Rollo, pp. 37, 44-45, 178-179.
30.Peñaranda v. Baganga Plywood Corp., 522 Phil. 640 (2006), G.R. No. 159577, 03 May 2006 [Per C.J. Panganiban].
31. 372 Phil. 697 (1999), G.R. No. 119085, 09 September 1999 [Per J. Kapunan].
32.Lozada v. Mendoza, 797 Phil. 168 (2016), G.R. No. 196134, 12 October 2016 [Per J. Bersamin].
33.Supra at note 31.
34. Note from the Publisher: Copied verbatim from the official document. Missing Footnote Text.