SOLE PROPRIETORSHIP

MANGILA vs COURT OF APPEALS

G.R. No. 125027| August 12, 2002| CARPIO, J.

Petitioner(s): ANITA MANGILA

Respondent(s): COURT OF APPEALS and LORETA GUINA

Doctrine: Same; Same; Parties; Sole Proprietorships;  A sole proprietorship does not

have a separate juridical personality that could enable it to file a suit in
court—there is no law authorizing sole proprietorships to file a suit in court.
—In the instant case, it was established in the lower court that petitioner
resides in San Fernando, Pampanga while private respondent resides in
Parañaque City. 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 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. 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.

Same; Same; Same; Same; It is the residence of the proprietor which should
be considered as one of the proper venues, not the business address of the
sole proprietorship.—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.

CASE SUMMARY:
Anita Mangila, a resident of San Fernando, Pampanga, is an exporter of seafoods. Loreta Guina, a resident of Better
Living Subdivision, Paranaque City, is the President and General Manager of Air Swift International (ASI) – Pasay
City, a single registered proprietorship engaged in the freight forwarding business. Mangila contracted the shipping
services of ASI for shipment of crabs, prawns and assorted fishes to Guam, USA. Both agreed that the payment shall
be in cash on delivery basis. However, for the second and third shipment, Mangila failed to pay Guina amounting to
P109,376.95. Due to this, Guina was strained to file an action for collection of sum of money against Mangila before
the RTC of Pasay City. The summons were unsuccessfully served as the sheriff found out that Mangila already left
the Philippines for Guam. The RTC issued a Writ of Preliminary Attachment against Mangila, which the latter filed
a Motion to Discharge Attachment without submitting herself to the jurisdiction of the court. Moreover, Mangila
filed a Motion to Dismiss the Complaint on the ground of improper venue. She invoked that the invoice for the
freight forwarding service stipulates that the agreed venue for an action for collection of money is Makati. On the
other hand, Guina asserts that the appearance of “Makati” is an advertence by the printing press. Finding credence in
Guina’s assertion, RTC denied the Motion to Dismiss and issued an order in favor of Guina. In its appeal, the CA
affirmed the decision of the RTC. It likewise sustained the filing of the action in RTC-Pasay.

ISSUE: Whether or not there was an improper venue. (YES)

RULING: A mere stipulation on the venue of an action is not enough to preclude the parties from bringing a case
in other venues. The partiers must be able to show that the stipulation is exclusive. In the present case, there are no
qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati is the only or
exclusive venue where the action would be instituted. Nevertheless, Pasay is not the proper venue.

Under the 1997 Rules of Civil Procedure, the general rule in 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.”

In this case it was established that Mangila resides in Pampanga while Guina resides in Parañaque. The case was
filed in Pasay where the business is located.

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.

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.