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G.R. No. L-41182-3 April 16, 1988 DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants, vs. !

E CO"R O# A$$EALS, O"RIS %ORLD SERVICE, INC., ELISEO S.CANILAO, and SEG"NDINA NOG"ERA, respondents-appellees.

SAR&IEN O , J.: The petitioners invoke the provisions on human relations of the Civil Code in this appeal by certiorari. The facts are beyond dispute: xxx xxx xxx On the strength of a contract ( xhibit ! for the appellant xhibit " for the appellees# entered into on Oct. $%, $%&' by and bet(een )rs. *egundina +oguera, party of the first part, the Tourist -orld *ervice, .nc., represented by )r. liseo Canilao as party of the second part, and hereinafter referred to as appellants, the Tourist -orld *ervice, .nc. leased the premises belonging to the party of the first part at )abini *t., )anila for the former-s use as a branch office. .n the said contract the party of the third part held herself solidarily liable (ith the party of the part for the prompt payment of the monthly rental agreed on. -hen the branch office (as opened, the same (as run by the herein appellant /na '. *evilla payable to Tourist -orld *ervice .nc. by any airline for any fare brought in on the efforts of )rs. 0ina *evilla, 12 (as to go to 0ina *evilla and 32 (as to be (ithheld by the Tourist -orld *ervice, .nc. On or about +ovember "1, $%&$ ( xhibit $&# the Tourist -orld *ervice, .nc. appears to have been informed that 0ina *evilla (as connected (ith a rival firm, the 4hilippine Travel 5ureau, and, since the branch office (as anyho( losing, the Tourist -orld *ervice considered closing do(n its office. This (as firmed up by t(o resolutions of the board of directors of Tourist -orld *ervice, .nc. dated 6ec. ", $%&$ ( xhibits $" and $3#, the first abolishing the office of the manager and vice-president of the Tourist -orld *ervice, .nc., rmita 5ranch, and the second,authori7ing the corporate secretary to receive the properties of the Tourist -orld *ervice then located at the said branch office. .t further appears that on 8an. 3, $%&", the contract (ith the appellees for the use of the 5ranch Office premises (as terminated and (hile the effectivity thereof (as 8an. 3$, $%&", the appellees no longer used it. !s a matter of fact appellants used it since +ov. $%&$. 5ecause of this, and to comply (ith the mandate of the Tourist -orld *ervice, the corporate secretary 9abino Canilao (ent over to the branch office, and, finding the premises locked, and, being unable to contact 0ina *evilla, he padlocked the premises on 8une 1, $%&" to protect the interests of the Tourist -orld *ervice. -hen neither the appellant 0ina *evilla nor any of her employees could enter the locked premises, a complaint (all filed by the herein appellants against the appellees (ith a prayer for the issuance of mandatory preliminary in:unction. 5oth appellees ans(ered (ith counterclaims. ;or apparent lack of interest of the parties therein, the trial court ordered the dismissal of the case (ithout pre:udice.

The appellee *egundina +oguera sought reconsideration of the order dismissing her counterclaim (hich the court a <uo, in an order dated 8une =, $%&3, granted permitting her to present evidence in support of her counterclaim. On 8une $>,$%&3, appellant 0ina *evilla refiled her case against the herein appellees and after the issues (ere :oined, the reinstated counterclaim of *egundina +oguera and the ne( complaint of appellant 0ina *evilla (ere :ointly heard follo(ing (hich the court a <uo ordered both cases dismiss for lack of merit, on the basis of (hich (as elevated the instant appeal on the follo(ing assignment of errors: .. T? 0O- @ CO/@T @@ 6 A + .+ !44@ C.!T.+9 T? +!T/@ O; 40!.+T.;;-!44 00!+T )@*. 0.+! O. * A.00!B* CO)40!.+T. ... T? 0O- @ CO/@T @@ 6 .+ ?O06.+9 T?!T !44 00!+T )@*. 0.+! '. * A.0!B* !@@!+9 ) +T (-.T? !44 00 TO/@.*T -O@06 * @A.C , .+C.# -!* O+ ) @ 0C O; )40OC @)40OC @ 0!T.O+ !+6 .+ ;!.0.+9 TO ?O06 T?!T T? *!.6 !@@!+9 ) +T -!* O+ O; 8O.+T 5/*.+ ** A +T/@ . .... T? 0O- @ CO/@T @@ 6 .+ @/0.+9 T?!T 40!.+T.;;!44 00!+T )@*. 0.+! O. * A.00! .* *TO44 6 ;@O) 6 +C.+9 T?!T *? -!* ! ) @ )40OC O; 6 ; +6!+T-!44 00 TO/@.*T -O@06 * @A.C , .+C. A + !* !9!.+*T T? 0!TT @. .A. T? 0O- @ CO/@T @@ 6 .+ +OT ?O06.+9 T?!T !44 00 * ?!6 +O @.9?T TO A.CT !44 00!+T )@*. 0.+! O. * A.00! ;@O) T? !. )!5.+. O;;.C 5C T!D.+9 T? 0!- .+TO T? .@ O-+ ?!+6*. A. T? 0O- @ CO/@T @@ 6 .+ +OT CO+*.6 @.+9 !T .!00 !44 00 +O9/ @!B* @ *4O+*.5.0.TC ;O@ !44 00!+T 0.+! O. * A.00!B* ;O@C.50 6.*4O** **.O+ O; T? !. )!5.+. 4@ ).* *. A.. T? 0O- @ CO/@T @@ 6 .+ ;.+6.+9 T?!T !44 00!+T !44 00!+T )@*. 0.+! O. * A.00! *.9+ 6 ) @ 0C !* 9/!@!+TO@ ;O@ @ +T!0*. On the foregoing facts and in the light of the errors asigned the issues to be resolved are: $. -hether the appellee Tourist -orld *ervice unilaterally disco the telephone line at the branch office on rmita, ". -hether or not the padlocking of the office by the Tourist -orld *ervice (as actionable or not, and 3. -hether or not the lessee to the office premises belonging to the appellee +oguera (as appellees T-* or T-* and the appellant. .n this appeal, appealant 0ina *evilla claims that a :oint bussiness venture (as entered into by and bet(een her and appellee T-* (ith offices at the rmita branch office and that she (as not an employee of the T-* to

the end that her relationship (ith T-* (as one of a :oint business venture appellant made declarations sho(ing: $. !ppellant )rs. 0ina '. *evilla, a prominent figure and (ife of an eminent eye, ear and nose specialist as (ell as a imediately columnist had been in the travel business prior to the establishment of the :oint business venture (ith appellee Tourist -orld *ervice, .nc. and appellee liseo Canilao, her compadre, she being the godmother of one of his children, (ith her o(n clientele, coming mostly from her o(n social circle (pp. 3-& tsn. ;ebruary $&,$%&E#. ". !ppellant )rs. *evilla (as signatory to a lease agreement dated $% October $%&' ( xh. B!B# covering the premises at !. )abini *t., she expressly (arranting and holding FsicG herself BsolidarilyB liable (ith appellee Tourist -orld *ervice, .nc. for the prompt payment of the monthly rentals thereof to other appellee )rs. +oguera (pp. $1-$E, tsn. 8an. $=,$%&1#. 3. !ppellant )rs. *evilla did not receive any salary from appellee Tourist -orld *ervice, .nc., (hich had its o(n, separate office located at the Trade H Commerce 5uilding, nor (as she an employee thereof, having no participation in nor connection (ith said business at the Trade H Commerce 5uilding (pp. $&-$= tsn .d.). 1. !ppellant )rs. *evilla earned commissions for her o(n passengers, her o(n bookings her o(n business (and not for any of the business of appellee Tourist -orld *ervice, .nc.# obtained from the airline companies. *he shared the >2 commissions given by the airline companies giving appellee Tourist -orld *ervice, 0ic. 32 thereof aid retaining 12 for herself (pp. $= tsn. Id.# E. !ppellant )rs. *evilla like(ise shared in the expenses of maintaining the !. )abini *t. office, paying for the salary of an office secretary, )iss Obieta, and other sundry expenses, aside from desicion the office furniture and supplying some of fice furnishings (pp. $E,$= tsn. !pril &,$%&E#, appellee Tourist -orld *ervice, .nc. shouldering the rental and other expenses in consideration for the 32 split in the co procured by appellant )rs. *evilla (p. 3E tsn ;eb. $&,$%&E#. &. .t (as the understanding bet(een them that appellant )rs. *evilla (ould be given the title of branch manager for appearanceBs sake only (p. 3$ tsn. .d.#, appellee liseo Canilao admit that it (as :ust a title for dignity (p. 3& tsn. 8une $=, $%&E- testimony of appellee liseo Canilao pp. 3=-3% tsn !pril &$%&E-testimony of corporate secretary 9abino Canilao (pp- "-E, !ppellantsB @eply 5rief#

/pon the other hand, appellee T-* contend that the appellant (as an employee of the appellee Tourist -orld *ervice, .nc. and as such (as designated manager. 1

xxx xxx xxx The trial court 2 held for the private respondent on the premise that the private respondent, Tourist -orld *ervice, .nc., being the true lessee, it (as (ithin its prerogative to terminate the lease and padlock the premises. 3 .t like(ise found the petitioner, 0ina *evilla, to be a mere employee of said Tourist -orld *ervice, .nc. and as such, she (as bound by the acts of her employer. 4 The respondent Court of !ppeal ' rendered an affirmance. The petitioners no( claim that the respondent Court, in sustaining the lo(er court, erred. *pecifically, they state: . T? CO/@T O; !44 !0* @@ 6 O+ ! I/ *T.O+ O; 0!- !+6 9@!A 0C !5/* 6 .T* 6.*C@ T.O+ .+ ?O06.+9 T?!T JT? 4!60OCD.+9 O; T? 4@ ).* * 5C TO/@.*T -O@06 * @A.C .+C. -.T?O/T T? D+O-0 69 !+6 CO+* +T O; T? !44 00!+T 0.+! * A.00! ... -.T?O/T +OT.;C.+9 )@*. 0.+! O. * A.00! O@ !+C O; ? @ )40OC * !+6 -.T?O/T .+;O@).+9 CO/+* 0 ;O@ T? !44 00!+T (* A.0.!#, -?O .)) 6.!T 0C 5 ;O@ T? 4!60OCD.+9 .+C.6 +T, -!* .+ CO+; @ +C -.T? T? CO@4O@!T * C@ T!@C O; TO/@.*T -O@06 * @A.C (!6).TT 60C T? 4 @*O+ -?O 4!60OCD 6 T? *!.6 O;;.C #, .+ T? .@ !TT )4 !).C!50C * TT0 T? CO+T@OA @*C 5 T- + T? !44 00!+T (* A.00!# !+6 T? TO/@.*T -O@06 * @A.C ... (6.6 +OT# +T.T0 T? 0!TT @ TO T? @ 0. ; O; 6!)!9 *J (!++ K J!J 44. >,= !+6 !++ K J5J 4. "# 6 C.*.O+ !9!.+*T 6/ 4@OC ** -?.C? !6? @ * TO T? @/0 O; 0!-. .. T? CO/@T O; !44 !0* @@ 6 O+ ! I/ *T.O+ O; 0!- !+6 9@!A 0C !5/* 6 .T* 6.*C@ T.O+ .+ 6 +C.+9 !44 00!+T * A.00! @ 0. ; 5 C!/* *? ?!6 JO;; @ 6 TO -.T?6@!- ? @ CO)4 4@OA.6 6 T?!T !00 C0!.)* !+6 CO/+T @C0!.)* 0O69 6 5C 5OT? !44 00 * - @ -.T?6@!-+.J (!++ K J!J 4. =# ... T? CO/@T O; !44 !0* @@ 6 O+ ! I/ *T.O+ O; 0!- !+6 9@!A 0C !5/* 6 .T* 6.*C@ T.O+ .+ 6 +C.+9-.+ ;!CT +OT 4!**.+9 !+6 @ *O0A.+9!44 00!+T * A.00!* C!/* O; !CT.O+ ;O/+6 6 O+ !@T.C0 * $%, "' !+6 "$ O; T? C.A.0 CO6 O+ @ 0!T.O+*. .A T? CO/@T O; !44 !0* @@ 6 O+ ! I/ *T.O+ O; 0!- !+6 9@!A 0C !5/* 6 .T* 6.*C@ T.O+ .+ 6 +C.+9 !44 !0 !44 00!+T * A.00! @ 0. ; C T +OT @ *O0A.+9 ? @ C0!.) T?!T *? -!* .+ 8O.+T A +T/@ -.T? TO/@.*T -O@06 * @A.C .+C. O@ !T 0 !*T .T* !9 +T CO/40 6 -.T? !+ .+T @ *T -?.C? CO/06 +OT 5 T @).+!T 6 O@ @ AOD 6 /+.0!T @!00C 5C TO/@.*T -O@06 * @A.C .+C. 6

!s a preliminary in<uiry, the Court is asked to declare the true nature of the relation bet(een 0ina *evilla and Tourist -orld *ervice, .nc. The respondent Court of see fit to rule on the <uestion, the crucial issue, in its opinion being J(hether or not the padlocking of the premises by the Tourist -orld *ervice, .nc. (ithout the kno(ledge and consent of the appellant 0ina *evilla entitled the latter to the relief of damages prayed for and (hether or not the evidence for the said appellant supports the contention that the appellee Tourist -orld *ervice, .nc. unilaterally and (ithout the consent of the appellant disconnected the telephone lines of the rmita branch office of the appellee Tourist -orld *ervice, .nc. ( Tourist -orld *ervice, .nc., insists, on the other hand, that 0ina * A.00! (as a mere employee, being Jbranch managerJ of its rmita JbranchJ office and that inferentially, she had no say on the lease executed (ith the private respondent, *egundina +oguera. The petitioners contend, ho(ever, that relation bet(een the bet(een parties (as one of :oint venture, but concede that "whatever might have been the true relationship between Sevilla and Tourist World Service," the @ule of 0a( en:oined Tourist -orld *ervice and Canilao from taking the la( into their o(n hands, 8 in reference to the padlocking no( <uestioned. The Court finds the resolution of the issue material, for if, as the private respondent, Tourist -orld *ervice, .nc., maintains, that the relation bet(een the parties (as in the character of employer and employee, the courts (ould have been (ithout :urisdiction to try the case, labor disputes being the exclusive domain of the Court of .ndustrial @elations, later, the 5ureau Of 0abor @elations, pursuant to statutes then in force. 9 .n this :urisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. .n general, (e have relied on the so-called right of control test, J(here the person for (hom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end.J 1) *ubse<uently, ho(ever, (e have considered, in addition to the standard of rightof control, the existing economic conditions prevailing bet(een the parties, like the inclusion of the employee in the payrolls, in determining the existence of an employeremployee relationship. 11 The records (ill sho( that the petitioner, 0ina *evilla, (as not sub:ect to control by the private respondent Tourist -orld *ervice, .nc., either as to the result of the enterprise or as to the means used in connection there(ith. .n the first place, under the contract of lease covering the Tourist -orlds rmita office, she had bound herself in solidumas and for rental payments, an arrangement that (ould be like claims of a master-servant relationship. True the respondent Court (ould later minimi7e her participation in the lease as one of mere guaranty, 12 that does not make her an employee of Tourist -orld, since in any case, a true employee cannot be made to part (ith his o(n money in pursuance of his employerBs business, or other(ise, assume any liability thereof. .n that event, the parties must be bound by some other relation, but certainly not employment. .n the second place, and as found by the !ppellate Court, BF(Ghen the branch office (as opened, the same (as run by the herein appellant 0ina O. *evilla payable to Tourist -orld *ervice, .nc. by any airline for any fare brought in on the effort of )rs. 0ina *evilla. 13 /nder these circumstances, it cannot be said that *evilla (as under the control of Tourist -orld *ervice, .nc. Jas to the means used.J *evilla in pursuing the business, obviously relied on her o(n gifts and capabilities. .t is further admitted that *evilla (as not in the companyBs payroll. ;or her efforts, she retained 12 in commissions from airline bookings, the remaining 32 going to Tourist -orld. /nlike an employee then, (ho earns a fixed salary usually, she earned compensation in fluctuating amounts depending on her booking successes.

The fact that *evilla had been designated Bbranch managerJ does not make her, ergo, Tourist -orldBs employee. !s (e said, employment is determined by the right-of-control test and certain economic parameters. 5ut titles are (eak indicators. .n re:ecting Tourist -orld *ervice, .nc.Bs arguments ho(ever, (e are not, as a conse<uence, accepting 0ina *evillaBs o(n, that is, that the parties had embarked on a :oint venture or other(ise, a partnership. !nd apparently, *evilla herself did not recogni7e the existence of such a relation. .n her letter of +ovember "=, $%&$, she expressly Bconcedes your FTourist -orld *ervice, .nc.BsG right to stop the operation of your branch office 14 in effect, accepting Tourist -orld *ervice, .nc.Bs control over the manner in (hich the business (as run. ! :oint venture, including a partnership, presupposes generally a of standing bet(een the :oint co-venturers or partners, in (hich each party has an e<ual proprietary interest in the capital or property contributed 1' and (here each party exercises e<ual rights in the conduct of the business. 16 furthermore, the parties did not hold themselves out as partners, and the building itself (as embellished (ith the electric sign JTourist -orld *ervice, .nc. 1(in lieu of a distinct partnership name. .t is the CourtBs considered opinion, that (hen the petitioner, 0ina *evilla, agreed to ((o#man the private respondent, Tourist -orld *ervice, .nc.Bs rmita office, she must have done so pursuant to a contract of agency. .t is the essence of this contract that the agent renders services Jin representation or on behalf of another. 18 .n the case at bar, *evilla solicited airline fares, but she did so for and on behalf of her principal, Tourist -orld *ervice, .nc. !s compensation, she received 12 of the proceeds in the concept of commissions. !nd as (e said, *evilla herself based on her letter of +ovember "=, $%&$, pre-assumed her principalBs authority as o(ner of the business undertaking. -e are convinced, considering the circumstances and from the respondent CourtBs recital of facts, that the ties had contemplated a principal agent relationship, rather than a :oint managament or a partnership.. 5ut unlike simple grants of a po(er of attorney, the agency that (e hereby declare to be compatible (ith the intent of the parties, cannot be revoked at (ill. The reason is that it is one coupled (ith an interest, the agency having been created for mutual interest, of the agent and the principal. 19 .t appears that 0ina *evilla is a bona fide travel agent herself, and as such, she had ac<uired an interest in the business entrusted to her. )oreover, she had assumed a personal obligation for the operation thereof, holding herself solidarily liable for the payment of rentals. *he continued the business, using her o(n name, after Tourist -orld had stopped further operations. ?er interest, obviously, is not to the commissions she earned as a result of her business transactions, but one that extends to the very sub:ect matter of the po(er of management delegated to her. .t is an agency that, as (e said, cannot be revoked at the pleasure of the principal. !ccordingly, the revocation complained of should entitle the petitioner, 0ina *evilla, to damages. !s (e have stated, the respondent Court avoided this issue, confining itself to the telephone disconnection and padlocking incidents. !nent the disconnection issue, it is the holding of the Court of !ppeals that there is Bno evidence sho(ing that the Tourist -orld *ervice, .nc. disconnected the telephone lines at the branch office. 2)Cet, (hat cannot be denied is the fact that Tourist -orld *ervice, .nc. did not take pains to have them reconnected. !ssuming, therefore, that it had no hand in the disconnection no( complained of, it had clearly condoned it, and as o(ner of the telephone lines, it must shoulder responsibility therefor. The Court of !ppeals must like(ise be held to be in error (ith respect to the padlocking incident. ;or the fact that Tourist -orld *ervice, .nc. (as the lessee named in the lease con-tract did not accord it any authority to terminate that contract (ithout notice to its actual occupant, and to padlock the premises in such fashion. !s this Court has ruled, the petitioner, 0ina *evilla, had ac<uired a personal stake in the business itself, and

necessarily, in the e<uipment pertaining thereto. ;urthermore, *evilla (as not a stranger to that contract having been explicitly named therein as a third party in charge of rental payments (solidarily (ith Tourist -orld, .nc.#. *he could not be ousted from possession as summarily as one (ould e:ect an interloper. The Court is satisfied that from the chronicle of events, there (as indeed some malevolent design to put the petitioner, 0ina *evilla, in a bad light follo(ing disclosures that she had (orked for a rival firm. To be sure, the respondent court speaks of alleged business losses to :ustify the closure *21 but there is no clear sho(ing that Tourist -orld rmita 5ranch had in fact sustained such reverses, let alone, the fact that *evilla had moonlit for another company. -hat the evidence discloses, on the other hand, is that follo(ing such an information (that *evilla (as (orking for another company#, Tourist -orldBs board of directors adopted t(o resolutions abolishing the office of BmanagerJ and authori7ing the corporate secretary, the respondent liseo Canilao, to effect the takeover of its branch office properties. On 8anuary 3, $%&", the private respondents ended the lease over the branch office premises, incidentally, (ithout notice to her. .t (as only on 8une 1, $%&", and after office hours significantly, that the rmita office (as padlocked, personally by the respondent Canilao, on the pretext that it (as necessary to 4rotect the interests of the Tourist -orld *ervice. J22 .t is strange indeed that Tourist -orld *ervice, .nc. did not find such a need (hen it cancelled the lease five months earlier. -hile Tourist -orld *ervice, .nc. (ould not pretend that it sought to locate *evilla to inform her of the closure, but surely, it (as a(are that after office hours, she could not have been any(here near the premises. Capping these series of Joffensives,J it cut the officeBs telephone lines, paraly7ing completely its business operations, and in the process, depriving *evilla articipation therein. This conduct on the part of Tourist -orld *ervice, .nc. betrays a sinister effort to punish *evillsa it had perceived to be disloyalty on her part. .t is offensive, in any event, to elementary norms of :ustice and fair play. -e rule therefore, that for its un(arranted revocation of the contract of agency, the private respondent, Tourist -orld *ervice, .nc., should be sentenced to pay damages. /nder the Civil Code, moral damages may be a(arded for Jbreaches of contract (here the defendant acted ... in bad faith. 23 -e like(ise condemn Tourist -orld *ervice, .nc. to pay further damages for the moral in:ury done to 0ina *evilla from its bra7en conduct subse<uent to the cancellation of the po(er of attorney granted to her on the authority of !rticle "$ of the Civil Code, in relation to !rticle ""$% ($'# thereof L
!@T. "$. !ny person (ho (ilfully causes loss or in:ury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. 24 !@T. ""$%. )oral damages 2' may be recovered in the follo(ing and analogous cases:

xxx xxx xxx ($'# !cts and actions refered into article "$, "&, ">, "=, "%, 3', 3", 31, and 3E. The respondent, liseo Canilao, as a :oint tortfeasor is like(ise hereby ordered to respond for the same damages in a solidary capacity.

.nsofar, ho(ever, as the private respondent, *egundina +oguera is concerned, no evidence has been sho(n that she had connived (ith Tourist -orld *ervice, .nc. in the disconnection and padlocking incidents. *he cannot therefore be held liable as a cotortfeasor. The Court considers the sums of 4"E,'''.'' as and for moral damages,"1 4$','''.'' as exemplary damages, 2'and 4E,'''.'' as nominal 26 andMor temperate 2( damages, to be :ust, fair, and reasonable under the circumstances. -? @ ;O@ , the 6ecision promulgated on 8anuary "3, $%>E as (ell as the @esolution issued on 8uly 3$, $%>E, by the respondent Court of !ppeals is hereby @ A @* 6 and * T !*.6 . The private respondent, Tourist -orld *ervice, .nc., and liseo Canilao, are O@6 @ 6 :ointly and severally to indemnify the petitioner, 0ina *evilla, the sum of "E,''.'' as and for moral damages, the sum of 4$','''.'', as and for exemplary damages, and the sum of 4E,'''.'', as and for nominal andMor temperate damages. Costs against said private respondents. *O O@6 @ 6.