MALVAR V. KRAFT FOODS PHILS., INC. G.R. No.

183952, 9
September 2013

FACTS:

In 1988, Kraft Foods (Phils.), KRAFT hired Czarina Malvar as its

Corporate Planning Manager. She rose in the ranks and became the
VP for Finance in the SEA of Kraft Foods Internation. KFPIs mother
company. In 1999, the chairman of the board of KFPI and concurrently
the VP and Area Director for SEA, sent Malvar a memo directing her
to explain why no administrative sanctions should be imposed on her
for possible breach of trust and confidence and for willful violation of
company rules and regulations. She was places under preventive
suspension and ultimately she was served a notice of termination.
Malvar, aggrieved, filed a complaint for illegal suspension and
illegal dismissal against KFPI and Bautista in the NLRC. The Labor
Arbiter found and declared her suspension and dismissal illegal and
ordered her reinstatement. The judegment became final and
executory however Malvars award was reduced. Both parties
appealed the computation of the NLRC. While pending appea, Malvar
and the respondents entered into a compromise agreement wherein
Malvar would be paid 40M pesos. Malvar moved to withdraw the case.
Before the court could act on the motion to dismiss/withdraw a motion
for intervention to protect the Attys rights was filed. It appears that,
to the intervenors surprise, Malvar unceremoniously and without any
justifiable reason terminated its legal service and required it to
withdraw from the case. The intervenor indicated that Malvars
precipitate action had baffled, shocked and even embarrassed the
intervenor, because it had done everything legally possible to serve
and protect her interest. It added that it could not recall any instance
of conflict or misunderstanding with her, for on the contrary, she had
even commended it for its dedication and devotion to her case.

ISSUES

1.W/N Malvars motion to dismiss the petition on the

ground of the execution of the compromise agreement was proper?

2. W/N the Motion for Intervention to protect attys rights

can prosper, and, if so, how much could it recover?

HELD:

-A compromise agreement is a contract, whereby the parties

undertake reciprocal obligations to avoid litigation, or put an end to
one already commenced. The client may enter into a compromise
agreement with the adverse party to terminate the litigation before a
judgment is rendered therein. If the compromise agreement is found
to be in order and not contrary to law, morals, good customs and
public policy.
-A client has an undoubted right to settle her litigation without the
intervention of the atty. It is important for the client to show, however,
that the compromise agreement does not adversely affect third
persons who are not parties to the agreement.

-By the same token, a client has the absolute right to terminate the
atty client relationship at any time with or without cause. But this
right is not unlimited because good faith is required in terminating
the relationship -

In fine it is basic that an attorney is entitled to have and to receive a

just and reasonable compensation for services performed at the
special instance and request of his client. The attorney who has acted
in good faith and honesty in representing and serving the interests of
the client should be reasonably compensated for his service.

-The intervenor was dismissed without a justifiable cause and

therefore in this case, Malvar not only downplayed the worth of
intervenors leagal services but also attempted to camouflage her
intent to defraud her lawyer.

-Is KRAFT liable? The respondents would be liable if they were shown
to have connived with Malvar in the execution of the compromise
agreement, with the intention of depriving the intervenor of its attys
fees. Therefy they would be solidarily liable with her for the attys fees
as stipulated in the written agreement under the theory that they
unfairly and unjustly interefered with the intervenors professional
relationship with Malvar.

-The circumstances show that Malvar and the respondents needed an

escape from greater liability towards the intervenor, and from the
possible obstacle to their plan to settle to pay.

-Thereby, she and the respondents became joint tort-feasors who

acted adversely against the interests of the INtervenor. -Joint tort-
feasors are those who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the commission of a
tort, or who approve of it after it is done, if done for their benefit.
They are also referred to as those who act together in committing
wrong or whose acts, if independent of each other, unite in causing a
single injury.
NATIONAL POWER CORPORATION V. COURT OF APPEALS

G.R. No. 119121, 14 August 1998

FACTS: National Power Corporations 4 dump trucks left Marawi City

for Iligan City when one of its trucks, RFT-9-6-673, driven by Ilumba
figured in a head- on- collision with a Toyota Tamaraw. The incident
resulted in the death of 3 persons riding in the Toyota, as well as
physical injuries to 17 other passengers. PHESCO claimed that it was
not the dump trucks owner and that they were owned by NPC. It
further said that it was merely NPCs contractor with the main duty of
supplying workers and technicians for the latters projects. NPC,
meantime, denied such liability and countered that the driver of the
dump truck was PHESCOs employee.

ISSUE: Whether or not NPC is liable for the tort of driver Gavino
Ilumba

HELD: YES.

Before we decide who is the employer of Ilumba, it is evidently

necessary to ascertain the contractual relationship between NPC and
PHESCO. Was the relationship one of employer and job (independent)
contractor or one of employer and labor only contractor?

Job (independent) contracting is present if the following conditions

are met: (a) the contractor carries on an independent business and
undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters
connected with the performance of the work except to the result
thereof; and (b) the contractor has substantial capital or investments
in the form of tools, equipment, machineries, work premises and other
materials which are necessary in the conduct of his business.

It must be noted that under the Memorandum, NPC had mandate

to approve the critical path network and rate of expenditure to be
undertaken by PHESCO.[7] Likewise, the manning schedule and pay
scale of the workers hired by PHESCO were subject to confirmation
by NPC.[8] Then too, it cannot be ignored that if PHESCO enters into
any sub-contract or lease, again NPCs concurrence is needed.
[9]
Another consideration is that even in the procurement of tools and
equipment that will be used by PHESCO, NPCs favorable
recommendation is still necessary before these tools and equipment
can be purchased.[10] Notably, it is NPC that will provide the money or
funding that will be used by PHESCO to undertake the project.
[11]
Furthermore, it must be emphasized that the project being
undertaken by PHESCO, i.e., construction of power energy facilities,
is related to NPCs principal business of power generation. In sum,
NPCs control over PHESCO in matters concerning the performance of
the latters work is evident. It is enough that NPC has the right to
wield such power to be considered as the employer.[12]

Under this factual milieu, there is no doubt that PHESCO was

engaged in labor-only contracting vis--vis NPC and as such, it is
considered merely an agent of the latter. So, even if Phesco hired
driver Gavino Ilumba, as Phesco is admittedly a labor only contractor
of Napocor, the statute itself establishes an employer-employee
relationship between the employer (Napocor) and the employee
(driver Ilumba) of the labor only contractor (Phesco). (Ecal vs.
National Labor Relations Commission, 195 SCRA 224).

Consequently, we hold Phesco not liable for the tort of driver Gavino
Ilumba, as there was no employment relationship between Phesco and
driver Gavino Ilumba. Under Article 2180 of the Civil Code, to hold
the employer liable for torts committed by his employees within the
scope of their assigned task, there must exist an employer-employee
relationship. (Martin vs. Court of Appeals, 205 SCRA 591).

Also, the position of NPC that even assuming that a labor only
contract exists between it and PHESCO, its liability will not extend to
third persons who are injured due to the tortious acts of the employee
of the labor-only contractor, stated otherwise, its liability shall only be
limited to violations of the Labor Code and not quasi-delicts is
misplaced.It bears stressing that the action was premised on the
recovery of damages as a result of quasi-delict against both NPC and
PHESCO, hence, it is the Civil Code and not the Labor Code which is
the applicable law in resolving this case.

An implementing rule on labor cannot be used by an employer as a

shield to avoid liability under the substantive provisions of the Civil
Code.

It is apparent that Article 2180 of the Civil Code and not the Labor
Code will determine the liability of NPC in a civil suit for damages
instituted by an injured person for any negligent act of the employees
of the labor only contractor. This is consistent with the ruling that a
finding that a contractor was a labor-only contractor is equivalent to a
finding that an employer-employee relationship existed between the
owner (principal contractor) and the labor-only contractor, including
the latters workers.[20]
 With respect to the liability of NPC as the direct employer, Article
2180 of the Civil Code explicitly provides:

Employers shall be liable for the damages caused by their employees

and household helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any business or industry.

In this regard, NPCs liability is direct, primary and solidary with

PHESCO and the driver. Of course, NPC, if the judgment for damages
is satisfied by it, shall have recourse against PHESCO and the driver
who committed the negligence which gave rise to the action.

Finally, NPC, even if it truly believed that it was not the employer
of the driver, could still have disclaimed any liability had it raised the
defense of due diligence in the selection or supervision of PHESCO
and Ilumba. However, for some reason or another, NPC did not invoke
said defense. Hence, by opting not to present any evidence that it
exercised due diligence in the supervision of the activities of PHESCO
and Ilumba, NPC has foreclosed its right to interpose the same on
appeal in conformity with the rule that points of law, theories, issues
of facts and arguments not raised in the proceedings below cannot be
ventilated for the first time on appeal. Consequently, its liability
stands.
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN vs.
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD &
PRUDENT SECURITY AGENCY. G.R. No. 145804. February 6,
2003

FACTS:

Nicanor Navidad was drunk when he entered the boarding

platform of the LRT. He got into an altercation with the security guard
Escartin. They had a fistfight and Navidad fell onto the tracks and was
killed when a train came and ran over him. The Heirs of Navidad filed
a complaint for damages against Escartin, the train driver, (Roman)
the LRTA, the Metro Transit Organization and Prudent Security
Agency (Prudent). The trial court found Prudent and Escartin jointly
and severally liable for damages to the heirs. The CA exonerated
Prudent and instead held the LRTA and the train driver Romero jointly
and severally liable as well as removing the award for compensatory
damages and replacing it with nominal damages. The reasoning of the
CA was that a contract of carriage already existed between Navidad
and LRTA by virtue of his having purchased train tickets and the
liability was caused by the mere fact of Navidad's death after being
hit by the train being managed by the LRTA and operated by Roman.
The Court of Appeals also blamed LRTA for not having presented
expert evidence showing that the emergency brakes could not have
stopped the train on time.

ISSUES:

(1) Whether or not LRTA and/or Roman is liable for the death.

(2) Whether or not Escartin and/or Prudent are liable.

(3) Whether or not nominal damages may coexist with

compensatory damages.

HELD:

(1) Yes. The foundation of LRTA's liability is the contract of carriage

and its obligation to indemnify the victim arising from the breach of
that contract by reason of its failure to exercise the high diligence
required of a common carrier.

(2) Fault was not established. Liability will be based on Tort under Art.
2176 of the New Civil Code.

(3) No. It is an established rule that nominal damages cannot co-exist

with compensatory damages.
RATIO:

Liability of LRTA Read Arts. 1755,1756, 1759 and 1763 of the New
Civil Code

A common carrier is required by these above statutory provisions to

use utmost diligence in carrying passengers with due regard for all
circumstances. This obligation exists not only during the course of the
trip but for so long as the passengers are within its premises where
they ought to be in pursuance to then contract of carriage.

Art. 1763 renders a common carrier liable for death of or injury to

passengers (a) through the negligence or wilful acts of its employees
or (b) on account of willful acts or negligence of other passengers or
of strangers if the common carriers employees through theexercise of
due diligence could have prevented or stopped the act or omission. In
case of such death or injury, a carrier is presumed to have been at
fault or been negligent, and by simple proof of injury, the passenger is
relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force
majeure.

Liability of Security Agency If Prudent is to be held liable, it would

be for a tort under Art. 2176 in conjunction with Art. 2180. Once the
fault of the employee Escartin is established, the employer, Prudent,
would be held liable on the presumption that it did not exercise the
diligence of a good father of the family in the selection and
supervision of its employees.

Relationship between contractual and non-contractual breach How

then must the liability of the common carrier, on the one hand, and an
independent contractor, on the other hand, be described? It would be
solidary. A contractual obligation can be breached by tort and when
the same act or omission causes the injury, one resulting in culpa
contractual and the other in culpa aquiliana, Article 2194 of the Civil
Code can well apply. In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract. Stated
differently, when an act which constitutes a breach of ontract would
have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have
been breached by tort, thereby allowing the rules on tort to apply.

Nominal Damages - The award of nominal damages in addition to

actual damages is untenable. Nominal damages are adjudicated in
order that a right of the plaintiff, which has been violated or invaded
by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him. It is
an established rule that nominal damages cannot co-exist with
compensatory damages. The award was deleted/\.