1

G.R. No. L-41182-3 April 16, 1988 SEVILLA vs. CA

DR. CARLOS L. SEVILLA a! LINA O. SEVILLA, petitioners-
appellants,
vs.
"#E CO$R" O% A&&EALS, "O$RIS" 'ORLD SERVICE, INC.,
ELISEO S.CANILAO, a! SEG$NDINA NOG$ERA, respondents-
appellees.
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
2
: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:
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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
3
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.
4
The petitioners no( claim that the respondent Court, in sustaining the
lo(er court, erred. *pecifically, they state:
.
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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
5
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 right-of 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 employer-employee 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 solidum as 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
6
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. J
22
.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.
7
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.