G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA NOGUERA, respondents-appellees.
SARMIENTO , 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 (Exhibit A for the
appellant Exhibit 2 for the appellees) entered into on Oct. 19, 1960 by
and between Mrs. Segundina Noguera, party of the first part; the Tourist
World Service, Inc., represented by Mr. Eliseo Canilao as party of the
second part, and hereinafter referred to as appellants, the Tourist
World Service, Inc. leased the premises belonging to the party of the
first part at Mabini St., Manila for the former-s use as a branch
office. In the said contract the party of the third part held herself
solidarily liable with the party of the part for the prompt payment of
the monthly rental agreed on. When the branch office was opened, the
same was run by the herein appellant Una 0. Sevilla payable to Tourist
World Service Inc. by any airline for any fare brought in on the efforts
of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be
withheld by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the
Tourist World Service, Inc. appears to have been informed that Lina
Sevilla was connected with a rival firm, the Philippine Travel Bureau,
and, since the branch office was anyhow losing, the Tourist World
Service considered closing down its office. This was firmed up by two
resolutions of the board of directors of Tourist World Service, Inc.
dated Dec. 2, 1961 (Exhibits 12 and 13), the first abolishing the office
of the manager and vice-president of the Tourist World Service, Inc.,
Ermita Branch, and the second,authorizing the corporate secretary to
receive the properties of the Tourist World Service then located at the
said branch office. It further appears that on Jan. 3, 1962, the
contract with the appellees for the use of the Branch Office premises
was terminated and while the effectivity thereof was Jan. 31, 1962, the
appellees no longer used it. As a matter of fact appellants used it
since Nov. 1961. Because of this, and to comply with the mandate of the
Tourist World Service, the corporate secretary Gabino Canilao went over
to the branch office, and, finding the premises locked, and, being
unable to contact Lina Sevilla, he padlocked the premises on June 4,
1962 to protect the interests of the Tourist World Service. When neither
the appellant Lina Sevilla nor any of her employees could enter the
locked premises, a complaint wall filed by the herein appellants against
the appellees with a prayer for the issuance of mandatory preliminary
injunction. Both appellees answered with counterclaims. For apparent
lack of interest of the parties therein, the trial court ordered the
dismissal of the case without prejudice.
The appellee Segundina Noguera sought reconsideration
of the order dismissing her counterclaim which the court a quo, in an
order dated June 8, 1963, granted permitting her to present evidence in
support of her counterclaim.
On June 17,1963, appellant Lina Sevilla refiled her
case against the herein appellees and after the issues were joined, the
reinstated counterclaim of Segundina Noguera and the new complaint of
appellant Lina Sevilla were jointly heard following which the court a
quo ordered both cases dismiss for lack of merit, on the basis of which
was elevated the instant appeal on the following assignment of errors:
I. THE LOWER COURT ERRED EVEN IN APPRECIATING THE NATURE OF PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA'S COMPLAINT.
II. THE LOWER COURT ERRED IN HOLDING THAT APPELLANT
MRS. LINA 0. SEVILA'S ARRANGEMENT (WITH APPELLEE TOURIST WORLD SERVICE,
INC.) WAS ONE MERELY OF EMPLOYER-EMPLOYEE RELATION AND IN FAILING TO
HOLD THAT THE SAID ARRANGEMENT WAS ONE OF JOINT BUSINESS VENTURE.
III. THE LOWER COURT ERRED IN RULING THAT
PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA IS ESTOPPED FROM DENYING THAT
SHE WAS A MERE EMPLOYEE OF DEFENDANT-APPELLEE TOURIST WORLD SERVICE,
INC. EVEN AS AGAINST THE LATTER.
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT
APPELLEES HAD NO RIGHT TO EVICT APPELLANT MRS. LINA O. SEVILLA FROM THE
A. MABINI OFFICE BY TAKING THE LAW INTO THEIR OWN HANDS.
V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL
APPELLEE NOGUERA'S RESPONSIBILITY FOR APPELLANT LINA O. SEVILLA'S
FORCIBLE DISPOSSESSION OF THE A. MABINI PREMISES.
VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT APPELLANT MRS. LINA O. SEVILLA SIGNED MERELY AS GUARANTOR FOR RENTALS.
On the foregoing facts and in the light of the errors asigned the issues to be resolved are:
1. Whether the appellee Tourist World Service unilaterally disco the telephone line at the branch office on Ermita;
2. Whether or not the padlocking of the office by the Tourist World Service was actionable or not; and
3. Whether or not the lessee to the office premises
belonging to the appellee Noguera was appellees TWS or TWS and the
appellant.
In this appeal, appealant Lina Sevilla claims that a
joint bussiness venture was entered into by and between her and appellee
TWS with offices at the Ermita branch office and that she was not an
employee of the TWS to the end that her relationship with TWS was one of
a joint business venture appellant made declarations showing:
1. Appellant Mrs. Lina 0. Sevilla, a prominent figure
and wife of an eminent eye, ear and nose specialist as well as a
imediately columnist had been in the travel business prior to the
establishment of the joint business venture with appellee Tourist World
Service, Inc. and appellee Eliseo Canilao, her compadre, she being the
godmother of one of his children, with her own clientele, coming mostly
from her own social circle (pp. 3-6 tsn. February 16,1965).
2. Appellant Mrs. Sevilla was signatory to a lease
agreement dated 19 October 1960 (Exh. 'A') covering the premises at A.
Mabini St., she expressly warranting and holding [sic] herself
'solidarily' liable with appellee Tourist World Service, Inc. for the
prompt payment of the monthly rentals thereof to other appellee Mrs.
Noguera (pp. 14-15, tsn. Jan. 18,1964).
3. Appellant Mrs. Sevilla did not receive any salary
from appellee Tourist World Service, Inc., which had its own, separate
office located at the Trade & Commerce Building; nor was she an
employee thereof, having no participation in nor connection with said
business at the Trade & Commerce Building (pp. 16-18 tsn Id.).
4. Appellant Mrs. Sevilla earned commissions for her
own passengers, her own bookings her own business (and not for any of
the business of appellee Tourist World Service, Inc.) obtained from the
airline companies. She shared the 7% commissions given by the airline
companies giving appellee Tourist World Service, Lic. 3% thereof aid
retaining 4% for herself (pp. 18 tsn. Id.)
5. Appellant Mrs. Sevilla likewise shared in the
expenses of maintaining the A. Mabini St. office, paying for the salary
of an office secretary, Miss Obieta, and other sundry expenses, aside
from desicion the office furniture and supplying some of fice
furnishings (pp. 15,18 tsn. April 6,1965), appellee Tourist World
Service, Inc. shouldering the rental and other expenses in consideration
for the 3% split in the co procured by appellant Mrs. Sevilla (p. 35
tsn Feb. 16,1965).
6. It was the understanding between them that
appellant Mrs. Sevilla would be given the title of branch manager for
appearance's sake only (p. 31 tsn. Id.), appellee Eliseo Canilao
admit that it was just a title for dignity (p. 36 tsn. June 18, 1965-
testimony of appellee Eliseo Canilao pp. 38-39 tsn April 61965-testimony
of corporate secretary Gabino Canilao (pp- 2-5, Appellants' Reply
Brief)
Upon
the other hand, appellee TWS contend that the appellant was an employee
of the appellee Tourist World Service, Inc. and as such was designated
manager. 1
xxx xxx xxx
The trial court 2
held for the private respondent on the premise that the private
respondent, Tourist World Service, Inc., being the true lessee, it was
within its prerogative to terminate the lease and padlock the premises. 3
It likewise found the petitioner, Lina Sevilla, to be a mere employee
of said Tourist World Service, Inc. and as such, she was bound by the
acts of her employer. 4 The respondent Court of Appeal 5 rendered an affirmance.
The petitioners now claim that the respondent Court, in sustaining the lower court, erred. Specifically, they state:
I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND
GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT "THE PADLOCKING OF THE
PREMISES BY TOURIST WORLD SERVICE INC. WITHOUT THE KNOWLEDGE AND CONSENT
OF THE APPELLANT LINA SEVILLA ... WITHOUT NOTIFYING MRS. LINA O.
SEVILLA OR ANY OF HER EMPLOYEES AND WITHOUT INFORMING COUNSEL FOR THE
APPELLANT (SEVILIA), WHO IMMEDIATELY BEFORE THE PADLOCKING INCIDENT, WAS
IN CONFERENCE WITH THE CORPORATE SECRETARY OF TOURIST WORLD SERVICE
(ADMITTEDLY THE PERSON WHO PADLOCKED THE SAID OFFICE), IN THEIR ATTEMP
AMICABLY SETTLE THE CONTROVERSY BETWEEN THE APPELLANT (SEVILLA) AND THE
TOURIST WORLD SERVICE ... (DID NOT) ENTITLE THE LATTER TO THE RELIEF OF
DAMAGES" (ANNEX "A" PP. 7,8 AND ANNEX "B" P. 2) DECISION AGAINST DUE
PROCESS WHICH ADHERES TO THE RULE OF LAW.
II
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND
GRAVELY ABUSED ITS DISCRETION IN DENYING APPELLANT SEVILLA RELIEF
BECAUSE SHE HAD "OFFERED TO WITHDRAW HER COMP PROVIDED THAT ALL CLAIMS
AND COUNTERCLAIMS LODGED BY BOTH APPELLEES WERE WITHDRAWN." (ANNEX "A"
P. 8)
III
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND
GRAVELY ABUSED ITS DISCRETION IN DENYING-IN FACT NOT PASSING AND
RESOLVING-APPELLANT SEVILLAS CAUSE OF ACTION FOUNDED ON ARTICLES 19, 20
AND 21 OF THE CIVIL CODE ON RELATIONS.
IV
THE COURT
OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION
IN DENYING APPEAL APPELLANT SEVILLA RELIEF YET NOT RESOLVING HER CLAIM
THAT SHE WAS IN JOINT VENTURE WITH TOURIST WORLD SERVICE INC. OR AT
LEAST ITS AGENT COUPLED WITH AN INTEREST WHICH COULD NOT BE TERMINATED
OR REVOKED UNILATERALLY BY TOURIST WORLD SERVICE INC. 6
As
a preliminary inquiry, the Court is asked to declare the true nature of
the relation between Lina Sevilla and Tourist World Service, Inc. The
respondent Court of see fit to rule on the question, the crucial issue,
in its opinion being "whether or not the padlocking of the premises by
the Tourist World Service, Inc. without the knowledge and consent of the
appellant Lina Sevilla entitled the latter to the relief of damages
prayed for and whether or not the evidence for the said appellant
supports the contention that the appellee Tourist World Service, Inc.
unilaterally and without the consent of the appellant disconnected the
telephone lines of the Ermita branch office of the appellee Tourist
World Service, Inc. 7 Tourist
World Service, Inc., insists, on the other hand, that Lina SEVILLA was a
mere employee, being "branch manager" of its Ermita "branch" office and
that inferentially, she had no say on the lease executed with the
private respondent, Segundina Noguera. The petitioners contend, however,
that relation between the between parties was one of joint venture, but
concede that "whatever might have been the true relationship between Sevilla and Tourist World Service," the Rule of Law enjoined Tourist World Service and Canilao from taking the law into their own hands, 8 in reference to the padlocking now questioned.
The Court
finds the resolution of the issue material, for if, as the private
respondent, Tourist World Service, Inc., maintains, that the relation
between the parties was in the character of employer and employee, the
courts would have been without jurisdiction to try the case, labor
disputes being the exclusive domain of the Court of Industrial
Relations, later, the Bureau Of Labor Relations, pursuant to statutes
then in force. 9
In
this jurisdiction, there has been no uniform test to determine the
evidence of an employer-employee relation. In general, we have relied on
the so-called right of control test, "where the person for whom 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." 10
Subsequently, however, we have considered, in addition to the standard
of right-of control, the existing economic conditions prevailing between
the parties, like the inclusion of the employee in the payrolls, in
determining the existence of an employer-employee relationship. 11
The
records will show that the petitioner, Lina Sevilla, was not subject to
control by the private respondent Tourist World Service, Inc., either
as to the result of the enterprise or as to the means used in connection
therewith. In the first place, under the contract of lease covering the
Tourist Worlds Ermita office, she had bound herself in solidum as
and for rental payments, an arrangement that would be like claims of a
master-servant relationship. True the respondent Court would later
minimize her participation in the lease as one of mere guaranty, 12
that does not make her an employee of Tourist World, since in any case,
a true employee cannot be made to part with his own money in pursuance
of his employer's business, or otherwise, assume any liability thereof.
In that event, the parties must be bound by some other relation, but
certainly not employment.
In the
second place, and as found by the Appellate Court, '[w]hen the branch
office was opened, the same was run by the herein appellant Lina O.
Sevilla payable to Tourist World Service, Inc. by any airline for any
fare brought in on the effort of Mrs. Lina Sevilla. 13 Under
these circumstances, it cannot be said that Sevilla was under the
control of Tourist World Service, Inc. "as to the means used." Sevilla
in pursuing the business, obviously relied on her own gifts and
capabilities.
It is further admitted that Sevilla was not in the
company's payroll. For her efforts, she retained 4% in commissions from
airline bookings, the remaining 3% going to Tourist World. Unlike an
employee then, who earns a fixed salary usually, she earned compensation
in fluctuating amounts depending on her booking successes.
The fact that Sevilla had been designated 'branch
manager" does not make her, ergo, Tourist World's employee. As we said,
employment is determined by the right-of-control test and certain
economic parameters. But titles are weak indicators.
In
rejecting Tourist World Service, Inc.'s arguments however, we are not,
as a consequence, accepting Lina Sevilla's own, that is, that the
parties had embarked on a joint venture or otherwise, a partnership. And
apparently, Sevilla herself did not recognize the existence of such a
relation. In her letter of November 28, 1961, she expressly 'concedes
your [Tourist World Service, Inc.'s] right to stop the operation of your
branch office 14
in effect, accepting Tourist World Service, Inc.'s control over the
manner in which the business was run. A joint venture, including a
partnership, presupposes generally a of standing between the joint
co-venturers or partners, in which each party has an equal proprietary
interest in the capital or property contributed 15 and where each party exercises equal rights in the conduct of the business. 16
furthermore, the parties did not hold themselves out as partners, and
the building itself was embellished with the electric sign "Tourist
World Service, Inc. 17in lieu of a distinct partnership name.
It is the
Court's considered opinion, that when the petitioner, Lina Sevilla,
agreed to (wo)man the private respondent, Tourist World Service, Inc.'s
Ermita office, she must have done so pursuant to a contract of agency.
It is the essence of this contract that the agent renders services "in
representation or on behalf of another. 18
In the case at bar, Sevilla solicited airline fares, but she did so for
and on behalf of her principal, Tourist World Service, Inc. As
compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself based on her letter of
November 28, 1961, pre-assumed her principal's authority as owner of the
business undertaking. We are convinced, considering the circumstances
and from the respondent Court's recital of facts, that the ties had
contemplated a principal agent relationship, rather than a joint
managament or a partnership..
But unlike
simple grants of a power of attorney, the agency that we hereby declare
to be compatible with the intent of the parties, cannot be revoked at
will. The reason is that it is one coupled with an interest, the agency
having been created for mutual interest, of the agent and the principal.
19 It appears that Lina Sevilla is a bona fide
travel agent herself, and as such, she had acquired an interest in the
business entrusted to her. Moreover, she had assumed a personal
obligation for the operation thereof, holding herself solidarily liable
for the payment of rentals. She continued the business, using her own
name, after Tourist World had stopped further operations. Her interest,
obviously, is not to the commissions she earned as a result of her
business transactions, but one that extends to the very subject matter
of the power of management delegated to her. It is an agency that, as we
said, cannot be revoked at the pleasure of the principal. Accordingly,
the revocation complained of should entitle the petitioner, Lina
Sevilla, to damages.
As we have
stated, the respondent Court avoided this issue, confining itself to the
telephone disconnection and padlocking incidents. Anent the
disconnection issue, it is the holding of the Court of Appeals that
there is 'no evidence showing that the Tourist World Service, Inc.
disconnected the telephone lines at the branch office. 20 Yet,
what cannot be denied is the fact that Tourist World Service, Inc. did
not take pains to have them reconnected. Assuming, therefore, that it
had no hand in the disconnection now complained of, it had clearly
condoned it, and as owner of the telephone lines, it must shoulder
responsibility therefor.
The Court of Appeals must likewise be held to be in
error with respect to the padlocking incident. For the fact that Tourist
World Service, Inc. was the lessee named in the lease con-tract did not
accord it any authority to terminate that contract without notice to
its actual occupant, and to padlock the premises in such fashion. As
this Court has ruled, the petitioner, Lina Sevilla, had acquired a
personal stake in the business itself, and necessarily, in the equipment
pertaining thereto. Furthermore, Sevilla was not a stranger to that
contract having been explicitly named therein as a third party in charge
of rental payments (solidarily with Tourist World, Inc.). She could not
be ousted from possession as summarily as one would eject an
interloper.
The Court
is satisfied that from the chronicle of events, there was indeed some
malevolent design to put the petitioner, Lina Sevilla, in a bad light
following disclosures that she had worked for a rival firm. To be sure,
the respondent court speaks of alleged business losses to justify the
closure '21
but there is no clear showing that Tourist World Ermita Branch had in
fact sustained such reverses, let alone, the fact that Sevilla had
moonlit for another company. What the evidence discloses, on the other
hand, is that following such an information (that Sevilla was working
for another company), Tourist World's board of directors adopted two
resolutions abolishing the office of 'manager" and authorizing the
corporate secretary, the respondent Eliseo Canilao, to effect the
takeover of its branch office properties. On January 3, 1962, the
private respondents ended the lease over the branch office premises,
incidentally, without notice to her.
It was only
on June 4, 1962, and after office hours significantly, that the Ermita
office was padlocked, personally by the respondent Canilao, on the
pretext that it was necessary to Protect the interests of the Tourist
World Service. " 22
It is strange indeed that Tourist World Service, Inc. did not find such
a need when it cancelled the lease five months earlier. While Tourist
World Service, Inc. would not pretend that it sought to locate Sevilla
to inform her of the closure, but surely, it
was aware that after office hours, she could not have been anywhere
near the premises. Capping these series of "offensives," it cut the
office's telephone lines, paralyzing completely its business operations,
and in the process, depriving Sevilla articipation therein.
This conduct on the part of Tourist World Service,
Inc. betrays a sinister effort to punish Sevillsa it had perceived to be
disloyalty on her part. It is offensive, in any event, to elementary
norms of justice and fair play.
We rule
therefore, that for its unwarranted revocation of the contract of
agency, the private respondent, Tourist World Service, Inc., should be
sentenced to pay damages. Under the Civil Code, moral damages may be
awarded for "breaches of contract where the defendant acted ... in bad
faith. 23
We
likewise condemn Tourist World Service, Inc. to pay further damages for
the moral injury done to Lina Sevilla from its brazen conduct subsequent
to the cancellation of the power of attorney granted to her on the
authority of Article 21 of the Civil Code, in relation to Article 2219
(10) thereof —
ART.
21. Any person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage. 24
ART. 2219. Moral damages 25 may be recovered in the following and analogous cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The
respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby
ordered to respond for the same damages in a solidary capacity.
Insofar, however, as the private respondent,
Segundina Noguera is concerned, no evidence has been shown that she had
connived with Tourist World Service, Inc. in the disconnection and
padlocking incidents. She cannot therefore be held liable as a
cotortfeasor.
The Court considers the sums of P25,000.00 as and for moral damages,24 P10,000.00 as exemplary damages, 25 and P5,000.00 as nominal 26 and/or temperate 27 damages, to be just, fair, and reasonable under the circumstances.
WHEREFORE, the Decision promulgated on January 23,
1975 as well as the Resolution issued on July 31, 1975, by the
respondent Court of Appeals is hereby REVERSED and SET ASIDE. The
private respondent, Tourist World Service, Inc., and Eliseo Canilao, are
ORDERED jointly and severally to indemnify the petitioner, Lina
Sevilla, the sum of 25,00.00 as and for moral damages, the sum of
P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as
and for nominal and/or temperate damages.
Costs against said private respondents.
SO ORDERED.
Yap (Chairman), Melencio-Herrera, Paras and Padilla, JJ., concur.
1 Rollo, 30-45.
2 Court of First Instance of Manila, Branch XIX Montesa, Agustin, Presiding Judge.
3 Rollo, Id 55; Record on Appeal, 38.
4 Record on Appeal, Id., 37-38.
5 Gaviola, Jr., RAmon, J., Reyes, Luis, and De Castro, Pacific, JJ., Conccurring
6 Rollo, Id., 124; Brief for Petitioners, 1-2.
7 Rollo, Id., 36.
8 Id., 21; emphasis in the original.
9 See Rep. Act No. 875 See also Rep. Act No. 1052, as amended by Rep. Act No. 1787.
10 LVN Pictures, Inc. v. Philippine Musicians Guild, No. L-12582, January 28,1961, 1 SCRA 132,173 (1961); emphasis in the original.
11 Visayan Stevedore Trans. Co., et al. v. C.I.R., et al., No. L-21696, February 25,1967,19 SCRA 426 (1967).
12 Rollo, Id., 40.
13 Id 31.
14 Id., 47.
15 BAUTISTA, TREATISE ON PHILIPPINE PARTNERSHIP LAW 34 (1978).
16 Op cit 37. In Tuazon v. Balanos [95 Phil. 106 (1954)], this Court distinguished between a joint venture and a partnership but this view has since raised questions from authorities. According to Campos, there seems to be no fundamental distinction between the two forms of business combinations. CAMPOS, THE CORPORATION CODE 12 (1981).] For p of this case, we use the terms of interchangeable.
17 See rollo, id.
18 CIVIL CODE, art. 1868.
19 See VI PADILLA, CIVIL LAW 350 (1974).
20 Rollo, id., 36.
21 Id, 31.
22 Id.
23 CIVIL CODE, art. 2220.
24 Supra.
25 Supra, art. 2232.
26 Supra art. 2221.
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