243 Phil.

340

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
second 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 Lina O. 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 was 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, the 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 dismissed for lack of merit, on the basis of which was elevated
the instant appeal on the following assignment of errors:

THE LOWER COURT ERRED EVEN IN APPRECIATING THE

"I. NATURE OF PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA'S
COMPLAINT.

THE LOWER COURT ERRED IN HOLDING THAT APPELLANT

MRS. LINA O. SEVILLA'S ARRANGEMENT ('WITH APPELLEE
TOURIST WORLD SERVICE, INC.) WAS ONE MERELY OF
"II.
EMPLOYER-EMPLOYEE RELATION AND IN FAILING TO HOLD
THAT THE SAID ARRANGEMENT WAS ONE OF JOINT
BUSINESS VENTURE.

THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-

APPELLANT MRS. LINA O. SEVILLA IS ESTOPPED FROM
"III.DENYING THAT SHE WAS A MERE EMPLOYEE OF
DEFENDANT-APPELLEE TOURIST WORLD SERVICE, INC. EVEN
AS AGAINST THE LATTER.

THE LOWER COURT ERRED IN NOT HOLDING THAT

APPELLEES HAD NO RIGHT TO EVICT APPELLANT MRS. LINA
"IV.
O. SEVILLA FROM THE A. MABINI OFFICE BY TAKING THE
LAW INTO THEIR OWN HANDS.

THE LOWER COURT ERRED IN NOT CONSIDERING AT ALL

"V.
APPELLEE NOGUERA'S RESPONSIBILITY FOR APPELLANT
 MRS. LINA O. SEVILLA'S FORCIBLE DISPOSSESSION OF THE A.
MABINI PREMISES.

THE LOWER COURT ERRED IN FINDING THAT APPELLANT

"VI. MRS. LINA O. SEVILLA SIGNED MERELY AS GUARANTOR FOR
RENTALS."
On the foregoing facts and in the light of the errors assigned the isues to
be resolved are:

1. Whether the appellee Tourist World Service unilaterally

disconnected 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 appellee TWS or TWS and the appellant.

In this appeal, appellant Lina Sevilla claims that a joint business 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:

Appellant Mrs. Lina O. Sevilla, a prominent social figure and wife of

an eminent eye, ear and nose specialist as well as a society columnist,
had been in the travel business prior to the establishment of the joint
"1. 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).

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
"2.
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).

Appellant Mrs. Sevilla did not receive any salary from appellee
"3. 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.)

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
"4.
companies. She shared the 7% commissions given by the airline
companies, giving appellee Tourist World Service, Inc. 3% thereof
and retaining 4% for herself (pp. 18 tsn. id.)

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 designing the
office furniture and supplying some office furnishings (pp. 15, 18 tsn.
"5.
April 6, 1965), appellee Tourist World Service, Inc. shouldering the
rental and other expenses in consideration for the 3% split in the
commissions procured by appellant Mrs. Sevilla (p. 35 tsn. Feb. 16,
1965).

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 admitting that it was just
"6.
a title for dignity (p. 36 tsn. June 18, 1965 -- testimony of appellee
Eliseo Canilao; pp. 38-39 tsn. April 6, 1965 -- 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 respondents 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 more
employee of said Tourist World Service, Inc. and as such, she was bound
by the acts of her employer.[4] The respondent Court of
Appeals[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 X X X WITHOUT NOTIFYING MRS. LINA
O. SEVILLA OR ANY OF HER EMPLOYEES AND WITHOUT
INFORMING COUNSEL FOR THE APPELLANT (SEVILLA), 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 ATTEMPT TO AMICABLY SETTLE
THE CONTROVERSY BETWEEN THE APPELLANT (SEVILLA) AND
THE TOURIST WORLD SERVICE X X X (DID NOT) ENTITLE THE
LATTER TO THE RELIEF OF DAMAGES" (ANNEX "A" PP. 7, 8 AND
ANNEX "B" P. 2) - A 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 COMPLAINT 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 SEVILLA'S CAUSE OF
ACTION FOUNDED ON ARTICLES 19, 20 AND 21 OF THE CIVIL
CODE ON HUMAN RELATIONS.

IV

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND

GRAVELY ABUSED ITS DISCRETION IN DENYING 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 Appeals did not 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
parties was one of joint venture, but concede that "whatever might have
been the true relationship between Sevilla and Touristir 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

existence 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 World's Ermita office, she had bound herself in solidum as and
for rental payments, an arrangement that would belie 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 parity 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.,"[17] in 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, presumed
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 parties had contemplated a principal-
agent relationship, rather than a joint management 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 the 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
limited 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
re-connected. 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 contract did not accord it any authority to
terminate that contract without notice to its actual occupant, and to
padlock the premises in such blitzkrieg 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 now 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 of her participation therein.
This conduct on the part of Tourist World Service, Inc. betrays a sinister
effort to punish Sevilla for what 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 arising 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.

ART. 2219. Moral damages may be recovered in the following and

analogous cases:

xxx xxx xxx

(10) Acts and actions referred to in articles 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 co-tortfeasor.

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
P25,000.00, 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.