47_Sevilla v.

Court of Appeals

Syllabus Topic: Irrevocable Agency Keywords: Padlocking of branch office.

DOCTRINE:
Right of Control Test
 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.
 The right-of-control test and certain economic parameters (i.e., salary) determines employment.

Joint Venture or 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 and where each party exercises equal
rights in the conduct of the business.

Parties/Characters

TWS – Principal.
Lina Sevilla – Agent of TWS.
Canilao – Representative of TWS.
Noguera – Owner of the building leased by TWS.

Facts
 Tourist World Service, Inc., (TWS) represented by Eliseo Canilao, leased the premises belonging to
Segundina Noguera for Tourist’s branch office in Ermita.
 In the contract, Lina Sevilla held herself solidarily liable with TWS for the prompt payment of the
monthly rental.
 When the branch office was open, it was run by Lina, payable to TWS by any airline for any fare brought in
on the efforts of Lina.
o 4% of the fares will go to Lina.
o 3% will be withheld by TWS.
 Sometime after, TWS was informed that Lina was connected with a rival firm, the PH Travel Bureau.
 And since the branch was losing anyway, TWS considered closing down its office. 2 resolutions of the Board
of Directors (BOD) of TWS were enacted for this purpose:
o The first abolished the office of the manager and vice-president of the TWS Ermita branch.
o The second authorized the corporate secretary to receive the properties of the TWS then located at the
Ermita branch.
 Furthermore, the lease contract for the office was terminated and while it was still effective for the rest of the
month, TWS no longer used it. The contract was terminated without notice to Lina. However, Lina and
her husband, Carlos Sevilla, continued to use the premises.
 Thus, to comply with the resolutions, corporate secretary Gabino Canilao went over to the branch
office, and, finding the premises locked, and being unable to contact Lina, he padlocked the premises to
protect the interests of the TWS. They also cut the telephone lines of the office.
 Sevilla then filed a complaint when neither her nor her employees could enter the premises.
 Lina argues that a joint business venture was entered into by and between her and 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.
o She was a prominent social figure, and she was even the godmother of the children of Canilao.
o She was a signatory to the lease.
o She did not receive any salary from TWS.
 o She earned commissions for her own passengers, bookings, and own business.
o She shared in the expenses for maintaining the branch office and the salary of the office secretary.
o It was the understanding between Lina and Canilao that Lina would be given the title of branch
manager for appearance's sake only.
 RTC ruled in favor of TWS, ruling that TWS, being the true lessee, it was within its prerogative to terminate
the lease and padlock the premises. It likewise found Lina to be a mere employee of TWS and as such, she
was bound by the acts of her employer.
 CA affirmed RTC’s decision.
 Hence, this petition.

Issue

W/N there was a partnership between Lina and TWS? - NONE. BUT LINA IS ALSO NOT AN EMPLOYEE. SHE
IS AN AGENT.
W/N the relationship (agency) between Lina and TWS may be revoked at will? - NO. LINA IS ENTITLED TO
DAMAGES.

Holding

Lina was NOT an employee of TWS as she was not under TWS’s control.
 Lina was NOT subject to control by TWS either as to the result of the enterprise or as to the means used in
connection therewith.
o Under the contract of lease, Lina has bound herself solidarily for rental payments with TWS.
o Even if the RTC later minimized her role as a mere guarnty, that still does NOT make her TWS’s
employee.
o 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.
o Lina, in pursuing the business, obviously relied on her own gifts and capabilities.
 Lina was not in TWS’s payroll. For her efforts, she retained 4% in commissions from airline bookings. Unlike
an employee who usually earns a fixed salary, she earned compensation in fluctuating amounts depending on
her booking successes.

There was also NO partnership between Lina and TWS.

 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 and where each party exercises equal rights in the conduct of the business.
 Here, Lina even expressed in her Letter that she conceded to TWS’s right to stop the operation of the branch
office. Thus, she accepted TWS’s control over the manner in which the business was run.
 Furthermore, the parties did not hold themselves out as partners, and the building itself was embellished with
the electric sign "Tourist World Service, Inc.," in lieu of a distinct partnership name.

Lina managed the TWS office 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.
 Here, Lina solicited airline fares, but she did so for and on behalf of her principal, TWS. As compensation,
she received 4% of the proceeds in the concept of commissions. And as we said, Sevilla herself, based on her
Letter, presumed her principal's authority as owner of the business undertaking.

✅ The agency between Lina and TWS cannot be revoked at will because it is couple with an interest.

 Couple with Interest - The agency was created for the mutual interest of the agent and the principal.
  Lina 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 TWS 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.

There was bad faith and malevolent design on the part of TWS. Thus, they are liable for moral damages to
Lina.
 They put Lina in a bad light following disclosures that she had worked for a rival fir, but there was no clear
showing that TWS sustained losses or that Lina had in fact moonlit for another company.
 TWS ended the lease over the branch office premises, incidentally, without notice to Lina through the board
resolutions.
 The padlocking was done significantly after office hours.
 TWS is also liable under Article 21, Civil Code:
o Any person who willfully 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.
 Canilao, as a joint tortfeasor, is also solidarily liable for damages.
 However, Noguera has not been shown to have connived with TWS in the padlocking and disconnection
incidents.

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.llcd