NIELSON & CO. INC. VS. LEPANTO CONSOLIDATED MINING CORP ( 2 6 S C R A 5 4 0 ) (G.R. No.

L-21601) December 28, 1968 Facts: An operating agreement was e x e c u t e d b e f o r e W o r l d W a r I I ( o n 3 0 January 1937) between Nielson & Co. Inc. and the Lepant o Consolidated Mining Co. whereby the former operated and managed the mining properties owned by the latter for a management fee of P2,500.00 a month and a 10% participation in the net profits resulting from the operation of the mining properties, for a period of 5 years. In the latter part of 1941, the parties agreed to renew the contract for another period of 5 years, but in the meantime, the Pacific War broke out in December 1941. In January 1942 operation of the mining properties was disrupted on account of the war. In February 1942, the mill, power plant, supplies on hand, equipment, concentrates on hand and mines, were destroyed upon orders of the United States Army, to prevent their utilization by the invading Japanese Army. The Japanese forces thereafter occupied the mining properties, operated the mines during the continuance of the war, and who were ousted from the mining properties only in August 1945On 26 June 1948 the mines resumed operation under the exclusive management of LEPANTO. Shortly after the mines were liberated from the Japanese invaders in 1945, a disagreement arose between NIELSON and LEPANTO over the status of the operating contract which as renewed expired in 1947. Under the terms thereof, the management contract shall remain in suspense in case fortuitous event or force majeure, such as war or civil commotion, adversely affects the work of mining and milling. On 6 February 1958, NIELSON brought an action against LEPANTO before the Court of First Instance of Manila to recover certain sums of money representing damages allegedly suffered by the former in view of the refusal of the latter to comply with the terms of a management contract entered into between them on 30 January 1937, including attorney's fees and costs. Issue: Whether the management contract is a contract of agency or a contract of lease of services.

Held: Article 1709 of the Old Civil Code, defining contract of agency, provides that "By the contract of agency, one person binds himself to render some service or do something for the account or at the request of another." Article 1544, defining contract of lease of service, provides that "In a lease of work or services, one of the parties binds himself to make or construct something or to render a service to the other for a price certain." In both agency and lease of services one of the parties binds himself to render some service to the other party. Agency, however, is distinguished from lease of work or services in that the basis of agency is representation, while in the lease of

work or services the basis is employment. The lessor of services does not represent his employer, while the agent represents his principal. Further, agency is a preparatory contract, as agency "does not stop with the agency because the purpose is to enter into other contracts." The most characteristic feature of an agency relationship is the agent's power to bring about business relations between his principal and third persons. "The agent is destined to execute juridical acts (creation, modification or extinction of relations with third parties). Lease of services contemplate only material (non-juridical) acts." Herein, the principal and paramount undertaking of Nielson under the management contract was the operation and development of the mine and the operation of the mill. All the other undertakings mentioned in the contract are necessary or incidental to the principal undertaking these other undertakings being dependent upon the work on the development of the mine and the operation of the mill. In the performance of this principal undertaking Nielson was not in any way executing juridical acts for Lepanto, destined to create, modify or extinguish business relations between Lepanto and third persons. In other words, in performing its principal undertaking Nielson was not acting as an agent of Lepanto, in the sense that the term agent is interpreted under the law of agency, but as one who was performing material acts for an employer, for a compensation. It is true that the management contract provides that Nielson would also act as purchasing agent of supplies and enter into contracts regarding the sale of mineral, but the contract also provides that Nielson could not make any purchase, or sell the minerals, without the prior approval of Lepanto. It is clear, therefore, that even in these cases Nielson could not execute juridical acts which would bind Lepanto without first securing the approval of Lepanto. Nielson, then, was to act only as an intermediary, not as an agent. Further, from the statements in the annual report for 1936, and from the provision of paragraph XI of the Management contract, that the employment by Lepanto of Nielson to operate and manage its mines was principally in consideration of the know-how and technical services that Nielson offered Lepanto. The contract thus entered into pursuant to the offer made by Nielson and accepted by Lepanto was a "detailed o p e r a t i n g c o n t r a c t " . I t w a s n o t a c o n t r a c t of agency. Nowhere in the record is it shown that Lepanto considered Nielson as its agent and that Lepanto terminated the management contract because it had lost its trust and confidence in Nielson.

DELA CRUZ VS. NORTHERNTHEATRICAL ENTERPRISES (95 PHIL 739) Facts:

Northern Theatrical Enterprises Inc - operated a movie house in Laoag, Ilocos Norte. Domingo De La Cruzspecial guard of Northern whose duties were to guard the main entrance, to maintain peace and order and to report the commission of disorders within premises. He carried a revolver. Martin wanted to crash the gate or entrance of the movie house. Infuriated by the refusal of De la Cruz to let him in without first providing himself with a ticket, Martin attacked him with a bolo. De la Cruz defendant himself as best he could until he was cornered, at which moment to save himself he shot Martin, resulting in the latter's death. De la Cruz was charged with homicide. After a re-investigation conducted by the Provincial Fiscal the latter filed a motion to dismiss the complaint, which was granted by the court . De la Cruz was again accused of the same crime of homicide. After trial, he was finally acquitted of the charge. In both criminal cases De la Cruz employed a lawyer to defend him. He demanded from his former employer reimbursement of his expenses but was refused, after which he filed the present action against the movie corporation and the three members of its board of directors, to recover not only the amounts he had paid his lawyers but also moral damages said to have been suffered. Northern asked for the dismissal of the complaint CFI of Ilocos Norte, after rejecting the theory of De la Cruz that he was an agent of Northern and that as such agent he was entitled to reimbursement of the expenses incurred by him in connection with the agency (Arts. 1709-1729 of the old Civil Code), found that De La Cruz had no cause of action and dismissed the complaint without costs. Issue/s: 1. Whether the relationship was that of principal and agent. 2. Whether an employee or servant who in line of duty and while in the performance of the task assigned to him, performs an act which eventually results in his incurring in expenses, caused not directly by his master or employer or his fellow servants or by reason of his performance of his duty, but rather by a third party or stranger not in the employ of his employer, may recover said damages against his employer Held: The relationship was not of principal and agent because the principle of representation was in no way involved De La Cruz was not employed to represent Northen in its dealings with third parties. He was a mere employee hired to perform a certain specific duty or task.

If the employer is not legally obliged to give, legal assistance to its employee and provide him with a lawyer, naturally said employee may not recover the amount he may have paid a lawyer hired by him. All the laws and principles of law we have found, as regards master and servants, or employer and employee, refer to cases of physical injuries, light or serious, resulting in loss of a member of the body or of any one of the senses, or permanent physical disability or even death, suffered in line of duty and in the course of the performance of the duties assigned to the servant or employee, and these cases are mainly governed by the Employer's Liability Act and the Workmen's Compensation Act. But a case involving damages caused to an employee by a stranger or outsider while said employee was in the performance of his duties, presents a novel question which under present legislation we are neither able nor prepared to decide in favor of the employee. In a case like the present or a similar case of say a driver employed by a transportation company, who while in the course of employment runs over and inflicts physical injuries on or causes the death of a pedestrian; and such driver is later charged criminally in court, one can imagine that it would be to the interest of the employer to give legal help to and defend its employee in order to show that the latter was not guilty of any crime either deliberately or through negligence, because should the employee be finally held criminally liable and he is found to be insolvent, the employer would be subsidiarily liable. It is to the interest of the employer to render legal assistance to its employee. But we are not prepared to say and to hold that the giving of said legal assistance to its employees is a legal obligation. Damage suffered by reason of the expenses incurred by him in remunerating his lawyer, is not caused by his act of shooting to death the gate crasher but rather by the filing of the charge of homicide which made it necessary for him to defend himself with the aid of counsel. Had no criminal charge been filed against him, there would have been no expenses incurred or damage suffered. So the damage suffered by plaintiff was caused rather by the improper filing of the criminal charge, possibly at the instance of the heirs of the deceased gate crasher and by the State through the Fiscal. We fail to see now this responsibility can be transferred to the employer who in no way intervened, much less initiated the criminal proceedings and whose only connection or relation to the whole affairs was that he employed De La Cruz to perform a special duty or task, which task or duty was performed lawfully and without negligence. Judgment of the lower court is affirmed FRESSEL VS. MARIANO UY CHACO SONS & CO. (34 Phil 122) March 3, 1916

Facts: Merritt undertook and agreed with the defendant to build for the d e f e n d a n t a c o s t l y edifice in the city of Manila at the corner of Calle Rosario and Plaza del Padre Moraga. In the contract it was agreed between the parties thereto, that Uy C h a c o a t a n y t i m e , u p o n c e r t a i n contingencies, before the completion of said edifice could take possession of said edifice in the course of construction and of all the materials in and about said premises acquired by Merritt for the construction of said edifice. Fressel delivered to Merritt at the said edifice in the course of construction certain materials of the value of P1,381.21Uy Chaco took possession of the incomplete edifice in course of construction t o g e t h e r w i t h a l l t h e m a t e r i a l s o n s a i d p r e m i s e s including the materials delivered. Neither Meritt n o r U y C h a c o p a i d f o r t h e m a t e r i a l s e v e n a f t e r extrajudicial demand. The appellants insist that the above quoted allegations show that Merritt acted a s t h e a g e n t o f t h e d e f e n d a n t i n p u r c h a s i n g t h e materials in question and that the defendant, by t a k i n g o v e r a n d u s i n g s u c h m a t e r i a l s , a c c e p t e d and ratified the purchase, thereby obligating itself to pay for the same. Issue: Whether Meritt acted as an independent contractor. Held: M e r i t t i s a n i n d e p e n d e n t c o n t r a c t o r . Where one party to a contract was authorized to do w o r k a c c o r d i n g t o h i s o w n m e t h o d a n d w i t h o u t being subject to the other partys control, except as to the result of the work, he is an independent contractor and not an agent. T h e f a c t t h a t "the defendant entered into a contract with one E. Merritt, w h e r e b y t h e s a i d Merritt undertook and agreed with the defendant to build for the defendant a costly edifice" shows that Merritt was authorized to do the work a c c o r d i n g t o h i s o w n m e t h o d a n d w i t h o u t b e i n g subject to the defendant's control, except as to the result of the work. He could purchase his materials a n d s u p p l i e s f r o m w h o m h e p l e a s e d a n d a t s u c h prices as he desired to pay. Again, the allegations t h a t t h e " p l a i n t i f f s d e l i v e r e d t h e M e r r i t t . . . . certain materials (the materials in question) of the value of P1,381.21, . . . . which price Merritt agreed to pay," show that there were no contractual relations whatever between the sellers and the d e f e n d a n t . T h e m e r e f a c t t h a t M e r r i t t a n d t h e defendant had stipulated in their building contract that the latter could, "upon certain contingencies, "take possession of the incomplete building and all m a t e r i a l s o n t h e g r o u n d , d i d n o t c h a n g e M e r r i t t from an independent contractor to an agent. In the a b s e n c e of a statute creating what is known as mechanics' liens, the

o w n e r o f a b u i l d i n g i s n o t liable for the value of materials purchased by an independent contractor either as such owner or as the assignee of the contractor

SHELL COMPANY OF THE PHILIPPINES, LTD. V. FIREMENS INSURANCE CO. OF NEWARK (100 Phil 757) Facts: This is an action for recovery of sum of money, based on alleged negligence of the defendants A car was brought to a Shell gasoline station owned by dela Fuente for washing and greasing. The car was placed on a hydraulic lifter for greasing. As some parts of the car couldnt be reached by the greaseman, the lifter was lowered. Unfortunately, for unknown reasons (probably due to mechanical failure or human error), while the lifter was being lowered, the car swung and fell from the platform. Said car was insured against loss or damage by Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance Company jointly for the sum of P10,000 The insurance companies after paying the sum of P1,651.38 for the damage and charging the balance of P100.00 to Salvador Sison in accordance with the terms of the insurance contract, have filed this action together with said Salvador Sison for the recovery of the total amount of the damage from the defendants on the ground of negligence Issue: Whether Dela Fuente was an agent of Shell Co or an independent contractor. Held: De la Fuente was merely an agent of the station "by grace" of the Defendant Company which could and did remove him as it pleased; that all the equipments needed to operate the station was owned by the Defendant Company which took charge of their proper care and maintenance, despite the fact that they were loaned to him; that the Defendant company did not leave the fixing of price for gasoline to De la Fuente; That the service station belonged to the company and bore its trade name and the operator sold only the products of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance As the act of the agent or his employees acting within the scope of his authority is the act of the principal, the breach of the undertaking by the agent is one for which the principal is answerable. The latter was negligent and the company must answer for the negligent act of its mechanic which was the cause of the fall of the car from the hydraulic lifter. AFRICA VS. CALTEX G.R. No. L-12986, March 31, 1966 | 16 SCRA 448

Facts: A fire broke out at the Caltex service station in Manila. It started while gasoline was being hosed from a tank truck into the underground storage, right at the opening of the receiving truck where the nozzle of the hose was inserted The fire then spread to and burned several neighboring houses, including the personal properties and effects inside them. The owners of the houses, among them petitioners here, sued Caltex (owner of the station) and Boquiren (agent in charge of operation). The gasoline station, with all its appliances, equipment and employees, was under the control of appellees. A fire occurred therein and spread to and burned the neighboring houses. The persons who knew or could have known how the fire started were appellees and their employees, but they gave no explanation thereof whatsoever. It is a fair and reasonable inference that the incident happened because of want of care. Issues: Whether Boquiren was an independent contractor or an agent of Caltex. Held: The finding of the Court of Appeals that the operator was an agent of the company and not an independent contractor. These facts are: (1) Boquiren made an admission that he was an agent of Caltex; (2) at the time of the fire Caltex owned the gasoline station and all the equipment therein; (3) Caltex exercised control over Boquiren in the management of the state; (4) the delivery truck used in delivering gasoline to the station had the name of CALTEX painted on it; and (5) the license to store gasoline at the station was in the name of Caltex, which paid the license fees. Taking into consideration the fact that the operator owed his position to the company and the latter could remove him or terminate his services at will; that the service station belonged to the company and bore its trade name and the operator sold only the products of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance and that the receipts signed by the operator indicated that he was a mere agent. Under that agreement Boquiren could sell only Caltex Products. Maintenance of the station and its equipment was subject to the approval, in other words control, of Caltex over Boquiren indicates that Boquiren is a mere agent of Caltex. DELA PENA VS. HIDALGO (16 Phil 450)

Facts: The Case was instituted by the heirs of Jose Gomiz y D e l a P e a t o r e c o v e r s u m s o f m o n e y f r o m Federico Hidalgo which he allegedly owes the estate of Jose representing unremitted accounts during the administration of Federico of the properties of Jose Gomiz y Dela Pea. In 1887, Federico Hidalgo took charge of administration of Jose Gomiz y Dela Peas properties by virtue of a power of attorney e x e c u t e d b y t h e l a t t e r i n f a v o r o f 4 a g e n t s (Federico included) before he embarked for Spain. A f t e r s e v e r a l y e a r s o f a g e n c y , F e d e r i c o Hidalgo wrote to Jose Gomiz requesting him to d e s i g n a t e a p e r s o n t o s u b s t i t u t e h i m i n t h e position because one of those appointed in the power of attorney had died and the others did not wish to take charge of the administration of Gomiz properties. Gomiz did not answer Federicos letters nor did he approve or object to Federicos accounts nor did he appoint or designate another person to substitute Federico. I n 1 8 9 4 , F e d e r i c o w a s o b l i g e d t o e m b a r k for Spain for health reasons. On preparing for his departure, he rendered the accounts of the administration. Federico also informed Gomiz of his intended departure from the Philippines and of his turning over the administration to his cousin Antonio Hidalgo, upon whom he conferred a GPA. But because he deemed such GPA to be insufficient, he also asked Gomiz to send a new SPA in favor or Antonio. When Antonio died, Francisco Hidalgo took Antonios place. Gomiz died without having said anything regarding the substitution of agents Issue: Whether t h e r e w a s v a l i d r e n u n c i a t i o n o f t h e agency. Held: YES, under the circumstances of the case, it is r e a s o n a b l e t o c o n c l u d e t h a t t h e a g e n c y w a s duly terminated. A l t h o u g h F e d e r i c o did not use the words re nouncing the agency, such wor ds w e r e undoubtedly understood and accepted by the princi pal because if the lapse of nearly 9 years up to time of principals death, he never interrogated the renouncing agent and disapproved what he had done nor the power conferred to the substituting agent. The agent who was obliged to leave his charge for a legitimate cause and who duly informed his principal, is released and

f r e e d from the results and the consequences of the substitute agent it was with the consent, even tacit of the principal. T h e a g e n t i s n o t r e q u i r e d t o s a c r i f i c e h i s health, life, and his own interests, if it is shown that it was impossible for him to continue the discharge of his duties.