Pilipinas Shell Petroleum Corporation v.

CA
GR No. 104658, Apr 07, 1993

Facts: Private respondent Clarita T. Camacho (private respondent for short) was the
operator of a gasoline station in Naguilian Road, Baguio City, wherein she sells
petitioner Shell's petroleum products. Sometime in April 1983, private respondent
requested petitioner to conduct a hydro-pressure test on the underground storage
tanks of the said station in order to determine whether or not the sales losses she was
incurring for the past several months were due to leakages therein. Petitioner acceded
to the said request and on April 27, 1983, one Jesus "Jessie" Feliciano together with other
workers, came to private respondent's station with a Job Order from petitioner to
perform the hydro-pressure test.

On the same day, Feliciano and his men drained the underground storage tank which
was to be tested of its remaining gasoline. After which, they filled the tank with water
through a water hose from the deposit tank of private respondent. Then, after
requesting one of private respondent's gasoline boys to shut off the water when the
tank was filled, Feliciano and his men left. At around 2:00 a.m. the following day, private
respondent saw that the water had reached the lip of the pipe of the underground
storage tank and so, she shut off the water faucet.

At around 5:30 a.m., private respondent's husband opened the station and started
selling gasoline. But at about 6:00 a.m., the customers who had bought gasoline
returned to the station complaining that their vehicles stalled because there was water
in the gasoline that they bought. On account of this, private respondent was
constrained to replace the gasoline sold to the said customers. However, a certain
Eduardo Villanueva, one of the customers, filed a complaint with the police against
private respondent for selling the adulterated gasoline. In addition, he caused the
incident to be published in two local newspapers.

Petitioner undertook to settle the criminal complaint filed by Villanueva. Subsequently,

Villanueva filed an Affidavit of Desistance.

Thereafter, private respondent demanded from petitioner the payment of damages in

the amount of P10,000.00. Petitioner, instead, offered private respondent additional
credit line and other beneficial terms, which offer was, however, rejected.

Subsequently, or on October 12, 1983, private respondent filed before the trial court a
complaint for damages against petitioner due to the latter's alleged negligence in the
conduct of the hydro-pressure test in her gasoline station. For its part, petitioner denied
liability because, according to it, the hydro-pressure test on the underground storage
tanks was conducted by an independent contractor.

The trial court dismissed private respondent's complaint for damages.

From the adverse decision of the trial court, private respondent appealed to the Court
of Appeals which court reversed the decision of the trial court.

Issue: Whether Jesus Feliciano is an employee of Pilipinas Shell Petroleum Corporation.

Held: NO. It is a well-entrenched rule that an employer-employee relationship must exist

before an employer may be held liable for the negligence of his employee. It is likewise
firmly settled that the existence or non-existence of the employer-employee relationship
is commonly to be determined by examination of certain factors or aspects of that
relationship. These include: (a) the manner of selection and engagement of the
putative employee; (b) the mode of payment of wages; (c) the presence or absence
of a power to control the putative employee's conduct, although the latter is the most
important element.

As aptly held by the trial court, petitioner did not exercise control and supervision over
Feliciano with regard to the manner in which he conducted the hydro-pressure test. All
that petitioner did, through its Field Engineer, Roberto Mitra, was relay to Feliciano the
request of private respondent for a hydro-pressure test, to determine any possible
leakages in the storage tanks in her gasoline station. The mere hiring of Feliciano by
petitioner for that particular task is not the form of control and supervision
contemplated by may be the basis for establishing an employer-employee relationship
between petitioner and Feliciano. The fact that there was no such control is further
amplified by the absence of any Shell representative in the job site time when the test
was conducted. Roberto Mitra was never there. Only Feliciano and his men were.

Feliciano is an independent contractor.

Feliciano is independently maintaining a business under a duly registered business

name, "JFS Repair and Maintenance Service," and is duly registered with the Bureau of
Domestic Trade. He does not enjoy a fixed salary but instead charges a lump sum
consideration for every piece of work he accomplishes. 8 If he is not able to finish his
work, he does not get paid, as what happened in this case. 9 Further, Feliciano utilizes
his own tools and equipment and has a complement of workers. Neither is he required
to work on a regular basis. Instead, he merely awaits calls from clients such as petitioner
whenever repairs and maintenance services are requested. Moreover, Feliciano does
not exclusively service petitioner because he can accept other business but not from
other oil companies. 10 All these are the hallmarks of an independent contractor.

Being an independent contractor, Feliciano is responsible for his own acts and
omissions. As he alone was in control over the manner of how he was to undertake the
hydro-pressure test, he alone must bear the consequences of his negligence, if any, in
the conduct of the same.
 Palafox v. Province of Ilocos Norte

Facts: Sabas Torralba was employed as the driver of Ilocos Norte and detailed to the
Office of the District Engineer. He was involved in the construction and maintenance of
roads in Ilocos Norte. While driving his truck, Sabas ran over Proceto Palafox resulting to
the latter’s death. Sabas was prosecuted for homicide through reckless imprudence to
which he pleaded guilty. The heirs of Palafox instituted a civil case against him, the
Province, the District Engineer and the Provincial Treasurer.

Issue:Whether the Province of Ilocos Norte can be held liable.

Held: NO. The general rule is that local government units are not liable for negligent
acts of its employees while they are performing governmental functions or duties. In this
case, the driver was involved in the construction or maintenance of roads which was a
governmental duty. Therefore, the province cannot be held liable for his negligent act.
However tragic and deplorable it may be, the death of Palafox imposed on the
province no duty to pay monetary consideration.

If the injury is caused in the course of the performance of a governmental function or

duty no recovery, as a rule, can be had from the municipality unless there is an existing
statute on the matter, nor from its officers, so long as they performed their duties
honestly and in good faith or that they did not act wantonly and maliciously. A truck
driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox
in the course of his work at the construction of a road. The Supreme Court in affirming
the trial court's dismissal of the complaint for damages held that the province could not
be made liable because its employee was in the performance of a governmental
function — the construction and maintenance of roads — and however tragic and
deplorable it may be, the death of Palafox imposed on the province no duty to pay
monetary consideration.
 Saudi Arabian Airlines vs Court of Appeals

Facts: Milagros Morada was working as a stewardess for Saudia Arabian Airlines. In 1990,
while she and some co-workers were in a lay-over in Jakarta, Indonesia, an Arab co-
worker tried to rape her in a hotel room. Fortunately, a roomboy heard her cry for help
and two of her Arab co-workers were arrested and detained in Indonesia. Later, Saudia
Airlines re-assigned her to work in their Manila office. While working in Manila, Saudia
Airlines advised her to meet with a Saudia Airlines officer in Saudi. She did but to her
surprise, she was brought to a Saudi court where she was interrogated and eventually
sentenced to 5 months imprisonment and 289 lashes; she allegedly violated Muslim
customs by partying with males. The Prince of Makkah got wind of her conviction and
the Prince determined that she was wrongfully convicted hence the Prince absolved
her and sent her back to the Philippines. Saudia Airlines later on dismissed Morada.
Morada then sued Saudia Airlines for damages under Article 19 and 21 of the Civil
Code. Saudia Airlines filed a motion to dismiss on the ground that the RTC has no
jurisdiction over the case because the applicable law should be the law of Saudi
Arabia. Saudia Airlines also prayed for other reliefs under the premises.

Issue: Whether or not Saudia Airlines’ contention is correct.

Held: No. Firstly, the RTC has acquired jurisdiction over Saudia Airlines when the latter
filed a motion to dismiss with petition for other reliefs. The asking for other reliefs
effectively asked the court to make a determination of Saudia Airlines’s rights hence a
submission to the court’s jurisdiction.

Secondly, the RTC has acquired jurisdiction over the case because as alleged in the
complaint of Morada, she is bringing the suit for damages under the provisions of our
Civil Law and not of the Arabian Law. Morada then has the right to file it in the QC RTC
because under the Rules of Court, a plaintiff may elect whether to file an action in
personam (case at bar) in the place where she resides or where the defendant resides.
Obviously, it is well within her right to file the case here because if she’ll file it in Saudi
Arabia, it will be very disadvantageous for her (and of course, again, Philippine Civil
Law is the law invoked).

Thirdly, one important test factor to determine where to file a case, if there is a foreign
element involved, is the so called “locus actus” or where an act has been done. In the
case at bar, Morada was already working in Manila when she was summoned by her
superior to go to Saudi Arabia to meet with a Saudia Airlines officer. She was not
informed that she was going to appear in a court trial. Clearly, she was defrauded into
appearing before a court trial which led to her wrongful conviction. The act of
defrauding, which is tortuous, was committed in Manila and this led to her humiliation,
misery, and suffering. And applying the torts principle in a conflicts case, the SC finds
that the Philippines could be said as a situs of the tort (the place where the alleged
tortious conduct took place).

State of the Most Significant Relationship Rule

In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated
according to their relative importance with respect to the particular issue: (a) the place
where the injury occurred; (b) the place where the conduct causing the injury
occurred; (c) the domicile, residence, nationality, place of incorporation and place of
business of the parties, and (d) the place where the relationship, if any, between the
parties is centered.

As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is a
resident Filipina national, working with petitioner, a resident foreign corporation
engaged here in the business of international air carriage. Thus, the “relationship”
between the parties was centered here, although it should be stressed that this suit is
not based on mere labor law violations. From the record, the claim that the Philippines
has the most significant contact with the matter in this dispute, raised by private
respondent as plaintiff below against defendant (herein petitioner), in our view, has
been properly established.

Prescinding from this premise that the Philippines is the situs of the tort complained of
and the place “having the most interest in the problem”, we find, by way of
recapitulation, that the Philippine law on tort liability should have paramount
application to and control in the resolution of the legal issues arising out of this case