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PILIPINAS SHELL PETROLEUM CORPORATION v. CA

FACTS:

Private respondent Clarita T. Camacho operated a gasoline station in Baguio City where she sold petitioner Pilipinas Shell Petroleum Corporation's petroleum products. In April 1983, private respondent requested Shell to conduct a hydro-pressure test on the underground storage tanks of her station to determine if there were leakages. Shell agreed and sent Jesus "Jessie" Feliciano and his team to perform the test. Feliciano and his team drained the underground storage tank and filled it with water from private respondent's deposit tank. They left after instructing one of private respondent's employees to shut off the water when the tank was full. The next day, private respondent shut off the water and her husband started selling gasoline. However, customers complained that their vehicles stalled due to water in the gasoline. Private respondent was forced to replace the gasoline. One of the customers filed a complaint against private respondent, which Shell subsequently resolved. Private respondent demanded damages from Shell, but Shell denied liability claiming that the test was conducted by an independent contractor. The trial court dismissed private respondent's complaint, stating that the conduct of the hydro-pressure test was under the sole control and supervision of Feliciano.

ISSUES:

  1. Was the hydro-pressure test of the underground storage tank conducted by an independent contractor or not?

  2. If the test was conducted by an independent contractor, is Shell liable for the acts or omissions of the contractor?

RULING:

  1. The hydro-pressure test of the underground storage tank was conducted by an independent contractor.

  2. Shell is not liable for the acts or omissions of the independent contractor.

PRINCIPLES:

  • An independent contractor is not a representative, agent, or employee of the principal, and therefore, the principal is not liable for the acts or omissions of the contractor.

  • Control and supervision over the manner of how the test is conducted is a determining factor in establishing liability for any resulting damage.