G.R. No. 83122 - Valenzuela vs. Court of Appeals

Since 1965, Arturo P. Valenzuela (“Valenzuela”) served as General Agent of Philippine American General Insurance Company, Inc. (“Philamgen”), authorized to solicit non-life insurance in exchange for a 32.5% commission under their agency agreement.
From 1973 to 1975, Valenzuela secured marine insurance for Delta Motors, Inc. totaling ₱4.4 M, entitling him to a ₱1.6 M commission; from 1976 to 1978 additional premiums of ₱1,946,886 yielded him ₱632,737 in commission, which he did not fully receive.

Beginning September 1977 and through June 1978, Philamgen—via its President Bienvenido Aragon and officers Robert Parnell and Carlos Catolico—repeatedly proposed that Valenzuela share his Delta commission on a 50–50 basis; Valenzuela refused, citing the agency agreement.
In retaliation, respondents:

On December 27, 1978, Philamgen terminated Valenzuela’s General Agency Agreement effective January 31, 1979.
Valenzuela and his wife, Hospitalita N. Valenzuela, filed suit (Jan. 24, 1979), alleging bad-faith termination, harassment, and withholding of commissions, seeking reinstatement, unpaid commissions, damages (compensatory and moral), attorney’s fees, and costs.
Trial Court (June 23, 1986) found the prime cause of termination was Valenzuela’s refusal to share commissions, held termination unjustified and mala fide, and awarded:

On Jan. 29, 1988, the CA reversed, holding that a principal may revoke agency at will—even in bad faith—subject only to liability for damages; CA ordered Valenzuela to pay Philamgen ₱1,932,532.17 (unpaid premiums) + interest, and attorney’s fees.
CA rejected trial court’s findings of bad faith and agency coupled with interest, and deemed the petitioners liable for unpaid premiums under an audit report.

Whether Valenzuela had an outstanding account with Philamgen at termination.
Whether Valenzuela was entitled to full 32.5% commission on the Delta account.
Whether the termination of Valenzuela’s agency was justified or constituted bad faith.
Whether individual officers (Aragon, Parnell, Catolico) can be liable personally.
Whether Hospitalita N. Valenzuela is entitled to relief as a real party in interest.
Whether Valenzuela is liable for unpaid premiums and whether non-payment extinguished the policies.