Case Summary (G.R. No. 141525)
Events Leading to Dispute
In 1987, Medicard appointed Sanchez as its special corporate agent, granting him a commission based on cash transactions. In September 1988, under Sanchez's initiative, Medicard entered into a Health Care Program Contract with Unilab, which subsequently led to significant commission payments to Sanchez. However, the relationship soured when Unilab rejected Medicard’s proposed premium increase for contract renewal, prompting Medicard to propose a new arrangement that excluded Sanchez's commission.
Legal Proceedings
In response to Medicard's refusal to pay his commission under the new terms after Unilab terminated the existing contract, Sanchez filed a complaint against Medicard and the other respondents in the Regional Trial Court (RTC) for sum of money. The RTC ruled in favor of the respondents, leading Sanchez to appeal to the Court of Appeals. The appellate court upheld the RTC's decision, establishing that no fraudulent activity occurred in revoking the agency contract.
Legal Principles on Agency and Commission
The appellate court based its findings on established legal principles concerning agency agreements, particularly the necessity for an agent to be the "procuring cause" of a sale to be entitled to commission. This concept suggests that an agent must actively contribute to the successful negotiation of a deal to claim compensation.
Court Findings
The Supreme Court affirmed the lower courts' decisions, concluding that Sanchez was not entitled to a commission following the contract's termination. The Court highlighted that Sanchez failed to demonstrate efforts to renew the contract or facilitate negotiations, and his refusal to lower his commission led Medicard to terminate the agency relationship in compliance with Article 1924 of the Civil Code, which allows such action if th
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Case Citation
- Jurisprudence: 506 Phil. 332; 102 OG No. 41, 6814 (October 9, 2006)
- G.R. No. 141525
- Date of Decision: September 02, 2005
Background of the Case
- The petition for review on certiorari was filed to reverse the Decision of the Court of Appeals dated February 24, 1999, and its Resolution dated January 12, 2000, in CA-G.R. CV No. 47681.
- The case involves Carlos Sanchez as the petitioner and Medicard Philippines, Inc., Dr. Nicanor Montoya, and Carlos Ejercito as respondents.
Facts of the Case
- In 1987, Medicard appointed Sanchez as a special corporate agent, offering a commission based on “cash brought in.”
- In September 1988, Sanchez facilitated a Health Care Program Contract between Medicard and United Laboratories (Unilab), resulting in a payment of P4,148,005.00 from Unilab to Medicard, with Sanchez receiving a commission of P746,640.90.
- The contract was renewed for another year, increasing the premium to P7,456,896.00, which earned Sanchez a commission of P1,342,241.00.
- Prior to the expiration of the renewed contract, Unilab rejected a proposal for an increase in premium, leading to a request from Medicard to Sanchez to reduce his commission, which he refused.
- On October 3, 1990, Unilab, through Carlos Ejercito, confirmed its decision not to renew the contract.
- Subsequently, Unilab negotiated a new scheme with Medicard, which d