Title
Sanchez vs. Medicard Philippines, Inc.
Case
G.R. No. 141525
Decision Date
Sep 2, 2005
Medicard revoked Sanchez's agency after he refused to reduce his commission, leading to direct negotiations with Unilab. Court ruled Sanchez not entitled to commission as he wasn't the procuring cause of the new contract.
special corporate agent
unpaid commission
contract of agency

Case Summary (G.R. No. 141525)

Factual Background

Through petitioner’s efforts, MEDICARD PHILIPPINES, INC. obtained from United Laboratories Group of Companies (Unilab) a one-year Health Care Program Contract under which Unilab paid a fixed monthly premium. Medicard paid petitioner commission on the premium. A renewal for a second year took place and petitioner again received commission. Prior to a proposed third-year renewal, Unilab rejected Medicard’s bid to increase the premium. Medicard asked petitioner to reduce his commission; petitioner refused. Unilab notified Medicard on October 3, 1990 that it would not renew the contract but negotiated with Medicard to preserve coverage for its personnel under a new arrangement in which Unilab would pay actual hospitalization expenses plus a fifteen percent service fee, a cost plus scheme with a minimum of P780,000.00. Under that scheme Medicard did not pay petitioner any commission.

Trial Court Proceedings

Petitioner filed a complaint for sum of money against MEDICARD PHILIPPINES, INC., DR. NICANOR MONTOYA, and CARLOS EJERCITO in the RTC, Branch 66, Makati City, seeking P338,000.00 in commissions and damages. After trial the RTC rendered a Decision dismissing petitioner’s complaint and dismissing respondents’ counterclaim. The RTC found that petitioner was not entitled to commission for the post-expiration arrangements.

Court of Appeals Decision

The Court of Appeals affirmed the trial court’s dismissal. The appellate court found no proof that Medicard’s execution of the new cost plus arrangement was a stratagem to deprive petitioner of his commission. The CA held that Medicard did not commit fraud in revoking the agency, that Unilab’s rejection of the premium increase effectively terminated the Health Care Program Contract, and that where the contract became ineffectual the agent was not entitled to commission.

Issue Presented

Whether the Court of Appeals erred in holding that Medicard revoked the agency relationship when it dealt directly with Unilab and that petitioner was therefore not entitled to commission for the third-year arrangement.

Parties’ Contentions

Petitioner contended that his efforts had been the procuring cause of the contract with Unilab and that equity and precedent entitled him to a commission despite the change in scheme. Respondents contended that Unilab refused to renew the premium scheme, that petitioner refused to reduce his commission, and that Medicard thereafter negotiated directly with Unilab resulting in a new cost plus arrangement which did not obligate Medicard to pay commission.

Supreme Court’s Analysis and Legal Basis

The Court reviewed the law on agency commissions and procuring cause. The Court reiterated that an agent earns commission only upon successful conclusion of the sale or contract procured, citing Damon v. Antonio A. Brimo & Co., 42 Phil. 134 (1921), and subsequent authorities such as Ramos v. Court of Appeals, G.R. No. 25463, April 4, 1975, and Hanh v. Court of Appeals, G.R. No. 113074, January 22, 1997. The Court further noted exceptions where equity required payment despite lapse of authority, as in Prats v. Court of Appeals, G.R. No. 39822, January 31, 1978, and Manotok Brothers v. Court of Appeals, G.R. No. 94753, April 7, 1993, where the agent had diligently brought the parties together and thereby remained the efficient procuring cause. The Court then applied Art. 1924, Civil Code, which provides that the agency is revoked if the principal directly manages the business entrusted to the agent by dealing directly with third persons. The Court found on the record that petitioner refused to reduce his commission and did not render services to procure the third-year arrangement. Medicard thereupon negotiated directly with Unilab and implemented a different contractual scheme. The Court concluded that Medicard’s direct dealings with Unilab effectively revoked the agency under Art. 1924 and that petitione

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster, building context before diving into full texts. AI-powered analysis, always verify critical details.

About Privacy Terms