Sanchez v Medicard

Facts
Sometime in 1987 Medicard Inc. appointed petitioner Sanchez as its special
corporate agent and they gave him a commission based on the "cash
brought in." In 1988, through petitioner's efforts, Medicard and Unilab
executed a Health Care Program Contract. Unilab paid Medicard
P4,148,005.00 representing the premium for one (1) year. Medicard then
handed petitioner 18% of said amount or P746,640.90 representing his
commission.
Again, through petitioner's initiative, the agency contract between Medicard
and Unilab was renewed for another year. Prior to the expiration of the
renewed contract, Medicard proposed an increase of the premium which
Unilab rejected "for the reason that it was too high". Medicard then asked
Sanchez to reduce his commission should the contract be renewed ( 3rd
renewal )but the latter did not agree. In a letter dated October 3, 1990,
Unilab confirmed its decision not to renew the health program. Meanwhile, in
order not to prejudice its personnel by the termination of their health
insurance, Unilab negotiated with Dr. Montoya and other officers of Medicard,
to discuss new ways in order to continue the insurance coverage. Under the
new scheme, Unilab shall pay Medicard only the amount corresponding to
the actual hospitalization expenses incurred by each personnel plus 15%
service fee. Medicard did not give petitioner any commission under the new
scheme. Aggrieved, Petitioner demanded from Medicard payment of
P338,000.00 as his commission plus damages, but the latter refused to heed
his demand.
Issues:
Whether or not the contract of agency between Medicard and Sanchez has
been revoked in order to entitle Sanchez to a commission
Held:
Yes the Contract of Agency has been revoked, thus the petitioner is not
entitled to any commission. It is dictum that in order for an agent to be
entitled to a commission, he must be the procuring cause of the sale, which
simply means that the measures employed by him and the efforts he exerted
must result in a sale. Based on the facts, it may be recalled that through
petitioner's efforts, Medicard was able to enter into a Contract with Unilab,

two times; however, before the expiration of the renewed contract, Unilab
rejected the proposal. Medicard then requested petitioner to reduce his
commission should the contract be renewed on its third year, but he was
obstinate. It is clear that since petitioner refused to reduce his commission,
Medicard directly negotiated with Unilab, thus revoking its agency contract
with petitioner. Such revocation is authorized by Article 1924 of the Civil
Code which provides: "The agency is revoked if the principal directly
manages the business entrusted to the agent, dealing directly with
third persons."

Moreover, as found by the lower courts, petitioner did not render services to
Medicard, his principal, to entitle him to a commission. There is no indication
from the records that he exerted any effort in order that Unilab and
Medicard, after the expiration of the Health Care Program Contract, can
renew it for the third time. In fact, his refusal to reduce his commission
constrained Medicard to negotiate directly with Unilab. We find no reason in
law or in equity to rule that he is entitled to a commission.

Infante v Cunanan
Consejo Infante, defendant herein, was the owner of two parcels of land,
together with a house built thereon, situated in the City of Manila and
covered by Transfer Certificate of Title No. 61786. She contracted the
services of Jose Cunanan and Juan Mijares to sell the above-mentioned
property for a price of 30,000 subject to the assumption of mortgage in favor
of Rehabilitation and Finance Corporation. Infante agreed to pay Cunanan
and Juan Mijares a commission of 5 percent of the purchase price and any
overprice they may obtain from the sale of property.
Cunanan and Mijares found an able and willing buyer in the name of Noche.
When they introduced Noche to Infante, Infante informed Cunanan and
Mijares that he was no longer willing to sell his property; in other words, she
is backing out of their agreement. Infante then managed to make Cunanan
and Mijares sign a document revoking the authority given by Infante.
Sometime thereafter, Infante sold the property to Noche in the amount of
31,000 for which Cunanan and Mijares are asking for their commission.
Issue:
Whether or not Ifnante is duty bound to pay Cunanan and Mijares their
commission notwithstanding the fact that the sale was made after the
termination of the contract of agency.
Held:
A principal may withdraw the authority given to an agent at will. But
respondents agreed to cancel the authority given to them upon assurance by
petitioner that should property be sold to Noche, they would be given
commission.
That petitioner had changed her mind even if respondents had found a buyer
who was willing to close the deal, is a matter that would give rise to a legal
consequence if respondents agree to call off to transaction in deference to
the request of the petitioner. Petitioner took advantage of the services of
respondents, but believing that she could evade payment of their

commission, she made use of a ruse by inducing them to sign the deed of
cancellation. This act of subversion cannot be sanctioned and cannot serve
as basis for petitioner to escape payment of the commissions agreed upon.
Note : Cunanan and Mijares only agreed to sign the written instrument
revoking the authority vested to them by Infante to sell the above-mentioned
property upon Infantes verbal assurance that they would still be entitled to
their commission should Infante decide to sell the property to Noche.

Maxicare v Carmela Estrada

Facts:
Maxicare engaged the services of Carmela Estrada to promote and sell a
health care program called MAXICARE PLAN with the position of
Independent Account Executive. Maxicare formally appointed Estrada as its
General agent.
Estrada is entitled to a commission which varies depending on the type of
account he successfully lands; 15-18 percent for family, group or individual
accounts; 2.5 10 percent to tailored-fit plans; 10 percent on standard
commissionable amount on corporate accounts.
Maxicare followed a franchising system in dealing with its agents whereby
the agency is required to first secure permission from Maxicare to list a
prospective company as his/her client. Meralco account was included as
corporate account applied by Estrada. Estrada then submitted proposals to
Meralco and made presentations to its officers regarding the MAXICARE Plan
but when MERALCO decided to subscribe to the MAXICARE Plan, Maxicare
directly negotiated with MERALCO regarding the terms and conditions of the
agreement and left Estrada out of it.
MERALCO eventually subscribed to the MAXICARE Plan and signed a Service
Agreement for medical coverage of its officers. The contract was renewed
twice for a term of 3 years. Estrada was never paid any commission.
RTC and CA decided both in favor of Estrada
Issue:
Whether or not Estrada should be paid his commission for the MAXICARE
Plans subscribed by Meralco.

Held:
Maxicares contention: Estrada would be entitled to his commission upon
satisfaction of twin requirements 1 ) Collection of premium dues by Estrada 2
) Contemporaneous remittance of the same.CA and RTC erred in applying the
efficient procuring cause doctrine enunciated in Manotok Brothers v CA.
SC : Estrada successfully landed the MERALCO account.
For many years, Maxicare had been eyeing to secure the Meralco account
but it was only because of Estradas involvement and participation that
MERALCO agreed to subscribe to MAXICAREs health program. ( Submission
of proposals and making presentations to MERALCOs officers). Estradas
efforts consisted in being the first to offer the Maxicare plan to Meralco, he
arranged dinner meetings with the officers of Meralco and sending follow-up
letters. Such were recognized by the certification issued by Meralcos
Manpower Planning and Research Head.

The only reason Estrada was not able to participate in the collection and
remittance of premium dues to Maxicare was because she was prevented
from doing so by the acts of Maxicare, its officers, and employees. Based
from the foregoing, it is readily apparent that Maxicare is attempting to
evade payment of the commission which rightfully belongs to Estrada as the
broker who brought the parties together.

Rep v Evangelista
Facts:
Legaspi executed a Special power of Attorney in favor of Gutierrez. Gutierrez
was given the power to deal with treasure hunting activities on Legaspis
land and to file charges against those who may enter it without Legapis
authority. There was an agreement that Gutierrez shall be entitled to 40
percent of the treasure that may be found in the land.
Gutierrez commenced a suit against herein petitioners for illegally entering
Legapis land. Gutierrez hired Atty. Homobono Adaza as his counsel. The
contract between Gutierrez and Homobono provided that the latter shall be
entitled to 30 percent of Legapis share in whatever treasure that may be
found in the land. There was also a separate pay for each of Homobonos
appearance in court.
Petitioners moved for the dismissal of the case for the reason that there is no
real-party in interest because of the Deed of Revocation issued by Legaspi.
Issue: Whether the contract of agency between Legaspi and private
respondent Gutierrez has been effectively revoked by Legaspi.
Held:
General rule : Contract of agency can be unilaterally rescinded by the
principal.
Exception : If it is one coupled with interest.
In this case, the agency is one coupled with interest because a bilateral
contract depends on it. Gutierrez was given by legaspi the power to manage
the treasure hunting activities in the subject land, to file cases against
anyone who enters the land without the permission of Legaspi, to engage the
services of lawyers to carry out the agency, to dig for any treasure within the
land and enter into agreements relative thereto. Gutierrez shall be entitled to
40 percent of whatever treasure may be found in the land.

As payment for legal services, Gutierrez agreed to assign to Atty.

Adaza 30% of Legaspis share in whatever treasure may be
recovered in the subject land. It is clear that the treasure that may be
found in the land is the subject matter of the agency; that under the SPA,
Gutierrez can enter into contract for the legal services of Atty. Adaza; and,
thus Gutierrez and Atty. Adaza have an interest in the subject matter of the
agency, i.e., in the treasures that may be found in the land. This bilateral
contract depends on the agency and thus renders it as one coupled with
interest, irrevocable at the sole will of the principal Legaspi[ When an
agency is constituted as a clause in a bilateral contract, that is, when the
agency is inserted in another agreement, the agency ceases to be revocable
at the pleasure of the principal as the agency shall now follow the condition
of the bilateral agreemen[. Consequently, the Deed of Revocation executed
by Legaspi has no effect. The authority of Gutierrez to file and continue with
the prosecution of the case at bar is unaffected.
Coleongco v Claparols
Facts:
Since 1951, Claparols operated a factory for the manufacture of nails under
the style of "Claparols Steel & Nail Plant". The raw material, nail wire, was
imported from foreign sources
Losses compelled Claparols in 1953 to look for someone to finance his
imports of nail wires. Coleongco became his financier.
A financing agreement was perfected .
In addition, a special power of attorney was executed authorizing Coleongco
to open and negotiate letters of credit, to sign contracts, bills of lading,
invoices, and papers covering transactions; to represent appellee and the
nail factory; and to accept payments and cash advances from dealers and
distributors.
Thereafter, Coleongco also became the assistant manager of the factory.,
1956, Claparols was surprised by service of an alias writ of execution to
enforce a judgment obtained against him by the Philippine National Bank,
despite the fact that on the preceding September he had submitted an
amortization plan to settle the account.

He learned that the execution had been procured because of derogatory

information against appellee that had reached the bank Coleongco. His
letters to the Philippine National attempting to undermine the credit of the
principal and to acquire the factory of the latter, without the principal's
knowledge. Fortunately, Claparols managed to arrange matters with the
bank and to have the execution levy lifted.
He further discovered the following acts of disloyalty of Coleongco:
A letter to his cousin, Kho To , instructing the latter to reduce to one-half the
usual monthly advances to Claparols on account of nail sales in order to
squeeze said appellee and compel him to extend the contract entitling
Coleongco to share in the profits of the nail factory on better terms, and
ultimately "own his factory", a plan carried out by Kho's letter, ,reducing the
advances to Claparols;
Coleongco's attempt to, have Romulo Agsam ( employee of Claparol ) pour
acid on the machinery;
His illegal diversion of the profits of the factory to his own benefit;
And the surreptitious disposition of the Yates band resaw machine in favor of
his cousin's Hong Shing Lumber Yard, made while Claparols was in Baguio in
July and August of 1956,
Instead of putting up all the necessary money needed to finance the imports
of raw material, Coelongco merely advanced 25% in cash on account of the
price and had the balance covered by surety agreements with Claparols and
others as solidary guarantors.
Claparols consequently revoked the power of attorney, and informed
Coleongco by registered mail, demanding a full accounting at the same time.
Coleongco protested. Claparols requested external auditors, examination
showed that Coleongco owed the Claparols Nail Factory the amount of
P87,387.37, as of June 30, 1957.
Coleongcos Argument :He also contended that the power of attorney was
made to protect his interest under the financing agreement and was one
coupled with an interest that the appellee Claparols had no legal power to
revoke.
Caparols' mal-administration of the business endangered the security for the
advances that he had made under the financing contract

Appellant likewise denies the authorship of the letter to Kho as well as the
attempt to induce Agsam to damage the machinery of the factory
ISSUES:
1.) WON the contract of agency between Claparols and Coleongco was one
coupled with interest. NO
2.) WON a contract of agency when coupled with an interest may be validly
revoked by the principal. YES
Held:
The financing agreement itself already contained clauses for the protection
of appellant's interest, and did not call for the execution of any power of
attorney in favor of Coleongco.

But granting appellant's view, it must not be forgotten that a power of

attorney can be made irrevocable by contract only in the sense that the
principal may not recall it at his pleasure; but coupled with interest or not,
the authority certainly can be revoked for a just cause, such as when the
attorney-in-fact betrays the interest of the principal, as happened in this
case. It is not open to serious doubt that the irrevocability of the power of
attorney may not be used to shield the perpetration of acts in bad faith,
breach of confidence, or betrayal of trust, by the agent for that would
amount to holding that a power coupled with an interest authorizes the
agent to commit frauds against the principal.
Our new Civil Code, in Article 1172, expressly provides the contrary in
prescribing that responsibility arising from fraud is demandable in all
obligations, and that any waiver of action for future fraud is void. It is
also on this principle that the Civil Code, in its Article 1800, declares that the
powers of a partner, appointed as manager, in the articles of co-partnership
are irrevocable without just or lawful cause; and an agent with power
coupled with an interest can not stand on better ground than such a partner
in so far as irrevocability of the power is concerned.
That the appellee Coleongco acted in bad faith towards his principal
Claparols is, on the record, unquestionable.
The facts mentioned acts of deliberate sabotage by the agent that fully
justified the revocation of the power of attorney EVEN IF IT IS ONE

COUPLED WITH INTEREST.

Note : What is the doctrine in this case? Principal may revoke an
agency coupled with interest for a just cause. ( Bad faith, breach of
confidence, betrayal of trust ) ; otherwise, it will effectively
authorize agent to commit fraud against the principal.

CMS LOGGING V CA Revocation of agency by principal prior to the

expiration of contract - valid
Fact:
Petitioner CMS is a forest concessionaire engaged in the logging business,
while private respondent DRACOR is engaged in the business of exporting
and selling logs and lumber. On August 28, 1957, CMS and DRACOR entered
into a contract of agency whereby the former appointed the latter as its
exclusive export and sales agent for all logs that the former may produce, for
a period of five (5) years.
CMS was able to sell through DRACOR a total of 77,264,672 board feet of
logs in Japan, from September 20, 1957 to April 4, 1962. Six months prior
the end of their agreement, CMS found out that DRACOR was using Shingko
Trading to sell their logs and earned commission for it from the buyers of
the logs. CMS claimed that it was a violation of their agreement and that
CMS is entitled to the amount received by Shinko as part of the proceeds of
the sale of the logs. CMS further contended that since DRACOR already
received 5% commission and is no longer entitled to the additional

commission to Shinko as this would amount to double compensation. After

the discovery, CMS directly transacted with Japanese firms without the aid if
DRACOR. CMS sued DRACOR for the commission Shingko received while
DRACOR counterclaimed for the commission of the sales made by CMS with
the Japanese firms.
Issue:
Whether or not DRACOR is entitled to its commissions from the sales made
by CMS to Japanese firms
Held:
The principal may revoke a contract of agency at will, and such revocation
may be express, or implied, and may be availed of even if the period fixed in
the contract of agency as not yet expired. As the principal has this absolute
right to revoke the agency, the agent can not object thereto; neither may he
claim damages arising from such revocation, unless it is shown that such was
done in order to evade the payment of agent's commission. During the
existence of the contract of agency, DRACOR admitted that CMS sold its logs
directly to several Japanese firms. This act constituted an implied revocation
of the contract of agency under Article 1924 of the Civil Code, which
provides: Art. 1924 The agency is revoked if the principal directly manages
the business entrusted to the agent, dealing directly with third persons.
DRACOR is not entitled to commission since it was revoked by CMS when
they transacted directly with the Japanese firms