CARLOS SANCHEZ, Petitioner, vs. MEDICARD PHILIPPINES, INC., DR.

NICANOR MONTOYA and CARLOS EJERCITO, Respondents.

G.R. No. 141525 September 2, 2005

FACTS: Sometime in 1987, Medicard Philippines, Inc. (Medicard), respondent, appointed petitioner as its special corporate
agent. As such agent, Medicard gave him a commission based on the cash brought in. Through petitioner’s efforts,
Medicard was able to enter into a one-year Health Care Program Contract with Unilab. As a result, Medicard paid petitioner
his commission. Again, through his efforts, the contract was renewed and once more, he received his commission. Before
the expiration of the renewed contract, Medicard, through petitioner, proposed an increase in premium, but Unilab rejected
this proposal. Medicard then requested petitioner to reduce his commission should the contract be renewed on its third year,
but he was obstinate. Meantime, on October 3, 1990, Unilab informed Medicard it was no longer renewing the Health Care
Program contract.

In order not to prejudice its personnel, Unilab, through respondent Ejercito, negotiated with respondent Dr. Montoya of
Medicard, in order to find mutually beneficial ways of continuing the Health Care Program. 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.

Thus, petitioner filed with the Regional Trial Court (RTC), Branch 66, Makati City, a complaint for sum of money against
Medicard, Dr. Nicanor Montoya and Carlos Ejercito, herein respondents.

After hearing, the RTC rendered its Decision dismissing petitioners complaint and respondents counterclaim. On appeal, the
Court of Appeals affirmed the trial courts assailed Decision. Petitioner filed a motion for reconsideration, but this was denied
by the Court of Appeals on January 12, 2000. Hence, the instant petition for review on certiorari.

ISSUE: Whether or not the contract of agency has been revoked by Medicard, hence, petitioner is not entitled to a
commission

HELD: YES. 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. In other
words, an agent receives his commission only upon the successful conclusion of a sale. Conversely, it follows that where his
efforts are unsuccessful, or there was no effort on his part, he is not entitled to a commission. 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."

In Prats vs. Court of Appeals, this Court held that for the purpose of equity, an agent who is not the efficient procuring cause
is nonetheless entitled to his commission, where said agent, notwithstanding the expiration of his authority, nonetheless,
took diligent steps to bring back together the parties, such that a sale was finalized and consummated between them. In
Manotok Borthers vs. Court of Appeals, where the Deed of Sale was only executed after the agents extended authority had
expired, this Court, applying its ruling in Prats, held that the agent (in Manotok) is entitled to a commission since he was the
efficient procuring cause of the sale, notwithstanding that the sale took place after his authority had lapsed. The proximate,
close, and causal connection between the agents efforts and the principals sale of his property cannot be ignored.

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.

It is clear that since petitioner refused to reduce his commission, Medicard directly negotiated with Unilab, thus revoking its
agency contract with petitioner. We hold that such revocation is authorized by 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.

ANTONIO M. A. BARRETTO, plaintiff-appellant, vs.JOSE SANTA MARINA, defendant-

appellee.

G.R. No. L-8169 December 29, 1913

FACTS:

The plaintiff, Antonio M.A. Barretto, was an agent and manager of Jose Santa Marina, the
defendant, a resident of Spain and the owner and proprietor of the business known as the La
Insular Cigar and Cigarette Factory. The petitioner alleged that the defendant, without reason,
justification, or pretext and in violation of the contract of agency, summarily and arbitrarily
dispensed with the plaintiff's services and removed him from the management of the business.

The evidence showed that the plaintiff Barretto's renunciation or registration of the position he
held as agent and manager of the said factory was freely and voluntarily made by him on the
occasion of the insolvency and disappearance of a Chinese man who had bought from the
factory products and, without paying this large debt, disappeared and has not been seen since.
Barretto sent a letter of resignation to Santa Marina and Santa Marina did not immediately reply
and tell him of his decision on the matter. After several months, Barretto was informed that the
power conferred upon him by the defendant has been revoked and the latter had already
appointed J. McGavin to substitute him.

ISSUE:

Whether the contract of agency was validly revoked.

RULING:

Yes, the contract of agency between the plaintiff and the defendant is validy revoked. Barretto
was not really dismissed or removed by Santa Marina. Rather, Barretto resigned as the
defendant’s agent and manager as evidenced by the letter he sent to the defendant.

Article 1733 of the civil Code, applicable to the case at bar, according to the provisions of article
2 of the Code of Commerce, prescribes: "The principal may, at his will, revoke the power and
compel the agent to return the instrument containing the same in which the authority was given."

Article 279 of the Code of Commerce provides: "The principal may revoke the commission
intrusted to an agent at any stage of the transaction, advising him thereof, but always being liable
for the result of the transactions which took place before the latter was informed of the
revocation." 1awphi1.net

The contract of agency can subsist only so long as the principal has confidence in his agent,
because, from the moment such confidence disappears and although there be a fixed period for
the exercise of the office of agent, the principal has a perfect right to revoke the power that he
had conferred upon the agent owing to the confidence he had in him and which for sound
reasons had ceased to exist.

The fixing of the period by the Courts in their contracts cannot be invoked since the rights and
obligations existing between Barretto and Santa Marina are absolutely different from those to
which it refers, for, according to article 1732 of the Civil Code, agency is terminated:
 1. By revocation.

2. By withdrawal of the agent.

3. By death, interdiction, bankruptcy, or insolvency of the principal or of the agent.

It is not incumbent upon the courts to fix the period during which contracts for services shall last.
Their duration is understood to be implicity fixed, in default of express stipulation, by the period
for the payment of the salary of the employee.

Article 302 of the Code of Commerce reads thus:

In cases in which no special time is fixed in the contracts of service, any one of the
parties thereto may dissolve it, advising the other party thereof one month in advance.

The factor or shop clerk shall be entitled, in such case, to the salary due for one month.

From the mere fact that the principal no longer had confidence in the agent, he is entitled to
withdraw it and to revoke the power he conferred upon the latter, even before the expiration of
the period of the engagement or of the agreement made between them; but, in the present case,
once it has been shown that, between the deceased Joaquin Santa Marina and the latter's heir,
now the defendant, on the one hand, and the plaintiff Barretto, on the other, no period whatever
was stipulated during which the last-named should hold the office and manager of the said
factory, it is unquestionable that the defendant, even without good reasons, could lawfully revoke
the power conferred upon the plaintiff and appoint in his place Mr. McGavin, and thereby
contracted no liability whatever other than the obligation to pay the plaintiff the salary pertaining
to one month and some odd days.