The antecedent facts of the case are as follows: The petitioners sought relief by filing the complaint
against the private respondents in the court a
quo (Complaint of January 24, 1979, Annex "F"
Petitioner Arturo P. Valenzuela (Valenzuela for short)
Petition). After due proceedings, the trial court found:
is a General Agent of private respondent Philippine
American General Insurance Company, Inc.
(Philamgen for short) since 1965. As such, he was xxx xxx xxx
authorized to solicit and sell in behalf of Philamgen all
kinds of non-life insurance, and in consideration of Defendants tried to justify the
services rendered was entitled to receive the full termination of plaintiff Arturo P.
agent's commission of 32.5% from Philamgen under Valenzuela as one of defendant
the scheduled commission rates (Exhibits "A" and PHILAMGEN's General Agent by
"1"). From 1973 to 1975, Valenzuela solicited marine making it appear that plaintiff Arturo
insurance from one of his clients, the Delta Motors, P. Valenzuela has a substantial
Inc. (Division of Electronics Airconditioning and account with defendant
Refrigeration) in the amount of P4.4 Million from PHILAMGEN particularly Delta
which he was entitled to a commission of 32% Motors, Inc.'s Account, thereby
(Exhibit "B"). However, Valenzuela did not receive his prejudicing defendant
full commission which amounted to P1.6 Million from PHILAMGEN's interest (Exhibits
the P4.4 Million insurance coverage of the Delta 6,"11","11- "12- A"and"13-A").
Motors. During the period 1976 to 1978, premium
payments amounting to P1,946,886.00 were paid
directly to Philamgen and Valenzuela's commission to Defendants also invoked the
which he is entitled amounted to P632,737.00. provisions of the Civil Code of the
Philippines (Article 1868) and the xxx xxx xxx
provisions of the General Agency
Agreement as their basis for These acts of harrassment done by
terminating plaintiff Arturo P. defendants on plaintiff Arturo P.
Valenzuela as one of their General Valenzuela to force him to agree to
Agents. the sharing of his Delta
commission, which culminated in
That defendants' position could the termination of plaintiff Arturo P.
have been justified had the Valenzuela as one of defendant
termination of plaintiff Arturo P. PHILAMGEN's General Agent, do
Valenzuela was (sic) based solely not justify said termination of the
on the provisions of the Civil Code General Agency Agreement
and the conditions of the General entered into by defendant
Agency Agreement. But the records PHILAMGEN and plaintiff Arturo P.
will show that the principal cause of Valenzuela.
the termination of the plaintiff as
General Agent of defendant That since defendants are not
PHILAMGEN was his refusal to justified in the termination of plaintiff
share his Delta commission. Arturo P. Valenzuela as one of their
General Agents, defendants shall
That it should be noted that there be liable for the resulting damage
were several attempts made by and loss of business of plaintiff
defendant Bienvenido M. Aragon to Arturo P. Valenzuela. (Arts.
share with the Delta commission of 2199/2200, Civil Code of the
plaintiff Arturo P. Valenzuela. He Philippines). (Ibid, p. 11)
had persistently pursued the
sharing scheme to the point of The court accordingly rendered judgment, the
terminating plaintiff Arturo P. dispositive portion of which reads:
Valenzuela, and to make matters
worse, defendants made it appear
that plaintiff Arturo P. Valenzuela WHEREFORE, judgment is hereby
had substantial accounts with rendered in favor of the plaintiffs
defendant PHILAMGEN. and against defendants ordering
the latter to reinstate plaintiff Arturo
P. Valenzuela as its General Agent,
Not only that, defendants have also and to pay plaintiffs, jointly and
started (a) to treat separately the severally, the following:
Delta Commission of plaintiff Arturo
P. Valenzuela, (b) to reverse the
Delta commission due plaintiff 1. The amount of five hundred
Arturo P. Valenzuela by not twenty-one thousand nine hundred
crediting or applying said sixty four and 16/100 pesos
commission earned to the account (P521,964.16) representing plaintiff
of plaintiff Arturo P. Valenzuela, (c) Arturo P. Valenzuela's Delta
placed plaintiff Arturo P. Commission with interest at the
Valenzuela's agency transactions legal rate from the time of the filing
on a "cash and carry basis", (d) of the complaint, which amount
sending threats to cancel existing shall be adjusted in accordance
policies issued by plaintiff Arturo P. with Article 1250 of the Civil Code
Valenzuela's agency, (e) to divert of the Philippines;
plaintiff Arturo P. Valenzuela's
insurance business to other 2. The amount of seventy-five
agencies, and (f) to spread wild and thousand pesos (P75,000.00) per
malicious rumors that plaintiff Arturo month as compensatory damages
P. Valenzuela has substantial from 1980 until such time that
account with defendant defendant Philamgen shall reinstate
PHILAMGEN to force plaintiff Arturo plaintiff Arturo P. Valenzuela as one
P. Valenzuela into agreeing with the of its general agents;
sharing of his Delta commission."
(pp. 9-10, Decision, Annex 1, 3. The amount of three hundred fifty
Petition). thousand pesos (P350,000.00) for
each plaintiff as moral damages;
4. The amount of seventy-five CORPORATE AGENTS ACTING
thousand pesos (P75,000.00) as WITHIN THE SCOPE OF THEIR
and for attorney's fees; AUTHORITY.
On May 23, 1978, another statement of account with The results of said audit were
exactly the same beginning balance was sent to presented in Court to show plaintiff
Valenzuela. Arturo P. Valenzuela's
accountability to defendant
On November 17, 1978, Philamgen sent still another PHILAMGEN. However, the auditor,
statement of account with P744,159.80 as the when presented as witness in this
beginning balance. case testified that the beginning
balance of their audit report was
And on December 20, 1978, a statement of account based on an unaudited amount of
with exactly the same figure was sent to Valenzuela. P1,758,185.43 (Exhibit 46-A) as of
August 20, 1976, which was
unverified and merely supplied by
It was only after the filing of the complaint that a the officers of defendant
radically different statement of accounts surfaced in PHILAMGEN.
court. Certainly, Philamgen's own statements made
by its own accountants over a long period of time and
covering examinations made on four different Even defendants very own Exhibit
occasions must prevail over unconfirmed and 38- A-3, showed that plaintiff Arturo
unaudited statements made to support a position P. Valenzuela's balance as of 1978
made in the course of defending against a lawsuit. amounted to only P3,865.59, not
P826,128.46 as stated in defendant
Bienvenido M. Aragon's letter dated
It is not correct to say that Valenzuela should have December 20,1978 (Exhibit 14) or
presented its own records to refute the unconfirmed P1,528,698.40 as reflected in
and unaudited finding of the Banaria auditor. The defendant's Exhibit 46 (Audit Report
records of Philamgen itself are the best refutation of Banaria dated December 24,
against figures made as an afterthought in the course 1980).
of litigation. Moreover, Valenzuela asked for a
meeting where the figures would be reconciled.
Philamgen refused to meet with him and, instead, These glaring discrepancy (sic) in
terminated the agency agreement. the accountability of plaintiff Arturo
P. Valenzuela to defendant
PHILAMGEN only lends credence
After off-setting the amount of P744,159.80, to the claim of plaintiff Arturo P.
beginning balance as of July 1977, by way of credits Valenzuela that he has no
representing the commission due from Delta and outstanding account with defendant
other accounts, Valenzuela had overpaid Philamgen PHILAMGEN when the latter, thru
the amount of P530,040.37 as of November 30, 1978. defendant Bienvenido M. Aragon,
Philamgen cannot later be heard to complain that it terminated the General Agency
committed a mistake in its computation. The alleged Agreement entered into by plaintiff
error may be given credence if committed only once. (Exhibit A) effective January 31,
But as earlier stated, the reconciliation of accounts 1979 (see Exhibits "2" and "2-A").
was arrived at four (4) times on different occasions Plaintiff Arturo P. Valenzuela has
where Philamgen was duly represented by its account shown that as of October 31, 1978,
executives. On the basis of these admissions and
he has overpaid defendant REINSTATED with the MODIFICATIONS that the
PHILAMGEN in the amount of amount of FIVE HUNDRED TWENTY ONE
P53,040.37 (Exhibit "EEE", which THOUSAND NINE HUNDRED SIXTY-FOUR AND
computation was based on 16/100 PESOS (P521,964.16) representing the
defendant PHILAMGEN's balance petitioners Delta commission shall earn only legal
of P744,159.80 furnished on interests without any adjustments under Article 1250
several occasions to plaintiff Arturo of the Civil Code and that the contractual relationship
P. Valenzuela by defendant between Arturo P. Valenzuela and Philippine
PHILAMGEN (Exhibits H-1, VV, American General Insurance Company shall be
VV-1, WW, WW-1 , YY , YY-2 , ZZ deemed terminated upon the satisfaction of the
and , ZZ-2). judgment as modified.