Philippine Health-Care Providers, Inc. vs. Estrada

A broker who is the "efficient procuring cause" of a sale is entitled to a commission on the total premiums paid under the contract, including those from subsequent renewals thereof. The "procuring cause" refers to a cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective of the employment of the broker—producing a purchaser ready, willing, and able to buy on the owner's terms.

Petitioner Philippine Health-Care Providers, Inc. (Maxicare) is a domestic corporation engaged in selling health insurance plans. Respondent Carmela Estrada, doing business under the name Cara Health Services, was engaged by Maxicare to promote and sell its prepaid group practice health care delivery program called the MAXICARE Plan. The relationship was formalized through a letter-agreement dated February 16, 1991, which provided for Estrada's compensation in the form of commissions. The dispute centers on the interpretation of this commission agreement and the application of the "efficient procuring cause" doctrine in brokerage law.

Petitioner Philippine Health-Care Providers, Inc. (Maxicare) is a domestic corporation engaged in selling health insurance plans. On September 15, 1990, Maxicare allegedly engaged the services of Carmela Estrada, who was doing business under the name Cara Health Services, to promote and sell the prepaid group practice health care delivery program called the MAXICARE Plan, with the position of Independent Account Executive. Maxicare formally appointed Estrada as its "General Agent," evidenced by a letter-agreement dated February 16, 1991. The letter agreement provided for Estrada's compensation in the form of commissions: 15 to 18% from individual, family, and group accounts; 2.5 to 10% on tailored fit plans; and 10% on standard plans of commissionable amount on corporate accounts from all membership dues collected and remitted by Estrada to Maxicare.

Maxicare alleged that it followed a "franchising system" in dealing with its agents, whereby an agent had to first secure permission from Maxicare to list a prospective company as client. Estrada alleged that she did apply with Maxicare for the MERALCO account and other accounts, and in fact, her franchise to solicit corporate accounts, MERALCO account included, was renewed on February 11, 1991. Estrada submitted proposals and made representations to the officers of MERALCO regarding the MAXICARE Plan. However, 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 the discussions.

On November 28, 1991, MERALCO eventually subscribed to the MAXICARE Plan and signed a Service Agreement directly with Maxicare for medical coverage of its qualified members. Its duration was for one year from December 1, 1991 to November 30, 1992. The contract was renewed twice for a term of three years each, the first starting on December 1, 1992, and the second taking effect on December 1, 1995. The premium amounts paid by MERALCO to Maxicare were: P215,788.00 in December 1991; P3,450,564.00 in 1992; P4,223,710.00 in 1993; P4,782,873.00 in 1994; P5,102,108.00 in 1995; and P2,394,292.00 in May 1996. As of May 1996, the total amount of premium paid by MERALCO to Maxicare was P20,169,335.00.

On March 24, 1992, Estrada, through counsel, demanded from Maxicare that she be paid commissions for the MERALCO account and nine other accounts. In reply, Maxicare, through counsel, denied Estrada's claims for commission for the MERALCO and other accounts because Maxicare directly negotiated with MERALCO and the other accounts, and no agent was given the go signal to intervene in the negotiations. Maxicare claimed that if ever it was indebted to Estrada, it was only for P1,555.00 and P43.12 as commissions on the accounts of Overseas Freighters Co. and Mr. Enrique Acosta, respectively. Estrada filed a complaint on March 18, 1993, against Maxicare and its officers with the RTC of Makati City.

The trial court found that Estrada's efforts were instrumental in introducing the Meralco account to Maxicare. Meralco's Manpower Planning and Research Staff Head Ruben A. Sapitula certified on September 5, 1991, that Estrada had initiated talks with Meralco since November 1990 regarding HMO requirements, and that it was favorably recommended and approved by the Meralco Management Committee. Meralco's Assistant Vice-President Donatila San Juan, in a letter dated January 21, 1992, also acknowledged Estrada's efforts in introducing Maxicare to Meralco. Maxicare's former Chairman Roberto K. Macasaet testified that Maxicare had been trying to land the Meralco account for two years prior to Estrada's entry in 1990.

• Twin Conditions for Commission: Maxicare argued that both the RTC and CA failed to take into account the stipulations in the February 19, 1991 letter agreement authorizing the payment of commissions only upon satisfaction of twin conditions, i.e., collection and contemporaneous remittance of premium dues by Estrada to Maxicare.
• Admission of Failed Negotiations: Maxicare contended that the lower courts disregarded Estrada's alleged admission that her negotiations with Meralco failed, as shown in Annex "F" of the Complaint, which should have barred her claim for commissions.
• Flawed Application of Doctrine: Maxicare argued that the lower courts erroneously applied the "efficient procuring cause" doctrine enunciated in Manotok Brothers, Inc. vs. Court of Appeals and erroneously concluded that Estrada was entitled to commissions on contracts completed without her participation.
• Limitation to Initial Year: Maxicare argued that assuming Estrada is entitled to commissions, such entitlement only covers the initial year of the service agreement and should not include the premiums paid for the succeeding renewals thereof.

• Efficient Procuring Cause: Estrada maintained that she was the "efficient procuring cause" of the sale of Maxicare health plans to Meralco, having been the first to offer the Maxicare plan to Meralco, using her connections with Meralco executives, inviting said executives to dinner meetings, making submissions and representations regarding the health plan, and sending follow-up letters.
• No Admission of Failure: Estrada argued that the letter attached as Annex "F" of her Complaint was not, ipso facto, an admission of the statements contained therein, especially since the bone of contention relates to her entitlement to commissions for the sale of health plans she claims to have brokered. The letter was offered in evidence to demonstrate Maxicare's bad faith and ill will towards her.
• Entitlement to Full Commissions: Estrada asserted her complete entitlement to commission for the total premiums paid until May 1996 in the amount of P20,169,335.00, given her close, proximate, and causal connection to the sale of health plans.

• Entitlement to Commissions: Whether the Court of Appeals committed serious error in affirming Estrada's entitlement to commissions for the execution of the service agreement between Meralco and Maxicare.
• Commissions on Renewals: Whether Estrada is entitled to commissions for the two consecutive renewals of the service agreement effective on December 1, 1992, and December 1, 1995.

• Entitlement to Commissions: Yes. Estrada is entitled to commissions for the premiums paid under the service agreement between Meralco and Maxicare from 1991 to 1996, as she was the "efficient procuring cause" of the sale, a factual finding affirmed by the CA and conclusive upon the Court.
• Commissions on Renewals: Yes. Estrada is entitled to 10% of the total amount of premiums paid by Meralco to Maxicare as of May 1996, including those from the renewals, considering her close, proximate, and causal connection to the sale of health plans.

• Entitlement to Commissions: The Court was in complete accord with the trial and appellate courts' ruling. Well-entrenched in jurisprudence is the rule that factual findings of the trial court, especially when affirmed by the appellate court, are accorded the highest degree of respect and are considered conclusive between the parties. None of the exceptions warranting a reversal of the assailed decision obtained in this instance. The Court noted that in petitions for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be put into issue, and the finding of "efficient procuring cause" by the CA is a question of fact which the Court desists from passing upon. The Court also cited the testimony of Maxicare's former Chairman Roberto K. Macasaet, who admitted that Maxicare had been trying to land the Meralco account for two years prior to Estrada's entry in 1990, and the letter of Meralco's Assistant Vice-President Donatila San Juan categorically acknowledging Estrada's efforts. The Court defined a broker as one whose occupation is to bring the parties together, in matter of trade, commerce or navigation, and held that a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made. The "procuring cause" refers to a cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective of the employment of the broker—producing a purchaser ready, willing and able to buy on the owner's terms. Verily, Estrada was instrumental in the sale of the Maxicare health plans to Meralco; without her intervention, no sale could have been consummated.
• Commissions on Renewals: The Court affirmed the uniform ruling of the RTC and CA that Estrada is entitled to 10% of the total amount of premiums paid by Meralco to Maxicare as of May 1996. Maxicare's argument that Estrada's entitlement only covers the initial year of the service agreement and should not include the premiums paid for the succeeding renewals failed to impress. Considering that the lower courts' factual finding of Estrada's close, proximate and causal connection to the sale of health plans was sustained, the Court was not wont to disturb Estrada's complete entitlement to commission for the total premiums paid until May 1996 in the amount of P20,169,335.00.

• Efficient Procuring Cause Doctrine — A broker is entitled to a commission if his or her efforts were the "procuring cause" of the sale. The term "procuring cause" refers to a cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective of the employment of the broker—producing a purchaser ready, willing and able to buy on the owner's terms. To be regarded as the "procuring cause" of a sale as to be entitled to a commission, a broker's efforts must have been the foundation on which the negotiations resulting in a sale began. In this case, the Court applied the doctrine to hold that Estrada was instrumental in the sale of the Maxicare health plans to Meralco, and without her intervention, no sale could have been consummated.
• Conclusiveness of Factual Findings — Factual findings of the trial court, especially when affirmed by the appellate court, are accorded the highest degree of respect and are considered conclusive between the parties. A review of such findings by the Supreme Court is not warranted except upon a showing of highly meritorious circumstances, such as: (1) when the findings of a trial court are grounded entirely on speculation, surmises or conjectures; (2) when a lower court's inference from its factual findings is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4) when the findings of the appellate court go beyond the issues of the case, or fail to notice certain relevant facts which, if properly considered, will justify a different conclusion; (5) when there is a misappreciation of facts; (6) when the findings of fact are conclusions without mention of the specific evidence on which they are based, are premised on the absence of evidence, or are contradicted by evidence on record. None of these exceptions obtained in this instance.
• Judicial Admissions Rule — Under Section 4 of Rule 129 of the Rules of Court, the general rule that a judicial admission is conclusive upon the party making it and does not require proof admits of two exceptions: (1) when it is shown that the admission was made through palpable mistake, and (2) when it is shown that no such admission was in fact made. The latter exception allows one to contradict an admission by denying that he made such an admission. If a party invokes an "admission" by an adverse party, but cites the admission "out of context," then the one making the admission may show that he made no "such" admission, or that his admission was taken out of context. In this case, the letter attached as Annex "F" of the Complaint was not, ipso facto, an admission of the statements contained therein, especially since the bone of contention relates to Estrada's entitlement to commissions for the sale of health plans she claims to have brokered.

• "A broker is one whose occupation is to bring the parties together, in matter of trade, commerce or navigation. An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made." — This passage from Tan vs. Gullas, cited by the Court, defines the distinction between a broker and an agent, which is central to determining Estrada's entitlement to commissions.
• "The term 'procuring cause' in describing a broker's activity, refers to a cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective of the employment of the broker—producing a purchaser ready, willing and able to buy on the owner's terms." — This passage, cited from Medrano vs. Court of Appeals, articulates the canonical definition of "procuring cause" that the Court applied to hold Estrada entitled to commissions.
• "Had not [Estrada] introduced Maxicare Plans to her bosom friends, Messrs. Lopez and Guingona of Meralco, PHPI would still be an anonymity." — This passage, quoted from the RTC's October 8, 1999 Decision, underscores the factual finding that Estrada was the efficient intervening cause in bringing about the service agreement with Meralco.

• Manotok Brothers, Inc. vs. Court of Appeals, G.R. No. 94753, April 7, 1993, 221 SCRA 224 — Cited as the doctrinal basis for the "efficient procuring cause" principle applied by the lower courts and affirmed by the Supreme Court in this case.
• Tan vs. Gullas, 441 Phil. 622 (2002) — Cited to define a broker and distinguish it from an agent; the Court relied on this case to establish that a broker earns his pay merely by bringing the buyer and the seller together.
• Atillo III vs. Court of Appeals, 334 Phil. 546 (1997) — Cited by Maxicare to bolster its position on judicial admissions, but the Court used it to provide a contrary answer, holding that in spite of the presence of judicial admissions in a party's pleading, the trial court is still given leeway to consider other evidence presented.
• Medrano vs. Court of Appeals, G.R. No. 150678, February 18, 2005, 452 SCRA 77 — Cited for the definition of "procuring cause" in describing a broker's activity.
• Titan Construction Corporation vs. Uni-Field Enterprises, Inc., G.R. No. 153874, March 1, 2007, 517 SCRA 180 — Cited for the rule that factual findings of the trial court, especially when affirmed by the appellate court, are conclusive between the parties.
• Ilao-Quianay vs. Mapile, G.R. No. 154087, October 25, 2005, 474 SCRA 246 — Cited for the enumeration of exceptions to the rule on conclusiveness of factual findings.

• Section 4, Rule 129, Rules of Court — Provides that the general rule that a judicial admission is conclusive upon the party making it and does not require proof admits of two exceptions: when the admission was made through palpable mistake, and when no such admission was in fact made. The Court applied this provision to reject Maxicare's claim that Estrada admitted her negotiations with Meralco failed.
• Section 34, Rule 132, Rules of Court — Requires the purpose for which the evidence is offered to be specified. The Court noted that the letter attached to the Complaint was offered in evidence to demonstrate Maxicare's bad faith and ill will towards Estrada, not as an admission of failed negotiations.
• Canon 10, Rule 10.02, Code of Professional Responsibility — Provides that a lawyer shall not knowingly misquote or misrepresent the contents of a paper, the language or the argument of opposing counsel, or the text of a decision or authority, or knowingly cite as law a provision already rendered inoperative by repeal or amendment, or assert as a fact that which has not been proved. The Court admonished Maxicare's counsel for violating this rule by misrepresenting the contents of Annex "F" and citing a case out of context.

• Associate Justice Consuelo Ynares-Santiago (Chairperson)
• Associate Justice Ma. Alicia Austria-Martinez
• Associate Justice Renato C. Corona
• Associate Justice Ruben T. Reyes