E. EXTINGUISHMENT OF AGENCY CASE 1 OF 2
A statement is not competent as an admission where it does not, under a
CMS LOGGING vs. CA July 10, 1992
G.R. No. L-41420 J. Nocon
DOCTRINE:
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 has not yet
expired.
IMPORTANT RULING RELATED TO THE PROVISION/DOCTRINE:
Appellate court erred in holding that DRACOR was entitled to its commission from the sales made
by CMS
FACTS:
1. Petitioner CMS is a forest concessionaire engaged in logging business
a. Private respondent DRACOR is engaged in business of exporting and selling
logs and lumber
b. Entered into contract of agency where CMS appointed DRACOR as its
exclusive exporter and sales agent for all logs that CMS may produce for the
next 5 years.
2. CMS was able to sell via DRACOR 77,264,672 board feet of logs in Japan
a. 6 months prior to expiration of agreement, while on a trip to Japan, CMS’s
president (ATTY SISON) and general manager/legal counsel (ATTY
DOMINGUEZ) discovered that DRACOR had used SHINKO TRADING CO
as agent, representative or liason officer in selling CMS’s logs in Japan for
i. Shinko earned a commission of $1 per 1k board feet from the buyer
3. CMS claimed that commission paid to Shinko was in violation of the agreement that
CMS was entitled to the amount as part of the proceeds of the sale of the logs
a. Contended that since DRACOR had been paid the 5% commission under the
agreement, it was no longer entitled to the additional commission paid to
Shinko as this tantamount to DRACOR receiving double compensation.
4. CMS thereafter sold and shipped logs directly to firms in Japan without aid and
intervention of DRACOR
5. Trial court ruled that there was no evidence that Shinko received the commission
arising from the sale of CMS’s logs and that Sison (CMS pres) was not entitled to recover
from DRACOR the amount collected by Shinko as commissions
a. Also ruled that DRACO is still entitled to its 5% commission arising from the
direct sales made by CMS to buyers in Japan (IMPORTANT)
ISSUES:
1. W/N there is sufficient evidence to prove that Shinko received commission [NO]
2. W/N DRACOR is still entitled to its 5% commission from CMS direct sales [NO]
RULING:
1. WHILE THERE IS EVIDENCE THAT SHINKO IS DRACOR’S AGENT OR LIASON
IN JAPAN, THERE IS NO EVIDENCE TO ESTABLISH THAT SHINKO DID
RECEIVE AMOUNT OF $ 77,264.56 AS COMMISSION
a.
reasonable construction, appear to admit or acknowledge the fact which is
sought to be proved by it
i. Testimony of Atty Dominguez (general manager/legal counsel of
CMS) that Shinko’s president and director told HIM that Shinko
received a commission of $1/1000 board feet sold is hearsay
ii. Letter of Mr. K. Shibata of Toyo Menka Kaisha, Ltd is also hearsay
since Mr. Shibata was not presented to testify on his letter
2. EVEN IF IT WAS SHOWN THAT SHINKO DID IN FACT RECEIVE THE
COMMISSIONS IN QUESTION, CMS IS NOT ENTITLED THERETO SINCE
THESE WERE APPARENTLY PAID BY THE BUYERS TO SHINKO FOR
ARRANGING THE SALE AND THEREFORE NOT PART OF CMS’S LOGS’
GROSS SALES.
3. HOWEVER, APPELLATE COURT ERRED IN HOLDING THAT DRACOR WAS
ENTITLED TO ITS COMMISSION FROM THE SALES MADE BY CMS
a. 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 has not yet expired.
i. Principal has the absolute right to envoke the agency, the agent
cannot 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
b. CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms.
Yet, during the existence of contract, DRACOR admitted that CMS sold its
logs directly to several Japanese firms
i. THIS ACT CONSTITUTED IMPLIED REVOCATION (Art 1924)
ii. Art 1924: The agency is revoked if the principal directly manages the
business entrusted to the agent, dealing directly with third persons.
c. Since contract was revoked by CMS when it sold its logs to the firms without
the intervention of DRACOR, the latter is no longer entitled to tis commission
from the proceeds of such sale and is not entitled to retain whatever moneys
it may have received as its commission for said transactions.
i. Neither would DRACOR be entitled to collect damages from CMS
since damages are generally not awarded to the agent for the
revocation of the agency (+ does not fall under exceptions to this)
4. NO EVIDENCE TO PROVE DRACOR COMMITTED FRAUD/BAD FAITH
a. Findings of the CA on matters were based on its appreciation of the evidence,
and these findings are binding on this Court.