Facts:

The case involves CMS Logging, Inc. (CMS), the petitioner, and D.R. Aguinaldo Corporation (DRACOR), the respondent. The events leading to the case began on August 28, 1957, when CMS, a forest concessionaire engaged in logging, entered into a contract of agency with DRACOR, which was appointed as the exclusive export and sales agent for all logs produced by CMS for a period of five years. The agreement stipulated that DRACOR would receive a 5% commission on the gross sales of logs, which would be deducted from the proceeds of sales. Between September 20, 1957, and April 4, 1962, CMS sold a total of 77,264,672 board feet of logs in Japan through DRACOR.

However, about six months before the contract's expiration, CMS's president and general manager discovered that DRACOR had engaged Shinko Trading Co., Ltd. (Shinko) as an agent in Japan, which earned a commission of U.S. $1.00 per 1,000 board feet sold. This arrangement led to Shinko collecting a total of U.S. $77,264....

Facts:

1. Parties Involved:

   • Petitioner: CMS Logging, Inc. (CMS), a forest concessionaire engaged in the logging business.
   • Respondent: D.R. Aguinaldo Corporation (DRACOR), a company engaged in exporting and selling logs and lumber.

2. Contract of Agency:

   • On August 28, 1957, CMS and DRACOR entered into a 5-year contract of agency.
   • DRACOR was appointed as CMS's exclusive export and sales agent for all logs produced by CMS.
   • DRACOR was entitled to a 5% commission on the gross sales of logs based on the F.O.B. invoice value.

3. Performance Under the Contract:

   • From September 20, 1957, to April 4, 1962, CMS sold 77,264,672 board feet of logs in Japan through DRACOR.
   • CMS discovered that DRACOR used Shinko Trading Co., Ltd. (Shinko) as an agent in Japan, and Shinko received a commission of U.S. $1.00 per 1,000 board feet from the buyers, totaling U.S. $77,264.67.

4. Dispute:

   • CMS claimed that DRACOR violated the agreement by allowing Shinko to collect commissions, which CMS argued should have been part of the gross sales proceeds.
   • CMS also sold logs directly to Japanese firms without DRACOR's involvement, amounting to U.S. $739,321.13 (P2,883,351.90).
   • CMS sued DRACOR for the commissions paid to Shinko and for moral and exemplary damages.
   • DRACOR counterclaimed for its 5% commission on the direct sales made by CMS.

5. Trial Court Decision:

   • The trial court dismissed CMS's complaint, finding no evidence that Shinko received the commissions.
   • DRACOR's counterclaim was also dismissed, as it had waived its right to the balance of its commission in a letter dated February 2, 1963.

6. Court of Appeals Decision:

   • The Court of Appeals affirmed the dismissal of CMS's complaint, stating that CMS failed to prove Shinko's receipt of the commissions.
   • The appellate court also held that DRACOR was entitled to its 5% commission on the direct sales made by CMS.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Burden of Proof:

   • The burden of proving that Shinko received the commissions lies with CMS. CMS failed to present competent evidence to establish this claim.

2. Revocation of Agency:

   • Under Article 1924 of the Civil Code, an agency is revoked if the principal directly manages the business entrusted to the agent. CMS's direct sales to Japanese firms constituted an implied revocation of DRACOR's agency.
   • Once the agency is revoked, the agent is no longer entitled to commissions or damages arising from the revocation, unless the revocation was done to evade payment of the agent's commission.

3. Hearsay Evidence:

   • Testimonies and documents that are hearsay in nature are inadmissible and cannot be used to prove the fact in question.

4. Finality of Factual Findings:

   • The findings of fact by the Court of Appeals are final and conclusive and cannot be reviewed by the Supreme Court unless there is a showing of grave abuse of discretion.

Conclusion:

The Supreme Court modified the decision of the Court of Appeals. It affirmed the dismissal of CMS's claim regarding Shinko's commissions but reversed the ruling on DRACOR's entitlement to its 5% commission. DRACOR was ordered to return the amount of P101,536.77 to CMS.