G.R. No. 41420 - CMS Logging, Inc. vs. Court of Appeals

Petitioner CMS Logging, Inc. (CMS) is a forest concessionaire engaged in logging.
Private respondent D.R. Aguinaldo Corporation (DRACOR) is engaged in exporting and selling logs and lumber.
On August 28, 1957, CMS and DRACOR entered into a five-year exclusive agency contract appointing DRACOR as CMS’s sole export and sales agent for all logs produced by CMS.

DRACOR was authorized to sell and export CMS’s logs exclusively under terms acceptable to CMS.
DRACOR was to handle all sales negotiations, procure vessel schedules subject to CMS’s written requests, and was exempt from liability for any shipment delays or defaults.
DRACOR’s commission was fixed at five percent (5%) of gross sales based on F.O.B. invoice value, to be deducted from proceeds received on behalf of CMS.

Between September 20, 1957, and April 4, 1962, CMS sold 77,264,672 board feet of logs in Japan through DRACOR.
Approximately six months before the contract expiration, CMS's president and general manager discovered that DRACOR engaged Shinko Trading Co., Ltd. (Shinko) as an agent or liaison in Japan.
Shinko allegedly received a commission of U.S. $1.00 per 1,000 board feet—totaling U.S. $77,264.67—from buyers. CMS claimed this commission was paid in violation of the exclusive agency contract and constituted double compensation to DRACOR.
Subsequent to the discovery, CMS sold and shipped logs valued at U.S. $739,321.13 (P2,883,351.90) directly to Japanese buyers without DRACOR’s involvement.

CMS filed a complaint against DRACOR claiming the commission received by Shinko and moral and exemplary damages.
DRACOR counterclaimed for its five percent commission (P144,167.59) on CMS’s direct sales to Japanese firms.
CMS responded that DRACOR had unlawfully retained P101,167.59 of its commission, demanding its return.
DRACOR amended its counterclaim admitting the retained amount, asserting only P42,630.82 balance was due.

Trial court dismissed CMS’s complaint for lack of evidence proving Shinko received the commissions, though it noted Shinko collected $77,264.67 according to CMS’s own exhibits.
Counterclaim was also dismissed because DRACOR waived rights to the balance of its commission via a letter dated February 2, 1963.
The Court of Appeals affirmed dismissal of the complaint, holding CMS failed to prove Shinko received the commissions and found it reasonable that Shinko was paid from DRACOR’s own commission.
The Court of Appeals also allowed DRACOR its commission from direct sales by CMS to Japanese firms.

CMS appealed via petition for review on certiorari, contending errors in findings of fact, admissibility of evidence, admission of commissions received by Shinko, DRACOR’s entitlement to commissions from direct sales, and fraud and bad faith by DRACOR.

Whether CMS presented sufficient evidence proving that Shinko received the commission of U.S. $77,264.67 from buyers of CMS’s logs.
Whether DRACOR is entitled to its commission from the sales made directly by CMS to Japanese firms notwithstanding CMS’s revocation of the agency.
Whether DRACOR committed fraud or acted in bad faith in its dealings with CMS regarding Shinko’s commissions and the agency contract.