CMS LOGGING V CA

FACTS: 

Petitioner CMS is a forest concessionaire engaged in the logging business, while private respondent DRACOR is engaged in the business of exporting and selling logs and lumber. On August 28, 1957, CMS and DRACOR entered into a contract of agency whereby the former appointed the latter as its exclusive export and sales agent for all logs that the former may produce, for a period of five (5) years.

CMS was able to sell through DRACOR a total of 77,264,672 board feet of logs in Japan, from September 20, 1957 to April 4, 1962. Six months prior the end of their agreement, CMS found out that DRACOR was using Shingko Trading to sell their logs and earned commission for it. CMS claimed that it was a violation of their agreement since DRACOR already received 5% commission and is no longer entitled to the additional commission to Shinko. After the discovery, CMS directly transacted with Japanese firms without the aid if DRACOR. CMS sued DRACOR for the commission Shingko received while DRACOR counterclaimed for the commission of the sales made by CMS with the Japanese firms.

ISSUE: 

w/n DRACOR is entitled to its commissions from the sales made by CMS to Japanese firms

HELD:

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 as not yet expired. As the principal has this absolute right to revoke the agency, the agent can not 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. During the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied revocation of the contract of agency under Article 1924 of the Civil Code, which provides: Art. 1924 The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. DRACOR is not entitled to commission since it was revoked by CMS when they transacted directly with the Japanese firms