render it impossible for the debtor to fulfill his obligation in a

normal manner; (d) the debtor must be free from any

participation in, or aggravation of

_______________

24 SUPREME COURT REPORTS ANNOTATED * SECOND DIVISION.

Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals

25
*
G.R. Nos. 81100-01. February 7, 1990.

BACOLOD-MURCIA MILLING CO., INC., petitioner,

vs. HON. COURT OF APPEALS AND ALONSO VOL. 182, FEBRUARY 7, 1990 25
GATUSLAO, respondents. Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals

BACOLOD-MURCIA MILLING CO., INC., petitioner, the injury to the creditor (Vasquez v. Court of Appeals, 138
vs. HON. COURT OF APPEALS, ALONSO SCRA 553 [1985]; Juan F. Nakpil & Sons v. Court of Appeals,
GATUSLAO, AGRO-INDUS-TRIAL DEVELOPMENT 144 SCRA 596 [1986]). Applying the criteria to the instant
OF SILAY-SARAVIA (AIDSISA) AND BACOLOD- case, there can be no other conclusion than that the closure
MURCIA AGRICULTURAL COOPERATIVE of the railroad tracks does not constitute force majeure. The
MARKETING ASSOCIATION (BM-ACMA), terms of the milling contracts were clear and undoubtedly
respondents. there was no reason for BMMC to expect otherwise. The
closure of any portion of the railroad track, not necessarily in
the hacienda Helvetia but in any of the properties whose
Obligations and Contracts; Caso Fortuito, Requirements owners decided not to renew their milling contracts with the
of; The closure of the railroad does not constitute force Central upon their expiration, was forseeable and inevitable.
majeure that will exempt petitioner from liability for breach of Petitioner Central should have anticipated and should have
its obligation.—It is the position of petitioner Bacolod-Murcia provided for the eventuality before committing itself. Under
Milling Co., Inc. (BMMC) that the closure of its railroad lines the circumstances it has no one to blame but itself and
constitute force majeure, citing Article 1174 of the Civil cannot now claim exemption from liability.
Code, exempting a person from liability for events which
Same; Rescission of Contract; Rescission of a contract
could not be foreseen or which though foreseen were
will not be permitted for a slight or casual breach, a
inevitable. This Court has consistently ruled that when an
substantial and fundamental breach is required.—Under
obligor is exempted from liability under the aforecited
Article 1191 of the Civil Code, the power to rescind
provision of the Civil Code for a breach of an obligation due
obligations is implied in reciprocal ones in case one of the
to an act of God, the following elements must concur: (a) the
obligors should not comply with what is incumbent upon
cause of the breach of the obligation must be independent of
him. In fact, it is well established that the party who deems
the will of the debtor; (b) the event must be either
the contract violated may consider it revoked or rescinded
unforseeable or unavoidable; (c) the event must be such as to
 1
pursuant to their agreement and act accordingly, even The uncontroverted facts of the case are as follows:
without previous court action (U.P. v. de los Angeles, 35
SCRA 102 [1970]; Luzon Brokerage Co., Inc. v. Maritime “1. xxx      xxx      xxx
Building Co., Inc., 43 SCRA 94 [1972]). It is the general rule, “2. BMMC is the owner and operator of the sugar
however, that rescission of a contract will not be permitted central in Bacolod City, Philippines;
for a slight or casual breach, but only for such substantial “3. ALONSO GATUSLAO is a registered planter of
and fundamental breach as would defeat the very object of the Bacolod-Murcia Mill District with
the parties in making the agreement. The question of Plantation Audit No. 3-79, being a registered
whether a breach of a contract is substantial depends upon owner of Lot Nos. 310, 140, 141 and 101-A of
the attendant circumstances (Universal Food Corporation v. the Cadastral Survey of Murcia, Negros
Court of Appeals, et al., 33 SCRA 1 [1970]). Occidental, otherwise known as Hda. San
Roque;
PETITION for certiorari to review the decision of the
“4. On May 24, 1957 BMMC and Alonso Gatuslao
Court of Appeals.
executed an ‘Extension and Modification of
The facts are stated in the opinion of the Court. Milling Contract’ (Annex ‘A’ of the complaint in
     Jalandoni, Herrera, Del Castillo & Associates for both cases) which was registered on September
petitioner. 17, 1962 in the Office of the Register of Deeds
     Tañada, Vico & Tan for respondent AIDSISA. of Negros Occidental, and annotated on
     San Juan, Gonzalez, San Agustin & Sinense for Transfer Certificates of Title Nos. T-24207, RT-
respondents Alfonso Gatuslao and BM-ACMA. 2252, RT-12035, and RT-12036 covering said
Lot Nos. 310, 140, 141 and 101-A;
PARAS, J.: “5. That since the crop year 1957-1958 up to crop
year 1967-1968, inclusive, Alonso Gatuslao has
This is a petition for review on certiorari of the been milling all the sugarcane grown and
decision of the Court of Appeals in CA-G.R. CV Nos. produced on said Lot Nos. 310, 140, 141 and
59716-59717 promulgated 101-A with the Mill of BMMC;
26 “6. Since the crop year 1920-21 to crop year 1967-
1968, inclusive, the canes of planters adhered
to the mill of BMMC were transported from the
26 SUPREME COURT REPORTS ANNOTATED
plantation to the mill by means of cane cars
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals and through railway system operated by
BMMC;
on September 11, 1987 affirming in toto the decision of “7. The loading points at which planters Alonso
the Court of First Instance of Negros Occidental in two Gatuslao was and should deliver and load all
consolidated civil cases, the dispositive portion of his canes produced in his plantation, Hda. San
which reads as follows: Roque, were at the Arimas Line, Switch 2, and
from which loading stations, BMMC had been
“PREMISES CONSIDERED, the decision appealed from is
hauling planter Gatuslao’s sugar cane to its
hereby affirmed in toto.”

1
 mill or factory continuously until the crop year way over their lands as provided for in the milling
1967-68; contracts. The owners of the hacienda Helvetia were
“8. BMMC had not been able to use its cane cars among the signatories of the milling contracts. When
and railway system for the cargo crop year their milling contracts with petitioner BMMC expired
1968-1969; at the end of the 1964-1965 crop year, the
corresponding right of way of the owners of the
“9. Planter Alonso Gatuslao on various dates
hacienda Helvetia granted to the Central also expired.
requested trans
Thus, the BMMC was unable to use its railroad
facilities during the crop year 1968-1969 due to the
_______________ closure in 1968 of the portion of the railway traversing
the hacienda Helvetia as per decision of the Court in
1 Record on Appeal, p. 234, Rollo.
Angela Estate, Inc. and Fernando F. Gonzaga, Inc. v.
27 Court of First Instance of Negros Occidental, G.R. No.
L-27084, (24 SCRA 500 [1968]). In the same case the
Court ruled that the Central’s conventional right of
VOL. 182, FEBRUARY 7, 1990 27 way over the hacienda Helvetia ceased with the
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals expiration of its amended milling contracts with the
landowners of the hacienda at the end of the 1964-1965
portation facilities of BMMC to be sent to his crop year and that in the absence of a renewal contract
loading stations or switches for purposes of or the establishment of a compulsory servitude of right
hauling and milling his sugarcane crops of crop of way on the same spot and route which must be
year 1968-1969; predicated on the satisfaction of the preconditions
required by law, there subsists no right of way to be
“10. The estimated gross production of Hda. San
protected.
Roque for the crop year 1968-1969 is 4,500
piculs.”
_______________
The records show that since the crop year 1920-1921 to 2 Milling Contract, par. 9, p. 335, Rollo.
the crop year 1967-1968, the canes of the adhered
planters were transported from the plantation to the 28
mill of BMMC by means of cane cars and through a
railway system operated by BMMC which traversed
28 SUPREME COURT REPORTS ANNOTATED
the land of the adherent planters, corresponding to the
rights of way on their lands granted by the planters to Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
the Central for the duration of the milling contracts
which is for “un periodo de cuarenta y cinco anos 2
o Consequently, the owners of the hacienda Helvetia
cosechas, a contar desde la cosecha de 1920-1921” (a required the Central to remove the railway tracks in
period of 45 years or harvests, beginning with a the hacienda occupying at least 3,245 lineal meters
harvest of 1920-1921). with a width of 7 meters or a total of 22,715 square
BMMC constructed the railroad tracks in 1920 and meters, more or less. That was the natural
the adherent planters granted the BMMC a right of consequence of the expiration of the milling contracts
with the landowners of the hacienda Helvetia (Angela only up to and including June 30, 1968 to give effect to
Estate, Inc. and Fernando Gonzaga, Inc. v. Court of the agreement but
First Instance of Negros Occidental, ibid). BMMC filed
29
a complaint for legal easement against the owners of
the hacienda, with the Court of First Instance of
Negros Occidental which issued on October 4, 1965 an VOL. 182, FEBRUARY 7, 1990 29
ex parte writ of preliminary injunction restraining the
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
landowners from reversing and/or destroying the
railroad tracks in question and from impeding,
obstructing or in any way preventing the passage and to be deemed automatically reinstated beginning July
operation of plaintiff’s locomotives and cane cars over 1, 1968 (Angela Estate, Inc. and Fernando F. Gonzaga,
defendants’ property during the pendency of the Inc. v. Court of First Instance of Negros Occidental,
litigation and maintained the same in its subsequent ibid.).
orders of May 31, and November 26, 1966. The The temporary lifting of the writ of preliminary
outcome of the case, however, was not favorable to the injunction assured the milling of the 1967-1968 crop
plaintiff BMMC. In the same case the landowners but not the produce of the succeeding crop years which
asked this Court to restrain the lower court from situation was duly communicated by the President and
enforcing the writ of preliminary injunction it issued, General Manager of the BMMC to the President of
praying that after the hearing on the merits, the Bacolod-Murcia Sugar 3
Farmers Corporation (BMSFC)
restraining order be made permanent and the orders on January 2, 1968.
complained of be annulled and set aside. The Court On October 30, 1968, Alonso Gatuslao, one of
gave due course to the landowner’s petition and on private respondents herein, and his wife, Maria H.
August 10, 1967 issued the writ of preliminary Gatuslao, filed Civil Case No. 8719 in the Court of
injunction enjoining the lower court from enforcing the First Instance of Negros Occidental, against petitioner
writ of preliminary injunction issued by the latter on herein, Bacolod-Murcia Milling Co., Inc. (BMMC), for
October 4, 1965. breach of contract, praying among others, for the
The writ of preliminary injunction issued by the issuance of a writ of preliminary mandatory injunction
Court was lifted temporarily on motion that through ordering defendant to immediately send transportation
the mediation of the President of the Philippines the facilities and haul the already cut sugarcane to the
Angela Estate and the Gonzaga Estate agreed with the mill site and principally praying after hearing, that
Central to allow the use of the railroad tracks passing judgment be rendered declaring the rescission of the
through the hacienda Helvetia during the 1967-1968 milling contract executed by plaintiffs and defendant
milling season only, for the same purpose for which in 1957 for seventeen (17) years or up to crop year
they had been previously used, but it was understood 1973-74, invoking as ground the alleged failure and/or
that the lifting of the writ was without prejudice to the inability of defendant to comply with its specific
respective rights and positions of the parties in the obligation of providing the necessary transportation
case and not deemed a waiver of any of their respective facilities to haul the sugarcane of Gatuslao from
claims and allegations in G.R. No. L-27084 or in any plaintiff’s plantation specifically for the crop year 1967-
other case between the same parties, future or 1968. Plaintiffs further prayed for the recovery of
pending. The Court resolved to approve the motion actual and compensatory damages as well4 as moral
and exemplary damages and attorney’s fees.
 In answer, defendant BMMC claimed that despite to stop the alleged violation of the contract by
its inability to use its railways system for its defendant Alonso Gatuslao in confederation,
locomotives and cane cars to haul the sugarcanes of all collaboration and connivance with defendant BM-
its adhered planters including plaintiffs for the 1968- ACMA, AIDSISA, and for the recovery of actual,
6
moral
69 crop year allegedly due to force majeure, in order to and exemplary damages and attorney’s fees.
comply with its obligation, defendant hired at Defendant Alonso Gatuslao and the Bacolod-Murcia
tremendous expense, private trucks as prime movers Agricultural Cooperative Marketing Association, Inc.
for its trailers to be used for hauling of the canes, filed their answer on January 27, 1969 with
especially for those who applied for and requested compulsory counter-claims, stating by way of special
transportation facilities. Plaintiffs, being one of said and affirmative defense, among others, that the case is
planters, instead of loading their cut canes for the barred by another action pending 7between the same
1968-69 crop on the cargo trucks of defendant, loaded parties for the same cause of action.
their Defendant Agro-Industrial Development
Corporation of Silay-Saravia, Inc. filed its answer on
_______________ February 8, 1969, alleging among others by way of
affirmative defense that before it agreed to mill the
3 Exhibits, p. 13. sugarcane of its co-defendant Alonso Gatuslao, it
4 Rollo, p. 116. carefully ascertained and believed in good faith that:
(a) plaintiff was incapable of milling the sugarcane of
30
AIDSISA’s co-defendant planters as well as the
sugarcane of other planters formerly adherent to
30 SUPREME COURT REPORTS ANNOTATED plaintiff; (b) plaintiff had in effect agreed to a
rescission of its milling contracts with its adhered
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
planters, including the defendant planter, because of
inadequate means of transportation and had warned
cut canes on trucks provided by the Bacolod-Murcia and advised them to mill their sugarcane elsewhere,
Agricultural Cooperative Marketing Association, Inc. and had thus induced them to be-
(B-M ACMA) which transported plaintiffs’ canes of the
1968-69 sugarcanes crop. Defendant prayed in its
_______________
counterclaim for the dismissal of Civil Case No. 8719
for the recovery of actual damages, 5moral and 5 Rollo, p. 148.
exemplary damages and for attorney’s fees. 6 Rollo, p. 157.
On November 21, 1968, BMMC filed in the same 7 Rollo, p. 293.
court Civil Case No. 8745 against Alonso Gatuslao, the
Agro-Industrial Development of Silay-Saravia 31
(AIDSISA) and the BacolodMurcia Agricultural
Cooperative Marketing Associations, Inc. (B-M VOL. 182, FEBRUARY 7, 1990 31
ACMA), seeking specific performance under the milling
contract executed on May 24, 1957 between plaintiff Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
and defendant Alonso Gatuslao praying for the
issuance of writs of preliminary mandatory injunction
lieve, and act on the belief, that it could not mill their 9 Rollo, p. 234.
sugarcane and that it would not object to their milling 10 Rollo, p. 238.
with other centrals; and (c) up to now plaintiff is 11 Rollo, p. 113.
incapable of hauling the sugarcane of AIDSISA’s co- 12 Rollo, p. 445.
defendants to plaintiff’s mill site for milling purposes.
32
The two cases, Civil Cases Nos. 8719 and 8745 were
consolidated for joint trial before Branch II of8 the
Court of First Instance of Negros Occidental. On 32 SUPREME COURT REPORTS ANNOTATED
September 8, 1969, the parties in both civil cases filed
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
their partial stipulation of facts which included9
a
statement of the issues raised by the parties.
On February 6, 1976, the lower court rendered I
judgment declaring the milling contract dated May 24, 10 WHETHER OR NOT THE CLOSURE OF PETITIONER’S
1957 rescinded. The dispositive portion of the decision RAILROAD LINES CONSTITUTE FORCE MAJEURE.
reads:
II
“WHEREFORE, judgment is hereby rendered as follows:
(1) In Civil Case No. 8719 the milling contract (Exh. “121”) WHETHER OR NOT PRIVATE RESPONDENT
dated May 24, 1957 is hereby declared rescinded or resolved GATUSLAO HAS THE RIGHT TO RESCIND THE
and the defendant Bacolod-Murcia Company, Inc. is hereby MILLING CONTRACT WITH PETITIONER UNDER
ordered to pay plaintiffs Alonso Gatuslao and Maria H. ARTICLE 1191 OF THE CIVIL CODE.
Gatuslao the amount of P2,625.00 with legal interest from
the time of the filing of the complaint by way of actual III
damages; P5,000.00 as attorney’s fees and the costs of the
suit; defendant’s counterclaim is dismissed; and WHETHER OR NOT PRIVATE RESPONDENT
(2) The complaint in Civil Case No. 8745 as well as the GATUSLAO WAS JUSTIFIED IN VIOLATING HIS
counterclaims therein are ordered dismissed, without costs.” MILLING CONTRACT WITH PETITIONER.

IV
Bacolod-Murcia Milling Co., Inc. defendant in Civil
Case No. 8719 and plaintiff in Civil Case No. 8745 WHETHER OR NOT PRIVATE RESPONDENTS
appealed the case to respondent Court of Appeals GATUSLAO AND B-M ACMA ARE GUILTY OF BAD
which affirmed in toto (Rollo, p. 81) the decision of the FAITH IN THE EXERCISE OF THEIR DUTIES AND ARE
lower court. The motion for reconsideration filed by IN ESTOPPEL TO QUESTION THE ADEQUACY OF THE
defendant-appellant Bacolod-Murcia Milling Company, TRANSPORTATION FACILITIES OF PETITIONER AND
petitioner herein,
11
was denied by the appellate court for ITS CAPACITY TO MILL AND HAUL THE CANES OF ITS
lack of merit. 12 Hence, this petition. ADHERENT PLANTERS.
The issues raised by petitioner are as follows:
The crux of the issue is whether or not the termination
_______________ of petitioner’s right of way over the hacienda Helvetia
caused by the expiration of its amended milling
8 Rollo, p. 233. contracts with the landowners of the lands in question
is a fortuitous event or force majeure which will Petitioner Central should have anticipated and
exempt petitioner BMMC from fulfillment of its should have provided for the eventuality before
contractual obligations. committing itself. Under the circumstances it has no
It is the position of petitioner Bacolod-Murcia one to blame but itself and cannot now claim
Milling Co., Inc. (BMMC) that the closure of its exemption from liability.
railroad lines constitute force majeure, citing Article In the language of the law, the event must have
1174 of the Civil Code, exempting a person from been impossible to foresee, or if it could be foreseen,
liability for events which could not be foreseen or must have been impossible to avoid. There must be an
which though foreseen were inevitable. entire exclusion of human agency from the cause of the
This Court has consistently ruled that when an injury or loss (Vasquez v. Court of Appeals, supra). In
obligor is exempted from liability under the aforecited the case at bar, despite its awareness that the
provision of the Civil Code for a breach of an obligation conventional contract of lease would expire in Crop
due to an act of God, the following elements must Year 1964-1965 and that refusal on the part of any one
concur: (a) the cause of the breach of the obligation of the landowners to renew their milling contracts and
must be independent of the will of the debtor; (b) the the corresponding use of the right of way on their lands
event must be either unforseeable or unavoidable; (c) would render impossible compliance of its
the commitments, petitioner took a calculated risk that all
the landowners would renew their contracts.
33
Unfortunately, the sugar plantation of Angela Estate,
Inc. which is located at the entrance of the mill was the
VOL. 182, FEBRUARY 7, 1990 33 one which refused to renew its milling contract. As a
result, the closure of the railway located inside said
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
plantation paralyzed the entire transportation system.
Thus, the closure of the railway lines was not an act of
event must be such as to render it impossible for the God nor does it constitute force majeure. It was due to
debtor to fulfill his obligation in a normal manner; (b) the termination of the contractual relationships of the
the debtor must be free from any participation in, or parties, for which petitioner is charged with
aggravation of the injury to the creditor (Vasquez v. knowledge. Verily, the lower court found that the
Court of Appeals, 138 SCRA 553 [1985]; Juan F. Angela Estate, Inc. notified BMMC as far back as
Nakpil & Sons v. Court of Appeals, 144 SCRA 596 August or September 1965 of its intention not to allow
[1986]). Applying the criteria to the instant case, there the passage of the railway
can be no other conclusion than that the closure of the
railroad tracks does not constitute force majeure. 34
The terms of the milling contracts were clear and
undoubtedly there was no reason for BMMC to expect 34 SUPREME COURT REPORTS ANNOTATED
otherwise. The closure of any portion of the railroad
track, not necessarily in the hacienda Helvetia but in Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
any of the properties whose owners decided not to
renew their milling contracts with the Central upon system thru its land after the aforesaid crop year.
their expiration, was forseeable and inevitable. Adequate measures should have been adopted by
BMMC to forestall such paralyzation but the records
show none. All its efforts were geared toward the Both parties are agreed that time is of the essence
outcome of the court litigation but provided no in the sugar industry; so that the sugarcanes have to
solutions to the transport problem early enough in case be milled at the
of an adverse decision.
35
The last three issues being inter-related will be
treated as one. Private respondent Gatuslao filed an
action for rescission while BMMC filed in the same VOL. 182, FEBRUARY 7, 1990 35
court an action against Gatuslao, the Agro Industrial
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
Development Silay Saravia (AIDSISA) and the
Bacolod-Murcia Agricultural Cooperative Marketing
Associations, Inc. (B-M ACMA) for specific right time, not too early or too late, if the quantity and
performance under the milling contract. quality of the juice are to be assured. As found by the
There is no question that the contract in question trial court, upon the execution of the amended milling
involves reciprocal obligations; as such party is a contract on May 24, 1957 for a period of 17 crop years,
debtor and creditor of the other, such that the BMMC undertook expressly among its principal
obligation of one is dependent upon the obligation of prestations not only to mill Gatuslao’s canes but to
the other. They are to be performed simultaneously so haul them by railway from the loading stations to the
that the performance of one is conditioned upon the mill. Atty. Solidum, Chief Legal Counsel and in Charge
simultaneous fulfillment of the other (Boysaw v. of the Legal-Crop Loan Department of the BMMC
Interphil Promotions, Inc., 148 SCRA 643 [1987]). Bacolod City admits that the mode of transportation of
Under Article 1191 of the Civil Code, the power to canes from the fields to the mill is a vital factor in the
rescind obligations is implied in reciprocal ones in case sugar industry; precisely for this reason the mode of
one of the obligors should not comply with what is transportation or13hauling the canes is embodied in the
incumbent upon him. In fact, it is well established that milling contract. But BMMC is now unable to haul
the party who deems the contract violated may the canes by railways as stipulated because of the
consider it revoked or rescinded pursuant to their closure of the railway lines; so that resolution of this
agreement and act accordingly, even without previous issue ultimately rests on whether or not BMMC was
court action (U.P. v. de los Angeles, 35 SCRA 102 able to provide adequate and efficient transportation
[1970]; Luzon Brokerage Co., Inc. v. Maritime Building facilities of the canes of Gatuslao and the other
Co., Inc., 43 SCRA 94 [1972]). planters milling with BMMC during the crop year
It is the general rule, however, that rescission of a 1968-1969. As found by both the trial court and the
contract will not be permitted for a slight or casual Court of Appeals, the answer is in the negative.
breach, but only for such substantial and fundamental Armando Guanzon, Dispatcher of the
breach as would defeat the very object of the parties in Transportation Department of BMMC testified that
making the agreement. The question of whether a when the Central was still using the railway lines, it
breach of a contract is substantial depends upon the had between 900 to 1,000 cane cars and 10
attendant circumstances (Universal Food Corporation locomotives, each locomotive pulling from 30 to 50 14
cane
v. Court of Appeals, et al., 33 SCRA 1 [1970]). cars with maximum capacity of 8 tons each. This
The issue therefore, hinges on who is guilty of the testimony was corroborated by Rodolfo Javelosa,
breach of the milling contract. Assistant Crop Loan Inspector
15
in the Crop Loan
Department of petitioner. After the closure of the
railway lines, petitioner on February 5, 1968 through reasonable assurance that the latter would be able to
its President and General Manager, informed the haul and mill their
20
canes for the 1968-1969 crop year,
National Committee of the National Federation of but to no avail.
Sugarcane Planters that the trucking requirement for As admitted by BMMC itself, in its communications
hauling adherent planters produce with a milling with the planters, it is not in a position to provide
average of 3,500 tons of canes daily at an average load adequate transportation for the canes in compliance
of 5 tons per truck is not less than 700 trucks daily with its commitment21
under the milling contract. Said
plus another 700 empty trucks to be shuttled back to communications were quoted by the Court of Appeals
the 16plantations to be available for loading the same as follows:
day. Guanzon, however, testified that petitioner had
only 280 units “We are sorry to inform you that unless we can work out a
fair and equitable solution to this problem of closure of our
railroad lines, the milling of your canes for the crop year
_______________
1968-69 would be greatly hampered to the great detriment of
13 Rollo, p. 97. our economy and the near elimination of the means of
14 TSN, June 29, 1971, pp. 21-22. livelihood of most planters and the possible starvation of
15 TSN, January 24, 1973, pp. 16-18. thousands of laborers working in the sugar District of
16 Exhibits, p. 51. Bacolod-Murcia Milling Co.”

36 and

“We are fully conscious of our contractual obligations to our

36 SUPREME COURT REPORTS ANNOTATED existing Milling Contract. But, if prevented by judicial order
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals we will

_______________
of trailers, 20 tractors and 3 trucks plus 20 trucks
more or less hired by the Central and17given as repartos 17 TSN, June 29, 1971, p. 13.
(allotments) to the different planters. The 180 trailers 18 TSN, July 29, 1971, pp. 13-20.
that the Central initially had were permanently leased 19 Exhibits, p. 34.
to some planters who had their own cargo trucks while 20 Rollo, pp. 97-98.
out of the 250 BMMC trailers existing during the 21 Rollo, p. 108.
entire milling season only 70 were left18 available to the
rest of the planters pulled by 3 trucks. 37
It is true that BMMC purchased 20 units John
Deere Tractors (prime movers) and 230 units, VOL. 182, FEBRUARY 7, 1990 37
Vanguard Trailers with land capacity of 3 tons each
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
but that was only on October 1968 as registered19in the
Land Transportation Commission, Bacolod City.
find ourselves unable to serve you in the hauling of the canes
The evidence shows that great efforts had been
through our railroad lines. It is for this reason that we
exerted by the planters to enter into some concrete
suggest you explore other solutions to the problem in the face
understanding with BMMC with a view of obtaining a
of such an eventuality so that you may be able to proceed 22 Exhibits, p. 17.
with the planting of your canes with absolute peace of mind 23 Exhibits, p. 18.
and the certainty that the same will be properly milled and
38
not left to rot in the fields.

also,
38 SUPREME COURT REPORTS ANNOTATED
“In the meantime, and before July 1, 1968, the end of the Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
temporary arrangement we have with Fernando Gonzaga,
Inc. and the Angela Estate, Inc. for the use of the rights of can not24be milled at the Central in the coming milling
ways, our lawyers are studying the possibility of getting a season.
new injunction from the Supreme Court or the Court of First BMMC’s reply was only to express optimism over
Instance of Negros Occidental based on the new grounds the final outcome of its pending cases in court.
interposed in said memorandum not heretofore raised Hence, what actually happened afterwards is that
previously nor in the Capitol Subdivision case. And if we are petitioner failed to provide adequate transportation
doing this, it is principally to prevent any injury to your facilities to Gatuslao and other adherent planters.
crops or foreclosure of your property, which is just in line As found by the trial court, the experience of Alfonso
with the object of your plans.” Gatuslao at the start of the 1968-1969 milling season
is reflective of the inadequacies of the reparto or trailer
On March 26, 1968 the President of the Bacolod-
allotment as well as the state of unpreparedness on the
Murcia Sugar Farmer’s Corporation writing on behalf
part of BMMC to meet the problem posed by the
of its plantermembers demanded to know the plans of
closure of the railway lines.
the Central for the crop year 1968- 1969, stating that if
It was established that after Gatuslao had cut his
they fail to hear from the Central on or before the 15th
sugarcanes for hauling, no trailers arrived and when
of April they will feel free to make their own plans in
two trailers finally arrived on October 20, 1968 after
order to save their crops 22and the possibility of
several unheeded requests, they were left on the
foreclosure of their properties.
national highway about one (1) kilometer away from
In its letter dated April 1, 1968, the president of
the loading station. Such fact was confirmed by Carlos
BMMC simply informed the Bacolod-Murcia Sugar
But-og, 25the driver of the truck that hauled the
Farmer’s Corporation that they were studying the
trailers.
possibility of getting a new injunction from the court
Still further, Javelosa, Assistant Crop Loan
before expiration of their temporary arrangement with23
Inspector, testified that the estimated production of
Fernando Gonzaga, Inc. and the Angela Estate, Inc.
Gatuslao for the crop year 1968-1969 was 4,400 piculs
Pressing for a more definite commitment (not a
hauled by 10 cane cars a week with a maximum
mere hope or expectation), on May 30, 1968 the 26
capacity of 8 tons. Compared with his later schedule
Bacolod-Murcia Sugar Farmer’s Corporation requested
of only one trailer a week with a maximum capacity of
the Central to put up a performance bond in the 27
only 3 to 4 tons, there appears to be no question that
amount of P13 million within a 5-day period to allay
the means of transportation provided by BMMC is very
the fears of the planters that their sugar canes
inadequate to answer the needs of Gatuslao.
Undoubtedly, BMMC is guilty of breach of the
_______________
conditions of the milling contract and that Gatuslao is
the injured party. Under the same Article 1191 of the explore solutions to the problem of hauling the canes to
Civil Code, the injured party may choose between the the milling station in the face of the eventuality of a
fulfillment and the rescission of the obligation, with judicial order permanently closing the railroad lines so
the payment of damages in either case. In fact, he may that the planters may be able to proceed with their
also seek rescission even after he had chosen planting of the canes with absolute peace of mind and
fulfillment if the latter should become impossible. the certainty that they will be properly milled and not
Under the foregoing, Gatuslao has the right to left to rot in the fields. As a result, the signing of the
rescind the milling contract and neither the court a milling contract between private respondents
28
AIDSISA
quo erred in decreeing the rescission claimed nor the and B-M ACMA on June 19, 1968 was a matter of
Court of Appeals in affirming the self-preservation inasmuch as the sugarcanes were
already matured and the planters had crop loans 29
to
_______________ pay. Further delay would mean tremendous losses.
In its defense AIDSISA stressed as earlier stated,
24 Exhibits, p. 21. that it agreed to mill the sugarcanes of Gatuslao only
25 TSN, February 23, 1971, pp. 7-12. after it had carefully ascertained and believed in good
26 TSN, January 24, 1973, pp. 24, 30. faith that BMMC was incapable of milling the
27 TSN, January 15, 1970, p. 25. sugarcanes of the adherent planters because of
inadequate transportation and in fact up to now said
39
Central is incapable of hauling the sugarcanes of the
said planters to its mill site for milling purposes.
VOL. 182, FEBRUARY 7, 1990 39 As an extra 30
precaution, AIDSISA provided in
paragraph 15 of its milling contract that—
Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals

_______________
same.
Conversely, BMMC cannot claim enforcement of the 28 Exhibits, p. 30.
contract. As ruled by this Court, by virtue of the 29 TSN, September 9, 1969, pp. 36-37.
violations of the terms of the contract, the offending 30 Rollo, p. 91.
party has forfeited any right to its enforcement
(Boysaw v. Interphil Promotions, Inc., 148 SCRA 645 40
[1987]).
Likewise, the Bacolod-Murcia Agricultural 40 SUPREME COURT REPORTS ANNOTATED
Cooperative Marketing Association, Inc. (B-M ACMA)
cannot be faulted for organizing itself to take care of Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals
the needs of its members. Definitely, it was organized
at that time when petitioner could not assure the “If any member of the planter has an existing milling
planters that it could definitely haul and mill their contract with other sugar central, then this milling contract
canes. More importantly, as mentioned earlier in a with the Central shall be of no force and effect with respect
letter dated January 12, 1968, J. Araneta, President & to that member or those members having such contract, if
General Manager of the Central itself suggested to the that other sugar central is able, ready and willing, to mill
Bacolod-Murcia Sugar Farmer’s Corporation that it
 said member or members’ canes in accordance with their said
milling contract.” (Italics supplied)

The President of BMMC himself induced the planters

to believe and to act on the belief that said Central
would not object to the milling of their canes with
other centrals.
Under the circumstances, no evidence of bad faith
on the part of private respondents could be found much
less any plausible reason to disturb the findings and
conclusions of the trial court and the Court of Appeals.
PREMISES CONSIDERED, the petition is hereby
DENIED for lack of merit and the decision of the Court
of Appeals is hereby AFFIRMED in toto.
SO ORDERED.

          Melencio-Herrera (Chairman), Padilla,

Sarmiento and Regalado, JJ., concur.

Petition denied; decision affirmed.

Notes.—Where both parties have committed a

breach of obligation and it cannot be determined who
was the first infractor, the contract shall be deemed
extinguished and each shall bear his/its own damages.
(Grace Park Eng’g. Co. vs. Dimaporo, 107 SCRA 266.)
Difficulty of service does not constitute a sufficient
cause of action for modification of contract. (Occeña vs.
Jabson, 73 SCRA 637).

——o0o——

41

© Copyright 2020 Central Book Supply, Inc. All rights reserved.