Facts:

The case involves The Bacolod-Murcia Milling Co., Inc. as the plaintiff-appellant and Banco Nacional Filipino and Fernando F. Gonzaga as the defendants-appellants. The appeal was filed on July 17, 1944, and originated from the Court of First Instance of Occidental Negros. The plaintiff sought to compel the Philippine National Bank to sell twelve hectares of land from the Hacienda Helvetia, specifically lots 1072-B and a portion of 1072-C-3 of the Bacolod cadastre, at a price of ₱300 per hectare. The trial court granted the plaintiff's request but set the price at ₱1,500 per hectare, prompting both parties to appeal.

The Hacienda Helvetia was originally owned by Jose de la Rama, who entered into a milling contract with the Bacolod-Murcia Milling Co., Inc. in 1920. This contract stipulated that the milling company could acquire land for its operations at the price of ₱300 per hectare. The hacienda was later sold to the Philippine National Bank, whi...

Facts:

Background and Parties

• Bacolod-Murcia Milling Co., Inc. (plaintiff‑appellant) initiated the suit against the Philippine National Bank and Fernando F. Gonzaga (defendants‑appellants).
• The controversy centers on the purchase of 12 hectares of Hacienda Helvetia, a property originally owned by Jose de la Rama and later involved in several transactions and contracts with both the milling company and the bank.
• The plaintiff sought to compel the sale of the 12 hectares at a contractually fixed price of P300 per hectare under an alleged obligation emerging from the milling contract.

Historical Contracts and Conveyances

• Original Milling Contract (Exhibit B)
• Concluded shortly after the organization of the sugar central in 1919.
• Contained clause 9, which obligates the planter (and collectively other sugar planters) to facilitate the acquisition of land (up to 10 hectares) by the milling operation at P300 per hectare, “con el fin de que el Molino pueda llevar a cabo las empresas arriba mencionadas.”
• Amended Milling Contract (Exhibit C)
• Executed on August 20, 1936, after the Philippine National Bank became the holder of Hacienda Helvetia.
• Incorporated the same clause 9 of the earlier contract and was duly recorded as an incumbrance on the property’s title.
• Redemption and Transfer Instruments
• A written contract dated October 18, 1932, existed between the bank and Jose de la Rama for the resale of Hacienda Helvetia under installment payments.
• Due to subsequent enforcement actions by creditors, Jose de la Rama, through successive contracts and redemptions, transferred and finally consolidated full dominion over the hacienda to Fernando F. Gonzaga.
• Additional Agreements Establishing Right to Negotiate
• Exhibit K (January 28, 1937): Provided that the milling company had the right to negotiate with the bank for the purchase of approximately 12 hectares, with de la Rama and his successors consenting to exclude that portion of land from the promise of sale.
• Exhibit O (February 23, 1937): Contained a covenant wherein Gonzaga acknowledged and consented to the milling company’s right to manage the purchase of 12 hectares from the bank.

Negotiations and Offer for Purchase

• On March 9, 1937, the plaintiff formally wrote to the bank offering to buy the 12 hectares at P500 per hectare.
• A series of further communications followed (including telegrams and letters), indicating the plaintiff’s persistent efforts and willingness to negotiate a reasonable price.
• The bank, via its representatives, stipulated that a sale would be possible if the involved parties (the milling company, de la Rama, and Gonzaga) agreed on a price, though negotiations eventually failed.

Intended Use of the Land and Conflict of Purposes

• Plaintiff’s Proposed Uses
• The 12 hectares were marked for developing a golf course and athletic game fields, as well as for the construction of additional houses for its laborers.
• Evidence from survey plans (Exhibit R) demonstrated that more than six hectares were earmarked for recreational facilities, while the remainder was proposed for labor housing.
• Defendants’ Argument on the Scope of Clause 9
• The defendants contended that clause 9 was meant strictly to cover land acquisitions necessary for constructing and operating the sugar central (e.g., for building warehouses, deposits, and other ancillary structures).
• They argued that the proposal to use part of the land for recreational and nonessential labor housing purposes exceeded the contemplated operational needs of the mill.

Trial Court Proceedings and Subsequent Appeals

• The trial court granted specific performance in favor of the plaintiff but fixed the sale price at P1,500 per hectare rather than the contractually stipulated P300 per hectare.
• Both parties subsequently appealed the decision.
• Later developments included the bank conveying the hacienda to defendant Gonzaga subject to the pending litigation and a separate cross-complaint by Gonzaga regarding the return of a specific lot (lot 1072‑B‑2) which had been loaned to the plaintiff.

Issue:

• Whether the plaintiff is entitled to enforce a sale of 12 hectares of Hacienda Helvetia at the stipulated price of P300 per hectare based on clause 9 of the milling contract.
• Whether the scope of clause 9, as incorporated in both the original and amended milling contracts, extends to cover the plaintiff’s intended use of the land for recreational facilities and additional labor housing, as opposed to strictly facilitating the operational needs of the sugar central.
• Whether the negotiations, including the subsequent failure to agree on terms beyond the original contractual provision, negate or modify the plaintiff’s rights under the contract.
• Whether the trial court erred in setting a price divergent from that expressly stipulated in the contract and in reading additional purposes into the contract that were not agreed upon by the parties.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)