Facts:
Bacolod-Murcia Milling Co., Inc. (petitioner) owned and operated a sugar central in Bacolod City, Negros Occidental and on May 24, 1957 entered into an Extension and Modification of Milling Contract with planter
Alonso Gatuslao for the haulage and milling of canes from his Hda. San Roque plantations; the contract was registered and annotated on titles and provided rights of way for BMMC’s railway for a prescribed period beginning with the 1920-1921 crop year. The Central constructed railroad tracks in 1920 and for decades transported adherent planters’ canes by locomotive and cane cars over rights of way granted under milling contracts, but when certain landowners, notably those of Hacienda Helvetia, did not renew their amended milling contracts at the end of crop year 1964-1965 the corresponding rights of way ended and a judicial controversy culminated in restrictions that effectively closed a portion of the railway; the Supreme Court temporarily lifted a lower court writ only until June 30, 1968 to permit milling of the 1967-1968 crop. In the face of the railway closure and despite hiring private trucks and later purchasing tractors and trailers, BMMC admitted to planters that it could not assure adequate hauling for the 1968-1969 crop, and planters organized alternative arrangements, including contracts with
Bacolod-Murcia Agricultural Cooperative Marketing Association, Inc. (B-M ACMA) and
Agro-Industrial Development of Silay-Saravia (AIDSISA). On October 30, 1968
Gatuslao sued BMMC in Civil Case No. 8719 for rescission for alleged failure to provide transportation and for damages; BMMC counterclaimed and on November 21, 1968 filed Civil Case No. 8745 against Gatuslao, AIDSISA and B-M ACMA for specific performance. The cases were consolidated, tried, and on February 6, 1976 the Court of First Instance of Negros Occidental declared the milling contract rescinded, awarded Gatuslao P2,625.00 plus interest and P5,000.00 attorney’s fees, dismissed BMMC’s counterclaims, and the Court of Appeals on September 11, 1987 affirmed the decision in toto; BMMC then filed this petition for review on certiorari which the Supreme Court resolved on February 7, 1990.
Issues:
Whether the closure of petitioner’s railroad lines constituted
force majeure excusing BMMC’s nonperformance. Whether
Alonso Gatuslao had the right to rescind the milling contract under
Article 1191 of the Civil Code. Whether Gatuslao was justified in breaching the milling contract by contracting with another central. Whether private respondents Gatuslao and B-M ACMA acted in bad faith or are estopped from questioning the adequacy of BMMC’s transportation.
Ruling:
Ratio:
Doctrine: