G.R. No. 81100-01 - Bacolod-Murcia Milling Co., Inc. vs. Court of Appeals

Bacolod-Murcia Milling Co., Inc. (BMMC) was owner and operator of the sugar central in Bacolod City.
Alonso Gatuslao was a registered planter of the Bacolod-Murcia Mill District and registered owner of Lot Nos. 310, 140, 141 and 101-A (Hda. San Roque).
On May 24, 1957 BMMC and Alonso Gatuslao executed an Extension and Modification of Milling Contract, registered September 17, 1962 and annotated on the relevant titles.
The milling contracts granted BMMC rights of way across planters’ lands for the duration of the milling contracts, specified as a period of 45 years beginning with the 1920-1921 harvest.

From crop year 1920-1921 through 1967-1968, BMMC transported planters’ canes by cane cars over a railway system traversing adherent planters’ lands.
BMMC constructed the railroad tracks in 1920 and used between 900 to 1,000 cane cars and ten locomotives, each pulling 30 to 50 cars with a maximum capacity of 8 tons per car.
The loading points for Alonso Gatuslao were at the Arimas Line, Switch 2, from which BMMC hauled his canes continuously until crop year 1967-1968.

Owners of Angela Estate, Inc. and others refused to renew their milling contracts at the end of crop year 1964-1965; their refusal caused termination of the conventional right of way across Hacienda Helvetia.
BMMC filed an action for legal easement and obtained an ex parte writ of preliminary injunction on October 4, 1965; the lower court maintained injunction orders in 1966.
The landowners petitioned the Supreme Court; on August 10, 1967 the Court issued a writ enjoining enforcement of the lower court’s injunction; the writ was temporarily lifted by agreement to allow use of the tracks through June 30, 1968 only, and automatically reinstated July 1, 1968.
The closure of the railway portion in Hacienda Helvetia in 1968 rendered BMMC unable to operate its cane cars and locomotives for the 1968-1969 crop year.

BMMC informed planters in February 1968 that trucking requirements to haul an average 3,500 tons daily at 5 tons per truck required not less than 700 loaded trucks plus 700 empties; BMMC admitted it had far fewer resources.
BMMC possessed initially 280 trailers, 20 tractors and 3 trucks, plus some hired trucks and permanently leased trailers to certain planters; BMMC acquired additional equipment only in October 1968.
BMMC’s communications to planters acknowledged the risk that milling would be greatly hampered if rights of way remained closed and suggested planters explore other solutions; planters pressed BMMC for definite plans and for a P13 million performance bond.

On June 19, 1968 Agro-Industrial Development of Silay-Saravia (AIDSISA) and Bacolod-Murcia Agricultural Cooperative Marketing Association (B-M ACMA) entered into a milling contract to mill certain planters’ canes.
B-M ACMA organized to transport planters’ canes when BMMC could not assure adequate hauling; the cooperative hauled canes of planters, including Gatuslao, during the 1968-1969 season.

Whether the closure of BMMC’s railroad lines constituted *force majeure* excusing performance.
Whether Alonso Gatuslao had the right to rescind the milling contract under Article 1191 of the Civil Code.
Whether Gatuslao was justified in violating his milling contract by milling with other centrals.
Whether private respondents Gatuslao and B-M A...(Subscriber-Only)

Ruling:

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Ratio:

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Doctrine:

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