Monday, February 27, 2012

Bacolod Murcia Milling Co., Inc (BMMC) vs. CA [GR No.81100-01 7 Feb1990]

Facts: BMMC constructed a railroad track system to transport sugar cane from the plantation to the milling station for period of 45 years beginning the years 1920-1921. However by the year 1964-1965, the railroad tracks over at Hacienda Helvetia was closed due to the expiration of the milling contract. The residents of the Angela Estates/ Hacienda Helvetia decided not to renew the contract. However, BMMC continues to have milling and transportation contracts by railroad with Agro-Industrial Development of Silay-Saravia (AIDSISA) for 17 years until 1973-74. Due the non-renewal of the right of way contract with Angela Estates, BMMC was unable to transport sugar canes of Alonso Gatuslao or of AIDSISA beginning 1968. Gatuslao on various dates requested transportation facilities from BMMC to no avail. Gatuslao filed for a Breach of Contract against BMMC and asks for rescission of contract and damages. BMMC argues that the inability to use its railways system is due to force majeure. In order to comply they hired private trucks as movers of to haul the sugar canes. Gatuslao/AIDSISA, seriously believing that BMMC is particularly unable to transport and mill their sugar canes, opted to use trucks provided by Bacolod-Murcia Agricultural Cooperative Marketing Association, Inc. (BM-ACMA). Further, its inability to do so in effect rescinds the milling contract. 

BMMC also filed a complaint against AIDSISA and BM-ACMA seeking specific performance of milling contract. It alleges that Gatuslao/AIDSISA violated the contract by hiring the services of BM-ACMA. The 2 complaints were consolidated fro trial the CFI- Negros Occidental. Lower court rendered judgment rescinding the milling contract and damages of Php2,625 and Php5,000 attorney’s fees. BMMC appealed. CA affirmed the CFI decision. 

Issue: Whether or not the inability of BMMC to comply with milling contract due to the closure of the railroad track right of way over Helvetia is force majeure 

Held: No. The closure of the railroad track way at Hacienda Helvetia is due to the expiration of their contract with the Hacienda. The requisites of force majeure: (a) breach is independent of the will of obligor. (b) Event is unforeseeable or unavoidable, (c) and the event renders the fulfillment of obligation impossible. Applying the criteria, the closure of the railroad track is not force majeure. BMMC should have anticipated it and provided for the eventuality. BMMC took the risk that the Hacienda Helvetia will not renew their contract. Thus, the closure of the track in the Hacienda, paralyzed the whole transportation system. It was die to the contract termination, which BMMC has knowledge that caused the Breach of Contract with the other plantations. Since the closure of the rail road track is a not a case of fortuitous event, the issue is whether or not BMMC is capable of providing adequate and efficient transportation facilities of the canes of AIDSIA and other planters. Evidence shows that BMMC is the one who committed breach of contract. A letter from BMMC was even quoted by the SC. The letter was suggesting planters to explore other solutions to the problem of milling and transportation. Thus, AIDSIA hiring BM-ACMA is a matter of self-preservation and is not in anyway a breach of contract.

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