Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

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

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

vs.
HON. COURT OF APPEALS AND ALONSO
GATUSLAO, respondents.

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

vs.
HON. COURT OF APPEALS, ALONSO GATUSLAO, AGRO-
INDUSTRIAL DEVELOPMENT OF SILAY-SARAVIA
(AIDSISA) AND BACOLOD-MURCIA AGRICULTURAL
COOPERATIVE MARKETING ASSOCIATION (BM-ACMA),
respondents.

Jalandoni, Herrera, Del Castillo & Associates for petitioner.

Tañada, Vico & Tan for respondent AIDSISA.

San Juan, Gonzalez, San Agustin & Sinense for

respondents Alfonso Gatuslao and BM-ACMA.

PARAS, J.:

This is a petition for review on certiorari of the decision of

the Court of Appeals in CA-G.R. CV Nos. 59716-59717
promulgated on September 11, 1987 affirming in toto the
decision of the Court of First Instance of Negros Occidental
in two consolidated civil cases, the dispositive portion of
which reads as follows:
 PREMISES CONSIDERED, the decision appealed
from is hereby affirmed in toto.

The uncontroverted facts of the case 1 are as follows:

1. xxx xxx xxx

2. BMMC is the owner and operator of the sugar

central in Bacolod City, Philippines;

3. ALONSO GATUSLAO is a registered planter of

the Bacolod-Murcia Mill District with Plantation
Audit No. 3-79, being a registered owner of Lot
Nos. 310, 140, 141 and 101-A of the Cadastral
Survey of Murcia, Negros Occidental, otherwise
known as Hda. San Roque;

4. On May 24, 1957 BMMC and Alonso Gatuslao

executed an 'Extension and Modification of Milling
Contract (Annex 'A' of the complaint in both
cases) which was registered on September 17,
1962 in the Office of the Register of Deeds of
Negros Occidental, and annotated on Transfer
Certificates of Title Nos. T-24207, RT-2252, RT-
12035, and RT-12036 covering said Lot Nos. 310,
140, 141 and 101-A;

5. That since the crop year 1957-1958 up to crop

year 1967-1968, inclusive, Alonso Gatuslao has
been milling all the sugarcane grown and
produced on said Lot Nos. 310, 140, 141 and 101-
A with the Mill of BMMC;.

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
plantation to the mill by means of cane cars and
through railway system operated by BMMC;

7. The loading points at which planters Alonso

Gatuslao was and should deliver and load all his
canes produced in his plantation, Hda. San
Roque, were at the Arimas Line, Switch 2, and
from which loading stations, BMMC had been
hauling planter Gatuslao's sugar cane to its mill
or factory continuously until the crop year 1967-
68;

8. BMMC had not been able to use its cane cars

and railway system for the cargo crop year 1968-
1969;

9. Planter Alonso Gatuslao on various dates

requested transportation facilities of BMMC to be
sent to his loading stations or switches for
purposes of hauling and milling his sugarcane
crops of crop year 1968-1969;

10. The estimated gross production of Hda. San

Roque for the crop year 1968-1969 is 4,500 piculs.

The records show that since the crop year 1920-1921 to the
crop year 1967-1968, the canes of the adhered planters
were transported from the plantation to the mill of BMMC
by means of cane cars and through a railway system
operated by BMMC which traversed the land of the
adherent planters, corresponding to the rights of way on
their lands granted by the planters to the Central for the
duration of the milling contracts which is for "un periodo
de cuarenta y cinco anos o cosechas a contar desde la
cosecha de 1920-1921" 2 (a period of 45 years or harvests, beginning with a
harvest of 1920-1921).

BMMC constructed the railroad tracks in 1920 and the

adherent planters granted the BMMC a right of way over
their lands as provided for in the milling contracts. The
owners of the hacienda Helvetia were among the
signatories of the milling contracts. When their milling
contracts with petitioner BMMC expired at the end of the
1964-1965 crop year, the corresponding right of way of the
owners of the hacienda Helvetia granted to the Central also
expired.

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 Angela Estate, Inc.
and Fernando F. Gonzaga, Inc. v. 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 way over the hacienda Helvetia
ceased with the expiration of its amended milling contracts
with the landowners of the hacienda at the end of the 1964-
1965 crop year and that in the absence of a renewal
contract or the establishment of a compulsory servitude of
right of way on the same spot and route which must be
predicated on the satisfaction of the preconditions required
by law, there subsists no right of way to be protected.

Consequently, the owners of the hacienda Helvetia

required the Central to remove the railway tracks in the
hacienda occupying at least 3,245 lineal meters with a
width of 7 meters or a total of 22,715 square meters, more
or less. That was the natural consequence of the expiration
of the milling contracts with the landowners of the
hacienda Helvetia (Angela Estate, Inc. and Fernando
Gonzaga, Inc. v. Court of First Instance of Negros
Occidental, ibid). BMMC filed 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 ex parte writ of preliminary
injunction restraining the landowners from reversing
and/or destroying the railroad tracks in question and from
impeding, obstructing or in any way preventing the
passage and operation of plaintiffs locomotives and cane
cars over defendants' property during the pendency of the
litigation and maintained the same in its subsequent orders
of May 31, and November 26, 1966. The outcome of the
case, however, was not favorable to the plaintiff BMMC. In
the same case the landowners asked this Court to restrain
the lower court from enforcing the writ of preliminary
injunction it issued, praying that after the hearing on the
merits, the restraining order be made permanent and the
orders complained of be annulled and set aside. The Court
gave due course to the landowner's petition and on August
10, 1967 issued the writ of preliminary injunction enjoining
the lower court from enforcing the writ of preliminary
injunction issued by the latter on October 4, 1965.

The writ of preliminary injunction issued by the Court was

lifted temporarily on motion that through the mediation of
the President of the Philippines the Angela Estate and the
Gonzaga Estate agreed with the Central to allow the use of
the railroad tracks passing through the hacienda Helvetia
during the 1967-1968 milling season only, for the same
purpose for which they had been previously used, but it
was understood that the lifting of the writ was without
prejudice to the respective rights and positions of the
parties in the case and not deemed a waiver of any of their
respective claims and allegations in G.R. No. L-27084 or in
any other case between the same parties, future or
pending. The Court resolved to approve the motion only up
to and including June 30, 1968 to give effect to the
agreement but to be deemed automatically reinstated
beginning July 1, 1968 (Angela Estate, Inc. and Fernando F.
Gonzaga, Inc. v. Court of First Instance of Negros
Occidental, ibid.).

The temporary lifting of the writ of preliminary injunction

assured the milling of the 1967-1968 crop but not the
produce of the succeeding crop years which situation was
duly communicated by the President and General Manager
of the BMMC to the President of Bacolod-Murcia Sugar
Farmers Corporation (BMSFC) on January 2, 1968. 3

On October 30, 1968, Alonso Gatuslao, one of private

respondents herein, and his wife, Maria H. Gatuslao, filed
Civil Case No. 8719 in the Court of First Instance of Negros
Occidental, against petitioner herein, Bacolod-Murcia
Milling Co., Inc. (BMMC), for breach of contract, praying
among others, for the issuance of a writ of preliminary
mandatory injunction ordering defendant to immediately
send transportation facilities and haul the already cut
sugarcane to the mill site and principally praying after
hearing, that judgment be rendered declaring the
rescission of the milling contract executed by plaintiffs and
defendant in 1957 for seventeen (17) years or up to crop
year 1973-74, invoking as ground the alleged failure and/or
inability of defendant to comply with its specific obligation
of providing the necessary transportation facilities to haul
the sugarcane of Gatuslao from plaintiffs plantation
specifically for the crop year 1967-1968. Plaintiffs further
prayed for the recovery of actual and compensatory
damages as well as moral and exemplary damages and
attorney's fees. 4

In answer, defendant BMMC claimed that despite its

inability to use its railways system for its locomotives and
cane cars to haul the sugarcanes of all its adhered planters
including plaintiffs for the 1968-69 crop year allegedly due
to force majeure, in order to comply with its obligation,
defendant hired at tremendous expense, private trucks as
prime movers for its trailers to be used for hauling of the
canes, especially for those who applied for and requested
transportation facilities. Plaintiffs, being one of said
planters, instead of loading their cut canes for the 1968-69
crop on the cargo trucks of defendant, loaded their cut
canes on trucks provided by the Bacolod-Murcia
Agricultural Cooperative Marketing Association, Inc. (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, moral and exemplary damages and for
attorney's fees. 5

On November 21, 1968, BMMC filed in the same court Civil

Case No. 8745 against Alonso Gatuslao, the Agro-Industrial
Development of Silay-Saravia (AIDSISA) and the Bacolod-
Murcia Agricultural Cooperative Marketing Associations,
Inc. (B-M ACMA), seeking specific performance under the
mining contract executed on May 24, 1957 between plaintiff
and defendant Alonso Gatuslao praying for the issuance of
writs of preliminary mandatory injunction to stop the
alleged violation of the contract by defendant Alonso
Gatuslao in confederation, collaboration and connivance
with defendant BM-ACMA, AIDSISA, and for the recovery of
actual, moral and exemplary damages and attorney's fees. 6
Defendant Alonso Gatuslao and the Bacolod-Murcia
Agricultural Cooperative Marketing Association, Inc. filed
their answer on January 27, 1969 with compulsory counter-
claims, stating by way of special and affirmative defense,
among others, that the case is barred by another action
pending between the same parties for the same cause of
action. 7

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 sugarcane of its co-defendant
Alonso Gatuslao, it carefully ascertained and believed in
good faith that: (a) plaintiff was incapable of the sugarcane
of AIDSISA's co-defendant planters as well as the
sugarcane of other planters formerly adherent to plaintiff,
(b) plaintiff had in effect agreed to a rescission of its milling
contracts with its adhered planters, including the
defendant planter, because of inadequate means of
transportation. and had warned and advised them to mill
their sugarcane elsewhere, and had thus induced them to
believe and act on the belief, that it could not mill their
sugarcane and that it would not object to their milling with
other centrals; and (c) up to now plaintiff is incapable of
hauling the sugarcane of AIDSISA's co-defendants to
plaintiffs mill site for milling purposes.

The two cases, Civil Cases Nos. 8719 and 8745 were
consolidated for joint trial before Branch II of the Court of
First Instance of Negros Occidental. 8 On September 8, 1969, the parties in
both civil cases filed their partial stipulation of facts which included a statement of the issues
9
raised by the parties. 
On February 6, 1976, the lower court rendered judgment
declaring the milling contract dated May 24, 1957
rescinded. The dispositive portion of the decision 10 reads:

WHEREFORE, judgment is hereby rendered as

follows:

(1) In Civil Case No. 8719 the milling contract

(Exh. "121") dated May 24, 1957 is hereby
declared rescinded or resolved and the defendant
Bacolod-Murcia Company, Inc. is hereby ordered
to pay plaintiffs Alonso Gatuslao and Maria H.
Gatuslao the amount of P2,625.00 with legal
interest from the time of the filing of the complaint
by way of actual damages; P5,000.00 as attorney's
fees and the costs of the suit; defendant's
counterclaim is dismissed; and

(2) The complaint in Civil Case No. 8745 as well as

the counterclaims therein are ordered dismissed,
without costs.

Bacolod-Murcia Milling Co., Inc. defendant in Civil Case No.

8719 and plaintiff in Civil Case No. 8745 appealed the case
to respondent Court of Appeals which affirmed in
toto (Rollo, p. 81) the decision of the lower court. The
motion for reconsideration filed by defendant-appellant
Bacolod-Murcia Milling Company, petitioner herein, was
denied by the appellate court for lack of merit. 11 Hence, this
petition.

The issues 12 raised by petitioner are as follows:

I
 WHETHER OR NOT THE CLOSURE OF
PETITIONER'S RAIL ROAD LINES
CONSTITUTE FORCE MAJEURE.

II

WHETHER OR NOT PRIVATE RESPONDENT

GATUSLAO HAS THE RIGHT TO RESCIND THE
MILLING CONTRACT WITH PETITIONER UNDER
ARTICLE 1191 OF THE CIVIL CODE.

III

WHETHER OR NOT PRIVATE RESPONDENT

GATUSLAO WAS JUSTIFIED IN VIOLATING HIS
MILLING CONTRACT WITH PETITIONER.

IV

WHETHER OR NOT PRIVATE RESPONDENTS

GATUSLAO AND B-M ACMA ARE GUILTY OF BAD
FAITH IN THE EXERCISE OF THEIR DUTIES AND
ARE IN ESTOPPEL TO QUESTION THE
ADEQUACY OF THE TRANSPORTATION
FACILITIES OF PETITIONER AND ITS CAPACITY
TO MILL AND HAUL THE CANES OF ITS
ADHERENT PLANTERS.

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 contracts with the
landowners of the lands in question is a fortuitous event
or force majeure which will exempt petitioner BMMC from
fulfillment of its contractual obligations.
It is the position of petitioner Bacolod-Murcia Milling Co.,
Inc. (BMMC) that the closure of its railroad lines
constitute force majeure, citing Article 1174 of the Civil
Code, exempting a person from liability for events which
could not be foreseen or which though foreseen were
inevitable.

This Court has consistently ruled that when an obligor is

exempted from liability under the aforecited provision of
the Civil Code for a breach of an obligation due to an act of
God, the following elements must concur: (a) the cause of
the breach of the obligation must be independent of the
wig of the debtor; (b) the event must be either unforseeable
or unavoidable; (c) the event must be such as to 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 the injury to the creditor (Vasquez v.
Court of Appeals, 138 SCRA 553 [1985]; Juan F. Nakpil &
Sons v. Court of Appeals, 144 SCRA 596 [1986]). Applying
the criteria to the instant case, there can be no other
conclusion than that the closure of the railroad tracks does
not constitute force majeure.

The terms of the milling contracts were clear and

undoubtedly there was no reason for BAMC 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 owners decided not to renew their milling
contracts with the Central upon their expiration, was
forseeable and inevitable.

Petitioner Central should have anticipated and should have

provided for the eventuality before committing itself. Under
the circumstances it has no one to blame but itself and
cannot now claim exemption from liability.

In the language of the law, the event must have been

impossible to foresee, or if it could be foreseen, must have
been impossible to avoid. There must be an entire
exclusion of human agency from the cause of the injury or
loss (Vasquez v. Court of Appeals, supra). In the case at
bar, despite its awareness that the conventional contract of
lease would expire in Crop Year 1964-1965 and that refusal
on the part of any one of the landowners to renew their
milling contracts and the corresponding use of the right of
way on their lands would render impossible compliance of
its commitments, petitioner took a calculated risk that all
the landowners would renew their contracts. Unfortunately,
the sugar plantation of Angela Estate, Inc. which is located
at the entrance of the mill was the one which refused to
renew its milling contract. As a result, the closure of the
railway located inside said plantation paralyzed the entire
transportation system. Thus, the closure of the railway
lines was not an act of God nor does it constitute force
majeure. It was due to the termination of the contractual
relationships of the parties, for which petitioner is charged
with knowledge. Verily, the lower court found that the
Angela Estate, Inc. notified BMMC as far back as August or
September 1965 of its intention not to allow the passage of
the railway system thru its land after the aforesaid crop
year. Adequate measures should have been adopted by
BMMC to forestall such paralyzation but the records show
none. All its efforts were geared toward the outcome of the
court litigation but provided no solutions to the transport
problem early enough in case of an adverse decision.
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 court an action
against Gatuslao, the Agro Industrial Development Silay
Saravia (AIDSISA) and the Bacolod-Murcia Agricultural
Cooperative Marketing Associations, Inc. (B-M ACMA) for
specific performance under the milling contract.

There is no question that the contract in question involves

reciprocal obligations; as such party is a debtor and
creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are to be
performed simultaneously so that the performance of one
is conditioned upon the simultaneous fulfillment of the
other (Boysaw v. Interphil Promotions, Inc., 148 SCRA 643
[1987]).

Under Article 1191 of the Civil Code, the power to rescind

obligations is implied in reciprocal ones in case one of the
obligors should not comply with what is incumbent upon
him. In fact, it is well established that the party who deems
the contract violated may consider it revoked or rescinded
pursuant to their agreement and act accordingly, even
without previous court action (U.P. v. de los Angeles, 35
SCRA 102 [1970]; Luzon Brokerage Co., Inc. v. Maritime
Building Co., Inc., 43 SCRA 94 [1972]).

It is the general rule, however, that rescission of a contract

will not be permitted for a slight or casual breach, but only
for such substantial and fundamental breach as would
defeat the very object of the parties in making the
agreement. The question of whether a breach of a contract
is substantial depends upon the attendant circumstances
(Universal Food Corporation v. Court of Appeals, et al., 33
SCRA 1 [1970]).

The issue therefore, hinges on who is guilty of the breach

of the milling contract.

Both parties are agreed that time is of the essence in the

sugar industry; so that the sugarcanes have to be milled at
the right time, not too early or too late, if the quantity and
quality of the juice are to be assured. As found by the trial
court, upon the execution of the amended milling contract
on May 24, 1957 for a period of 17 crop years, BMMC
undertook expressly among its principal prestations not
only to mill Gatuslao's canes but to haul them by railway
from the loading stations to the mill. Atty. Solidum, Chief
Legal Counsel and in Charge of the Legal-Crop Loan
Department of the BMMC Bacolod City admits that the
mode of transportation of canes from the fields to the mill
is a vital factor in the sugar industry; precisely for this
reason the mode of transportation or hauling the canes is
embodied in the milling contract. 13 But BMMC is now unable to haul the
canes by railways as stipulated because of the closure of the railway lines; so that resolution of
this issue ultimately rests on whether or not BMMC was able to provide adequate and efficient
transportation facilities of the canes of Gatuslao and the other planters milling with BMMC during
the crop year 1968-1969. As found by both the trial court and the Court of Appeals, the answer is
in the negative.

Armando Guanzon, Dispatcher of the Transportation

Department of BMMC testified that when the Central was
still using the railway lines, it had between 900 to 1,000
cane cars and 10 locomotives, each locomotive pulling
from 30 to 50 cane cars with maximum capacity of 8 tons
each. 14 This testimony was corroborated by Rodolfo Javelosa, 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 its President and General Manager, informed the National Committee of
the National Federation of Sugarcane Planters that the trucking requirement for hauling adherent
planters produce with a milling average of 3,500 tons of canes daily at an average load of 5 tons
per truck is not less than 700 trucks daily plus another 700 empty trucks to be shuttled back to the
 16
plantations to be available for loading the same day.   Guanzon, however, testified that petitioner
had only 280 units of trailers, 20 tractors and 3 trucks plus 20 trucks more or less hired by the
17
Central and given as repartos (allotments) to the different planters.   The 180 trailers that the
Central initially had were permanently leased to some planters who had their own cargo trucks
while out of the 250 BMMC trailers existing during the entire milling season only 70 were left
18
available to the rest of the planters pulled by 3 trucks. 

It is true that BMMC purchased 20 units John Deere

Tractors (prime movers) and 230 units, Vanguard Trailers
with land capacity of 3 tons each but that was only on
October 1968 as registered in the Land Transportation
Commission, Bacolod City. 19

The evidence shows that great efforts had been exerted by

the planters to enter into some concrete understanding
with BMMC with a view of obtaining a reasonable
assurance that the latter would be able to haul and mill
their canes for the 1968-1969 crop year, but to no avail. 20

As admitted by BMMC itself, in its communications with the

planters, it is not in a position to provide adequate
transportation for the canes in compliance with its
commitment under the milling contract. Said
communications 21 were quoted by the Court of Appeals as follows:

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 our economy and the near elimination of the
means of livelihood of most planters and the
possible starvation of thousands of laborers
working in the sugar District of Bacolod-Murcia
Milling Co.

and
 We are fully conscious of our contractual
obligations to our existing Milling Contract. But, if
prevented by judicial order we will find ourselves
unable to serve you in the hauling of the canes
through our railroad lines. It is for this reason that
we suggest you explore other solutions to the
problem in the face of such an eventuality so that
you may be able to proceed with the planting of
your canes with absolute peace of mind and the
certainty that the same will be properly milled and
not left to rot in the fields.

also,

In the meantime, and before July 1, 1968, the end

of the temporary arrangement we have with
Fernando Gonzaga, Inc. and the Angela Estate,
Inc. for the use of the rights of ways, our lawyers
are studying the possibility of getting a new
injunction from the Supreme Court or the Court of
First Instance of Negros Occidental based on the
new grounds interposed in said memorandum not
heretofore raised previously nor in the Capitol
Subdivision case. And if we are doing this, it is
principally to prevent any injury to your crops or
foreclosure of your property, which is just in line
with the object of your plans.

On March 26, 1968 the President of the Bacolod-Murcia

Sugar Farmer's Corporation writing on behalf of its planter-
members demanded to know the plans of the Central for
the crop year 1968-1969, stating that if they fail to hear from
the Central on or before the 15th of April they will feel free
to make their own plans in order to save their crops and
the possibility of foreclosure of their properties. 22

In its letter dated April 1, 1968, the president of BMMC

simply informed the Bacolod-Murcia Sugar Farmer's
Corporation that they were studying the possibility of
getting a new injunction from the court before expiration of
their temporary arrangement with Fernando Gonzaga, Inc.
and the Angela Estate, Inc. 23

Pressing for a more definite commitment (not a mere hope

or expectation), on May 30, 1968 the Bacolod-Murcia Sugar
Farmer's Corporation requested the Central to put up a
performance bond in the amount of P13 million within a 5-
day period to allay the fears of the planters that their sugar
canes can not be milled at the Central in the coming milling
season. 24

BMMC's reply was only to express optimism over the final

outcome of its pending cases in court.

Hence, what actually happened afterwards is that petitioner

failed to provide adequate transportation facilities to
Gatuslao and other adherent planters.

As found by the trial court, the experience of Alfonso

Gatuslao at the start of the 1968-1969 milling season is
reflective of the inadequacies of the reparto or trailer
allotment as well as the state of unpreparedness on the
part of BMMC to meet the problem posed by the closure of
the railway lines.

It was established that after Gatuslao had cut his

sugarcanes for hauling, no trailers arrived and when two
trailers finally arrived on October 20, 1968 after several
unheeded requests, they were left on the national highway
about one (1) kilometer away from the loading station.
Such fact was confirmed by Carlos Butog the driver of the
truck that hauled the trailers. 25

Still further, Javelosa, Assistant Crop Loan Inspector,

testified that the estimated production of Gatuslao for the
crop year 1968-1969 was 4,400 piculs hauled by 10 cane
cars a week with a maximum capacity of 8 tons. 26 Compared with
27
his later schedule of only one trailer a week with a maximum capacity of only 3 to 4 tons,   there
appears to be no question that the means of transportation provided by BMMC is very 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 Civil Code, the injured
party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages
in either case. In fact, he may also seek rescission even
after he had chosen fulfillment if the latter should become
impossible.

Under the foregoing, Gatuslao has the right to rescind the

milling contract and neither the court a quoerred in
decreeing the rescission claimed nor the Court of Appeals
in affirming the same.

Conversely, BMMC cannot claim enforcement of the

contract. As ruled by this Court, by virtue of the violations
of the terms of the contract, the offending party has
forfeited any right to its enforcement (Boysaw v. Interphil
Promotions, Inc., 148 SCRA 645 [1987]).

Likewise, the Bacolod-Murcia Agricultural Cooperative

Marketing Association, Inc. (B-M ACMA) cannot be faulted
for organizing itself to take care of the needs of its
members. Definitely, it was organized at that time when
petitioner could not assure the planters that it could
definitely haul and mill their canes. More importantly, as
mentioned earlier in a letter dated January 12, 1968, J.
Araneta, President & General Manager of the Central itself
suggested to the Bacolod-Murcia Sugar Farmer's
Corporation that it explore solutions to the problem of
hauling the canes to the milling station in the face of the
eventuality of a judicial order permanently closing the
railroad lines so that the planters may be able to proceed
with their planting of the canes with absolute peace of
mind and the certainty that they will be properly milled and
not left to rot in the fields. As a result, the signing of the
milling contract between private respondents AIDSISA and
B-M-ACMA on June 19, 1968 28 was a matter of self-preservation inasmuch as
the sugarcanes were already matured and the planters had crop loans to pay. Further delay would
29
mean tremendous losses. 

In its defense AIDSISA stressed as earlier stated, that it

agreed to mill the sugarcanes of Gatuslao only after it had
carefully ascertained and believed in good faith that BMMC
was incapable of milling the sugarcanes of the adherent
planters because of inadequate transportation and in fact
up to now said Central is incapable of hauling the
sugarcanes of the said planters to its mill site for milling
purposes.

As an extra precaution, AIDSISA provided in paragraph

15 30 of its milling contract that—

If any member of the planter has an existing

milling contract with other sugar central, then this
milling contract with the Central shall be of no
force and effect with respect to that member or
those members having such contract, if that other
 sugar central is able, ready and willing, to mill
said member or members' canes in accordance
with their said milling contract.(Emphasis
supplied)

The President of BANC 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