BACOLOD-MURCIA MILLING CO., INC., PETITIONER, VS. INTERMEDIATE APPELLATE COURT AND ANGELA ESTATE, INC., RESPONDENTS.

Petitioner Bacolod-Murcia Milling Co., Inc. (BMMC, for brevity)
assails in this petition for review on certiorari the decision dated
December 20, 1978 of the Court of Appeals in AC-G.R. CV No. 39196-R which
modified the award in favor of respondent Angela Estate, Inc. (AEI, for
brevity) by the Court of First Instance of Negros Occidental in Civil Case No.
4650.

The facts of the case are as follows: AEI is the owner of the sugar plantation No. 3-228, also known as
“Hacienda Helvetia”, situated in the Bacolod-Murcia Mill
District. Said plantation was adhered
to BMMC’s sugar mill by virtue of a milling contract executed sometime in 1916
between BMMC and AEI’s predecessor-in-interest, Gonzaga & Co. Said contract was to be in force for 30
years beginning with crop year 1920-1921, and provided that the resulting
product would be divided in the ratio of 45% for the mill and 55% for the
planters.

The milling contract was amended sometime in 1936, whereby the
planters’ share was increased to 60% and the contract’s duration extended to 45
years. Further concessions to the
planters were granted by BMMC’s Board of Directors when it adopted a resolution
on August 20, 1936 known as “Acta No. 11, Acuerdo No. 1” which increased
the planters’ share of the sugar and molasses produced over and above the 60%
share that the planters are entitled to under the amended milling contract,
subject to certain conditions. Paragraph 9 of the aforesaid resolution stated, to wit:

9.a A que si durante la vigencia de este Contrato de Molienda
Enmendado, las centrales azucareras, de Negros Occidental cuya production anual
de azucar centrifugado sea mas de una tercera parte de la production total
anual de todas las centrales azucarera de Negros Occidental, concedieran a sus plantadores mejores condiciones que
las estipulados en el presente contrato, entonces esas mejores condiciones se
concederan y por el presente se
entenderan concedidas a los plantadores que hayan otorgado este Contrato de Molienda Emendado.^[1]

AEI became the owner of the plantation beginning crop year
1953-1954. On June 2, 1958, AEI
instituted the present action against BMMC, docketed as Civil Case No. 4650,
seeking to compel the latter to increase the former’s share of the sugar produced
from its cane, invoking paragraph 9 of “Acta No. 11”. AEI claimed that during crop year 1956-1957,
three sugar centrals in Negros Occidental had combined production of more than
one-third of all the centrifugal sugar pro­duced by all the sugar centrals in
Negros Occidental and that these sugar centrals granted their adhered planters
shares bigger than that stipulated in BMMC’s amended milling contract. The complaint was later amended to include
claims covering crop years 1958-1959 through 1962-1963.

BMMC resisted AEI’s claim, alleging that paragraph 9 of
“Acta No. 11” never became operative in view of the non-fulfillment
of the conditions found in paragraph 11 thereof, which provided, to wit:

11.a Estas enmiendas surtiran todos sus efectos desde que todos los duenoos de haciendas o terrenos en
los que estan colocadas las vies ferreas principales del Molino, hayan otorgado
e inscrito en el Registro de Titulos se esta Provincia el Contrato de Molienda
Enmendado, y entonces, estas enmiendas, beneficiaran tambien a
auellos plantadores que habian otorgado el Conttrato de Molienda Enmendado con
annterioridad a la vigencia de estas enmiendas.

Entendiendose que despues de que se hayan complido ciertas
condiciones convenidas entre el Sr. R Nolan, uno de los abogados de la
compania, y el Sr. Alfredo Montelibano,
Presidente de la Asociacion se suprimiran el parafo 11 arribo transcrito las
palabras siguientes: ‘Estes enmiendas
suritan todos sus efectos desde que todos los dueños de haciendas O terrenos en
los ques eaten colocadas las vias ferreras principales del Molino, hayan
otorgado e inscrito en el Registrp de Titulos de esta Provincia, el Conttrato
Molienda Enmendado y entonces’ en
la palabra ‘estas’ que siga a la palabra ‘entonces’ se cambiara la letra ‘e’
minisccula por una Ietra ‘E’ mayuscula.’^[2]

BMMC further contended that the reports of the Sugar Quota
Administrator on which AEI premised its claim was hearsay and therefore
inadmissible, and that paragraph 9 referred to individual, not combined, annual
production of the sugar centrals giving better conditions to their planters.

In reply, AEI invoked the doctrine of res judicata, citing
the decision of this Court in the case of Montelibano vs. Bacolod Murcia
Co., Inc.,^[3]
which had involved crop years 1951-1952 to 1955-1956. BMMC disputed the applicability of said doctrine.

While the case was still pending, AEI filed another case,
docketed as Civil Case No. 7985, against BMMC for its additional share over and
above the 60% basic share for crop years 1963-1964 and 1964-1965, again
invoking paragraph 9 of “Acta No. 11”. BMMC raised the same defenses as in Civil Case No. 4650.

After trial on the merits, the lower court in Civil Case No. 4650
promulgated its decision on September 26, 1966, in favor of AEI, ordering BMMC
to grant the former additional shares of sugar over and above the basic 60%
share for crop years 1951-1952 to 1955-1956, inclusive, but excluding claims
for crop years 1957-1958 to 1962-1963. Both parties appealed to the Court of Appeals, where the case was
docketed as CA-G.R. No. 39196-R.

While the case was pending in the Court of Appeals, judgment was
rendered on September 26, 1974 in Civil Case No. 7985 in favor of AEI for its
increased share for crop years 1963-1964 and 1964-1965. BMMC appealed to the Court of Appeals, where
the case was docketed as CA-G.R. No. 56570-R. On September 6, 1978, the Court of Appeals rendered its decision in
CA-G.R. No. 56570-R, reversing the decision of the trial court and dismissing
the complaint. AEI brought the case to
this Court by way of a petition for review on certiorari, entitled Angela
Estate, Inc. vs. Bacolod-Murcia Milling Co., Inc. and Court of Appeals (hereinafter
referred to as the Angela Estate case), and docketed as G.R. No. L-49261. On September 26, 1986, We affirmed the
decision of the Court of Appeals,^[4] and
said decision has since become final and executory.

Meanwhile, in CA-G.R. No. 39196-R, the Court of Appeals modified
the judgment rendered in favor of AEI by deleting the awards made for crop
years 1951-1952 up to 1955-1956, while awarding the money value of the
increased shares for crop years 1956-1957 to 1962-1963. After its motion for reconsideration was
denied, BMMC brought this case to Us on a petition for review on certiorari.

We find the petition impressed with merit.

The issues raised in this case are similar to the ones raised in
the Angela Estates case, both of which involve (1) the correct interpretation
of paragraphs 9 and 11 of “Acta No. 11”; and (2) whether the
conditions set forth in said paragraphs have been met.

The Court of Appeals did not rule upon the correct interpretation
of paragraph 9, though the same was raised as an assignment of error by
BMMC. We agree with BMMC that the
condition in paragraph 9 should have been interpreted to mean that there should
be at least one central whose annual production is more than one-third of the
total production of all the sugar centrals in Negros Occidental, and which
gives better sharing participation to its planters. In the Angela Estate case, this Court held:

We agree with the petitioner that paragraph 9 is so ‘literally
clear’ that it leaves no room for interpretation. However, We do not subscribe to its interpretation that the
production of several centrals which give better concessions to planters must
be considered together to reach one-third of the total production of
centrifugal sugar in the province.

The use of the phrase ‘las centrales azucareras’ indicate that each
of the sugar mills was bound to grant better terms to the planters should the
stipulated conditions to met [sic]. Those individual sugar mills taken together had to be referred to as a
plurality. The word ‘centrales’ was
used primarily to express the intention
of the contracting parties to cover all the sugar centrals in the
province. Hence, ‘las centrales
azucareras’ should be understood in its distributive sense, that is any or
every or each sugar central. This interpretation is clearly explained by the Court of Appeals when it
said that:

“What the provisions obviously intends is to impose it as an
obligation on appellant to give increased participation to its planters only
when any one or more sugar central(s) would extend additional share in the
consideration of their individual and separate production, each extended
to the planters, more in the spirit of gen­erosity, but conditioned very
reasonably on one or more sugar centrals, each producing individually
more than 1/3 of the total production of centrifugal sugar of all sugar
centrals in the province, conceding the increased participation of their planters. Then, and only then, regardless of its rate
of production in any given year, appellant bound itself also to extend the same
increased participations to its planters.” (Italics supplied)

We fully agree with the interpretation given by respondent Court of
Appeals. Its interpretation is more
logical and appropriate than the submissions of petitioner, especially when it
is considered that:

“(1) The pertinent clause
of the subject provision does not say “the sugar centrals whose combined or
aggregate annual production should be more that one-third’ etc. but simply
‘the sugar centrals whose annual production be more that one-third,’ etc.

“(2) Although in the clause the term ‘sugar
centrals’ is in the plural form, its context makes it obvious that it is
intended to convey the singular term ‘any sugar central whose annual production
. . . be more than one-third’ etc. The
plural was used evidently [only] because there might be more than one sugar
central whose individual annual produc­tion was more than one-third.”^[5]

Inasmuch as AEI has not shown that the condition found in
paragraph 9, i.e., that there was at least one sugar central whose
annual production was more than one-third of the sugar produced by all the
centrals in Negros Occidental, and that this central had given better
concessions to its planters, had occurred, AEI is not entitled to the increased
shares it demanded from BMMC.

With regard to paragraph 11, We hold that Court of Appeals erred
in ruling that there was substantial compliance with the said first condition
of said paragraph. As We have said in
the Angela Estate case:

Paragraph 11, which sets forth the prerequisites before a planter
can enjoy increased participation, was incorporated in Acta No. 11 for a
definite purpose. By requiring that all
lands on which the milling company’s railway lines traverse, whether
planted to sugar or not, must sign the milling contract and cause its
registration in the Registry of Deeds, the milling company is assured of a
continuous right of way and a steady supply of canes during the milling season
(Exh 7, Folder of Exhibits, pp. 124 & 131).

We share the Court of Appeals’ view that the condition imposed in
paragraph 11 should be considered as ‘joint and collective’ obligations of all
the owners of haciendas or lands on which the principal railroad tracks of
respondent are located. The necessity
for such collective obligation cannot be overemphasized considering that a
continuous supply of sugarcane is the very lifeline not only of the milling
company but also of the planters. As
aptly stated by the respondent court, —

‘In the first place, as earlier adverted to, there is no proof,
against the denial of appellant that appellee’s milling contract had been
registered. The purpose of this
requirement goes into the essence of the contract or agreement in that
registration is the best assurance of the continued enjoyment of the right of
way even against third persons to whom the land may be sold or transferred, as
explained by appellant’s witness, Atty. Juan B. Solidum. The Resolution which was passed on the
appellant’s Board of Directors sole benevolent initiative, would require, in
consideration of the increased share conceded to all its planters, not just one
or some of them, but all the said planters collectively to see to it that all
of them execute and register their milling contracts. The obligation imposed on the planters is, therefore,
intended to be a joint and collective one, if the purpose of the concession is to be truly achieved which
was the very consideration for the concession or grant of additional shares to
the planters. The condition that
all the owners of all the haciendas or lands on which are located,
constructed or maintained the principal railroad tracks of appellant must (1)
adhere all such haciendas or lands under the “Contrato de Molienda” and
(2) register such contract with the Register of Deeds was accepted by appellee
was imposed under paragraph 11 of the Resolution, in its Answer to Defendant’s
Requests for Admission.” It was, therefore, improper, for lack of legal
warrant, for the court a quo to consider the compliance by appellee
alone, even without that of the rest of the planters of appellant, as ‘substantial
performance,’ sufficient to place appellant under obligation to grant the
additional share to appellee.”^[6]

Besides, there is nothing in the record that would indicate that
AEI itself had registered the milling contract with the Register of Deeds.

In view of the foregoing, AEI’s claim for additional milling for
crop years 1956-1957 through 1962-1963 can not be granted.

WHEREFORE, the decision appealed from is hereby REVERSED
and SET ASIDE and the instant
complaint DISMISSED.

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, and Regalado, JJ., concur.

^[1]
As translated in English, paragraph 9 reads:

“That upon a motion duly seconded,
the Board, in consideration of a petition of the planters made by a committee
appointed by the same, agrees to amend the amended milling contract by means of
the following:

x x x

“9. That if
during the existence of this Amended Milling Contract, the sugar centrals of
Negros Occidental whose annual production of centrifugal sugar be more that one
third (1/3) of the total annual production of all the sugar centrals of Negros
Occidental, should grant to their planters better conditions that those
stipulated in the present contract, then these better conditions shall be
granted and by these presents are understood granted to the planters who may
have signed this Amended Milling Contract”

See decision of the Court of Appeals, p. 11; Rollo of CA-G.R No. 39196-R, p.
288.

^[2]
Freely translated in English:

“1. That all the owners of the haciendas or
lands over which the principal railroad lines of the defendants are located
should have entered into and registered in the Registry of Deeds for the
Province of Negros Occidental the corresponding Amended Milling Contract; and

“2. The said requirement of the execution and
registration of the Amended Milling Contract may only be dispensed with if
certain conditions entered into between Mr. R. Nolan, one of the lawyers of the
company, and Mr. Alfredo Montelibano, President of the Association, shall be
complied with.”

See decision of the Court of
Appeals, p. 12; Rollo of
CA-G.R. No. 39196-R, p. 289.

^[3]
L-15092, 115 Phil. 27.

^[4]
144 SCRA 482.

^[5]
144 SCRA, at 491-992.

^[6]
144 SCRA, at 492-293.