G.R. No. 31624, 31625, 31626, 31627, 31628 / January 28, 1930
ANTONIO G. JAYME, ET AL. vs. THE BACOLOD-MURCIA MILLING CO., INC., ET AL. (Consolidated Cases)

FACTS

These are five consolidated cases arising from a “Planter’s Contract” between sugar planters (Antonio Jayme y Ledesma and his son Antonio G. Jayme) and the Bacolod-Murcia Milling Co., Inc. (the Central). The contract obligated the Central to construct and maintain a railway such that no part of the attached cane lands would be more than one mile from a branch line. The Central failed to extend the railroad to the Jaymes’ San Antonio and Santa Angela estates. Due to financial difficulties, the Central, with Antonio Jayme y Ledesma (a company director) voting in favor, adopted a resolution to compensate planters lacking rail access at a rate per kilometer for cane transported to the nearest station. The Jaymes accepted such payments for several years. Subsequently, the Jaymes sued the Central and the Philippine National Bank (which financed the Central) for damages due to the Central’s failure to build the railroad, claiming lost harvests and lost lease opportunities. The Central counterclaimed for rescission of the contract regarding the Santa Angela estate for the Jaymes’ alleged failure to plant the required cane area. The Bank, in separate actions, sued the Jaymes to recover various loan amounts.

ISSUE

1. Whether the Central and the Bank are liable to the Jaymes for damages due to the Central’s failure to extend the railroad as stipulated in the Planter’s Contract.
2. Whether the Jaymes’ acceptance of compensation under the Central’s resolution constitutes a waiver of their right to claim such damages.
3. Whether the Bank, as financier, shares liability for the Central’s alleged contractual breach.

RULING

The Supreme Court AFFIRMED the trial court’s decision in all respects, dismissing the Jaymes’ claims and ruling in favor of the Bank in its collection suits.

1. On the Claims for Damages against the Central: The Jaymes’ claim for damages is without merit. Antonio Jayme y Ledesma, as a director of the Central, participated in and voted for the resolution that provided monetary compensation to planters for the lack of railroad facilities. Both he and his son subsequently accepted and received these payments for several agricultural years. This conduct constitutes a waiver of their right to claim damages for the non-fulfillment of the railroad construction obligation. The principle of estoppel applies; they cannot accept the benefit of the alternative arrangement and later sue for damages based on the original unperformed term.

2. On the Liability of the Bank: The Bank is not liable. The Bank was not a party to the Planter’s Contract between the Jaymes and the Central. Its role was merely that of a financier to the Central. The Bank was under no contractual or legal obligation to provide unlimited funds to the Central to ensure the latter’s compliance with its contracts with third parties like the Jaymes.

3. On the Bank’s Collection Suits: The appellants’ arguments against their loan obligations to the Bank were found to be entirely without foundation and warranted no discussion. The trial court’s orders for the Jaymes to pay their outstanding debts to the Bank were upheld.

DOCTRINE:
A party who, with knowledge of a breach of contract, accepts performance or compensation different from that stipulated, and derives benefit therefrom, waives the right to claim damages for that breach. The principle prevents a party from affirming a contract in part and disaffirming it in another (i.e., “cannot eat their cake and have it, too”). Furthermore, a financing entity is not automatically liable for the contractual breaches of its debtor unless it is itself a party to the breached contract or has assumed such liability.