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 Antonio Jayme y Ledesma and his son Antonio G. Jayme (the Jaymes) 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, financed by the Philippine National Bank (PNB), failed to extend the railway to the Jaymes’ San Antonio and Santa Angela estates. Due to financial constraints, the Central’s board of directors (which included Antonio Jayme, Sr.) passed a resolution allowing compensation to affected planters at 30 centavos per kilometer per ton of cane hauled to the nearest station, which the Jaymes accepted and collected. The Jaymes subsequently filed suits for damages against the Central and PNB for losses from unharvested cane and lost lease opportunities. In turn, PNB filed collection suits against the Jaymes for unpaid loans. The trial court ruled against the Jaymes in their damage suits and in favor of PNB in its collection suits.

ISSUE

1. Whether the Central and PNB are liable for damages to the Jaymes for failing to extend the railway as stipulated in the Planter’s Contract.
2. Whether the Jaymes’ acceptance of the compensation resolution constituted a waiver of their right to claim damages for the non-extension of the railway.
3. Whether PNB, as financier, had any obligation under the Planter’s Contract.

RULING

The Supreme Court AFFIRMED the trial court’s decision in toto.
1. No liability for damages. The Jaymes’ claims for damages are without merit. The Central’s failure to extend the railway was due to legitimate financial inability, not bad faith.
2. Waiver through acceptance of compensation. Antonio Jayme, Sr., as a director, voted in favor of the board resolution providing monetary compensation for the lack of railway access. Both Jaymes accepted the payments under this resolution. This act constituted a clear waiver of their right to claim further damages for the same breach. They cannot accept the benefit of the alternative arrangement and later sue for damages based on the original unfulfilled obligation.
3. No PNB liability. PNB was not a party to the Planter’s Contract. Its role was merely that of a financier to the Central, and it was under no obligation to provide unlimited funds to fulfill the Central’s contractual duties. Therefore, PNB cannot be held liable for the Central’s breach.
4. Collection suits upheld. The Court found the Jaymes’ assignments of error in the collection suits (G.R. Nos. 4547 and 4573) to be entirely without foundation and upheld PNB’s right to collect the unpaid loans.

DOCTRINE:
A party who, with knowledge of a breach of contract, accepts and receives compensation offered as an alternative to the original obligation, and who participated in authorizing such alternative arrangement, waives the right to subsequently claim damages for that breach. The principle prevents a party from accepting a benefit and later contesting the validity or sufficiency of the consideration for that benefit.