Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-27084           July 31, 1968

ANGELA ESTATE, INC., and FERNANDO F. GONZAGA, INC. petitioners,
vs.
COURT OF FIRST INSTANCE OF NEGROS OCCIDENTAL, BACOLOD-MURCIA MILLING CO., INC.,
and THE BACOLOD-MURCIA SUGAR FARMERS CORPORATION,
respondents.

Carreon and Taada and Ramon A. Gonzales for petitioners.
Gianzon, Sison, Camus and Associates, Lasam, Dizon and Mirano and Barrera and Recto Law Office for respondents.

CASTRO, J.:

This is a petition for certiorari with preliminary injunction by the Angela Estate, Inc. and the Fernando F. Gonzaga, Inc., against the Court of First Instance of Negros Occidental, the Bacolod-Murcia Milling Co., Inc. and the Bacolod-Murcia Sugar Farmers Corporation.

All the petitioners and the private respondents are domestic corporations duly organized and existing under the laws of the Philippines. The Angela Estate, Inc. and the Fernando F. Gonzaga, Inc. (hereinafter referred to as the Landowners) are the owners of the Hacienda Helvetia, comprising lots 1071, 1072 and 1073 of the Bacolod cadastre.1 The Bacolod-Murcia Milling Co., Inc. (hereinafter referred to as the Central) is the owner and operator of the Bacolod-Murcia sugar mill, has operated the same since the 1920-1921 crop year, and manufactures sugar from sugar cane planted and grown by sugar cane planters in the Bacolod-Murcia mill district and surrounding areas. The Bacolod-Murcia Sugar Farmers Corporation (hereinafter referred to as the Planters) represents about 350 sugar planters-members, with an annual production of over 700,000 piculs of sugar, and a total acreage of about 10,000 hectares of land planted to sugar cane.

In 1920 the Central entered into identical printed milling contracts with the adherent planters in the Bacolod-Murcia mill district. In 1936 these milling contracts were superseded by identical printed amended milling contracts. Among the signatories were the predecessors-in-interest of the Landowners, then owners of the Hacienda Halvetia.

The Central undertook to construct, maintain and operate a wharf (which the adherent planters could use for the shipment of their sugar or the unloading of materials needed by them), and railroad lines for the transportation of sugar cane from the plantations to the central mill site, these obligations being imposed by paragraphs 3 and 5 (of the milling contracts) which provide: "Que el Molino construira y despues mantendra un pantalan que, sin perjudicar los intereses del Molino, el Plantador podra utilizar para el embarque de sus azucares y desembarque de los materiales y efectos que necesite. Entendiendose, sin embargo, que no se permitira al Plantador depositar sus azucares, materiales o efectos en dicho pantalan (cuyo pantalan ha sido construido mucho antes de esta fecha)." (par. 3) .

x x x           x x x           x x x

Que para el transporte de la canadulce desde los campos a la Central, el Molino construira, mantendra y operara en los sitios que crea conveniente, un ferrocarril de vapor o motor o de ambas clases, con sus correspondicates remales y desvios, de tal manera que ninguna parte de los terrenos adheridos a la Central como adaptables para el cultivo de la canadulce, estara a mas de una milla de distancia de dicho ramal. Igualmente construira y mantendra los patios convenientes para depositar los vagones cargados y vacios que sean necesarios. Entendiendose, sin embargo, que no obstante todo lo estipulado en este contrato referente a la construccion y functionamiento de un ferrocarril y desvios, queda convenido que el Molino, o sea la Bacolod-Murcia Milling Co., Inc., debido a la situacion economica actual de la misma en caso de que hasta ahora no se haya puesto via ferrea en los terrenos del Plantador, queda relevado de la obligacion de construir, extender o hacer llegar su ferrocarril a los terrenos del Plantador, y que dicho Plantador, sus herederos y causahabientes, se obligan a transportar la canadulce que produzcan los mencionadas terrenos y cargarla en los vagones de la Compania en la estacion de ferrocarril que el Molino, o sea la Bacolod-Murcia Milling Co., Inc. designe. Entendiendose ademas que el Molino, o sea la Bacolod-Murcia Milling Co., Inc., se reserva el derecho, cuando lo crea conveniente y su situacion economica lo permita, de construir, hacer funcionar y mantener el citado ferrocarril y desvios en lo que se refiere a los terrenos del Plantador arribanombrado, de conformidad con lo estipulado en el presente contrato. (par. 5) .

Concomitant to the obligations assumed by the Central, the adherent planters granted to it the corresponding rights of way on their lands for the duration of the milling contracts, that is, "por un periodo de cuarenta y cinco anos o cosechas, a contar desde la cosecha de 1920-1921." Thus

Que con el fin que el Molino puede llevar a cabo las empresas arriba mencionadas, el Plantador facilitara o hara que se obtenga y facilite, al Molino mediante pago a razon de TRESCIENTOS PESOS (P300.00), por hectarea, libre de gravamen, todos los terrenos que el Molino requiera la estacion experimental de una extension no mayor de 10 hectareas para el Sitio de la Central, bodegas, depositos, almacenes, y otros edificios, para la estacion, y patios del ferrocarril; y cedera como por la presente cede gratuitamente y libres de gravamen los terrenos que el Molino requiera para el tendido de las vias ferreas, sus ramales, desvios y patios, para los canales canalizos y tuberias para la traida de aguas, y para la construccion de los postes de telefonos. Entendiendose que el Plantador cedera, como por el presente cede gratuitamente, y libre de gravamen, cualquiera parte de sus terrenos que necesite el Molino para el tendido de las vias ferreas hasta los terrenos contiguos a los suyos a fin de que el Molino pueda moler las canas de otras plantaciones. Entendiendose, ademas, que todas las servidumbres para las vias ferreas, y para otros fines, que el Plantador por el presente concede al Molino, seran por un periodo de cuarenta y cinco aos o cosechas, a contar desde la cosecha de 1920-1921. (par. 9)

In the early 1920s the Central constructed railroad tracks on the lands of the adherent planters. One trunk thereof traversed the Hacienda Helvetia, occupying at least 3,245 lineal meters with a width of 7 meters, or a total of 22,715 square meters, more or less.

When their 1936 printed amended milling contracts expired at the end of the 1964-1965 crop year, the Landowners required the Central to remove the railway tracks in the hacienda and threatened to deny passage to its cane cars.

In September of 1965 the Central filed a complaint with the respondent Court of First Instance of Negros Occidental (CC 7697) against the Landowners, praying that an ex parte writ of preliminary injunction issue restraining the latter "from removing and/or destroying the railroad tracks in question and from impeding, obstructing or in anyway preventing the passage and operation of plaintiff's locomotives and cane cars over defendants' property during the pendency of this litigation," and that, after a hearing on the merits, the Central be awarded "a legal easement of the right of way" over the Hacienda Helvetia, plus costs. The Planters became a party to the suit as complainant-intervenor.

The Central took the position that it has acquired a legal easement on the hacienda through 45 years of continuous use of the railroad tracks under the aforesaid milling contracts and by virtue of article 649 of the Civil Code; that the hacienda completely surrounds the mill site on the eastern side where the railroad tracks enter the sugar central; that the continuous use of the railroad tracks is "absolutely indispensable" for hauling cane from the adherent plantations to the central, for the transportation of export and domestic sugar from the mill site to the Sto. Nio dock for shipment, and for the transportation of materials and fertilizers from said dock to thecentral; that there is no other place through which the railroad linescould reach the sugar central, except the indicated portions of the hacienda; that the destruction and/or removal of the railroad tracks in the hacienda would paralyze the operations of the Central and cause irreparable damage to it, the adherent planters, the sugar industry, and the national economy as a whole; and that the Landowners will not suffer any damage if the railroad tracks were allowed to remain in their hacienda.

The Landowners (Fernando F. Gonzaga, Inc. became a party to the action as intervenor-defendant) opposed the permanent establishment of the railroad tracks in their hacienda as well as the issuance of a writ of preliminary injunction, averring that the 1936 milling contract their predecessors-in-interest had entered inot with the Central has ceased to have effect, its term having expired at the end of the 1964-1965 crop year; that althout under article 649 of the Civil Code, an "owner, or any person who by virtue of a real right may cultivate or use any immovable, which is surrounded by other immovables pertaining to the other persons and without adequate outlet to a public highway, is entitled to demand a right of way through the neighboring estates, after payment of the proper in demnity," the Central waived this right when, in the aforesaid contract, it stipulated that the existence of the railroad tracks would be coterminous with the life of the contract; that the railraod tracks are neither necessary n or indispensable to the Central's operations, pointing out in this connection that at least two other suger centrals in Negros Occidental employ trucks and truck-trailers in transporting cane from plantations to mill sites, and the Central, in fact, during the 1964-1965 crop year, utilized such means of transportation in hauling cane from adherent plantations to its sugar mill; that the continued existence of the railroad tracks in their hacienda unduly prevents them, particularly the Fernando F. Gonzaga, Inc., from utilizing the hacienda, and makes it impossible for them to develop certain portions thereof into a real estate subdivision; and that their rights to the uninterrupted and exclusive use and enjoyment of their hacienda are far superior to the Central's claim of assement.On

October 4, 1965 the respondent court issued the writ of preliminary injunction prayed for by the Central, and maintained the same in its two subsequent orders of May 31 and November 26, 1966. It justified the writ by stating that "the continuance of the acts complained of during the litigation would work injustice to the plaintiff, and that great or irreparable loss and damage would result to the plaintiff before the matter can heard on notice."

Hence the present recouse by the Landowners. They ask this Court to restrain the respondent court from enfrocing the writ of preliminary injunction, and pray that after a hearing on the merits, the restraining order be made permanent and the orders complained of be annulled and set aside.

By resolution of Janaury 25, 1967, we gave due course to teh petition, and, on August 10, 1967, issued a writ of preliminary injunction enjoining the respondent court from enforcing the writ of preliminary injunction issued by it on October 4, 1965.

On October 12, 1967, acting upon a manifestation and motion that "through the mediation of the President of the Philippines, the parties herein have agreed, subject to this Court's approval, that the petitioners shall permit during the 1967-68 milling season only, the use of the railroad tracks passing through petitioners' properties for the same purpose for which they have been previously used, it being understood that this shall be without prejudice to the respective rights and positions of the parties herein and shall not be deemed a waiver of any of their respective claims and allegations either in the instant case or in Civil Case No 7697 of the Court of First Instance of Negros Occidental or in any other case between the same parties, future or pending," this Court resolved to approve the motion, and "as prayed for the parties, the writ of preliminary injunction issued by this Court is temporarily lifted up to and including June 30, 1968, to give effect to this agreement, and shall be deemed automtically reinstated beginning July 1, 1968."

On March 12, 1968 the Central filed a motion to admit supplemental memorandum. Attached to it as part thereof is a copy of the amended complaint it filed with the respondent court, which presents several "new issues." The first six, relief upon by the Central to sustain the writ of injunction issued by the respondent court, are quoted hereunder:

a) That under Sec. 7, Act 2479, the milling contracts that should be executed between the PLANTERS and the CENTRAL should `convey tot the Central such right of way as the Central may deem necessary for roads and railroads connecting the mill with the fields' which provision of law must be read into the said contract, and since a conveyance of a railroad right of way is not only an easement, but is a conveyance in fee simple of the strip of land covered thereby, then the provision of the milling contracts limiting the existence of the said right of way to 45 crop years or harvests is null and void, as being in conflict with the law and public policy, and since the Centrals is the owner of the said railroad right of way, then, it may not be prevented from using the same;

b) That assuming arguendo that there is no conveyance in fee simple of the strip of land over the right of way, and the limitation of 45 crop years or harvests is valid, the same has not yet expired for there were no harvests during the six years from 1940-41 to 1946-47, hence, landowners' threat of closing the right of way is premature:

c) That assuming that the 45 year -period has already expired, nevertheless, since according to sec. 1(a), subpar. 4(c) of Act 4166, `a plantation is adherent to a sugar mill by virtue of the sugar cane delivered to the mill regardless of the contract relations,' and that according to Asturias Sugar Co. vs. Montinola (69 Phil. 725) the contractual relations of planter and miller continues by operation of law even after the expiration of the contract, then, the contractual obligation of the defendants to give such rigth of way to plaintiff Central continues up to the present, hence, closing of said right of way is an impairment of that obligation;

d) That, moreover, the contract for rights of way between the Central and the adhered planters, and the adhered planters themselves, is one entire and indivisible contract, considering that the performance of the Planters in granting the rights of way is the consideration in the performance of the plaintiff in putting up the railways, without which collective promises oor commitments, the plaintiff could not have built said railways, and since the contract is entire, it may not be terminated piecemeal, for an entire contract stands or falls together, hence, since the contracts or rights of way of most adhered Planters have not expired (assuming those of the defendants have expired), the entire contract is not deemed to have expired:

e) That assuming that the defendants can now possess the land constituting the right of way, nevertheless, under art. 448 of the New Civil Code, the plaintiff being a possessor in good faith of the right of way and have built contruction thereon in the form of railway tracts, the same mya not be removed without payment of the value of the said railway tracks as well as the locomitives and cane cars using the same amounting to not less then P7 million, while on the other hand, the plaintiff is willing to buy the land covered by the railway tracks in Hacienda `Helvetia' at the price that may be fixed by the court, being smaller in value than the cost of improvements attached to the land, hence, impeding the passage thereof, which will amount to appropriating said improvements, without compensation, and without a hearing, hence, a denial of due process of law (sec. 1[1 & 2], ART. III, constitution);

f) That assuming that plaintiff Central is a possesor in bad faith, nevertheless, it is entitled to a legal easement under art. 649 of the New Civil Code, after payment of the proper indemnity.

In the said amended complaint, the Cental prays that the Landowners (Fernando F. Gonzaga, Inc. was made a party defendant therein) be ordered, jointly and severally, to pay attorney's fees and expenses of litigation plus costs. This amended complaint was made a party defendant therein) be ordered, jointly and severally, to pay attorney's fees and expenses of litigation plus costs. This amended complaint was admitted by the respondent court on April 5, 1968. The Planters, on its part, manifested that "it adopts and incorporates by reference all the allegations contained in the Amended Complaint."

As required in our resolution of April 23, 1968, the Landowners, on May 14, 1968, filed their reply to the supplemental memorandum. The Central, in turn, filed a rejoinder-memorandum.

The basic issues, to which all other issues are subsidiary, is whether the respondent court acted in excess of jurisdiction and/or with grave abuse of discretion in issuing the questioned writ of preliminary injunction.

Pertinent at this juncture is a summary of the whys and wherefores of a writ of preliminary injunction.

The writ may be issued at any time after the commencement of an action and before judgment, when it is established that the plaintiff is entitled to the relief demanded and only when his complaint shows facts entitling him to such relief.2 This extraordinary writ is not designed to protect contingent or future rights.3 "An injunction will not issue to protect a right not in esse and which may never arise or to restrain an act which does not give rise to a cause of action. (32 C.J. pp. 34, 35)"4 "Injunction, like other equitable remedies, will issue only at the instance of a suitor who has sufficient interest or title in the right or property sought to be protected ... . For the court to act, there must be an exsting basis of facts affording a present right which is directly threatened by the act sought to be ejoined. An impending or threatened invasion of some legal right of the complainant, and some interest in preventing the wrong sought to be perpetrated must be shown. It is always a ground for denying injunction that that party seeking it has insufficient title or interest to sustain it, and no cliam to the ultimate relief sought in other words, that he shows no equity. Want of equity on the part of the plaintiff in attempting to use the injunctive process of the court to enforce a mere barren right will justify the court in refusing the relief even though the defendant has little equity on his side. The complainants' right or title, moreover, must be clear and unquestioned, for equity, as a rule, will not take cognizance of suits to establish title, and will not lend its preventive adi by injunction where the complaint's title or right is doubtful or disputed. He must stand on the strength of his own right or title, rather than on the weakness of that claimed by his adversary."5 "The posibility of irreparable damage, without proof of violation of an actually existing right, is no ground for an injunction, being a mere damnum absque ijuria."6

Viewed in the light of the time-honored principles above restated, the problem at hand may be narrowed down to the inquiry: Ha the Central made allegations in its complaints (original as well as amended) sufficient in law to entitle it to the principle relief therein sought, that is, "a legal easement of the right of way" over the hacienda Helvetia, so as to justify the lower court's issuance of the disputed preliminary writ of injunction.?

By express provision of article 649 and 650 of the new Civil Code, the owner of an estate may claim a compulsory right of way only after he has established the existence of four requisites, namely, (1) the estate is sourrounded by other immovables and is without adequate outle to a public highway; (2) after payment of the proper indemnity; (3) the isolation was not due to the proprietor's own acts; and (4) the right of way claimed is "at a point least prejudicial to the servient estate, and in so far as consistent with this rule, where the distance from teh dominant estate to a public highway may be the shortest." The onus is upon the owner of the dominant estate to show by specific averments in his complaint the existence of the requisites or pre-conditions enumerated. And in granting a writ of preliminary injunction, the order of the court must show by specific finding, even preliminary, that the pre-conditions exist. Thus

By express provision of law [Arts. 649 and 650, N.C.C.], therefore, a compulsory right of way can not be obtained unless the four requisites enumerated are first show to exist, and the burden of proof to show their existence was on the Central. Nowhere in the complaint is any specific averment, nor is there in the Court of First Instance orders for the issuance of the writ of temporary injunction, and denying its reconsideration, any specific findings, even preliminary, that each and everyone of the four preconditions do exist. ... This deficiency made the issuance of a preliminary injunction improvident and artibrary, for the first condition for the granting of the writ is `that the plaintiff is entitled to the relief demanded' (sec. 3[a], Rule 58, Revised Rules) and `that the complaint in the action is verified, and shows facts entitleng the plaintiff to the relief demanded (sec. 4[a], Rule 58).7

Let us now take a look at the original complaint.

The Central alleged therein that the hacienda helvetia completely surrounds the mill site "at its eastern side where the railroad tracks enter." This allegation hardly satisfied requisite (1) above, for it fails to aver that it is "without adequate outlet to a public highway." The Central's own " Sketch" (annex A) conclusively shows that the mill site is easily accessible from various points through the existing provincial roads of Bacolod City, Bago and Murcia, aside from the main roads in Bacolod City itself.

The allegation in the complaint that the railroad tracks are "absolutely indispensable" for the operation of the Central is belied by the fact that during the 1964-1965 crop year, most of the sugar cane harvested in the adherent plantations was hauled to the Central by the use of trucks and truck-trailers. This is the same means of transportation used by two new sugar centrals in Negros Occidental the First Farmers Milling Company and the AIDSISA following the universal practice in Hawii.8 It may be true that the railroad tracks provide an economical and convenient means of transportation to and from the mill site. Unfortunately, our Civil Code speaks of necessity and not of comfort and convenience.9

The Central also allegation that it is wiling to pay a "reasonable compensation to be fixed by the Court," corresponding to the value of the 22,712-sq m. portion of the hacienda traversed by the railroad tracks, as well as the resultant damages. We observe, however, that this manifestation of willingness to pay was made for the first time only in the Central's complaint, and this only after the Landowners had made known their intention to make full use of their hacienda for their own purposes. The Central, before then, amde no genunine attmpt to negotiate with the Landowners for the continued use of the railroad tracks, and kept on using them for its benefit, totally disregarding the proprietary rights of the Landowners.

Likewise the Central has not demonstrated that the isolation of the mill site assuming that isolated it is was due to the Landowner's acts. With full awarness that the conventional easement of right of way would expire at the end of the crop year 1964-1965 which means that from then on the Landowners would be freed from the burdens imposed by the covenants entered into by their prodecessors-in-interest the Central did not seasonably pursue steps to prevent the inevitable isolation consequent to the terminaiton of the termination of the printed amended milling contracts of 1936.

Apparently realizing that its original complaint fails to state a solid cause of action upon which may be leglly predicated the issuance of the writ of injunction in question, the Central abondoned its original theory. In its amended complaint is the altogether new thematic insistence that the Central, by virtue of specifically named laws and legal principles, has become the owner of the strip of land traversed by the railroad tracks in the hacienda Helvetia, which dominion sufficiently invests the disputed writ of injunciton with instrinsic validity.

This new development has compelled us to examine the allgations of hte amended complaint and their implications. After mature deliberation, we reach the view that the said amended complaint does not render the Central's position any less untenable.The Central initially maintans therein that its right to the continued use of the railroad tracks traversing the hacienda, after the printed amended milling contracts of 1936 expired with the 1964-1965 crop year, is authorized by sections 2 an d7 of Act 2479 (enacted February 5, 1913), otherwise known as the "Sugar Central Act." These sections read:

SEC. 2. It shall be the duty of this board to promote and aid in the estblishement of sugar centrals with their machinery, equipment, rights of way, railroads, and other apprutenances for the manufacture of sugar and industries derived therefrom in the sugar-producing provinces, if in its judgment the logical conditions warrant the establishment of a sugar central.

SEC. 7. A sum not to exceed two million pesos of the gold stantard fund shall be available for investment by teh Insular Trasurer, with the approval of the Governor-General , in accordance with the provisions of this Act: Provided, That the central sugar board shall not purchase bonds of any corporation except under the following terms and conditions, among others: That the amount of bonds issued by the corporation shall not exceed sixty per centum of the value of the property offered as security ; that before before such purchase is made, such corporation shall have contracts with the owners of not less than one thousand hectares of land suitable for the cultivation of sugar, obligating such owners to cultivate in sugar cane a reasonable area of their holdings and to deliver and sell to the corporation all the sugar can produced on such land and to convey to the corporation such rights of way as the corporation may deem necessary for roads and railroads connecting the mill with the fields; ..

It is argued that Act 2479 envisioned a sugar central and "railroads connecting the same to the plantations and rights of way for the said railroads;" that the Central having been created and financed by the said Act, the printed amended milling contracts of 1936 were also entered into in accordance with the intendment and provisions thereof; that the underscored words of section 7 above, reading "to convey to the corporation such rights of way as the corporation may deem necessary for roads and railroads connecting the mill with the fields," must be construed to means "to transfer title," and the words "such rights of way" include not only the easement of railroad rights of way but also the strips of land traversed thereby; that, therefore, the quoted portion of section 7 should be understood to means to transfer to the Central tittle to such rights of way as it may deem necessary for railroad tracks, including the strips of land of the hacienda Helvetia and other areas surrounding the mill site traversed by the railroad tracks; and that the amended milling contract of 1936 in so far as it did not provide for such transfer or conveyuance, but instead provided for a "45-year contractual limitation," is null and void, and in violation of sections 2 and 7 of said Act, in relation to article 130610 of the new Civil Code.

The construction given by the Central to the word "convey" is its broad and comprehensive meaning, that is, to transfer property or title to property from one person to another.11 The word "convey" may, however, include any other transaction by which any interest in real estate is created, short of transferring title thereto.12 And construing the word in reference to the entire context of section 7, supra, more specifically in the light of the words, "rights of way," we hold that when the Philippine Legislature used the word "convey," it intended merely to allow, to permit, to grant, the Central "such rights of way" in the hacienda Helvetia and other surrounding areas, short of transferring ownership of the strips of land traversed by such rights of way.

A "right of way" is an easement, an encumbrance on a servient estate, a real right of limited use without possession and ownership of the land upon which the easement was established.13 This, we are persuaded, is the meaning of the word "servidumbres" as used by the parties in the printed amended milling contract of 1936, which word, we must assume, was deliberately employed by them to express the real intention of the Act itself and their own: ".. que todas las servidumbres para las vias ferreas, y para otros fines, que el Plantador por el presente concede al Molino, seran por un periodo de cuarenta y cinco aos of cosechas, a contar desde la cosecha de 1920-1921." This conclusion is fortified by teh admonition of the Civil Code that conveyance should be interpreted to effect "the least transmission of rights"14 and is there a better example of least transmission of rights than merely allowing or permitting the use without transfer of posssession and ownership of the strip of land traversed by the railroad tracks? At all events, if we are to follow the theory espoused by the Central, the use of the term "rights of way" in sections 2 and 7 of Act 2479 would be a patent superfluity. For if the said sections already conveyed to the Central the ownership of the land on which the railroad tracks are laid, the law itself would have dispensed with any mention or reference to "rights of waw." We surmise that the law advisedly did not purport to convey in fee simple the affected strips of land because if it did so it would perhaps be afflicted with constituional infirmity.

The next contention of the Central is that in view of the provisions of section 2 and 7 of Act 2479, supra, the they provided a contractual limitation of 45 years. To our mind, this does not merit extended attention. For there is nothing in the entire context of the said Act nor in article 1306 of the new Civil Code (cited by the Central in connection with the Act) that supports, either expressly or inferentially, this proposition. Moreover, we regard the argument as pure casuistry. In the long span of 45 years, the Central not only did not question the validity of any single provision of the milling contracts but, as far as we gather from the record, even unremittingly exacted compliance therewith from the signatories thereto. Now that the term of the contracts has expired, and the Central finds itself beset with difficulties, it executes a complete turnabout and invokes the invalidity of the said contracts to relieve itself of the inconveniences and vicissitudes confronting it.

The next argument of the Central is that, assuming that the milling contracts are valid, its "right of way has not yet expired" for the reason that there were no harvests during the crop years 1941-42 to 1946-47, and for this reason the 45 crop years envisioned in the contracts would expire only with the crop year 1971-72. This argument is likewise specious. A close scrutiny of the milling contracts can yield no inference that the inability on the part of the adhered plantations to raise sugar cane during the crop years alluded to automatically extended the contractual period of 45 years. Besides, the issue presented is not really one of first impression. In Nueno vs. Angeles,15 we held that the occupation of the Philippines by the Japanese Imperial Forces did not suspend the running of the term of office of the members of the municipal board of Manila, and in two other cases,16 we ruled that the terms of contracts of lease of urban properties were not suspended by the fact that the lessees did not enjoy the possession of the leased properties during such occupation. Reasoning by analogy, we hold the view that the intendment of the rulings in the cases adverted to applies with equal force to resolve the issue at bar against the Central's pretension.

The Central further maintains that pursuant to section 1, subparagraph 4(c) of Act 4166, otherwise known as "the Sugar Limitation Law" (approved December 14, 1934), providing that

(c) The term "mill district" is used to mean a centrifugal sugar mill together with all plantations adherent thereto. A plantation is adhered by virtue of sugar cane being delivered therefrom to a mill regardless of contract relations between the mill company and the plantation owner and/or any other person cultivating sugar cane on the plantation,

and the following pronouncement made in Asturias Sugar Co. vs. Montinola (69 Phil. 725), 1wph1.t

Fue en virtud de las mencionadas Leyes No. 213 del Congreso de los Estados Unidos y No. 4166 de la Legislatura Filipina, como los recurridos se vieron obligados a moler sus canas en la Central de la recurrente. Hubo por consiguiente una indeclinable reasuncion tanto por los recurridos como por la recurrente de su contrato celebrado antes de la zafra de 1931-1932, reanudando entre si, las relaciones que entre ellos entonces existian, y viendose necesariamente obligadas a las prestaciones que se habian prometido mutuamente. Esto es obvio porque las obligaciones no solamente nacen de los contratos y cuasi contratos, y de los actos y omisiones ilicitos o culposos o negligentes sino tambien y mas principalmente, de la ley. (Art. 1089, Codigo Civil.)

the expiration of the term of the amended milling contracts of 1936 has not resulted in the absence of a contract between the parties, for Act 4166 stepped in to effect renewal of the said contracts, and because the rights of way are part thereof, these perforce continue to exist.

It is our view that the Sugar Limitation Law is erroneously invoked as authority to sustain the above proposition. Unlike sections 2 and 7 of Act 2479 which expressly provided for the establishment of "such rights of way as the corporation may deem necessary for roads and railroad connecting the mill with the fields." Act 4166, even with the amendments introduced by Commonwealth Acts 77 and 323 and Republic Acts 1072 and 1825, contains no provision conferring upon the Central the right to establish rights of way in the lands of the adherent planters. It would appear from its title and declaration of policy that Act 4166 was enacted solely for the purpose of limiting and allocating the production of sugar in the Philippines as well as regulating the processing and marketing thereof.

For disparity in factual settings, the doctrine enunciatad in Arturias is inapplicable. The case referred to a planter who had a verbal milling contract with a central before the crop year 1931-1932. Under this contract the former received from the latter a certain form of bonus as additional participation. In the crop years 1932-1933 and 1933-1934, the planter milled his sugar cane with another central. After the passage of Act 4166 in 1934, the planter resumed milling his sugar cane with first central. Resolving the question whether the planter was entitled to the same bonus which the central had given him in the 1931-1932 and previous crop years, this Court ruled in the affirmative, holding that there was an indeclinable reassumption both by the central and the planter of their contract subsisting before the 1931-1932 crop year, renewing the relations which between them then existed, they finding themselves necessarily obligated by the undertakings which they had mutually assumed. Apart, therefore, form the fact that the issue therein posed in completely alien to the main issue in the present case, which is whether the Central is entitled to a right of way over the hacienda Halvetia, the inescapable, fundamental and decisive difference is that the verbal milling contract of the parties in Asturias was deemed renewed to govern the relationship which existed between them; while in the case at bar, the amended milling contracts of 1936 were not renewed after they expired at the end of the 1964-65 crop year.

The Central further maintains that the amended milling contracts of 1936 constitute "one entire" and indivisible contract ," for the collective "one entire and indivisible contract," for the collective performance of the planters in granting the rights of way was the consideration of the Central in laying the railways, without which collective commitment the latter would not have built the tracks, and for this reason the "entire and indivisible contract" may not be terminated piecemeal, as to terminate the same would require the collective action of all the adhered planters.

The novelty of this argument does not imply its validity. The amended milling contracts were distinct contracts entered into by the Central separately with the individual planters. To say, in effect, that all the contracts created obligations not only between each individual planters and the Central but also between the planters themselves, isto offend against logic and common sense. But in any event, the rights of way granted by the so-called "entireand indivisible contract"all expired collectively at the same time at the end of the 1964-1965 crop year,so that whatever collective and indivisible obligations and covenants were supposedly agreed upon ceased to haveany forceand effect.

The Central finally contents that it is possessor in good faith or the right of way traversing the hacienda Helvitia. Invoking article 448 of the new Civil Code17 it argues it argues that the railroad tracks may not be removed without payment by the Landowners of their value as well as that of the locomotives and cane cars using the same, all amounting to not less than P7 million, and asserts that on the other hand, "the Central is willing to buy the land covered by the railway tracks in Hacienda 'Helvetia' at the price that may be fixed by the court, being smaller in value than the cost of improvements attached to the land.

Good faith is one of the basic concepts articulated in article448 of the Civil Code. It is present"where one builds or sows or plants on land in which he believes himself to have a claim of title."18 In this case,the Central cannot validly lay claim to that good faith, because it knew and and recodnized from as early as 1920 that the strip of land traversed by its railroad tracks was owned and possessed by the Landowners.

After anassiduous analysis and examination of the order a quo of October 4, 1965, the allegations of the complaint and the amended complaint, and the other pleadings in the record, we conclude that the Central's conventional right of wasy over the hacienda Helvetia ceased with the expiration of the amended milling contracts at the end of the 1964-1965 cropy year. In the absence of a renewal contract or the establisment of a compulsory sertude or right of way on the same spot and route which must be predicted on the satisfaction of the preconditions required by law, the subsists no right of way to be protected.

In our view, the following pronouncements made by Mr. Justice J.B.L. Reyes in Bacolod-Murcia Milling Co. vs. Capitol Subdivision, supra, control the present case:

In truth, the court of origin seems to have proceeded on the erroneous assumption that, even after expiration of its contractual right of way, petititoner Central was entitled to a compulsory right of way in the same location and route it had been using up to the present. This is not true: the Central's use of the present railway for the preceding 45 years was based on the assent of the Subdivision's predessors-in-interest, as evidenced by their milling contract, while a compulsory servitude of right of way on the same spot and route must be predicated on the minimum inconvenience to the would-be servient estate, in addition to the other requisites above set forth. There is no specific finding by the court of origin that the prerequisites exist, and the lack of it suffices to negate the propriety of the temporary injunction issued.

In issuing the preliminary writ for defendant to permit the Central to uset its railway in the manner established under the milling contract, the court of origin in effect extended that corresponding part of the contract even beyond the term stipulated by the parties. Such action is not warranted by law. The function of an injunction is the maintenance fo the status quo as of the time of its issuance, and at that time, the right of the Central under the milling contract had uncontrovertibly expired. It needs no emphasizing that the court can not create contracts between the parties.

x x x           x x x           x x x

[T]he preliminary injunciton was issued on an erroneous premise, 'the premature assumption that respondent Bacolod Murcia Milling Co., Inc., is entitled to the legal easement prayed for by it', since the existence of the statutory requisites for such easement had not been properly averred or proved, ... Of course, preconditions required by the Civil Code do actually exist; but until that is done, the right to the legal servitude is not clear, and the writ of injunction is unwarranted, and issued in grave abuse of discretion.19

ACCORDINGLY, the petition for certiorari is granted, and the three orders of October 4, 1965, May 31 and November 26, 1966 of the respondent court are annulled and set aside. The writ of preliminary injunction issued by this Court on August 10, 1967 is hereby made permanent. Cost against the private respondents.

Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Angeles and Fernando, JJ., concur.
Makalintal, J., did not take part.

Footnotes

1Lot 1073 and a portion of lot 1072 [lot 1072-C-3-B2] belong to the Angela Estate, Inc. ; lot 1071 and portions of lot 1072 [lot 1072-C-3-A and lot 1072-C-3-B-1] belong to the Fernando F. Gonzaga, Inc.

2Sec. 3(a), in relation to sec. 4(a), Rules of Court.

3Bacolod-Mucia Milling Co., Inc., et al. vs. Capitol Subdivision, et al., L-25887, July 26, 1966, 17 SCRA 736.

4Cited in North Negros Sugar Co. vs. Hidalgo, 63 Phil 671, 677.

5 28 American Jurisprudence, sec 26, p. 517. (emphasis ours)

6Note 3, 17 SCRA at p. 737.

7Bacolod-Murcia Milling Co., Inc., et al. vs Capitol Subdivision, Inc., supra, 17 SCRA at p. 736.

8See Opposition to Central's Urgent Petition to Dissolved Preliminary Injunction on Counterbond.

9Manresa, 5th ed., pp. 653-654.

10"ART. 1306. The contracting parties may establish such stipulation, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy."

119-A Words and Phares, pp. 215-216.

12Cf. Monte, et al. vs. Angeles, et al., 101 Phil. 563, 564-565, citing 13 CJ. 900, and 18 C.J.S. 92

13II Civil law, by Reyes and Puno, 67 ed., pp. 149, 151; 17-A Am. Jur., 619; Hicks Brothers vs. Swift Creek Mill Co., 57 L.R.A., 720, 721.

14Art. 1378, 1st sent., N.C.C.; Cf. Olino vs. Medina, 13 Phil 379.

1576 Phil. 12.

16Lo Ching vs. Court of Appeals, 81 Phil. 601; American Far Eastern School of Aviation vs. Aguila y Cia., 89 Phil. 292.

17The owner of the land on which anything has been built sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after propre indemnity. The parties shall agree upon the terms of the lease and ins case of disagreement, the court shall fix the terms thereof."

18Alburo vs. Villanueva, 7 Phil. 277, 280

1917 SCRA, pp. 738 and 739


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