MONTELIBANO VS BACOLOD-MURCIA CASE DIGEST
G.R. No. L-15092 May 18, 1962
ALFREDO MONTELIBANO, ET AL., plaintiffs-appellants,
vs.
BACOLOD-MURCIA MILLING CO., INC., defendant-appellee.
ALFREDO MONTELIBANO, ET AL., plaintiffs-appellants,
vs.
BACOLOD-MURCIA MILLING CO., INC., defendant-appellee.
CORPORATION LAW; ULTRA-VIRES ACTS
FACTS:
- Plaintiffs-appellants, Alfredo Montelibano, Alejandro Montelibano, and the Limited co-partnership Gonzaga and Company, had been and are sugar planters adhered to the defendant-appellee's sugar central mill under identical milling contracts.
- Said contracts were stipulated to be in force for 30 years and provided that the resulting product should be divided in the ratio of 45% for the mill and 55% for the planters.
- Sometime, it was proposed to execute amended milling contracts, increasing the planters' share to 60% but extending the operation of the milling contract from the original 30 years to 45 years. To this effect, a printed Amended Milling Contract form was drawn up. The Board of Directors of the appellee Bacolod-Murcia Milling Co., Inc., adopted a resolution granting further concessions to the planters over and above those contained in the printed Amended Milling Contract.
- The bone of contention is paragraph 9 of this resolution
- Appellants initiated the present action, contending that three Negros sugar centrals (La Carlota, Binalbagan-Isabela and San Carlos) had already granted increased participation (of 62.5%) to their planters, and that under paragraph 9 of the resolution, the appellee had become obligated to grant similar concessions to the plaintiffs (appellants herein).
- Bacolod-Murcia Milling Co., inc., resisted the claim, and defended by urging that the stipulations contained in the resolution was null and void, being in effect a donation that was ultra vires and beyond the powers of the corporate directors to adopt.
- After trial, the court below rendered judgment upholding the stand of the defendant Milling company, and dismissed the complaint. Thereupon, plaintiffs duly appealed to this Court.
Whether there is an ultra-vires act
HELD:
- NO. It must be remembered that the controverted resolution was adopted by appellee corporation as a supplement to, or further amendment of, the proposed milling contract, and that it was approved twenty-one days prior to the signing by appellants of the Amended Milling Contract itself; so that when the Milling Contract was executed, the concessions granted by the disputed resolution had been already incorporated into its terms. No reason appears of record why, in the face of such concessions, the appellants should reject them or consider them as separate and apart from the main amended milling contract, specially taking into account that appellant Alfredo Montelibano was, at the time, the President of the Planters Association
- There can be no doubt that the directors of the appellee company had authority to modify the proposed terms of the Amended Milling Contract for the purpose of making its terms more acceptable to the other contracting parties.
- The rule is that It is a question, therefore, in each case of the logical relation of the act to the corporate purpose expressed in the charter. If that act is one which is lawful in itself, and not otherwise prohibited, is done for the purpose of serving corporate ends, and is reasonably tributary to the promotion of those ends, in a substantial, and not in a remote and fanciful sense, it may fairly be considered within charter powers. The test to be applied is whether the act in question is in direct and immediate furtherance of the corporation's business, fairly incident to the express powers and reasonably necessary to their exercise. If so, the corporation has the power to do it; otherwise, not.
As the resolution in question was passed in good faith by the board of directors, it is valid and binding, and whether or not it will cause losses or decrease the profits of the central, the court has no authority to review them.
They hold such office charged with the duty to act for the corporation according to their best judgment, and in so doing they cannot be controlled in the reasonable exercise and performance of such duty.
And it appearing undisputed in this appeal that sugar centrals of La Carlota, Hawaiian Philippines, San Carlos and Binalbagan have granted progressively increasing participations to their adhered planter the appellee Bacolod-Murcia Milling Company is, under the terms of its Resolution duty bound to grant similar increases to plaintiffs-appellants herein.