GR No.

L-15092 / May 18, 1962

Alfredo Montelibano et. al. v. Bacolod-Murcia Milling Co., Inc.

Facts:
Petitioners are sugar planters with milling contracts with Bacolod-Murcia for thirty years and with 55
percent share in the manufactured sugar and resulting molasses. Due to a proposal to increase planter’s
share, an Amended Milling Contract was drawn providing for longer contract period of 45 years and
increased share to sixty percent. The Board of Directors of the Bacolod-Murcia adopted a resolution
granting further concessions to planters over and above what was in the Amended Milling Contract.
Petitioners sign the amended contract twenty days after the resolution has been adopted. When they
claim their increased share, the milling company refused saying that the resolution was made without
consideration and thus, null and void being in effect a donation ultra vires and beyond the powers of
corporate directors to adopt. Planters filed action in court to enforce their claim but such was dismissed.
Hence, the appeal.

Issue:
Whether or not the planters can claim the increase in share in the amended milling contract.

Held:
Yes, the planters can claim the increase in share in the amended milling contract. When it was signed,
the concessions granted by the disputed resolution, which can be over and above the benchmark of
sixty percent provided in the amended contract, had already been incorporated into its terms, even
including the promises and obligations to be taken thereunder by the planters. The signing of the
amended contract gave rise to a binding agreement. Also, the act of the board of directors in adopting
the resolution was within its powers as it was done for the purpose of serving corporate ends and in
good faith. If an act of corporate directors is in direct and immediate furtherance of corporate
business, or is fairly incidental to the express powers, and reasonably necessary to their exercise, such
act may fairly be considered within their charter powers.