GODOY, JERICO U.

ALFREDO MONTELIBANO, ET AL. vs BACOLOD-MURCIA MILLING CO., INC

THE CASE:

The case arose when the central mill and herein respondent Bacolod-Murcia expressed their
concern to raise the share of the planters from 55% to 60% of the manufactured sugar and
resulting molasses, besides other concessions and extending the milling contract operation by 45
years.

The noted provision of the Amended Milling Contract states that in translated English terms
“grant their planters better conditions than those stipulated in this contract, then those better
conditions will be granted”. In lieu of this, some of the sugar centrals properly informed with the
said increase whereas the sugar central on the side of the petitioners were not properly laid.

The plaintiff filed a case to stop the implementation as to increase of their share same way as the
other sugar centrals, that, the resolution was not made without consideration.

The trial court ruled in favor of the respondent.

The matters reached the Supreme Court questioning as to whether the Board of Directors of
Bacolod-Murcia has the expressed powers to amend the Amended Milling Contract..

The Supreme Court ruled in the affirmative. The Supreme Court ruled that 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.

In the case at bar, 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. If the resolution was passed in absence of bad faith, the contract is
considered valid and binding even with or without the manifestation of profits or losses over the
company.

In all foregoing, the Court FAVORED the plaintiff.