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1.

SOLIDBANK CORP VS CA
Gateway obtained 4 foreign currency denominated loans from petitioner Solid Bank as capital for its manufacturing operations. The
loans were secured by Promissory notes and by assignment to Solid Bank of all the proceeds of Gateway's Back-end Services
Agreement with Alliance Semiconductors.
2.

However, Gateway failed to pay its obligations despite repeated demands from the petitioner. This prompted petitioner to file a
complaint for collection of sum of money.

3.

During the trial, Petitioner filed a motion for the production and inspection of documents after learning that Gateway already
received proceeds of its Back-end agreement with Alliance. The motion called for the inspecion of all books of accounts, financial
statements, receipts, checks, vouchers, and other accounting records. The court granted the motion.

4.

Subsequently, after a couple of postponements, Gateway was only able to produce the billings and not all the other documents.
The Court chastised it for not exerting due diligence in procuring the required documents and it ordered that those not produced
shall be deemed established in accordance with Solid Bank's claim.

5.

Gateway filed a petition for certiorari before the CA to nullify the 2 orders of the lower court. CA granted the petition and ruled
that the motion to produce and inspect failed to comply with Sec. 1, Rule 27 of the Ruled of Court. Hence this petition.
Issue: W/N the motion for production and inspection complied with Sec. 1, Rule 27 of the Rules of Court
HELD: NO (Petition denied).

1.

Rule 27 of the Revised Rules of Court permits "fishing" for evidence, the only limitation being that the documents, papers, etc.,
sought to be produced are not privileged, that they are in the possession of the party ordered to produce them and that they are
material to any matter involved in the action. A fishing expedition no longer precludes a party from prying into the facts underlying
his opponent's case. However, fishing for evidence has its limitations.

2.

Solidbank's motion was fatally defective and violates Sec. 1 Rule 27 due to its failure to specify with particularity the documents it
required Gateway to produce. Simply, the motion called for a blanket inspection, too broad and too generalized in scope. Its request
that "all documents pertaining to, arising from, in connection with or involving the Back-end Services Agreement" ask for a
promiscuous mass of documents.

3.

A motion for production and inspection of documents should not demand a roving inspection of a promiscuous mass of
documents. The inspection should be limited to those documents designated with sufficient particularity in the motion, such that
the adverse party can easily identify the documents he is required to produce.

4.

Since it is Solid Bank who asserted that Gateway already received payment from its Back-end Agreement with Alliance, then the
burden of proof is on its side. Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish
his claim or defense by the amount of evidence required by law. Throughout the trial, the burden of proof remains with the party
upon whom it is imposed, until he shall have discharged the same.

2. MANUFACTURERS HANOVER TRUST CO. v. GUERRERO


G.R. No. 136804 February 19, 2003
FACTS
The petition alleged the following:
On May 17, 1994, respondent Rafael Ma. Guerrero fled before the Regional Trial Court of Mania against Manufacturers
Hanover Trust Co. and/or Chemical Bank
Guerrero sought payment of damages allegedly for (1) illegally withheld taxed charged against interests on his checking
account with the Bank, (2) a returned check worth $18,000.00 due to signature verification problems; and (3)
unauthorized conversion of his account.
The bank filed its Answer alleging that Guerreros account is governed by New York law which does not permit any
Guerreros claims except actual damages.
Seeking the dismissal of Guerreros claims, the Bank filed a Motion for Partial Summary Judgment, supported by an
affidavit of New York attorney Alyssa Walden.
The RTC denied the Banks Motion for Partial Summary Judgment.
The Court of Appeals also dismissed the petition for certiorari and prohibition assailing the RTC Orders
ISSUE
Whether the Walden affidavit does serve as proof of the New York law and jurisprudence
HELD
The Walden affidavit stated conclusions from the affiants personal interpretation and opinion of the facts of the case vis--vis, the
alleged laws and jurisprudence without citing any laws in particular. While the attached copies of some US court decisions do not
comply with Section 24 of Rule 132 on proof of official records or decisions of foreign courts. Thus, the Walden affidavit did not
prove the current state of New York law and jurisprudence.
Hence, the petition is denied for lack of merit and Court of Appeals decision is affirmed.
3.Philippine National Bank vs. Manila Oil Refining& By-Products Company, Inc. (GR L-18103, 8 June 1922)
Philippine National Bank vs. Manila Oil Refining & By-Products Company, Inc.

[GR L-18103, 8 June 1922]First Division, Malcolm (J): 6 concur


Facts:
On 8 May 1920, the manager and the treasurer of the Manila Oil Refining & By-Products Company, Inc, executed and delivered to the Philippine
National Bank (PNB), a written instrument reading as follows: "RENEWAL. P61, 000.00MANILA, P.I., May 8, 1920. On demand after date we promise
to pay to the order of the Philippine National Bank sixty-one thousand only pesos at Philippine National Bank, Manila, P.I. Without defalcation, value
received; and do hereby authorize any attorney in the Philippine Islands, in case this note be not paid at maturity, to appear in my name and confess
judgment for the above sum with interest, cost of suit and attorneys fees of ten (10) per cent for collection, a release of all errors
and waiver of all rights to inquisition and appeal, and to the benefit of all laws exempting property, real or personal, from levy or sale. Value
received. No. Due MANILA OILREFINING & BY-PRODUCTS CO., INC., (Sgd.) VICENTE SOTELO, Manager. MANILA OIL REFINING & BY-PRODUCTS CO., INC.,
(Sgd.) RAFAEL LOPEZ. Treasurer." The Manila Oil Refining &By-Products Company, Inc. failed to pay the promissory note on demand. PNB
brought action in the Court of First Instance of Manila, to recover P61,000, the amount of the note, together with interest and costs.
Mr. Elias N. Recto, an attorney associated with PNB, entered his appearance in representation of Manila Oil, and filed a motion confessing
judgment. Manila Oil, however, in a sworn declaration, objected strongly to the unsolicited representation of attorney Recto. Later, attorney Antonio Gonzalez
appeared for Manila Oil and filed a demurrer, and when this was overruled, presented an answer. The trial judge rendered judgment on the
motion of attorney Recto in the terms of the complaint. In the Supreme Court, the question of first impression raised in the case
concerns the validity in this jurisdiction of a provision in a promissory note whereby incase the same is not paid at maturity, the
maker authorizes any attorney to appear and confess judgment thereon for the principal amount, with interest, costs, and attorney's fees, and
waives all errors, rights to inquisition, and appeal, and all property exemptions.
Issue [1]:
Whether the Negotiable Instruments Law (Act No.2031) expressly recognized judgment notes, enforceable under the regular procedure.
Held [1]:
The Negotiable Instruments Law, in section 5, provides that "The negotiable character of an instrument
otherwise negotiable is not affected by a provision which (b) Authorizes confession of judgment if the instrument be not paid at
maturity"; but this provision of law cannot be taken to sanction judgments by confession, because it is a portion of uniform law
which merely provides that, in jurisdictions where judgments notes are recognized, such clauses shall not affect the negotiable character
of the instrument. Moreover, the same section of the Negotiable Instruments Law concludes with these words: "But nothing in this section shall
validate any provision or stipulation otherwise illegal."
Issue [2]:
Whether provisions in notes authorizing attorneys to appear and confess judgments against makers should not be recognized in
Philippine jurisdiction by implication.
Held [2]:
Judgments by confession as appeared at common-law were considered an amicable, easy, and cheap way to settle and secure debts. They are quick remedy serve
to save the court's time. Time also save time and money of the litigants and the government the expenses that a long litigation entails. In one
sense, instruments of this character may be considered as special agreements, with power to enter up judgments on them, binding the parties to the result
as they themselves viewed it. On the other hand, are disadvantages to the commercial world which outweigh the considerations just mentioned? Such warrants of
attorney are void as against public policy, because they enlarge the field for fraud, because under these instruments the promissory
bargains away his right to a day in court, and because the effect of the instrument is to strike down the right of appeal accorded by
statute. The recognition of such form of obligation would bring about a complete reorganization of commercial customs and practices, with reference to
short-term obligations. It can readily be seen that judgment notes, instead of resulting to the advantage of commercial life the Philippines might be
the source of abuse and oppression, and make the courts involuntary parties thereto. If the bank has a meritorious case, the judgment is ultimately
certain in the courts. The Court is of the opinion thus that warrants of attorney to confess judgment are not authorized nor contemplated by
Philippine law; and that provisions in notes authorizing attorneys to appear and confess judgments against makers should not be recognized in this
jurisdiction by implication and should only be considered as valid when given express legislative sanction.

4. Air France v Carrascoso


Facts:
Air France issued to Carrascoso, a civil engineer, a 1st class round trip ticket from Manila - Rome. During the stopover at Bangkok,
the Manager of Air France forced plaintiff to vacate the 1st class seat because there was a "white man" who had better right to the
seat.
As a result, he filed a suit against Air France where the CFI Manila granted him moral and exemplary damages.
Issue:
Whether or not Carrascoso was entitled to the 1st class seat and consequently, whether or not he was entitled to the damages
awarded.
Held:
Yes to both.
To achieve stability in the relation between passenger and air carrier, adherence to the ticket issued is desirable. Quoting the court,
"We cannot understand how a reputable firm like Air France could have the indiscretion to give out tickets it never meant to honor
at all. It received the corresponding amount in payment of the tickets and yet it allowed the passenger to be at the mercy of its
employees. It is more in keeping with the ordinary course of business that the company should know whether or not the tickets it
issues are to be honored or not."
Evidence of bad faith was presented without objection on the part of the Carrascoso. In the case, it could have been easy for Air
France to present its manager to testify at the trial or secure his deposition but defendant did neither. There is also no evidence as
to whether or not a prior reservation was made by the white man.
The manager not only prevented Carrascoso from enjoying his right to a 1st class seat, worse he imposed his arbitrary will. He
forcibly ejected him from his seat, made him suffer the humiliation of having to go to tourist class just to give way to another
passenger whose right was not established. Certainly, this is bad faith.
Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness,

respect, courtesy and due consideration. They are entitled to be protected against personal is conduct, injurious language,
indignities and abuse from such employees. Any discourteous conduct on the part of employees towards a passenger gives the
latter an action for damages against the carrier.
Exemplary damages were also awarded. The manner of ejectment fits into the condition for exemplary damages that defendant
acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.
*Bad Faith - state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior
purpose
5. OIL AND NATURAL GAS COMMISSION v Court of Appeals Case Digest
OIL AND NATURAL GAS COMMISSION v CA
FACTS:
This proceeding involves the enforcement of a foreign judgment rendered by the Civil Judge of Dehra Dun, India in favor of the
petitioner, against the private respondent, PACIFIC CEMENT COMPANY, INCORPORATED. The petitioner is a foreign corporation
owned and controlled by the Government of India while the private respondent is a private corporation duly organized and existing
under the laws of the Philippines.
The conflict between the petitioner and the private respondent rooted from the failure of the respondent to deliver 43,000 metric
tons of oil well cement to the petitioner even it had already received payment and despite petitioners several demands. The
petitioner then informed the private respondent that it was referring its claim to an arbitrator pursuant to Clause 16 of their
contract which stipulates that he venue for arbitration shall be at Dehra dun.
The chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in favour of the petitioner setting forth the arbitral award. To
enable the petitioner to execute the above award, it filed a Petition before the Court of the Civil Judge in Dehra Dun. India praying
that the decision of the arbitrator be made "the Rule of Court" in India. This was objected by the respondent but foreign court
refused to admit the private respondent's objections for failure to pay the required filing fees. Despite notice sent to the private
respondent of the foregoing order and several demands by the petitioner for compliance therewith, the private respondent refused
to pay the amount adjudged by the foreign court as owing to the petitioner.
The petitioner filed a complaint with Branch 30 of the Regional Trial Court (RTC) of Surigao City for the enforcement of the
aforementioned judgment of the foreign court. The private respondent moved to dismiss the complaint. RTC dismissed the
complaint for lack of a valid cause of action. The petitioner then appealed to the respondent Court of Appeals which affirmed the
dismissal of the complaint. In its decision, the appellate court concurred with the RTC's ruling that the arbitrator did not have
jurisdiction over the dispute between the parties, thus, the foreign court could not validly adopt the arbitrator's award. The
petitioner filed this petition for review on certiorari,
ISSUE:
Whether or not the arbitrator had jurisdiction over the dispute between the petitioner and the private respondent under Clause 16
of the contract.
RULING:
The constitutional mandate that no decision shall be rendered by any court without expressing therein dearly and distinctly the
facts and the law on which it is based does not preclude the validity of "memorandum decisions" which adopt by reference the
findings of fact and conclusions of law contained in the decisions of inferior tribunals.
Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected by the fact that the procedure in the
courts of the country in which such judgment was rendered differs from that of the courts of the country in which the judgment is
relied on. If the procedure in the foreign court mandates that an Order of the Court becomes final and executory upon failure to pay
the necessary docket fees, then the courts in this jurisdiction cannot invalidate the order of the foreign court simply because our
rules provide otherwise.
WHEREFORE, the instant petition is GRANTED, and the assailed decision of the Court of Appeals sustaining the trial court's
dismissal of the OIL AND NATURAL GAS COMMISSION's complaint before Branch 30 of the RTC of Surigao City is REVERSED,
6.
HABALUYAS
ENTERPRISES,
INC.
and
PEDRO
HABALUYAS, petitioners,
VS.
JUDGE MAXIMO M. JAPSON, Manila Regional Trial Court, Branch 36; SHUGO NODA & CO., LTD., and SHUYA
NODA, respondents.
FACTS: Respondents have filed a motion for reconsideration of the Decision of the Second Division of the Court promulgated on
August 5, 1985 which granted the petition for certiorari and prohibition and set aside the order of respondent Judge granting
private respondents' motion for new trial.
ISSUE
Whether the fifteen-day period within which a party may file a motion for reconsideration of a final order or
ruling of the Regional Trial Court may be extended.
HELD: YES

SINCE, the law and the Rules of Court do not expressly prohibit the filing of a motion for extension of time to file a motion
for reconsideration of a final order or judgment.
The Court resolved that the interest of justice would be better served if the ruling in the original decision IN THE CASE OF
GIBS VS CFI (refer below) were applied prospectively from the time herein stated. The reason is that it would be unfair to deprive
parties of their right to appeal simply because they availed themselves of a procedure which was not expressly prohibited or
allowed by the law or the Rules. On the other hand, a motion for new trial or reconsideration is not a pre-requisite to an appeal, a
petition for review or a petition for review on certiorari, and since the purpose of the amendments above referred to is to expedite
the final disposition of cases, a strict but prospective application of the said ruling is in order. Hence, for the guidance of Bench and
Bar, the Court restates and clarifies the rules on this point, as follows:
1.) Beginning one month after the promulgation of this Resolution(May 30, 1986), the rule shall be strictly
enforced that no motion for extension of time to file a motion for new trial or reconsideration may be filed with the
Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and the Intermediate Appellate Court. Such a motion may
be filed only in cases pending with the Supreme Court as the court of last resort, which may in its sound discretion
either grant or deny the extension requested.
2.) In appeals in special proceedings under Rule 109 of the Rules of Court and in other cases wherein multiple
appeals are allowed, a motion for extension of time to file the record on appeal may be filed within the reglementary
period of thirty (30) days. If the court denies the motion for extension, the appeal must be taken within the original period,
inasmuch as such a motion does not suspend the period for appeal .The trial court may grant said motion after the
expiration of the period for appeal provided it was filed within the original period.
All appeals heretofore timely taken, after extensions of time were granted for the filing of a motion for new trial or
reconsideration, shall be allowed and determined on the merits.

(In the case of Gibbs vs. Court, of First Instance (80 Phil. 160), the Court dismissed the petition for certiorari and
ruled that the failure of defendant's attorney to file the petition to set aside the judgment within the reglementary period
was due to excusable neglect, and, consequently, the record on appeal was allowed. The Court did not rule that the
motion for extension of time to file a motion for new trial or reconsideration could not be granted.)
7. PHIL RABBIT VS ARCIAGA
148 SCRA 438 Civil Law Preliminary Title Application of Laws Finality of Judgment
On August 24, 1960, Taurino Singson as paying passenger on board a bus belonging to the Philippine Rabbit Bus Lines sustained
multiple serious physical injuries when the said bus crashed against an acacia tree somewhere in Balaoan, La Union. Thereafter, he
brought a complaint for contractual tort. In their answer, Philippine Rabbit interposed the defense that the collision was due to
fortuitous event. The case was set for trial but the case was dismissed for non appearance of the plaintiff (Singson). He then filed a
motion for relief on the grounds of equity. He averred that the jeepney he was riding on the way to court for trial had engine trouble
hence he was too late in court (when he arrived, the case was already dismissed.) Judge Ludivico Arciaga, the hearing judge,
granted the motion. Philippine Rabbit questioned the grant.
ISSUE: Whether or not the case filed by Taurino Singson should be dismissed.
HELD: Yes. Normally, a petition for relief may be granted by the courts but in this case, there is no reason to grant such. It appears
that in this case, Singson and his lawyer let 61 days lapse before filing their petition/motion for relief. Under the rules, a petition for
relief must be filed within 60 days from the order of dismissal otherwise, the judgment shall become final and executory. It is
already too late for Singson when he filed his petition on the 61st day. Equity aids the vigilant, not those who slumber on their
rights.
8. El Banco Espanol-Filipino vs. Vicente Palanca G.R. No. L-11390, March 26, 1918
El Banco Espanol-Filipino vs. Palanca
G.R. No. L-11390, March 26, 1918

* JURISDICTION, HOW ACQUIRED: Jurisdiction over the property which is the subject of the litigation may result either from a seizure
of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of
legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made
effective.
* The action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is expressed the idea that while it is not
strictly speaking an action in rem yet it partakes of that nature and is substantially such.
* DUE PROCESS IN FORECLOSURE PROCEEDINGS: Property is always assumed to be in the possession of its owner, in person or by
agent; and he may be safely held, under certain conditions, to be affected with knowledge that proceedings have been instituted
for its condemnation and sale.
FACTS:
Engracio Palanca Tanquinyeng y Limquingco mortgaged various parcels of real property in Manila to El Banco Espanol-Filipino.
Afterwards, Engracio returned to China and there he died on January 29, 1810 without returning again to the Philippines. The
mortgagor then instituted foreclosure proceeding but since defendant is a non-resident, it was necessary to give notice by
publication. The Clerk of Court was also directed to send copy of the summons to the defendants last known address, which is in
Amoy, China. It is not shown whether the Clerk complied with this requirement. Nevertheless, after publication in a newspaper of
the City of Manila, the cause proceeded and judgment by default was rendered. The decision was likewise published and afterwards
sale by public auction was held with the bank as the highest bidder. On August 7, 1908, this sale was confirmed by the court.
However, about seven years after the confirmation of this sale, a motion was made by Vicente Palanca, as administrator of the
estate of the original defendant, wherein the applicant requested the court to set aside the order of default and the judgment, and
to vacate all the proceedings subsequent thereto. The basis of this application was that the order of default and the judgment
rendered thereon were void because the court had never acquired jurisdiction over the defendant or over the subject of the action.
ISSUE:
* Whether or not the lower court acquired jurisdiction over the defendant and the subject matter of the action
* Whether or not due process of law was observed
RULING:
On Jurisdiction
The word jurisdiction is used in several different, though related, senses since it may have reference (1) to the authority of the
court to entertain a particular kind of action or to administer a particular kind of relief, or it may refer to the power of the court over
the parties, or (2) over the property which is the subject to the litigation.
The sovereign authority which organizes a court determines the nature and extent of its powers in general and thus fixes its
competency or jurisdiction with reference to the actions which it may entertain and the relief it may grant.
How Jurisdiction is Acquired
Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his submission to its authority, or it is
acquired by the coercive power of legal process exerted over the person.
Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the property under legal
process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein,
under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the
property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration of
the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the
action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustration of what we term
potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of
land. Here the court, without taking actual physical control over the property assumes, at the instance of some person claiming to
be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the
world.
In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is
expressed the idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is substantially such. The
expression "action in rem" is, in its narrow application, used only with reference to certain proceedings in courts of admiralty
wherein the property alone is treated as responsible for the claim or obligation upon which the proceedings are based. The action
quasi rem differs from the true action in rem in the circumstance that in the former an individual is named as defendant, and the
purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. All proceedings having
for their sole object the sale or other disposition of the property of the defendant, whether by attachment, foreclosure, or other
form of remedy, are in a general way thus designated. The judgment entered in these proceedings is conclusive only between the
parties.
It is true that in proceedings of this character, if the defendant for whom publication is made appears, the action becomes as to
him a personal action and is conducted as such. This, however, does not affect the proposition that where the defendant fails to
appear the action is quasi in rem; and it should therefore be considered with reference to the principles governing actions in rem.

9. Conde, et. al v. IAC

G.R. No. 70443


September 15, 1986
GUTIERREZ, JR., J.:
DESCRIPTION OF THE CASE:
This case is about the jurisdiction of the courts on fraud.
STATEMENT OF THE FACTS:
Braulio Conde (Conde), et. al. filed a complaint for the recovery of possession of a parcel of land. He also filed a petition
against Gutierrez (Gutierrez) for fraud. Conde claims that Gutierrez used fraud to acquire absolute ownership of the properties of
Esteban Guiterrez (Esteban) and Fermina Ramos (Fermina) by succession.
STATEMENT OF THE CASE:
Conde, et. al. initially filed a complaint for the recovery of possession of a parcel of land before the Court of First Instance
in Tarlac (Now Regional Trial Court Branch 64). After a full blown trial in the RTC Branch 64, Marcello Gutierrez lost the suit and was
ordered to pay the Conde, et. al.
Gutierrez filed a petition to the Court of Appeals (CA) which then reversed the decision of the RTC ordering Conde, et. al. to
deliver the property to Gutierrez. The decision became final and executory on December 20, 1982.
Conde, et. al. filed a petition before the RTC Branch 56, Third Judicial Region in Capas, Tarlac to annul the judgment of the
CA which was then dismissed for it had no jurisdiction to annul the judgment of the CA.
Conde, et. al. filed a motion for reconsideration before the respondent court which was then denied. A petiton for
certiorari, mandamus, and a writ of injuction was filled before the Intermediate Appellate Court (IAC) and raffled to the Third Special
Case Division. The court dismissed the case for lack of merrit on the grounds that the RTC has no jurisdiction to annul the IAC.
Finally, Conde, et. al., filed a motion for reconsideration to this court (Supreme Court - SC) where it was denied.
ISSUE:
Whether or not the courts have acted in grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the case
of fraud
Ruling:
The Petition is DISMISSED
There are two kinds of fraud, Intrinsic and Extrinsic. Intrinsic fraud is the presentation of false documents before the
courts, while extrinsic fraud is a fraudulent scheme that would prevent a party from having his day in court from presenting his/her
case.
The CA was correct in determining that the fraud committed by Gutierrez was intrinsic in nature. Even if the contention of
Conde, et. al. were true it would be of no merit because intrinsic fraud is not sufficient to attack a judgment of the court.
DISPOSITIVE PORTION:
WHEREFORE, the petition is DISMISSED for lack of merit. The respondents' counsel, Atty. Adelaido G. Rivera is fined Five Hundred
Pesos (P500) for his failure to act on the order to file comment.
SO ORDERED.
10. MONTELIBANO
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.
The contracts were stipulated to be in force for 30 years and that the resulting product should be divided in the ratio of 45% for the
mill and 55% for the planters. It was later proposed to execute amended milling contracts, increasing the planters' share to 60% of
the manufactured sugar and resulting molasses, besides other concessions, but extending the operation of the milling contract
from the original 30 years to 45 years.
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. Appellants signed and executed the printed
Amended Milling Contract but a copy of the resolution was not attached to the printed contract.
In 1953, the appellants initiated the present action, contending that three Negros sugar centrals had already granted increased
participation to their planters, and that under paragraph 9 of the abovementioned resolution, the appellee had become obligated to
grant similar concessions to the plaintiffs (appellants herein).
However, the appellee Bacolod-Murcia Milling Co., inc., resisted the claim, and defended by urging that the stipulations contained in
the resolution were made without consideration; that the resolution in question was, therefore, null and void ab initio, 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.

Issue: Whether or not the resolution is valid and binding between the corporation and planters.
Held: The Supreme Court held in the affirmative. 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.
It is a well-known rule of law that questions of policy or of management are left solely to the honest decision of officers and
directors of a corporation, and the court is without authority to substitute its judgment of the board of directors; the board is the
business manager of the corporation, and so long as it acts in good faith its orders are not reviewable by the courts. Hence, the
appellee Bacolod-Murcia Milling Company is, under the terms of its Resolution, duty bound to grant similar increases to plaintiffsappellants herein.

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