[with Resolution of September 29, 1962]

Appeal on points of law from a judgment of the Court of First
Instance of Occidental Negros, in its Civil Case No. 2603, dismissing
plaintiff’s complaint that sought to compel the defendant Milling
Company to increase plaintiff’s share in the sugar produced from their
cane, from 60% to 62.33%, starting from the 1951-1952 crop year.

It is undisputed that plaintiffs-appellants, Alfredo Montelibano,
Alejandro Montelibano, and the limited copartnership Gonzaga and
Company, had been and are sugar planters adhered to the
defendant-appellee’s sugar central mill under identical milling
contracts. Originally executed in 1919, said contracts were stipulated
to be in force for 30 years starting with the 1920-21 crop, and
provided that the resulting product should be divided in the ratio of
45% for the mill and 55% for the planters. Sometime in 1936, it was
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. To this effect, a printed
Amended Milling Contract form was drawn up. On August 20, 1936, the
Board of Directors of the appellee Bacolod Murcia Milling Co., Inc.,
adopted a resolution (Acta No. 11, Acuerdo No. 1) 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, that reads as follows:

“ACTA NO. 11
SSESION DE LA JUNTA DIRECTIVA
AGOSTO 20, 1936

* * * * * * *

Acuerdo No. 1—Previa moeion debidamente secundada, la Junta en
consideraci6n a una peticion de Ios pkintadores hecha por un comite
nombrado por los mismos, acuerda enmendar el contrato de molienda
enmendado mediante las siguientes:”

* * * * * * *

“9.a Que si durante la vigencia de este contrato de
Molienda Enmendado, las centrales azucareras, de Negros Occidental,
cuya produccion anual de azucar centrifugado sea mas de una tercera
parte de la produccion total antfal de todas las centrales azucareras
de Negros Occidental, concedieren a sus plantadores mejores condiciones
que las estipuladas en el presente contrato, entonces esas mejores
condiciones se concederan y por el presente, se enten-deran concedidas
a los plantadores que hayan otorgado este Contrato de Molienda
Enmendado.”

Appellants signed and executed the printed Amended Milling Contract
on September 10, 1936; but a copy of the resolution of August 20, 1936,
signed by the Central’s General Manager, was not attached to the
printed contract until April 17, 1937; with the notation—

“Las enmiendas arriba transcritas forman parte del
contrato de molienda enmendado, otorgado por— y la Bacolod Murcia
Milling Co., Inc.”

In 1953, the appellants initiated the present action, contending
that three Negros sugar centrals (La Carlota, Binalbagan-Isabela and
San Carlos), with a total annual production exceeding one-third of the
production of all the sugar central mills in the province, had already
granted increased participation (of 62.5 %) to their planters, and that
under paragraph 9 of the resolution of August 20, 1936, heretofore
quoted, the appellee had become obligated to grant similar concessions
to the plaintiffs (appellants herein). 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.

We agree with appellants that the appealed decisions can not stand.
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 on August 20, 1936,
twenty-one days prior to the signing by appellants on September 10, of
the Amended Milling Contract itself; so that when the amended 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 (Exhibit 4, p. 11) that had agitated for the concessions
embodied in the resolution of August 20, 1936. That the resolution
formed an integral part of the amended milling contract, signed on
September 10, and not a separate bargain, is further shown by the fact
that a copy of the resolution was simply attached to the printed
contract without special negotiations or agreement between the parties.

It follows from the foregoing that the terms embodied in the resolution of August 20, 1936 were supported by the same causa
or consideration underlying the main amended milling contract; i.e.,
the promises and obligations undertaken thereunder by the planters,
and, particularly, the extension of its operative period for an
additional 15 years over and beyond the 30 years stipulated in the
original contract. Hence, the conclusion of the court below that the
resolution constituted gratuitous concessions not supported by any
consideration is legally untenable.

All disquisition concerning donations and the lack of power of the
directors of the respondent sugar milling company to make a gift to the
planters would be relevant if the resolution in question had embodied a
separate agreement after the appellants had already bound
themselves to the terms of the printed milling contract. But this was
not the case. When the resolution was adopted and the additional
concessions were made by the company, the appellants were not yet
obligated by the terms of the printed contract, since they admittedly
did not sign it until twenty-one days later, on September 10, 1936.
Before that date, the printed form was no more than a proposal that
either party could modify at its pleasure, and the appellee actually
modified it by adopting the resolution in question. So that by
September 10, 1936, defendant corporation already understood that the
printed terms were not controlling, save as modified by its resolution
of August 20, 1936; and we are satisfied that such was also the
understanding of appellants herein, and that the minds of the parties
met upon that basis. Otherwise there would have been no consent or
“meeting of the minds”, and no binding contract at all. But the conduct
of the parties indicates that they assumed, and they do not now deny,
that the signing of the contract on September 10, 1962 did give rise to
a binding agreement. That agreement had to exist on the basis of the
printed terms as modified by the resolution of August 20, 1936, or not
at all. Since there is no rational explanation for the Company’s
assenting to the further concessions asked by the planters before the
contracts were signed, except as further inducement for the planters to
agree to the extension of the contract period, to allow the company now
to retract such concessions . would be to sanction a fraud upon the
planters who relied on such additional stipulations.

The same considerations apply to the “void novation” theory of
appellees. There can be no novation unless two distinct and successive
binding contracts take place, with the later one designed to replace
the preceding convention. Modifications introduced before a bargain
become obligatory and can in no sense constitute novation in law.

Stress is placed on the fact that the text of the Resolution of
August 20, 1936 was not attached to the printed contract until April
17, 1937. But, except in the case of statutory forms or solemn
agreements (and it is not claimed that this is one), it is the assent
and concurrence (the “meeting of the minds”) of the parties, and not
the setting down of its terms, that constitute a binding contract. And
the fact that the addendum is only signed by the General Manager of the
milling company emphasizes that the addition was made solely in order
that the memorial of the terms of the agreement should be full and
complete.

Much is made of the circumstance that the report submitted by the
Board of Directors of the appellee company in November 19, 1936
(Exhibit 4) only made mention of the 90 per cent, the planters having
agreed to the 60-40 sharing of the sugar set forth in the printed
“amended milling contract”, and did not make any reference at all to
the terms of the resolution of August 20, 1936. But a reading of this
report shows that it was not intended to inventory all the details of
the amended contract; numerous provisions of the printed terms are also
glossed over. The Directors of the appellee Milling Company had no
reason at the time to call attention to the provisions of the
resolution in question, since it contained mostly modifications in
detail of the printed terms, and the only major change was paragraph 9
heretofore quoted; but when the report was made, that paragraph was not
yet in effect, since it was conditioned on other centrals granting
better concessions to their planters, and that did not happen until
after 1950. There was no reason in 1936 to emphasize a concession that
was not yet, and might never be, in effective operation.

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.” (Fletcher Cyc. Corp., Vol. 6, Rev. Ed.
1950, pp. 266-268)

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. Whether the business of a corporation should be operated at
a loss during depression, or close down at a smaller loss, is a purely
business and economic problem to be determined by the directors of the
corporation and not by the court. It is a well-known rule of law that
questions ox 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.”
(Fletcher on Corporations, Vol. 2, p. 390)

And it appearing undisputed in this appeal that sugar centrals of La
Carlota, Hawaiian Philippines, San Carlos and Binalbagan (which produce
over one-third of the entire annual sugar production in Occidental
Negros) have granted progressively increasing participations to their
adhered planters, at an average rate of—

62.333% for the 1951-52 crop year;

64.2% for the 1952-53;

64.3% for the 1953-54;

64.5% for the 1954-55; and

63.5% for the 1955-1956,

the appellee Bacolod-Murcia Milling Company is, under the terms of
its Resolution of August 20, 1936, duty bound to grant similar
increases to plaintiffs-appellants herein.

Wherefore, the decision under appeal is reversed and set aside; and
judgment is decreed sentencing defendant-appellee to pay
plaintiffs-appellants the differential or increase of participation in
the milled sugar in accordance with paragraph 9 of the appellee’s
Resolution of August 20, 1936, over and in addition to the 60%
expressed in the printed Amended Milling Contract, or the value thereof
when due, as follows:

0.333% to appellants Montelibano for the 1951-1952
crop year, said appellants having received an additional 2%
corresponding to said year in October, 1953; 2.333% to appellant
Gonzaga & Co., for the 1951-1952 crop year;

and to all appellants thereafter—

4.2% for the 1952-1953 crop year;

4.3% for the 1953-1954 crop year;

4.5% for the 1954-1955 crop year;

3.5% for the 1955-1956 crop year;

with interest at the legal rate on the value of such differential
during the time they were withheld; and the right is reserved to
plaintiffs-appellants to sue for such additional increases as they may
be entitled to for the crop years subsequent to those herein adjudged.

Costs against appellee, Bacolod-Murcia Milling Co.

Padilla, Bautista Angelo, Labrador, Conception, Barrera, Paredes, and Dizon, JJ., concur.

RESOLUTION

September 29, 1962

REYES, J. B. L., J.:

The appellee Bacolod-Murcia Milling Company has filed two motions to
reconsider, urging that our decision be set aside to give way for the
consideration of the issues of fact raised in its original answer to
appellants complaints, and for their resolution either by the court a quo or by the Court of Appeals.

We can not see our way clear to granting the motions taking into
account that the court of first instance, in its appealed decision
dismissing the complaint, limited itself exclusively to the questions
of law posited by the defendant Company, now appellee, and ignored all
its other defenses based on questions of fact. The appellee Company, in
turn, even when made aware of the intention of the plaintiffs to appeal
to this Court, did not ask the court below to make any findings on the
issues of fact raised by its other defenses. Neither has it called our
attention, during the period of more than two years that the appeal has
been pending in this Court, to the necessity of considering such
factual defenses. Indeed, appellee’s brief has been limited to argue
the issue of law that was raised by it and which was upheld by the
court of origin.

During the pendency of the appeal, the appellee had more than ample
opportunity to point out to the Court that the resolution of the issues
of law would not bar its other defenses. Even more, as appellee, it
could have discussed, under the Court’s doctrines, its other defenses
in its brief, by way of support of the dismissal made by the court of
first instance. As pointed out in several decisions, an appellee, who
is not an appellant, may even assign errors in his brief where his
purpose is only to maintain the judgment on other grounds, although not
to have the judgment modified or reversed.^[1] In fact, appellee could have asked this Court to refer the case to the Court of Appeals for resolution of the issues of fact.

Appellee has taken none of these various options. Instead, it
submitted the case for decision exclusively on the issue of law, and
has called attention to the issues of fact only when the decision went
against it. Now it wants the case remanded for another trial, another
decision, and, in all probability, another appeal, with all the
attendant delays.

Plainly, the course suggested can not be countenanced. The delay in
the administration of justice and the clogging of court dockets have
been a constant source of complaints in our country, and the policy of
this Court has ever been to discourage piecemeal appeals. Thus, this
Court has consistently ruled that a party defendant who demurs to the
evidence presented by the plaintiff, and obtains a dismissal on the
basis of its insufficiency, should not, in case that the dismissal is
reversed on appeal, be allowed to submit evidence in its own behalf. As
ruled In Moody, Aaronson & Company vs. Hotel Bilbao, 50 Phil., 198
(followed in many subsequent cases).

“The efforts of the courts should be concentrated on providing rules
which will avoid lengthy and expensive litigation, and which will
assist in the speedy disposition of cases”^[2]

Again, by resolution of 23 March 1956, this Court refused to
entertain a claim that a decision rendered by the Court of Appeals was
void for lack of jurisdiction over the amount in issue, ruling that a
party who allows an appeal to be considered and decided by the Court of
Appeals must be deemed to have waived so much of its claim as is in
excess of the jurisdiction of the Court of Appeals in order to
discourage the practice of accepting a decision, if favorable, and
attacking it for lack of jurisdiction when adverse.^[3]

Consistently with these precedents, the appellee in the case at bar,
having submitted the case on its legal issue without adverting to its
factual defenses until the case was decided, despite ample opportunity
to do so, must be regarded as having waived all such defenses. Its
inaction, in fact, is evidence of its intention to so waived.

Finally, the appellee Company contends that our judgment is illegal
in that the precise amount of sugar to which appellants are entitled is
not determined. This argument is untenable, for the Court has fixed the
additional percentages of sugar that under the contract appellants
ought to have received in each of the crop years specified in the
decision, so that the exact amount of piculs due becomes a matter of
arithmetical computation on the basis of the production records for
each year. This determination, like that of the interest on the market
value of the sugar improperly withheld by the milling Company, to run
from the time the various quantities of sugar should have been
delivered, can be ascertained by the court of origin in supplementary
proceedings in aid of execution under Rule 34, paragraph 3, of the
Rules of Court (Buenaventura vs. Fernan, G.R. No. L-14282, December 29,
1959; Deliva vs. Surtida, 92 Phil., 131; 48 Off. Gaz., (10) 4339;
Villones vs. Nable, 85 Phil., 43). Such supplementary proceedings in
aid of execution are neither a new trial nor a rehearing of the
original case (Villones vs. Nable, ante).

Wherefore, the motions for reconsideration are denied.

Bengzon, C.J., Padilla,Bautista Angelo, Labrador, Paredes, and Dizon, JJ., concur.

^[1] See cases collected in I. Moran, Comments on the Rules of Court, p. 712, footnotes 19 and 20.

^[2] See Arroyo vs. Azur, 76 Phil. 499. Demeterio vs. Lopez, 50 Phil., 45. Abriol vs. Homeres, 84 Phil., 531.

^[3] L-10096, Tyson Tan vs. Filipinas Cia Seguros