101 - Republic vs. Acoje Mining Co.

Republic of the Philippines vs. Acoje Mining Company, Inc.
G.R. No. L-18062, February 28, 1963

Bautista Angelo, J.
Facts:
On May 17, 1948, defendant company requested the Director of Posts for the opening
of a post, telegraph and money order offices at its mining camp at Sta. Cruz, Zambales
to service its employees and their families living at the said camp. In reply, The Director
of Posts stated that is aside from free quarters, the company would also provide for all
essential equipment and assign a responsible employee to perform its duties of a
postmaster without compensation from his office until such time as funds therefor may
be available of. The company in turn signified its willingness to comply with the said
conditions.
Subsequently, the Director of Posts wrote again on April 11, 1949 stating that, as a
matter of policy, the company shall assume direct responsibility for whatever pecuniary
loss may be suffered by the Bureau of Posts by reason of any act of dishonesty,
carelessness or negligence on the part of the employee of the company who is
assigned to take charge of the post office. On September 2, 1949, the company
informed the Director of Posts of the passage by its board of directors a resolution
stating that the company shall accept full responsibility for all cash received by the
postmaster assigned by it to take charge of the post office branch.
The post office branch was opened at the camp on October 13, 1949 with Hilario M.
Sanchez, an employee of defendant company, as postmaster. On May 11, 1954,
Sanchez went on a three-day leave but never returned. The company immediately
informed the officials of the Manila Post Office and the provincial auditor of Zambales.
Upon checking of Sanchez’s accounts, a shortage amounting to P13,867.24 was found.
The Bureau for Posts demanded for payment of the amount but remained unheeded.
Thus, the government commended the present action seeking to recover the amount of
P13,867.24.
The trial court ruled in favor of the government, rejecting the contention of the defendant
company that the resolution adopted by it is ultra vires. However, since only the sum of
P9,515.25 was supported by evidence, judgment was rendered only for such amount.
Hence, this appeal.
Issue:
Whether or not the defendant company is estopped from claiming that the resolution of
its board of directors is ultra vires.
Held:
Yes. The defendant company is estopped from claiming that the resolution of its board
of directors is ultra vires.
The claim that the resolution adopted by the board of directors of defendant company is
an ultra vires act cannot be entertained it appearing that the same covers a subject
which concerns the benefits, convenience and welfare of its employees and their
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families. While as a rule, an ultra vires act is one committed outside the object for which
a corporation is created as defined by the law of its organization and therefore beyond
the powers conferred upon it by law, there are however certain corporate acts that may
be performed outside of the scope of the powers expressly conferred if they are
necessary to promote the interest or welfare of the corporation. Thus, it has been held
that “although not expressly authorized to do so[,] a corporation may become a surety
where the particular transaction is reasonably necessary or proper to the conduct of its
business,” and here it is undisputed that the establishment of the local post office is a
reasonable and proper adjunct to the conduct of the business of defendant company.
Even assuming arguendo that the resolution in question constitutes an ultra vires act,
the same however is not void for it was approved not in contravention of law, customs,
public order or public policy. The term ultra vires should be distinguished from an illegal
act for the former is merely voidable which may be enforced by performance, ratification
or estoppel, while the latter is void and cannot be validated. Here, the Court finds it fair
to upheld the resolution on the ground of estoppel.
It is a rule that where the ultra vires transaction has been executed by the other party
and the corporation has received the benefit of it, the law interposes an estoppel, and
will not permit the validity of the transaction or contract to be questioned.
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101 - Republic vs. Acoje Mining Co.

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Republic of the Philippines vs. Acoje Mining Company, Inc.

G.R. No. L-18062, February 28, 1963

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