Republic v. Acoje Mining Company Inc.

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

FACTS:

Acoje Mining Company, Inc. wrote the Director of Posts requesting 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 that were living in said camp.

The request was approved on the condition that the company 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. A resolution to that effect was also adopted by the board of directors of the company expressing conformity to the above condition relative to the responsibility to be assumed by it in the event a post office branch is opened as requested.

The postmaster 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 of postmasters’ disappearance with the result that the accounts of the postmaster were checked and a shortage was found.

Several demands were made upon the company for the payment of the shortage in line with the liability it has assumed but failed. The company denied liability for said amount contending that the resolution of the board of directors wherein it assumed responsibility for the act of the postmaster is ultra vires.

ISSUE:

Whether the resolution issued by the board of directors is ultra vires.

RULING:

No. The claim that the resolution adopted by the board of directors of appellant company is an ultra vires act cannot be entertained it appearing that the same covers a subject which concerns the benefit, convenience and welfare of its employees and their 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 (19 C.J.S., Section 965, p. 419), 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 appellant company.

Indeed, such post office is a vital improvement in the living condition of its employees and laborers who came to settle in its mining camp which is far removed from the postal facilities or means of communication accorded to people living in a city or municipality.

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. It being merely voidable, an ultra vires act can be enforced or validated if there are equitable grounds for taking such action.Here it is fair that the resolution be upheld at least on the ground of estoppel.

*Case Digest by Nikki P. Ebillo, JD-4, Andres Bonifacio Law School, SY 2019-2020

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