Case Summary (G.R. No. L-18062)
Petitioner
Republic of the Philippines, plaintiff-appellee in the action to recover funds missing from the branch post office.
Respondent
Acoje Mining Company, Inc., defendant-appellant which adopted a board resolution undertaking responsibility for cash handled by the postmaster assigned from among its employees.
Key Dates
- May 17, 1948: Company requested establishment of post, telegraph and money order office at its camp.
- April 1, 1949: Director of Posts communicated conditions, including company assumption of responsibility for pecuniary losses caused by its assigned employee.
- September 2, 1949: Company transmitted board resolution agreeing to assume responsibility.
- October 13, 1949: Branch post office opened; Hilario M. Sanchez served as postmaster.
- May 11, 1954: Postmaster went on leave and did not return; a shortage was later discovered.
- September 10, 1954: Government filed suit in the Court of First Instance of Manila.
- February 28, 1963: Supreme Court decision (appellate disposition).
Applicable constitution: 1935 Philippine Constitution (decision predates the 1987 Constitution).
Applicable Law and Authorities Relied Upon
The court’s reasoning relies on corporate law doctrines concerning ultra vires acts, capacity to act as surety where necessary to corporate business, and equitable estoppel. The opinion cites authorities from 19 C.J.S. (Sections 965, 966, 976, 977) and precedents and treatises referenced in the record to support the propositions that (a) ultra vires acts may be enforceable between parties where one party has received benefits, and (b) a corporation may, although not expressly authorized, assume liability akin to suretyship when reasonably necessary to its operations.
Procedural History
After the company refused payment, the government instituted an action to recover the shortage alleged to be caused by the postmaster’s disappearance. The Court of First Instance found that of the P13,867.24 claimed, only P9,515.25 was supported by the evidence and rendered judgment for that amount. The trial court rejected the company’s defenses that its board resolution was ultra vires and that its liability was merely that of a guarantor. The company appealed to the Supreme Court.
Facts
The company requested establishment of a postal branch to serve its isolated mining camp. The Director of Posts conditioned approval on the company furnishing quarters, equipment, and assigning a responsible employee as postmaster, and further stated the policy that the company should assume responsibility for pecuniary losses caused by acts of dishonesty, carelessness or negligence of the assigned employee. The company’s board adopted a resolution expressly agreeing that “the requirement of the Bureau of Posts that the Company should accept full responsibility for all cash received by the Postmaster, be complied with.” The branch opened with a company employee as postmaster. The postmaster disappeared in 1954; audit revealed a shortage. The company refused to pay and raised defenses.
Issues Presented
- Whether the board resolution of the company accepting responsibility for cash received by the postmaster was ultra vires and therefore not enforceable.
- Whether the company’s assumed obligation was merely that of a guarantor (secondary liability) rather than primary liability as principal.
- Whether the government’s claim was supported by office records and evidence as to amount.
Ruling / Disposition
The Supreme Court affirmed the trial court’s judgment. It held that the company was liable for the shortage to the extent of P9,515.25 as supported by evidence. The Court rejected the company’s contentions that the resolution was ultra vires and that its liability was only as a guarantor.
Reasoning — Ultra Vires and Estoppel
The Court emphasized that the post office branch was established at the company’s request to benefit its employees, and the Director of Posts conditioned approval on the company’s assumption of responsibility. The company voluntarily adopted the resolution and obtained the benefit of a local postal facility. Under these circumstances the company was estopped from denying the obligation it undertook. The opinion distinguished mere ultra vires acts (voidable) from acts illegal or contrary to public policy (void); where an act is merely ultra vires and the corporation has received the contract’s benefit, equity and common authority support enforcing the transaction against the corporation. The Court cited the prevailing authorities that a party receiving full performance cannot accept benefits and then repudiate the transaction on an ultra vires defense; doing so would work greater wrong to the innocent party (here, the government). The Court further observed that the resolution concerned the welfare and convenience of employees and thus fell within actions reasonably necessary or proper to the conduct of the corporation’s business.
...continue readingCase Syllabus (G.R. No. L-18062)
Facts
- On May 17, 1948, 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 living in the camp.
- The Director of Posts conditioned consent upon the company furnishing free quarters, all essential equipment, and assigning a responsible employee to perform the duties of a postmaster without compensation from the Bureau until funds were available; the Director agreed to put up the requested offices subject to these terms.
- The company replied signifying its willingness to comply and requested the necessary forms for early establishment of the branch post office.
- On April 1, 1949, the Director of Posts reiterated policy: "In cases where a post office will be opened under circumstances similar to the present, it is the policy of this office to have 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," and suggested the company adopt a board resolution expressing conformity to that condition.
- On September 2, 1949, the company informed the Director of Posts that its board of directors had passed a resolution: "That the requirement of the Bureau of Posts that the Company should accept full responsibility for all cash received by the Postmaster be complied with, and that a copy of this resolution be forwarded to the Bureau of Posts."
- The company further requested that an inspector be sent to the camp to acquaint the postmaster with the operation of the branch.
- The post office branch was opened on October 13, 1949, with Hilario M. Sanchez, an employee of the company, appointed postmaster.
- On May 11, 1954, the postmaster went on a three-day leave and never returned; the company immediately informed Manila post office officials and the provincial auditor of Zambales of Sanchez's disappearance.
- The postmaster’s accounts were audited and a shortage of P13,867.24 was discovered.
- After demands on the company to pay the shortage failed, the Republic of the Philippines sued Acoje Mining Company, Inc. on September 10, 1954, in the Court of First Instance of Manila for recovery of P13,867.24.
Procedural History
- The action was tried in the Court of First Instance of Manila.
- The company answered denying liability, asserting: (a) the board resolution was ultra vires; (b) in any event the company was only a guarantor liable after exhaustion of the principal’s assets; and (c) the plaintiff’s claimed loss was not supported by office records.
- After trial, the court a quo found that only P9,515.25 of the P13,867.24 claimed was supported by evidence and rendered judgment for plaintiff in that amount.
- The court rejected the company’s contentions that the board resolution was ultra vires and that the company’s obligation was only that of a guarantor.
- The defendant (Acoje Mining Company, Inc.) appealed to the Supreme Court (G.R. No. L-18062).
- The Supreme Court, through Bautista Angelo, J., affirmed the decision of the court a quo.
- Concurrence was noted by Bengzon, C.J., Padilla, Concepcion, Reyes, J.B.L., Barrera, Parades, Dizon, Regala, and Makalintal, JJ.
Issues Presented
- Whether the board of directors’ resolution of August 31, 1949, whereby the company accepted "full responsibility for all cash received by the Postmaster," was ultra vires and therefore invalid or unenforceable against the company.
- Whether, assuming the resolution was valid or binding, the company’s liability was merely that of a guarantor (secondary liability) or that of a principal (primary liability).
- Whether the plaintiff’s claimed loss of P13,867.24 was supported by the records and evidence presented.
Contentions of the Parties
- Plaintiff (Republic of the Philippines): Sought recovery of the shortage found in the accounts of the postmaster; relied on the company’s request for the post office, the Director of Posts' condition, and the company’s board resolution accepting responsibility.
- Defendant (Acoje Mining Company, Inc.):
- Argued the board resolution was ultra vires (beyond the corporate power) and therefore not binding.
- Contended that, at best, the company’s obligation was that of a guarantor, liable only after exhaustion of the properties of the principal (the postmaster).
- Asserted that the plaintiff’s claimed loss was not fully supported by office record.
Evidence and Trial Court Findings
- The trial court found that of the P13,867.24 claimed by plaintiff, only P9,515.25 was supported by evidence and rendered judgment for that amount.
- The trial court examined the wording of the board resolution and concluded that the defendant assumed "full responsibility for all cash received by the Postmaster," making the company’s obligation that of a principal rather than a mere guarantor.
- The trial court rejected the company’s ultra vires defense on factual and legal grounds.
Court’s Legal Analysis and Reasoning
- The Supreme Court emphasized that the opening of the post office branch was undertaken at the behest of the company for the convenience and benefit of its employees; the government did not originate the idea.
- The Director of Posts agreed to open the branch only after imposing conditions intended to safeguard government interests, including the company’s undertaking