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FACTS: Hi-Cement Hi-Cemen t Corporation borrowed money from E.T. E.T. Henry and Co. The said loan was secured by 4 checks amounting to P2 million in total. The checks were signed by ourdes ourdes !. de eon"#2$ treasurer" and the late %ntonio de las %las" Chairman. E.T. Henry and Co." &nc." in turn" endorsed the four checks to petitioner %trium !anagement Corporation for 'aluable consideration" after Enri(ue Tan" or E.T. Henry approached %trium for )nancial assistance" o*ering to discount four +C,C checks. %trium agreed to Tans o*er based on two letters" dated ebruary /" 010 and ebruary 1" 010 issued by Hi-Cement through ourdes !. de eon" as treasurer" con)rming the issuance of the four checks in fa'or of E.T. Henry in payment for petroleum products. 3pon presentment for payment" the drawee bank dishonored dishonored all four checks for the common reason reason payment stopped. %trium" thus" instituted this action after its demand for payment of the 'alue of the checks was denied.
RTC Ruling: The trial court court ordered ordered all the defendants defendants Hi-Cement" E.T. E.T. Henry" and ourdes ourdes !. de de eon5 e6cept e6cept defendant %ntonio de las %las to pay %trium 7ointly and se'erally P2"888"888.88 with the legal rate of interest from the )lling of the complaint until fully paid" plus P28"888.88 as attorneys fees and the cost of suit. ourdes ourdes de eon and Hi-Cement appealed the trial court decision.
CA Ruling: C% 05 dismissed the plainti*s complaint as against defendants defendants Hi-Cement and 9e las %las: 25 ordered the defendants E.T. Henry de eon" 7ointly and se'erally to pay the plainti* %trium P2"888"888.885 P2"888"888.885 with interest at the legal rate from the )lling of the complaint until fully paid" plus P28"888.88 for attorneys fees. ;5 ordered the plainti* and defendants E.T. Henry de eon" 7ointly and se'erally to pay defendant defendant Hi-Cement Hi-Cement P28"888.88 as attorneys fees. fees. 9e eon and %trium appealed the C% decision separately.
ISSUES: 0.
RULING: 0. &t is a 'alid corporate act.
There is basis to rule that the act of issuing the checks was well within the ambit of a 'alid corporate act" for it was for securing a loan to )nance the acti'ities of the corporation" hence" not an ultra 'ires act. %n ultra 'ires act is one committed outside the ob7ect for which a corporation is created as de)ned by the law of its organi=ation and therefore beyond the power conferred upon it by law The term ultra 'ires is distinguished from an illegal act for the former is merely 'oidable which may be enforced by performance" rati)cation" or estoppel" while the latter is 'oid and cannot be 'alidated. 2. %trium could not be considered a holder in due course. % holder in due course is a holder who has taken the instrument under the following conditions> a5 That it is complete and regular upon its face: b5 That he became the holder of it before it was o'erdue" and without notice that it had been pre'iously dishonored" if such was the fact: c5 That he took it in good faith and for 'alue: d5 That at the time it was negotiated to him he had no notice of any in)rmity in the instrument or defect in the title of the person negotiating it. &n the instant case" the checks were crossed checks and speci)cally indorsed for deposit to payees account only. rom the beginning" %trium was aware of the fact that the checks were all for deposit only to payees account" meaning E.T. Henry. ;. 9e eon is personally liable. ?Personal liability of a corporate director" trustee or o@cer along although not necessarily5 with the corporation may so 'alidly attach" as a rule" only when> 0. He assents a5 to a patently unlawful act of the corporation" or b5 for bad faith or gross negligence in directing its a*airs" or c5 for conAict of interest" resulting in damages to the corporation" its stockholders or other persons: 2. He consents to the issuance of watered down stocks or who" ha'ing knowledge thereof" does not forthwith )le with the corporate secretary his written ob7ection thereto: ;. He agrees to hold himself personally and solidarily liable with the corporation: or 4. He is made" by a speci)c pro'ision of law" to personally answer for his corporate action. &n the case at bar" ourdes !. de eon and %ntonio de las %las as treasurer and Chairman of HiCement were authori=ed to issue the checks. Howe'er" !s. de eon was negligent when she signed the con)rmation letter re(uested by !r. Bap of %trium and !r. Henry of E.T. Henry for the rediscounting of the crossed checks issued in fa'or of E.T. Henry. he was aware that the checks were strictly endorsed for deposit only to the payees account and not to be further negotiated.
