Atrium Management Corp. v.

Court of Appeals, classified as ultra vires, thus invalidating such

353 SCRA 23 (2001) contracts.

Facts: **Conclusion:**

Atrium Management Corporation entered into fixed- Atrium Management Corp. v. Court of Appeals serves
term employment contracts with certain employees. as a crucial precedent in labor law, highlighting the
Upon termination of these contracts, the employees protection of workers' rights and the limitations on
filed for regularization, arguing that they had been corporate authority regarding employment practices.
performing work that was continuous and necessary
to the business. The company contended that the Safic Alcan & Cie v. Imperial Vegetable Oil Co., Inc.,
fixed-term contracts were valid and binding. 355 SCRA 559 (2001)

Issue: Facts:

The primary issue was whether the employment Safic Alcan & Cie, a foreign corporation, entered into
contracts were valid under Philippine labor laws, a distributorship agreement with Imperial Vegetable
specifically regarding the classification of employees Oil Co., Inc. to distribute its products in the
as regular or contractual. Additionally, the case Philippines. Disputes arose regarding the
touched on the concept of ultra vires acts, as it enforcement of certain contractual obligations,
examined whether the company's actions were within leading Safic to seek judicial relief against Imperial for
its authority as defined by its corporate purpose. non-compliance.

Ruling: Issue:

The Supreme Court ruled in favor of the employees, The main issue was whether the actions of Imperial
declaring that the fixed-term contracts were invalid. Vegetable Oil were valid, particularly in light of the
The Court emphasized that the nature of the work arguments concerning ultra vires acts, meaning
being performed by the employees was inherently actions taken beyond the authority granted by its
permanent and essential to the company's corporate charter.
operations, thus qualifying them as regular
Ruling:
employees.
The Supreme Court ruled in favor of Safic Alcan,
The Court also addressed the issue of ultra vires acts.
holding that Imperial’s actions were ultra vires. The
It stated that the company’s attempt to limit employee
Court found that the disputed activities performed by
benefits through fixed-term contracts was beyond its
Imperial were not within the scope of its corporate
legal authority, as such actions contravened labor
powers as defined in its articles of incorporation. As
laws designed to protect workers' rights.
such, any agreements or obligations arising from
Consequently, the company's decisions were deemed
those actions were deemed invalid.
ultra vires, as they exceeded the powers granted
under its corporate charter and the law. **Significance:**
**Significance:** This case emphasized the principle that corporations
must operate within the limits of their charter and
This case underscored the principle that employers
cannot engage in activities beyond their stated
cannot evade labor laws through contractual
purposes. Contracts arising from ultra vires acts lack
arrangements. It reinforced the notion that
enforceability, protecting third parties like Safic Alcan
employment contracts must reflect the true nature of
from being bound by such invalid agreements.
the employment relationship, and any attempt to
circumvent these laws could lead to actions being **Conclusion:**
Safic Alcan & Cie v. Imperial Vegetable Oil Co., Inc. **Conclusion:**
illustrates the importance of adhering to corporate
authority and the implications of ultra vires acts, Harden vs. Benguet Consolidated Mining Co.
reaffirming that corporations must act within the underscores the importance of protecting third parties
powers granted by law to ensure valid contractual in contractual agreements and clarifies that a
relationships. corporation can be held accountable for ultra vires
acts committed by its officers, as long as those third
Harden vs. Benguet Consolidated Mining Co., 58 parties are acting in good faith and without knowledge
Phil 140 (1933) of any restrictions.

Facts: Republic v. Acoje Mining Co., 3 SCRA 361 (1963)

Harden entered into a contract with Benguet Facts:

Consolidated Mining Company for the purchase of
shares in the company. Subsequently, the company Acoje Mining Company, incorporated in the
refused to recognize the validity of the contract, Philippines, was granted a mining lease by the
claiming that it was executed beyond the powers government to explore and exploit mineral resources
conferred upon its officers by the corporation's by- in a specified area. The lease was subject to certain
laws. conditions as outlined in the Mining Act and the
company's articles of incorporation.
Issue:

The central issue was whether the contract entered

into by the officers of Benguet Consolidated Mining The government later discovered that Acoje Mining
was valid or if it was considered ultra vires, meaning it was engaging in mining activities that exceeded the
was executed beyond the authority granted to the scope of its authorized operations. Specifically, the
corporation or its officers. company had entered into contracts and agreements
not specified in its charter, such as subleasing parts
Ruling: of the mining area to other parties without
government approval. This led to concerns that Acoje
The Supreme Court ruled in favor of Harden, stating was not adhering to the regulations set forth for
that the contract was valid and enforceable. The mining operations.
Court held that even if the officers had acted beyond
the scope of their authority, the company was still As a result, the government initiated proceedings to
bound by the contract because Harden was a third cancel Acoje's mining lease, arguing that the
party and had no knowledge of the limitations on the company had acted ultra vires—beyond the powers
officers' powers. The Court emphasized the principle conferred upon it by its corporate charter. Acoje
of protecting third parties who enter into contracts in Mining contested this action, asserting that it had the
good faith. right to conduct its operations and that the
government had no basis for cancellation.
**Significance:**
Issue:
This case reinforced the doctrine that a corporation
may be held liable for the actions of its officers when The primary issue was whether the acts of Acoje
those actions, although ultra vires, have been Mining constituted ultra vires actions that warranted
executed in good faith towards a third party. It the cancellation of its mining lease by the
highlighted the need for corporations to clearly government.
communicate their internal limitations to avoid
exposing themselves to liability. Ruling:
The Supreme Court ruled in favor of the Republic, The primary issue was whether the loan agreement
affirming the cancellation of Acoje Mining's lease. The was valid despite the lack of board approval, and
Court found that the company's activities were indeed whether it constituted an ultra vires act that would
ultra vires, as they exceeded the authority explicitly prevent enforcement.
granted in its articles of incorporation. The Court
emphasized that any actions outside the scope of Ruling:
corporate powers are invalid and cannot be ratified,
The Supreme Court ruled in favor of Pirovano,
thereby justifying the government's action to cancel
holding that the loan agreement was valid and
the lease.
enforceable. The Court recognized that while the
**Significance:** president's actions were not in strict compliance with
the company’s by-laws, the creditor acted in good
This case underscored the principle that corporations faith and had no knowledge of the limitations on the
must operate within the limits defined by their president's authority.
corporate charters. It affirmed that acts deemed ultra
vires are void and emphasized the government's role The Court emphasized that ultra vires acts cannot be
in enforcing compliance with corporate limitations to raised against third parties who are acting in good
protect public interest. The decision reinforced the faith, as it would be unjust to deny them their rights
doctrine that a corporation cannot claim benefits from based on the internal mismanagement of the
actions taken beyond its legal authority. corporation. The ruling underscored the principle that
corporations must clearly communicate internal
**Conclusion:** limitations to avoid liability for unauthorized acts.

Republic v. Acoje Mining Co. serves as a crucial **Significance:**

precedent in corporate law, illustrating the
consequences of ultra vires acts. It highlights the This case reaffirmed the doctrine that a corporation is
necessity for corporations to adhere strictly to their bound by the acts of its officers when dealing with
authorized powers to ensure that their transactions third parties, especially when those third parties are
are valid and enforceable. acting in good faith. It highlighted the importance of
protecting the rights of creditors and the necessity for
Pirovano v. De la Rama Steamship Co., Inc., 96 corporations to adhere to their internal governance
Phil. 335 (1954) structures while ensuring that such governance does
not adversely affect legitimate business transactions
Facts:
**Conclusion:**
Pirovano, a creditor of De la Rama Steamship
Company, filed a complaint to enforce a loan Pirovano v. De la Rama Steamship Co., Inc. serves
agreement against the company. The agreement was as a key precedent in corporate law, illustrating the
executed by the president of the company without the limitations of the ultra vires doctrine in the context of
approval of the board of directors, contrary to the third-party transactions. It emphasizes that
requirements set forth in the company’s by-laws, corporations must act within their powers but cannot
which stipulated that any contract exceeding a certain use internal procedural failures as a shield against
amount required board approval. claims from good-faith creditors.

De la Rama Steamship contested the validity of the Magallanes Watercraft Assn. v. Auguis, 791 SCRA
loan agreement, arguing that it was ultra vires 455 (2016)
because it had not been ratified by the board, thus
making it invalid and unenforceable. Facts:

Issue:
The Magallanes Watercraft Association, a Montelibano v. Bacolod Murcia, 5 SCRA 36 (1962)
cooperative engaged in water transport services, had
an agreement with local government officials to Facts:
operate within certain areas. However, the
Montelibano, a stockholder of Bacolod Murcia Milling
Association later entered into a contract with a private
Co., Inc., challenged the validity of a corporate
entity for additional services that exceeded its stated
resolution that authorized the sale of certain assets of
purpose as outlined in its bylaws. When the local
the company. The resolution was passed without the
government contested the validity of this contract,
required two-thirds vote of the stockholders, as
claiming it was ultra vires, the Association argued that
stipulated in the corporation's by-laws. Montelibano
the contract was necessary for its operations.
contended that the sale was ultra vires because it
Issue: exceeded the authority of the company as outlined in
its corporate charter and violated procedural
The main issue was whether the contract entered into requirements.
by the Magallanes Watercraft Association constituted
an ultra vires act, thereby rendering it invalid and Issue:
unenforceable.
The primary issue was whether the sale of the
Ruling: company’s assets was valid given that it did not
comply with the voting requirements set forth in the
The Supreme Court ruled that the contract was by-laws, thereby rendering it ultra vires.
indeed ultra vires. The Court emphasized that the
Association’s actions exceeded the scope of its Ruling:
corporate powers as defined in its bylaws. The Court
The Supreme Court ruled in favor of Montelibano,
stated that while a corporation has the ability to adapt
declaring the resolution void. The Court emphasized
its operations, it must do so within the framework of
that the sale of significant assets constituted a major
its authorized activities. As such, the contract with the
decision that required adherence to the procedural
private entity was deemed invalid.
requirements in the by-laws, including the necessary
stockholder approval. The lack of compliance with
these requirements rendered the resolution ultra
**Significance:** vires, thus invalidating the sale.

This case reinforced the principle that a corporation or **Significance:**

cooperative must act within the confines of its
corporate powers as specified in its governing This case underscored the importance of corporate
documents. It highlighted the protection of governance and adherence to the by-laws. It
stakeholders and the public interest by ensuring that reinforced the principle that acts taken beyond the
entities do not engage in activities beyond their legal powers conferred by a corporation's charter or in
authority, which could lead to potential liabilities. violation of procedural requirements are considered
ultra vires and are thus void. The ruling emphasized
**Conclusion:** the need for corporations to operate within the legal
framework established by their governing documents
Magallanes Watercraft Assn. v. Auguis illustrates the to protect the rights of stockholders and maintain
importance of adhering to the defined powers within a corporate integrity.
corporation’s bylaws. It underscores the
consequences of ultra vires acts, emphasizing that **Conclusion:**
entities cannot validly engage in activities outside
their stated purpose without appropriate authorization. Montelibano v. Bacolod Murcia highlights the legal
consequences of ultra vires acts in corporate
governance, stressing that failure to comply with and ensuring compliance with established corporate
specified procedures can invalidate significant frameworks.
corporate actions. The case serves as a reminder for
corporations to uphold internal regulations to ensure **Conclusion:**
valid and enforceable decisions.
University of Mindanao v. Bangko Sentral ng Pilipinas
University of Mindanao v. Bangko Sentral ng serves as a significant precedent in corporate law,
Pilipinas, 778 SCRA 458 (2016) illustrating the implications of ultra vires acts and the
necessity for corporations to operate strictly within
Facts: their legal authority. The case highlights the role of
regulatory bodies in enforcing compliance to protect
The University of Mindanao (UM) was involved in a the integrity of financial operations.
dispute with the Bangko Sentral ng Pilipinas (BSP)
regarding the legality of certain financial transactions.
UM argued that the BSP's actions in terminating its
authority to engage in specific banking operations
were unjustified. BSP contended that UM had
engaged in transactions that exceeded its corporate
powers as outlined in its articles of incorporation,
specifically concerning the management of funds not
permitted under its charter.

Issue:

The main issue was whether the transactions

conducted by UM were ultra vires, thus rendering
them invalid and justifying BSP's termination of UM's
banking authority.

Ruling:

The Supreme Court ruled in favor of BSP, affirming

that the transactions in question were indeed ultra
vires. The Court found that UM had acted beyond its
corporate powers as defined in its articles of
incorporation, which restricted its financial operations.
Therefore, the BSP's action to terminate UM's
authority was valid and justified under the law.

**Significance:**

This case emphasized the importance of adhering to

the limitations set forth in a corporation's charter. It
reinforced the principle that actions taken outside the
defined scope of authority, classified as ultra vires,
are invalid and can result in serious legal
consequences. The ruling underscored the regulatory
power of the BSP in overseeing banking operations