G.R. No.

109491 February 28, 2001

ATRIUM MANAGEMENT CORPORATION, petitioner, vs.
COURT OF APPEALS, E.T. HENRY AND CO., LOURDES VICTORIA M. DE LEON,
RAFAEL DE LEON, JR., AND HI-CEMENT CORPORATION, respondents.
G.R. No. 121794 February 28, 2001
LOURDES M. DE LEON, petitioner, vs.
COURT OF APPEALS, ATRIUM MANAGEMENT CORPORATION, AND HI-CEMENT
CORPORATION, respondents.
Facts: 1981, Hi-Cement Corporation through Lourdes De Leon (its Treasurer) and Antonio De
Las Alas (its Chairman, now deceased) issued four postdated checks to E.T. Henry and Co. The
checks amount to P2 million. The checks are crossed checks and are only made payable to E.T.
Henry’s account. However, E.T. Henry still indorsed the checks to Atrium Management
Corporation (AMC). AMC then made sure that the checks were validly issued by requesting E.T.
Henry to get some confirmation from Atrium. Interestingly, De Leon confirmed the checks and
advised that the checks are okay to be rediscounted by AMC notwithstanding the fact that the
checks are crossed checks payable to no other accounts but that of E.T. Henry. So when AMC
presented the check, it was dishonored because Hi-Cement stopped payment. Eventually, AMC
sued Hi-Cement, E.T. Henry, and De Leon. The trial court ruled in favor of AMC and made all
the respondents liable.
On appeal, Hi-Cement averred that De Leon’s act in signing the check was ultra vires hence De
Leon should be personally liable for the check. De Leon, on the other hand, insisted that the
checks were authorized by the corporation.
Issue: Whether or not De Leon’s act of signing the check constitutes an ultra vires act hence
making her personally liable.
Ruling: No, the act is not ultra vires but De Leon is still personally liable. The act is not ultra
vires because the act of issuing the checks was well within the ambit of a valid corporate act. De
Leon as treasurer is authorized to sign checks. When the checks were issued, Hi-Cement has
sufficient funds to cover the P2 million.
As a rule, there are four instances that will make a corporate director, trustee or officer along
(although not necessarily) with the corporation personally liable to certain obligations. They are:
He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross
negligence in directing its affairs, or (c) for conflict of interest, resulting in damages to the
corporation, its stockholders or other persons;
He consents to the issuance of watered down stocks or who, having knowledge thereof, does not
forthwith file with the corporate secretary his written objection thereto;
He agrees to hold himself personally and solidarily liable with the corporation; or
He is made, by a specific provision of law, to personally answer for his corporate action.
In the case at bar, De Leon is negligent. She was aware that the checks were only payable to E.T.
Henry’s account yet she sent a confirmation to Atrium to the effect that the checks can be
negotiated to them (Atrium) by E.T. Henry. Therefore, she may be held personally liable along
with E.T. Henry (but not with Hi-Cement where she is an officer).