Facts
TOPROS was incorporated in 1983 by the Spouses Ramon and Yaona Ang Ty (Spouses Ty). John Charles Chang, Jr. (Chang) was elected as President and General Manager by the Ty Family to manage the new corporation which developed into a multi-million enterprise.
Ty Family sensed irregularities in Chang’s dealings when their friends and relatives began questioning the manner in which products and services from TOPROS were issued receipts and vouchers from TOPGOLD, Golden Exim, and Identic. Upon investigation, it was revealed that while still a Corporate Director and an officer of TOPROS, Chang, together with the individual respondents, incorporated the respondent-corporations to siphon the assets, funds, goodwill, equipment, and resources of TOPROS; that Chang used its properties in organizing the respondent corporations and obtained opportunities properly belonging to it and its stockholders to their damage and prejudice.
TOPROS filed a Petition for Accounting and Damages with Prayer for the Issuance of a Writ of Preliminary Attachment.
Chang argued that he did most of the work of TOPROS from its incorporation in 1983 until his ouster as President and General Manager in 1998 and that he also paid for the loans of TOPROS with Chinabank in view of his having signed as guarantor or surety for the loans.
ISSUE: Whether or not Chang is liable for violation of his fiduciary duties under the Corporation Code.
Ruling
Yes, Chang is liable.
A claim of damages under Section 34 of the Corporation Code (now Section 33 of the RCC) arises when a corporate officer or director takes a business opportunity for his own, provided that it is sufficiently shown by the claimant that:
- The corporation is financially able to exploit the opportunity;
- The opportunity is within the corporation’s line of business;
- The corporation has an interest or expectancy in the opportunity; and
- By taking the opportunity for his own, the corporate fiduciary (i.e., corporate director, trustee or officer) will thereby be placed in a position inimicable to his duties to the corporation.
Consequently, it is not enough to impute bare acts of transactions in which the claimant subjectively perceives the duty of loyalty to be breached. Sufficient evidence must be presented.
Here, the Court agrees with the RTC that Chang committed several acts showing personal or pecuniary interest that were in conflict with his duties as director and officer of TOPROS.
The service report of Linde, which was a client of TOPROS, as well as the provisional receipts issued by Golden Exim, showed that Golden Exim entered into a service contract with the same client at the same time that TOPROS was servicing it. In 1998, TOPGOLD published printed advertisements which were strikingly similar to those previously printed by TOPROS in 1997, with the difference that the phrase “now available at TOPROS” was changed to “now available at TOPGOLD.” Further, Chang signed a deed of assignment wherein TOPROS assigned its rights under several rental agreements with different entities for the lease of various kinds of office equipment to TOPGOLD. In addition to this, TOPGOLD uses the same address as TOPROS which not only gives it the opportunity to use TOPROS’ resources but leads the public to believe that they are one and the same entity, if not intimately related to each other.
To determine the exact liability of Chang, however, the instant case should be remanded to the trial court for the reception of additional evidence and the reevaluation of evidence already submitted, guided by the parameters aforementioned.