Belisario, France Noreen B.

BSA-B225

Total Office Products and Services (TOPROS), Inc. Vs. John Charles Chang, Jr., Topgold
Philippines, Inc., Golden Exim Trading and Commercial Corporation, and Identic
International Corp., represented by John Charles Chang, Jr., Hector and Cecilia Katigbak
G.R. No. 200070-71. December 7, 2021

Did Chang violate the “doctrine of corporate opportunity”? Yes. The following are the
elements of corporate opportunity doctrine: (1) The corporation is financially able to exploit the
opportunity; (2) The opportunity is within the corporate’s line of business; (3) The corporation
has an interest or expectancy in the opportunity; and (4) By taking the opportunity for his own,
the corporate fiduciary will be placed in a position inimical to his duties to the corporation. The
Court ruled that even if the incorporation of TOPGOLD, et.al. were done with the full
knowledge of the members of the Ty Family, this does not imply that the prejudicial transfer and
acquisition of TOPROS properties and opportunities, which Chang, through his corporations, has
shown to have committed. The doctrine of "corporate opportunity" does, in fact, apply in this
case, as TOPROS correctly noted.
It is undeniable that Chang founded TOPGOLD, et al. while remaining an officer and
director of TOPROS, which were in the same business. Chang controlled 80% of the shares in
Golden Exim and 99.76% of the shares in TOPGOLD, according to the articles of incorporation
for both businesses. Chang held 65% of Identic, according to the General Information Sheet.
According to the service report of Linde and the provisional receipts provided by Golden Exim,
Golden Exim signed a service contract with the same client at the same time that TOPROS was
providing maintenance services. Advertisements printed by TOPGOLD were eerily like those
previously produced by TOPROS. Chang signed a deed of assignment with TOPGOLD as
president and general manager with Hector as the company's Service and Operations Manager of
TOPROS that appeared to have TOPROS' rights under many rental agreements with various
parties for the lease of different types of office equipment to TOPGOLD. It also gave
TOPGOLD permission to receive the necessary rent payments listed on the rental agreements.
Moreover, TOPGOLD used TOPROS' address, giving it access to the latter's resources and
giving the impression that the two are one and the same entity to the public. Even if admitted, the
events Chang mentions point to TOPROS knowledge, tolerance, or even acquiescence to his
establishment of the TOPGOLD, et al. which equal to the conformity required by Section 34 of
the Corporation Code to absolve a director of disloyalty and are engaged in the same line of
work as TOPROS. According to the law, if a director takes advantage of a business opportunity
that should belong to the corporation as a result of his position, he must refund all profits to the
company unless his actions have been approved by a vote of the stockholders who own or
represent at least two-thirds of the outstanding capital stock. However, the current case should be
remanded to the trial court for the reception of supplementary evidence and the reevaluation of
existing evidence, guided by the aforementioned criteria, in order to ascertain Chang's exact
liability. To prove the specific business prospects that gave rise to its claim for damages under
Section 34 of the Corporation Code, TOPROS as the claimant has the burden of proof.
 UCPB vs. Secretary of Justice, Antiporda, Jr., and Carreon
G.R. No. 209601 January 12, 2021
Caguioa, J.

The DOJ received a complaint-affidavit from UCPB accusing Antiporda and Carreon of
violating Section 31 in connection with Section 144 of the Corporation Code. It claimed that the
two were the previous CEO and COO of UCPB subsidiary UCAP. The two gave their consent
for some of UCPB's corporate officials and directors to receive bonuses in 1998. From April 6
through July 31, 1998, 50 manager's checks were issued. There were significant losses incurred
by the UCAP. As a result, the corporate officers of UCPB decided to limit UCAP's corporate
existence. Antiporda and Carreon declared bonuses in 1998 while having knowledge of the
aforementioned losses, doing so in bad faith, negligently, and in violation of UCPB bylaws that
stipulate that bonuses must first be approved by the board. Thus, the two were alleged liable
under Section 31 which provides the liability of directors or officers who conduct the affairs of
the corporation in bad faith. Additionally, it was claimed that they were legally liable for the
Corporation Code's violations under Section 144 of the law. In a resolution, the DOJ Secretary
determined that Section 144 did not apply to violations of Section. The Secretary also held that
the action against Antiporda and Carreon had prescribed. It held penalties in Section 144 applies
only when the Corporation Code does not provide penalties. Section 144 is no longer applicable
because Section 31 establishes a civil action for damages. The Court of Appeals upheld the DOJ
Resolution. Hence, this action.

Issues:
1) Whether or not Section 144 of the Corporation Code does not apply to Section 31; and
2) Whether or not the action based on Section 31 of the Corporation Code had prescribed.

Ruling:

1) The provision applies. The Court has ruled in Ient that violations of Section 31 of the
Corporation Code are not considered “violation of the Code not otherwise specifically penalized
therein.” In other words, Section 144 did not include Section 31. The rationale is because the
Corporation Code is intended to be regulatory and not merely penal. Particularly Section 31is
intended to impose exacting standards of fidelity on corporate officers and directors.

2) The action is mandated. Reiterating earlier statements, the questioned bonuses were paid
using 50 manager's checks that were released to the UCPB corporate office and directors
between April 6 and July 31, 1998. The KPMG audit report was completed on June 30, 2003,
and the UCPB complaint-affidavit was submitted to the DOJ on July 23, 2007. Hence, even
upholding UCPB’s actual discovery premise, UCPB’s action had mandated on July 1, 2007 or
four years from June 30, 2003, the alleged date of the actual discovery by the UCPB.

In the case of CIR v. Primetown Property Group, the Supreme Court ruled that the term "year"
refers to a period of 12 calendar months. The aforementioned case shall apply because the newer
law supersedes Article 13 of the Civil Code, which states that a "year" consists of 365 days.
Therefore, the prescriptive period had expired when UCPB filed its complaint-affidavit on July
23, 2007, which was four years or 48 calendar months earlier.

Prescription is halted, according to Article 1155 of the Civil Code, when a lawsuit is filed in
court, creditors issue a written extrajudicial demand, and the debtor acknowledges the debt in
writing. Here, the complaint-affidavit filed by UCPB with the DOJ did not end the prescriptive
period because it was filed in the wrong court, it was filed after the prescriptive period of 48
calendar months based on Section 31 of the Corporation Code, and it is not considered an
extrajudicial demand for damages. Simply put, in its complaint affidavit, UCPB did not assert a
claim for damages.

In conclusion, because there is no factual basis from which actual discovery of the payment of
the disputed bonuses could be made, assuming it was concealed by Antiporda and Carreon, and
because the payment was widely and publicly known because UCPB is a part of the highly
regulated banking industry, the filing of the action for damages had already passed the statute of
limitations.