FACTS OF THE CASE:
In 1983, Total Office Products and Services, Inc. (TOPROS) was incorporated to become the exclusive distributor of Minolta plain paper copiers in the Philippines. John Charles Chang, Jr., the only incorporator who was not a member of the Ty family, was appointed President and General Manager and was entrusted with the corporation’s management and funds. The Ty family initially gave Chang 10% of the shares, which later increased to 20% as the corporation expanded its business.
Despite TOPROS’s success, the corporation did not distribute substantial cash dividends to its stockholders. Chang explained that its funds were being invested in real properties and other business ventures.
In 1998, the Ty family discovered suspected irregularities involving transactions and documents issued under the names of TOPGOLD Philippines, Inc., Golden Exim Trading and Commercial Corporation, and Identic International Corp. An investigation allegedly revealed that Chang, while still a director and officer of TOPROS, had organized these corporations with other individuals and diverted TOPROS’s assets, funds, goodwill, equipment, resources, and business opportunities for their benefit. TOPROS filed a case seeking an accounting of profits, recovery of corporate properties, damages, and dissolution of the respondent corporations. Chang denied the allegations, claiming that the Ty family knew about and participated in the other corporations’ activities. He maintained that TOPROS was heavily indebted and facing possible bankruptcy, prompting him to establish TOPGOLD to continue serving TOPROS’s clients. He also claimed that he personally guaranteed and paid TOPROS’s loans and the separation benefits of its employees.
