Memorandandum Breach Case

‘Republic of the Philippines
Supreme Court of the Philippines

REGIONAL TRIAL COURT OF NEGROS ORIENTAL
7th Judicial Region
BRANCH 34
Hall of Justice, E.J. Blanco Drive, Dumaguete City, Negros

Oriental
Tel. No. 035-422-7289 / Mobile No. 0935-207-3491
Email: rtc1dum034@judiciary.gov.ph
XXX, CIVIL CASE No. 00000

Plaintiff,
FOR: Breach of Fiduciary
-versus- Duty, Abuse of Control,
etc.
YYY,
Defendants.
x------------------------------------/
The Plaintiff, by collaborating counsel, respectfully states that:

TIMELINESS
The Pre-trial Order dated March 23, 2021 requires the parties
herein to file their respective memoranda within thirty (30) days from
receipt thereof. The Pre-Trial Order dated March 23, 2021 was
received by Plaintiff by counsel on June 30, 2021. Hence, Plaintiff has
until July 30, 2021 to file its memorandum.
ISSUES:
The legal issues, as defined by the court, are:
I. Whether Plaintiff is estopped from questioning the corporate

decision to shorten its existence by failing to exercise his
appraisal right;
II. Whether the defendants breached their fiduciary duties as

Board of Directors of JJJ Corporation in deciding to shorten
the corporate existence of the Corporation and thereafter
conducting the business of PPP, Inc.;
III. Whether the dissolution to and process observed in

shortening the corporate existence of JJJ Corporation,
including its winding up, was done in accordance with law
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and proper procedure.
The above-mentioned legal issues, as framed by the court, are

anchored on the following factual issues, as likewise framed by it:
I. Whether PPP, Inc. was already in existence at the time the

resolution to shorten JJJ Corporation’s corporate existence was
passed;
II. Whether the business of JJJ, at the time of the decision to

shorten its corporate existence was made, was lucrative and
profitable;
III. Whether the decision to close down JJJ Corporation was

without factual basis, justification and/or was otherwise
intended to unduly benefit PPP, Inc., through the surreptitious
transfer of JJJ’s customers and employees, to the prejudice and
damage of JJJ Corporation;
IV. Whether PPP, Inc. Is a direct competitor of JJJ, such that,

Defendants, in conducting the business in PPP, are guilty of
bad faith, and conflict of interest, being former members of the
governing body of JJJ Corporation.
ARGUMENTS/DISCUSSION:
While the legal issues must be given utmost priority, we find it

necessary to address first the factual issues, as framed by the
court, in order to support the legal issues it has defined.
ARGUMENTS FOR FACTUAL ISSUES
I. PPP, INC. WAS ALREADY IN EXISTENCE AT THE TIME THE

RESOLUTION TO SHORTEN JJJ CORPORATION’S
CORPORATE EXISTENCE WAS PASSED.
It is an admitted fact that PPP was established and duly

issued an SEC license on 19 April 2006.1 The Treasurer’s
Affidavit certifying that at least 25% of the authorized capital
stock of the corporation has been subscribed and at least 25%
of the subscription has been paid,
was subscribed and sworn to on 21 March 2006.2 A few
days after or on 04 April 2006, its Articles of Incorporation was
notarized.3
1
Pre-trial Order - Page Four.
2
Exhibit B.
3
Ibid.
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As certified by JJJ’s Corporate Secretary, the Board of
Directors of JJJ Corporation passed Resolution No. 2016-003 in
May 2016.4 Clearly, PPP, Inc., a family corporation owned by
the U family, was already in existence and had been in the
trading industry for more than a decade before the decision to
stop the operation of JJJ Corporation was passed.
II. THE BUSINESS OF JJJ CORPORATION, AT THE TIME OF THE

DECISION TO SHORTEN ITS CORPORATE EXISTENCE WAS
MADE, WAS LUCRATIVE AND PROFITABLE.
It is an admitted fact that JJJ Corporation was profitable

and liquid at the time the Board of Directors passed the
Resolution shortening the corporate life of JJJ.5
Lucrative means profitable and a corporation is said to be

profitable when it has the ability to produce a return on an
investment based on its resources.6
JJJ Corporation has an accumulated bank deposit of

about Five Hundred Million Pesos (PHP500,000,000.00), more
or less, with different commercial banks in Dumaguete City.
This is an admitted fact and is supported by verified bank
account statements, several checks associated with dividend
payments, as well as the existence of various equipment
necessary to carry out large-scale business operations.7
Further, the Financial Statement of JJJ for the year 2015

will best support the fact that the business was profitable and
liquid at the time the Resolution to shorten the corporate life of
JJJ Corporation was passed in May 2016. Details of the
Financial Statement will be discussed in detail in the
succeeding sections.
III. THE DECISION TO CLOSE DOWN JJJ CORPORATION WAS

WITHOUT FACTUAL BASIS, JUSTIFICATION AND WAS
INTENDED TO UNDULY BENEFIT PPP, INC. TO THE
PREJUDICE AND DAMAGE OF JJJ.
It is an admitted fact that the Board Resolution No.

2016-003 was passed by the Board of Directors on 16 May
2016.8 Based on the transcript of the Special Stockholders
4
Exhibit “A”.
5
Pre-trial Order - Page Three.
6
Retrieved from
https://www.investopedia.com/ask/answers/012715/what-difference-between-profitability-and-profit.asp
7
Pre-trial Order - Page Three and Exhibits “X” to” X-4”.
8
Pre-Trial Order - Page Four.
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meeting on 05 August 2016, Plaintiff came to know about the
decision to shorten the corporate life of JJJ Corporation only on
the day of the said meeting. Despite being a stockholder and
the founder of the corporation, Plaintiff was not given any prior
notice about the board meeting and the board resolution.
The Corporation has stopped selling rice, corn, fertilizer,

and salt despite the absence of the approval or ratification of
the stockholders, which is a necessary requirement in
amending the articles of incorporation to shorten the corporate
term. An excerpt of the transcript of the Special Stockholders
meeting is hereby replicated:
JUL: Then December 27, refers to the amendment. In

other words, both resolutions are not yet approved by the
stockholders.
ECU: Not yet. So that’s why we are going to decide this

right now.
JUL: So why did we already stop selling rice and corn,

fertilizer and salt when it is not yet approved by the
stockholders?
…
ECU: Kay madugay man gud ang ku-an ang...imo
ipautang sa mga tawo mas madugay man gud ug kolekta.
The U family got the majority of the seats in the board of

directors in 2015 because of a gentleman’s agreement between
the Us and the Ls. Taking advantage of the family crisis, the Us
were able to retain their seats and have obtained full control of
the business in 2016. On the other hand, Plaintiff, for the first
time, was excluded from the Board of directors and was neither
made a corporate officer thereof. He lost any sway in JJJ and
this paved the way for Defendants to actualize their plan to
close the business of JJJ and make PPP, Inc. the new market
leader in the industry.
The business operations were suspended on 30

September 2016. It is an admitted fact that PPP Trade, Inc., a
competing business, operated facilities similar to JJJ in the
town of Sibulan and got their New Business Permit and SEC
license in August 2016. JJJ’s employees were terminated
effective 01 October 2016 and forty (40) of them were
immediately hired by PPP in the same year, as evidenced by
SSS records.
It is also an admitted fact that there was a two-fold
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increase, more or less, in the sales and net income of PPP, Inc.
for the years 2016 and 2017. PPP’s merchandise inventory also
increased from Three Million One Hundred Eighty-Seven
Thousand Four Hundred Ten Pesos (PHP3,187,410.00) to
Ninety-Seven Million Pesos (PHP97,000,000.00).9 In addition,
PPP bought some of the unsold and remaining stocks of JJJ for
the purpose of disposing those stocks after the closure.10
Evidently, PPP, Inc. has benefitted from the closure of

JJJ. It was able to hire a number of experienced employees,
gained a large number of customers, was able to save on its
expenditures by acquiring the properties and assets of JJJ, and
significantly increased its inventory and income in a span of a
year. Ordinarily, PPP will not be able to acquire the same
success if not for the fact that the incorporators and directors of
PPP are the same directors of JJJ.
There is certainly no doubt that the shortening of the

corporate term of JJJ Corporation was premeditated even
before the Board passed a Resolution to shorten its term. There
was no valid reason or legitimate purpose behind the closure of
JJJ since the Corporation was generating huge profits at the
time of its closure. It is the market leader in its industry and was
not experiencing losses even months prior to the board
meeting.
Without any justifiable reason and even with the

vehement objection of the Plaintiff, the Defendants pushed
through with their plan to close JJJ Corporation. They even
amended the dates of suspension of business operations and
the shortening of corporate life previously passed in their
meeting to earlier dates.
Defendants, as directors of JJJ Corporation, have a

fiduciary duty to exercise good faith and diligence in the
administration of the affairs of the corporation, including the use
and preservation of its assets and properties.
The decision to suspend the business operation and

shorten the corporate life of JJJ permanently crippled the
operations of JJJ to the prejudice of the interest of the minority
stockholders and imperiled the continued existence of the
corporation as a going concern.
IV. PPP, INC IS A DIRECT COMPETITOR OF JJJ CORPORATION,

SUCH THAT, DEFENDANTS, IN CONDUCTING THE BUSINESS
9
Pre-trial Order - Page Four.
10
Ibid. Page Three.
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OF PPP, ARE GUILTY OF BAD FAITH AND CONFLICT OF
INTEREST, BEING FORMER MEMBERS OF THE GOVERNING
BODY OF JJJ.
It is an established fact that PPP was duly authorized to engage

in coconut trading as well as in the wholesale and retail of grains.11 It
is the main supplier of margarine and lard in Dumaguete City and just
like JJJ, it delivers copra to Dumaguete Coconut Oil Mills,
Incorporated (DUCOMI). After the closure of JJJ caused by
suspension of its operations on September 30, 2016 by its board of
directors, PPP engaged mainly in copra, fertilizer, rice, and corn.12
The fundamental principle of equity imposes a fiduciary duty on

a director not to compete with his company or to serve as a director
of a competing company. Serving on the boards of two competing
companies raises policy issues and conflict of interest problems.13
Hence, a director or officer of a corporation may not enter into a
competing enterprise that cripples or injures the business of the
corporation of which he is an officer or director.
However, not every person or entity engaged in a business of

the same kind is a competitor. Competition implies a struggle for
advantage between two entities who possess substantially similar
characteristics with the objective of obtaining business patronage,
thus, securing trade. The place of business, identity of products, and
area of competition must be factored in. In other words, the alleged
competing business must cover a substantial portion of the same
market for similar products.14
In this case, although the Articles of Incorporation of PPP only

provides that its primary purpose is “to carry on a general mercantile
and commercial business of trading...all kinds of merchandise,
agricultural or otherwise,...,” the New Business Permit of PPP
explicitly states that the nature of business of Paylin is
“Bodega-Wholesaler/Distributor: Rice and Corn) (Copra Buyer),
which is the same as that of JJJ Corporation. The Articles of
Incorporation of JJJ provides that the primary purpose of the
corporation is “to engage in the business of buying and selling copra,
abaca, rice and corn, flour, foods, household appliances…and all
other general merchandise.”
Although the principal office of PPP, as indicated in its Articles

of Incorporation and in its audited Financial Statement for 2019, was
in JJJ Compound, Tabuc-tubig, Dumaguete City, its registered
11
Ibid. Page Four.
12
Ibid. Page Three.
13
Christie, M. (1992). The Director’s Fiduciary Duty not to Compete. The Modern Law Review, 55( 4), 506-520.
Retrieved July 13, 2021, from http://www.jstor.org/stable/1096651
14
Gokongwei vs SEC, GR NO. L-45911, APRIL 11, 1979.
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business address, as indicated in its New Business Permit, is in
Tubtubon, Sibulan, Negros Oriental. As for JJJ, its principal office, as
stated in its Articles of Incorporation, is in Calindagan, Dumaguete
City. Currently, all communications with JJJ are addressed at 000
South Road, Tabuc-tubig, Dumaguete City.
From the foregoing, PPP and JJJ trade the same kind of
products and cater to the customers in Dumaguete and its
neighboring towns and cities. In fact, as part of the admitted facts,
both corporations deliver copra to DUCOMI.
Furthermore, the incorporators of PPP are Cherrie Ang, Carlos

Tan, TTT, EEE, and RRR. As of 14 July 2016, the same names
appear as members of the Board of PPP Inc.15 As early as April 2016,
just a month before the Board Resolution to shorten the term of JJJ
was passed, EEE, the President and General Manager of JJJ
Corporation, applied for a business permit for Paylin Trading, Inc.. In
fact, its New Business Permit dated 24 August 2016, indicates EEE
as its authorized representative. Except for Carlos Tan who is the
husband of TTT, the members of the Board of Directors of PPP are
the very same directors seated in the board and are directing the
business of JJJ. To recall, based on the stockholder’s meeting, JJJ
will only cease its operation on September 30, 2016. Thus, the
records clearly show the flagrant violation of Defendants of their
fiduciary duties as members of the Board of JJJ.
One’s loyalty must be undivided. As they say, “No one can

serve two masters, for either he will hate the one and love the other,
or he will be devoted to the one and despise the other.”16 When the
two masters have competing interests, it is difficult, if not impossible,
to uphold the interest of one without prejudicing the other.
The Directors of JJJ Corporation have the fiduciary duty to

uphold and look after the business interest of JJJ to make sure that it
is profitable and that it continues to be the market leader in the
industry. They cannot engage in a competing business and sacrifice
the business of JJJ in order to protect their interest in PPP, at the
expense of the minority stockholders.
The Civil Code gives us the duty to always act with justice and
in good faith, and indemnify the other for any damage that we have
caused him which are contrary to law, morals, good customs or public
policy.
Having established that JJJ Corporation is a direct competitor of

PPP, Inc., herein Defendants are guilty of bad faith and conflict of
15
Pre-trial Order - Page Three.
16
Matthew 6:24. The Bible.
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interest. They must answer for the irreparable damage they have
caused against JJJ and its minority stockholders.
ARGUMENTS FOR LEGAL ISSUES
I. PLAINTIFF IS NOT ESTOPPED FROM QUESTIONING THE

CORPORATE DECISION TO SHORTEN ITS EXISTENCE.
Plaintiff is not estopped from questioning the corporate decision to

shorten its existence by failing to exercise his appraisal right.
Appraisal right is not available to Plaintiff Lee for the following

reasons:
A. Appraisal rights are not available in a derivative suit.
B. Requiring Plaintiff to exercise his appraisal right after the

company's goodwill has been dissipated and its operations
were abruptly suspended would be the height of injustice
and unjust enrichment.
A.1. Plaintiff, while being the registered owner of only

one share of stock, is the true and beneficial owner of
50% of the shares of stock of JJJ Corporation.
A.2. The shares of stock registered in the name of AAA

(roughly 25% of the shares of stock of JJJ Corporation)
are still under litigation hence the appraisal right is not
available therefor.
C. Appraisal right is not available for indefinite suspension of

business operations/shortening the corporate term without
any rational business purpose.
D. There is no appraisal right for a breach of fiduciary duty.
A. APPRAISAL RIGHTS ARE NOT AVAILABLE IN A

DERIVATIVE SUIT.
The Corporation Code was the law in effect at the time the
factual antecedents of this case occurred. Section 36 of the Code
enumerates the Corporate powers and capacity which, according to
Section 23 of the same Code, are to be exercised by the board of
directors or trustees.17 Hence, it follows that a case instituted without
the authority from a corporation’s board of directors is subject to
dismissal.
17
Corporation Code, BP Blg 68 (Phil.).
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However, jurisprudence provides an exception to the rule such
that the minority stockholders are able to bring suits on behalf of the
corporation. A stockholder is permitted to institute a derivative suit on
behalf of the corporation whenever officials of the corporation are the
ones to be sued. The action is derivative because the gravamen of
the complaint is the injury to the corporation and it is the corporation
who is the party in interest.18
A corporation is an entity with a legal personality separate and

distinct from the people comprising it. Thus, when a wrong is done to
a corporation, the corporation itself must seek redress through a
derivative suit instituted by its stockholder.19
A derivative suit is an equitable remedy and one of last resort.20

Although its institution does not need to be preceded by a board
resolution, it cannot prosper in the absence of any or some of the
requisites in Section 1, Rule 8 of the Interim Rules of Procedure
Governing Intra-Corporate Controversies. Based on the Rules, there
are four conditions to be met, to wit:
1. He was a stockholder or member at the time the acts or
transactions subject of the action occurred and at the time
the action was filed;
2. He exerted all reasonable efforts, and alleges the same
with particularity in the complaint, to exhaust all remedies
available under the articles of incorporation, by-laws, laws
or rules governing the corporation or partnership to obtain
the relief he desires;
3. No appraisal rights are available for the act or acts
complained of; and
4. The suit is not a nuisance or harassment suit.21
All the four requisites are present in this case. It is

uncontroverted that Plaintiff was a stockholder at the time the acts or
transactions subject of this action occurred and also at the time this
action was filed in court.
Prior to filing this instant case, Plaintiff has exerted all

reasonable efforts and alleges the same with particularity in the
complaint and also in his affidavit. Plaintiff vehemently objected to the
decision and sent a number of letters to the defendants with the hope
of settling the issue without the need for judicial intervention. Earnest
efforts were also done to arrive at an amicable settlement but to no
avail.
18
Ching, et.al vs. Subic Bay Golf and Country Club, Inc., et. al., GR No. 174353, September 10, 2014.
19
Ago ealty vs Ago, GR No. 210906, 211203, October 16, 2019.
20
Ibid.
21
Villamor vs Umale, GR No. 172843, 172881, September 24, 2014.
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Since the complaint is for breach of fiduciary duties of
Defendants who are members of the Board of Directors of JJJ
Corporation and, except for AAA, are also members of the Board of
Directors of PPP, Inc., which is a competing business in the industry,
no appraisal rights are available that could redress the wrong done
against JJJ.
Finally, the instant derivative suit was filed by Plaintiff for and on
behalf of JJJ Corporation in order to prevent dissipation of the
corporation assets and protect its interest from the members of the
Board of Directors, who fraudulently closed down the profitable
business of JJJ. The suit is not intended to harass the Defendants,
but is filed in order to recover damages for the benefit of the
corporation and its minority shareholders, to stop the abrupt closure
of the profitable and lucrative business of JJJ, and to obtain other
relief that the court may deem as just and proper.
To simplify, because JJJ Corporation itself is the wronged

party, there is no appraisal right to speak. And since the provision on
appraisal rights does not apply in this case, it necessarily follows that
there is no estoppel for failing or refusing to exercise the right.
B. REQUIRING PLAINTIFF TO EXERCISE HIS

APPRAISAL RIGHT AFTER THE COMPANY'S GOODWILL
HAS BEEN DISSIPATED AND ITS OPERATIONS WERE
ABRUPTLY SUSPENDED WOULD BE THE HEIGHT OF
INJUSTICE AND UNJUST ENRICHMENT.
The concept of goodwill as an intangible asset arises from the

economic reality that a company which has acquired a good name or
reputation in the business on account of its long years of good
business operations in the industry is more valuable than a company
which is just starting out in the industry. Goodwill represents the value
of a good name, solid customer base, and solid employee relations. A
company such as JJJ with goodwill is already a well-oiled machine,
which is superior to a startup company.
It is fairly obvious to state that a company that is a going

concern is more valuable than a company whose business
operations, despite being lucrative, have been suspended indefinitely
thereby rendering it in a state of paralysis. Therefore, the price of a
company's stock would be substantially depleted if its business is in a
state of paralysis since it is undoubtedly less valuable compared to a
business that is a going concern.
In the case at bar, the stock price of the company undoubtedly
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plummeted when its lucrative business operations were abruptly
suspended by the Members of the Board of Directors of JJJ without
any rational business purpose.
To require a stockholder to exercise his appraisal right under

these circumstances would be the height of injustice since he would
incur an enormous loss on account of the dissipation of the
company's goodwill and the irrational closure of the business, which
would substantially diminish the value of the company's stock price.
It is respectfully submitted that Congress intends to make

appraisal rights available only in certain situations where there is
disagreement on a business decision attributable to some rational
business purpose. The disputed business decision may be risky but
has some rational business purpose behind it. In the case at bar, the
sole purpose behind the irrational decision to suspend the business
operations of JJJ and shorten its corporate life despite its thriving
business is to bleed the company dry so its new competitor, PPP,
Inc., may take its place in the market.
Considering that PPP, Inc. was instantly catapulted to the top of

the industry after absorbing JJJ's employees and customers, the
Defendant's pronouncement that the stockholder's appraisal right is
the only legal remedy under the facts and circumstances of the case
would be the height of unjust enrichment. It would undoubtedly
reward the dishonesty, disloyalty, and bad faith of the Defendants in
directing the affairs of JJJ Corporation. It would not only allow disloyal
directors to have their cake but allow them to eat it as well.
The concept of an appraisal right was never intended and

should never be allowed to be a shield for fraud.
Requiring the dissenting stockholder to exercise his appraisal

right under the facts and circumstances of the case would leave the
stockholder holding an empty bag while the unscrupulous directors fill
their pockets. It would promote dishonesty, disloyalty, and bad faith of
directors in the conduct of the corporation’s affairs.
B.1. PLAINTIFF WHILE BEING THE REGISTERED OWNER OF

ONLY ONE SHARE OF STOCK, IS THE TRUE AND BENEFICIAL
OWNER OF50% OF THE SHARES OF STOCK OF JJJ
CORPORATION.
.2. THE SHARES OF STOCK REGISTERED IN THE NAME OF

B
AAA (ROUGHLY 25% OF THE SHARES OF STOCK OF JJJ
CORPORATION) ARE STILL UNDER LITIGATION HENCE THE
APPRAISAL RIGHT IS NOT AVAILABLE THEREFOR.
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Yet another reason why the appraisal right is not available to
herein Plaintiff is that although he is the registered owner of only one
share of stock, Plaintiff is the true and beneficial owner of 50% of the
shares of stock of JJJ Corporation which have been placed in trust
under the names of his children, namely: Jonathan V. Lee, Faye
Sharon Lee and AAA.
Based on the Judgment dated June 10, 2016 of the Regional

Trial Court Branch 40 of Dumaguete City, Jonathan Lee and Faye
Lee were declared to be holding shares of stock of JJJ as trustees of
Juanito Lee.22
While Jonathan V. Lee and Faye Sharon Lee have executed a

compromise agreement and have returned the stock certificates
endorsed to their father (herein Plaintiff), private Defendant - Ms. AAA
insisted on her ownership of the shares, effectively repudiating the
trust arrangement with her father. The subject shares of stock
registered under the name of AAA represent 25% of JJJ Corporation.
The reconveyance of the ownership of the subject shares of JJJ
Corporation, representing 25% of the total stock ownership, is the
subject matter of Civil Case No. 2016-15116 now pending before
Regional Trial Court branch 34.
Hence, it would be unfair for Plaintiff to force him to exercise his

appraisal right if he cannot demand the fair value of his shares of
stock (50% of JJJ Corporation), the ownership of which is still under
litigation.
The availability or unavailability of appraisal rights should be

objectively based on the subject matter of the complaint.23
Plaintiff cannot be estopped in exercising a right which is

unavailable to him. Exercising his right of appraisal is not the proper
relief. In fact, Plaintiff has exerted earnest efforts to obtain redress but
to no avail, as can be gleaned in the timeline of events relevant to this
case.
TIMELINE OF EVENTS
Date Event
December 2014 Plaintiff resigned as President of
JJJ and the main factor is the
strained relationship with EEE.
22
TSN, Pre-Trial Conference dated October 9, 2020, p. 65
23
Cua et. al. v. Tan, G.R. No. 181455-56, December 4, 2009.
12/62
Sometime in 2014 Gentleman’s agreement: To
alternate the majority between
the Us and the Ls
2015 Us had the majority on the board
for the first time.
Plaintiff transferred his

shareholdings to his children as
part of tradition. However,
Plaintiff continued to receive
dividends and exercised voting
rights over the shares.
January 30, 2016 (regular The Us exploited the conflict of
stockholder’s meeting) Plaintiff and his daughter in order
to obtain full control of JJJ and in
disregard to the Gentleman’s
agreement.
Respondents were elected

members of the Board of
Directors.
May 16, 2016 Although JJJ was profitable and
liquid, the new Board of
Directors passed Board
Resolution No. 2016-003
shortening the corporate life of
JJJ.
May 30, 2016 The case for reconveyance of
stocks was filed by Plaintiff.
June 10, 2016 Jonathan Lee and Faye Lee
were declared to be holding
shares of stock of JJJ as
trustees of Plaintiff.
August 5, 2016 The stockholders affirmed, by
more than a ⅔ vote, the decision
of shortening the corporate life of
JJJ.
Majority of the stockholders

voted to shorten the corporate
term until October 30, 2017
instead of December 31, 2017
as initially decided by the Board.
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The suspension of business
operation was also accelerated
to September 30, 2016 instead
of December 31, 2016.
Plaintiff sent a letter expressing

his objection to the dissolution of
JJJ.
September 30, 2016 Suspension of JJJ’s business
operation
October 1, 2016 Termination of JJJ employees
October 5, 2016 Letter sent by a lawyer, on behalf
of Plaintiff, expressing strong
objection to the implementation
of the suspension of business
operations.
January 9, 2017 Plaintiff filed a Complaint in
court.
February 28, 2017 Filed Plaintiff’s amended
complaint.
March 9, 2018 Received a notice of bidding of
corporation assets, scheduled on
April 2018
January 14, 2021 Still no approval from SEC to
shorten the corporate term of
JJJ.
C. APPRAISAL RIGHT IS NOT AVAILABLE FOR

SHORTENING THE CORPORATE TERM / INDEFINITE
SUSPENSION OF BUSINESS WITH NO RATIONAL
BUSINESS PURPOSE.
The Corporation Code of the Philippines was based on U.S.

law, therefore their jurisprudence on the matter should have a
persuasive influence. In an article entitled "Delaware's Business
Judgment Rule: International Variations," Honorable Justice Randy
Holland explained that a business judgment must comply with the
requirements of good faith and bona fide purpose, as follows:
“The idea that directors of Delaware corporations
owed fiduciary duties to the stockholders was
probably first expressed in Bodell v. General Gas &
Electric Corp., a 1926 decision of the Court of
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Chancery that was affirmed by the Delaware
Supreme Court. In 1931, building on Bodell, the
Court of Chancery “articulated what it considered
the elemental requirements for invoking the
Delaware business judgment rule—good faith and
a ‘bona fide[|’ purpose. 24
In 1984, the Supreme Court refined the business
judgment mle in what is now a seminal
case—Aronson v. Lewis. In Aronson, the Delaware
Supreme Court held that the business judgment
rule “is a presumption that in making a business
decision the directors of a corporation acted on an
informed basis, in good faith and in the honest
belief that the action was taken in the best
interests of the company.”25 A hallmark of the
business judgment mle is that a court will not
substitute its judgment for that of the board if the
latter’s decision “can be attributed to any rational
business purpose.”
The directors of Delaware corporations stand in a
fiduciary relationship not only to the stockholders
but also to the corporations upon whose boards
they serve. The directors’ fiduciary responsibilities
to both the corporation and its shareholders have
frequently been described as a “triad”: due care,
loyalty and good faith.”
In the case at bar, it bears stressing, at the risk of being
repetitive, that the decision to abruptly close the lucrative and thriving
business of JJJ Corporation made by Directors, who will directly and
personally benefit from the said decision, has no rational business or
bona fide purpose whatsoever which may be attributed to it. The fact
that the questionable decision was made by the very same people
who would personally benefit from it all the more shows the
fraudulent nature of the decision since the consequence would be to
bleed the company dry while another entity associated with
Defendants benefits.
It must be stressed that the enumerated instances under
the Corporation Code where the appraisal right is available
apply to disagreements over major business decisions to which
a rational business purpose may be attributed. However, it does
not apply to situations such as the case at bar where no rational
business purpose whatsoever can be attributed to the abrupt
decision to close down the lucrative and thriving business of
24
Horsey, ibid., at 984 (citing Cole v. Nat 7 Cash Credit Ass 'n. 156 A. 183, 188
(Del. Ch. 1931)).
25
Id. at 812 (citing Kaplan v. Centex Corp., 284 A.2d 119, 124 (Del. Ch. 1971); .
15/62
JJJ Corporation since the only purpose which can be attributed
to the said decision is to bleed the company dry so that PPP, Inc.
would take its place. Furthermore, this decision to indefinitely
suspend the business of JJJ and to shorten its corporate term was
made by Members of the Board of Directors who are interlocking
directors and in conflict of interest as they will directly and personally
benefit from the decision to close down the business. PPP, Inc., the
family corporation of the Defendants U family, decided to expand its
business to the lucrative business lines in which JJJ was engaged in
the same year that the decision to close down JJJ was made. This
shows a community of design to siphon off the customers and
employees of JJJ to their family corporation.
To reiterate, the provisions of the Corporation Code regarding
the instances when appraisal right is available to the stockholder
presupposes that there is a rational business purpose behind those
decisions and that the same is done in good faith. It does not apply in
a situation where the corporate decisions are motivated by animus
lucrandi or an intent to personally gain on the part of the members of
the board of directors themselves IN BREACH OF THEIR
FIDUCIARY DUTIES TO THE CORPORATION.
Likewise, under U.S. Law, an action for appraisal right where a
cause of action belonging to an individual stockholder is being
invoked can proceed separately from a derivative action for breach of
fiduciary duty since the latter involves invoking a cause of action
belonging to the corporation itself.
THE SPECIFIC AND PARTICULAR PROVISION OF THE
CORPORATION CODE THAT IS APPLICABLE TO THE
EXTENSION OR SHORTENING OF CORPORATE TERM
PROVIDES, THUS:
Sec. 37. Power to extend or shorten corporate
term. - A private corporation may extend or
shorten its term as stated in the articles of
incorporation when approved by a majority vote of
the board of directors or trustees and ratified at a
meeting by the stockholders representing at least
two- thirds (2/3) of the outstanding capital stock or
by at least two-thirds (2/3) of the members in case
of non-stock corporations. Written notice of the
proposed action and of the time and place of
the meeting shall be addressed to each
stockholder or member at his place of
residence as shown on the books of the
corporation and deposited to the addressee in the
post office with postage prepaid, or served
personally: Provided, That in case of extension
of corporate term, any dissenting stockholder
16/62
may exercise his appraisal right under the
conditions provided in this code.
There is a conflict between the general provision on appraisal
rights under section 81 of the Corporation Code, which is the general
provision that enumerates and provides for the general instances
when appraisal right is available, and the special and particular
provision under Sec. 37, which specifically and particularly deals with
the topic of extension and shortening of corporate term and the
instance when appraisal right is available.
In the thirteenth Congress, a bill filed on August 2, 2004 by the
late Senator Santiago sought to harmonize Section 81 and Section
37 of the Corporation Code by clearly allowing the appraisal right in
both cases of lengthening and shortening of the corporate term since
both results in a substantial change in a stockholder’s contract of
investment with a corporation.26 Unfortunately, the bill was not passed
into law, which means that the law applicable at the time JJJ
shortened its corporate term is still the 1980 Corporation Code.
It is a tenet of statutory construction that in the event of a
conflict between a general and special provision in a statute, the
special provision shall prevail. Hence, the appraisal right under
Section 37 of the Corporation Code is only available in the case
of extension of corporate term. Appraisal right is available when
the basis of dissent or objection is that the stockholder does not want
to extend the corporate term, which necessarily means that he wants
to withdraw from the business. Thus, receiving the fair market value
of his shares in this instance 30 days from the date the decision was
made would be just compensation to the dissenting stockholder;
In the case at bar, the fair market value of the shares 30 days
from the date on which the vote was taken will not be just
compensation since it does not factor in the loss of business
opportunities and profits had the business been continued for the
remainder of its term.
Finally, if we were to follow the interpretation that the appraisal
right is available in cases where the corporate term is shortened for
the purpose of transferring the entire business to another entity
(where the members of the directors personally profit) then no one in
any situation would be held accountable for breach of fiduciary duties
since they can defeat this right to demand accountability for breach of
fiduciary duty through the simple expedient of shortening the
corporate term to the nearest possible date. It is a venerable principle
of statutory construction that a law will not be interpreted to produce
absurd results.
The Corporation Code does not include indefinite suspension of
business as among the enumerated instances when appraisal right is
26
An Act Amending Section 37 of BP Blg 68, SB No. 1580, 13th Cong. (2004).
17/62
available.
The general instances when appraisal right is available
presupposes that there is a rational business purpose behind the
corporate decisions enumerated therein. In the case at bar, there is
no rational business purpose but a personal motive to profit on the
part of the very same fiduciary officers who made the unexplained
decision to close down the business.
Under the Code Of Corporate Governance it is provided thus:
c. Specific Duties and Responsibilities of a Director
i. To conduct fair business transactions with the
corporation and to ensure that personal interest
does not bias Board decisions. The basic principle
to be observed is that a director should not use his
position to make profit or to acquire benefit or
advantage for himself and/or his related interests.
He should avoid situations that may compromise
his impartiality. If an actual or potential conflict of
interest should arise on the part of directors or
senior executives, it should be fully disclosed and
the concerned director should not participate in the
decision making. A director who has a continuing
conflict of interest of a material nature should
consider resigning.
D. THERE IS NO APPRAISAL RIGHT FOR A

BREACH OF FIDUCIARY DUTY
There is no appraisal right for breach of fiduciary duties,

especially in extreme cases such as the case at bar wherein a
thriving business was summarily and abruptly closed, consequently
benefiting the very same officers responsible for the closure.
The fact of the matter is that the business was closed for the
purpose of transferring it to the personal business of its directors and
officers. The fair market value of the shares 30 days from the date the
decision was made would not be just compensation in the case at bar
since it does not factor in the lost business opportunities and income
of the corporation and the minority stockholder for the remainder of
the corporate term. To say otherwise would reward the disloyal
fiduciary officers by sanctioning their unjust enrichment at the
corporation's expense and at the expense of the minority
stockholders.
The circumstances of this case clearly show that the appraisal

right is not available to Plaintiff, a stockholder and the founder of JJJ,
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who exerted all reasonable efforts to obtain the appropriate relief.
Thus, Plaintiff filed this derivative suit against the defendants who, as
members of the Board of Directors of JJJ Corporation, employed
devices or schemes amounting to fraud and misrepresentation, which
constitutes a breach of their fiduciary duty, detrimental to the interest
of the public and/or the stockholders.
II. DEFENDANTS BREACH THEIR FIDUCIARY DUTIES TO JJJ

CORPORATION IN DECIDING TO SHORTEN THE CORPORATE
EXISTENCE OF THE CORPORATION
A. It is undisputed that the business is in a state of paralysis

due to the bad faith of the members of the board of
directors.
B. The business of the corporation was completely dissipated

because of the abrupt decision to indefinitely suspend
operations.
C. The U family members who are members of the board of

directors are disqualified from occupying fiduciary
positions by virtue of their ownership of PPP, Inc. which
commenced its copra, rice, and corn business in the same
year that JJJ Corporation was to be closed.
D. PPP Inc. had the most to gain upon the closure of JJJ
Corporation
E. Defendants did not bother to deny any incident of

diversion of the Company’s physical assets.
The Members of the Board of Directors of JJJ Corporation

(members of the U family) took advantage of the pending
disagreement between Plaintiff XXX and his daughter, Ms. AAA, and
convinced her to agree in closing down the business in accordance
with their plan to eventually expand the business of their family
corporation, PPP, Inc., to include the same lines of business (Copra,
Rice, and Corn) in which JJJ Corporation was engaged; This after
obtaining control of all seats in the Board of Directors after reneging
on a gentleman's agreement with herein Plaintiff XXX.
The Members of the Board of Directors who are Members of

the U family were aware that sometime in 2015 the estranged
daughter (AAA, Defendants herein) of herein Plaintiff had decided to
repudiate the trust arrangement with her father regarding the shares
of stock of JJJ Corporation, which were registered under her name
but which had already been sold and endorsed back to her father (the
19/62
Plaintiff herein) since the inception. The sale, although unregistered,
creates a binding vinculum between the transferor and the transferee.
Hence, the true and beneficial owner of the subject shares of stock
had always been acknowledged by JJJ to be the herein Plaintiff.
However, a family conflict between Plaintiff and his daughter AAA
erupted, which led to the afore-mentioned repudiation of the trust
over the subject shares of stock in litigation. This conflict, coupled
with the fraudulent misrepresentation on the part of Defendants U
family that they were committed to abide by the gentleman's
agreement and to exercise their voting rights in accordance therewith
such that the Lee family would be the majority bloc on the board,
allowed the Defendants to obtain full control of the corporation.
For the protection of herein Plaintiff, he likewise demanded that

his son, Mr. Jonathan V. Lee, who is also holding shares of stock in
trust, return the same to him. In a settlement reached in Civil Case
No. 2016-15116, his son acknowledged that he is merely holding in
trust the shares of stock of JJJ Corporation. A copy of the
COMPROMISE AGREEMENT and its approval per ORDER dated
June 10, 2016, are respectively attached hereto as ANNEX "V" and
"W" and made an integral part hereof.
Without any rational business purpose therefore and motivated

by their desire for personal gain at the expense of the corporation, the
Members of the Board of Directors, consisting of the U family
members and the estranged daughter of herein Plaintiff (AAA),
decided to shorten the corporate term of JJJ Corporation and
indefinitely suspend the business operations starting on 30
September 2016.
It is undisputed and well-settled in the case at bar that the

business operations of JJJ Corporation are in a state of paralysis or
suspended animation since the Members of the Board of Directors
abruptly decided to close the lucrative business of JJJ without any
rational business purpose. Even the Defendants do not dispute this
fact notwithstanding that it has the economic resources to resume
operations and continue as a going concern.
As a consequence, the Goodwill of JJJ as an intangible asset

stands to be completely dissipated and will become negative
goodwill. In accounting parlance, one of the most valuable assets of a
strong business that has been in existence for a long time is its
goodwill. Goodwill is an intangible asset representing the value of a
company's brand name, solid customer base, good customer
relations, good employee relations, and any patents or proprietary
technology. Goodwill is considered an intangible asset because it is
not a physical asset like buildings or equipment. The goodwill account
can be found in the assets portion of a company's balance sheet.
20/62
This Goodwill will result in a premium value for the acquisition of one
company by another.Thus, the price of acquisition for the shares of
stock of a corporation, which has goodwill on account of its company
or brand name or reputation, its solid customer base, and its good
employee and customer relations, will be at a premium.
In the case at bar, JJJ Corporation, through its long years of

existence and its being the market leader in the Copra trading
business in the province of Negros Oriental prior to its closure, had
established a reputable name in the industry, a solid customer base,
and good customer and employee relations. Verily, Goodwill as an
intangible asset will result in a higher price for the shares of stock of
the company so long as it is a going concern.
This Goodwill, as an intangible asset, had been substantially

dissipated when the business operations of JJJ Corporation was
abruptly suspended indefinitely on 30 September 2016 without any
rational business purpose in flagrant breach of the fiduciary duties of
herein Defendants who are all occupying fiduciary positions as
Members of the Board of Directors of JJJ Corporation. These
fiduciary positions mandate that they promote the long-term business
interests and welfare of JJJ Corporation as a going concern. Its
business name was damaged, its solid customer base completely
wiped out, and its loyal employees were all terminated on account of
the decision to close the business, which was attended with fraud and
bad faith.
Corollary to this, to require a dissenting shareholder to exercise

his appraisal right after the goodwill of the company has been
substantially dissipated would be the height of injustice as he would
shoulder an enormous loss arising from the fact that the company is
no longer treated by the Members of the Board of Directors as a
going concern as will be lengthily explained in a further section of this
pleading.
Prior to the premeditated closure, several incidents of

malversation of company funds amounting to P50,000,000.00 and
P78,510,350.03, principally involving the brother-in-law of Mr. EEE,
had been discovered but has never been accounted for until now.
In 2008, Harry Delos Santos, the bookkeeper and cashier of

JJJ and Defendant Edward EEE’s brother-in-law, failed to produce
the company statements for seven (7) months. An audit initiated by
one of the stockholders revealed that there was a shortage or
discrepancy of around Fifty Million Pesos (Php 50,000,000.00).
Defendant EEE, who was already a Member of the Board of Directors
and was acting as General Manager of JJJ chose not to investigate
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the matter. 27
At the time, Plaintiff did not want to strain his relations with
Edward and the U family, so he did not pursue further investigations
on the matter. This incident led the Sy brothers to lose their trust and
confidence in the Management of JJJ after they were not satisfied
with the actions taken by Management regarding this incident, and
they eventually decided to sell their shares in the corporation. JJJ
relieved Mr. Delos Santos of his duties as bookkeeper and cashier
but was given the new assignment as custodian of daily collections
for cash and checks.
In 2012, the replacement bookkeeper and auditor discovered

fund shortages involving the same Mr. Delos Santos. The fund
shortages amounted to Php 78,510,350.03. These were different
from the previous amount of Php 50,000,000.00 reported in the past.
Plaintiff pushed for an investigation, but Mr. EEE chose not to

conduct a formal investigation on the matter. He instead attempted to
offer explanations about how the shortages might have come about.
The fact remains, however, that company funds had indeed gone
missing. It was thus decided that an independent audit investigation
should be conducted.
A series of audit investigations were conducted by company

auditors. They reported Php78,510,350.03 were missing and that Mr.
Delos Santos was primarily accountable for that amount. Mr. EEE
dismissed the audit findings. He insisted on an independent audit
from a firm, KPMG, based in Manila. Plaintiff assented to it. KPMG
concluded in its draft report that “there is no clear documentary
indication that there are any post-dated checks that were taken out of
the funds of JJJ (JJJ). However, due to the lack of effective controls
and policies and procedures in the collection process, JJJ is
vulnerable to fraud without detecting it for an extended period of
time.” However, said audit findings were found unsatisfactory by JJJ’s
counsel, ANGEL Law.
There were some concerns pointed out by ANGEL Law.

ANGEL Law wrote to KPMG that their conclusion raised more
questions rather than provide answers. It did not dispute that funds
were missing but simply stated that fraud could be perpetrated
without being detected.28
However, Defendant EEE still insisted on the innocence of Mr.

Delos Santos. Plaintiff has always known Edward to have good
judgment. He wrote Plaintiff a letter to admonish him not to have any
27
Exhibit “P”.
28
Exhibit “E”.
22/62
direct or indirect relations with the CPA-lawyer that JJJ intended to
hire to address the gray areas in KPMG’s draft report. In the same
letter, he also insinuated that Plaintiff had some kind of influence over
KPMG.
Plaintiff reminded Edward that KPMG was chosen through a

pre-agreed process. It was Edward who created a committee of two
to scrutinize a list of four accounting firms and to recommend two of
those firms. It was also him who he previously said: “Nonetheless, the
company is fortunate that KPMG did its’ (sic) work without fear or
favor.” Plaintiff also tried to confront Edward with a rumor going
around in the office that Edward gave gifts and business offers to
KPMG personnel prior to the start of the audit.
1. I have here a letter, dated July 10, 2014, signed by you

and addressed to EEE; is this the letter you were referring in
response to EEE’s letter insinuation?
Yes, that’s the same letter dated July 10, 2014 addressed to
EEE which was marked as EXHIBIT “F”. This letter also contains
other matters related to Mr. Harry Delos Santos.
In the letter, Plaintiff discussed matters involving Mr. Harry

Delos Santos, Edward’s brother-in-law. Plaintiff’s relations with Ed
became strained due to the incidents involving his brother-in-law.
Plaintiff wrote him a letter to try to restore their relationship.
Plaintiff was a member of the Board of Directors and was also

the President of JJJ. However, he decided to resign as President
ofJJJ sometime in December 2014. There were many factors, but the
main factor for his resignation was his strained relations with Ed.
Aside from the issue of EEE concerning the shortages

involving Mr. Harry Delos Santos, there are other instances
where the Respondents were grossly negligent or in bad faith.
The second instance involves a hostile take-over by the Us in

violation of a gentleman’s agreement Plaintiff had with Mr. RRR.
When the Uy’s had taken over, they voted for the immediate closure
of JJJ so that their family company, PPP, Inc., could take JJJ’s place
in the market.
These incidents of fraud had never been properly investigated

nor were the funds properly accounted for, which also established a
pattern of dissipation of the company's assets prior to its abrupt
closure.
On the other hand, members of the U family personally
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benefited from the decision to abruptly close down JJJ Corporation
since they are the owners of a competing business, PPP, Inc., which
expanded its line of business (which was previously limited to lard
and margarine) into the line of business of JJJ (Copra, Rice and
Com) in the same year (2016) the decision to close down JJJ was
executed. PPP, Inc. a new player in the copra business, suddenly
gained a solid customer base and experienced employees. It did not
undergo the growing pains a new entrant in the business would
naturally experience in starting out a new business. Instead, it is as if
PPP, Inc. acquired JJJ Corporation without paying the latter a single
centavo therefor.
A. IT IS UNDISPUTED THAT THE BUSINESS IS IN A STATE

OF PARALYSIS DUE TO THE BAD FAITH OF THE
MEMBERS OF THE BOARD OF DIRECTORS.
It is an undisputed and settled fact, in the case at bar, that the

business operations of JJJ are in a state of paralysis as a direct
consequence of the abrupt decision of the Members of the Board of
Directors (herein Defendants) to indefinitely suspend its business
operations and to shorten its corporate term. The decision was
attended with fraud, made in bad faith, and without any rational
business purpose whatsoever. The obvious and thinly veiled purpose
behind the abrupt closure was to transfer the customers and
employees of JJJ to PPP, Inc., the family corporation of the herein
Defendants U family.
The RESOLUTION29 of the Members of the Board of Directors

are reproduced herein:
“EXCERPTS OF THE SPECIAL

STOCKHOLDERS MEETING ON AUGUST 5,
2016
OPENING:
Minutes of the Special Stockholders Meeting of
JJJ CORPORATION duly called for in
accordance with the company’s by-law and
held on August 5, 2016 at No. 000 South Road,
Tabuc-tubig, Dumaguete City, commenced at
5:05PM and officially adjourned at 6:10PM.
PRESENT WERE:
Mr. EEE
Mr.RRR
29
Exhibit “A”.
24/62
Mrs. TTT
Mrs. CCC
Mrs.AAA
Mr .XXX
On motions duly made and seconded, the
following matters were taken up following the
procedure mandated by the by-laws and in
accordance with the Corporation Code of the
Philippines, that:
1. Cessation of business Operations — To stop
the operations of the Corporation on
September 30, 2016. This motion was moved
by RRR and seconded by CCC. Objections was
made by XXX. Motion was carried through
more than 2/3 votes totalling to 36,993 out of
50,000 shares made by the following
stockholders: EEE, RRR, CCC, TTT, and AAA.
2. Shortening the Corporate Life by Amending
the Articles of Incorporation — To shorten the
corporate life of the Corporation to October 30,
2017 by amending the Articles of Incorporation.
This motion was moved by CCC and seconded
by TTT. Objection was made by XXX. Motion
was carried through more than 2/3 votes
totalling to 36,993 out of 50,000 shares made
by the following stockholders: EEE, RRR, CCC,
TTT, and AAA.
There being no further matters to be discussed
at this time, it was voted to adjourn the
meeting.
Prepared by:
(SGD)
DDD
Corporate Secretary”
B. THE BUSINESS OF THE CORPORATION WAS

DISSIPATED BECAUSE OF THE ABRUPT DECISION TO
INDEFINITELY SUSPEND OPERATIONS.
As earlier explained, should a company desire to acquire JJJ

Corporation while it was a going concern, then this would result in a
huge premium on the price of its shares of stock because of the
25/62
"Goodwill" of the company. Goodwill results from its business brand,
name or reputation acquired over the years, from its solid customer
base being the market leader in the industry, and from its good
employee and customer relations.
In the case at bar, it has been established, through the records

of the Social Security System, that a good number of employees of
JJJ Corporation, terminated on account of the closure of the
business, effectively transferred employment to PPP, Inc,. a business
owned by the Defendants U family. Thus, the systematic transfer of
the employees of JJJ occurred simultaneously as the business was
being transferred to PPP, Inc..
With respect to the customers of JJJ, Mr. EEE, as the General

Manager of JJJ Corporation, personally knows all the customers of
JJJ as he transacts with them in his daily duties as General Manager.
JJJ allowed cash advances or loans to its copra customers and it was
EEE who was responsible for approving the loans and cash
advances of their big customers. Hence,it would not be far-fetched to
assume that he would convince them to transfer to PPP, Inc. Ordinary
human experience tells us that a businessman will exert earnest
efforts to maximize whatever business opportunities and profits are
available in the market.
The following timeline likewise shows that Mr. EEE

orchestrated, in advance, the plan to siphon off the customers and
employees of JJJ Corporation to PPP, Inc., thus:
Date Description Documents
21 October 2014 Mr. EEE applies for 1)
(date of application) building permit for the Application for
property at Maslog, Building Permit with
Sibulan, Negros Permit No.
Oriental, which is 201410258 (date
now being used as issued)
24 August 2016 the business office of 2)
PPP, Inc. Application for
Mr. EEE applies for a Business License
business license and and Permit for
permit in of PPP, Inc. Sibulan, Negros
is now located. Oriental, where the
copra, rice and com
business Tax Year
2016
3) Granted Business
Permit (NEW) for
Calendar Year 2016,
with Permit No.
26/62
2016-0840, dated
August 24, 2016,
issued by the Office
of the Municipal
Mayor of Sibulan,
Negros Oriental
30 September 2016 JJJ Corporation’s 4)
business is CERTIFICATION
indefinitely (Board Resolutions)
suspended and its of the Corporate
articles amended to Secretary of JJJ
shorten its corporateCorp.
life per Resolution
No. 2016-003.30
1 October 2016 Date of termination of 5) Letter dated
JJJ Employees September 26 2016
signed by EEE
addressed to the
DOLE informing them
of the cessation of
business and
termination of its
employees effective
October 1, 2016
December 2016 Date of Employment 6) Per SSS record
of the terminated JJJ
employees in PPP
The EXCERPTS from the minutes of the Meeting of JJJ

Corporation on 05 August 2016, 31 is reproduced herein thus:
“EXCERPTS OF THE SPECIAL
STOCKHOLDERS MEETING ON AUGUST 5,
2016
OPENING:
Minutes of the Special Stockholders Meeting of
JJJ CORPORATION duly called for in accordance
with the company’s by-law and held on August 5,
2016 at No. 000 South Road, Tabuc-tubig,
Dumaguete City, commenced at 5:05PM and
officially adjourned at 6:10PM.
PRESENT WERE:
Mr. EEE
30
Exhibit “A”.
31
Exhibit “J-2” to “J-14”
27/62
Mr.RRR
Mrs.TTT
Mrs. CCC
Mrs. AAA
Mr .XXX
On motions duly made and seconded, the
following matters were taken up following the
procedure mandated by the by-laws and in
accordance with the Corporation Code of the
Philippines, that:
1. Cessation of business Operations — To stop the
operations of the Corporation on September 30,
2016. This motion was moved by RRR and
seconded by CCC. Objections was made by XXX.
Motion was carried through more than 2/3 votes
totalling to 36,993 out of 50,000 shares made by
the following stockholders: EEE, RRR, CCC, TTT,
and AAA.
2. Shortening the Corporate Life by Amending the
Articles of Incorporation — To shorten the
corporate life of the Corporation to October 30,
2017 by amending the Articles of Incorporation.
This motion was moved by CCC and seconded by
TTT. Objection was made by XXX. Motion was
carried through more than 2/3 votes totalling to
36,993 out of 50,000 shares made by the following
stockholders: EEE, RRR, CCC, TTT, and AAA.
There being no further matters to be discussed at
this time, it was voted to adjourn the meeting.
Prepared by:
(SGD)
DDD
Corporate Secretary”
Furthermore, as shown in the TRANSCRIPT OF THE SPECIAL

STOCKHOLDERS MEETING ON AUGUST 5, 2016, PRIVATE
DEFENDANT - EEE (ECU), when he was asked by Plaintiff (XXX) if
he had already transferred the customers to PPP, he responded,
thus:
“xxx
28/62
ECU: So with regards to this, do we have any
other matters to discuss?
JUL: So Ed, asa na tong mga customers ron? Tua
na sa PPP?
ECU: Wala man namokuha-a tanan. Wala pud
na ku-ana ang uban Hia Boy.
JUL: Pero kadaghanan tu-a gyud sa PPP. Kay ako
mga tawo sige ga report nganung tu-a man didto
na sa JJJ man to?
ECU: Actually ang price Hia Boy, wala man ko
capital actually wala gyud dili gyud ma cover tanan
in fact, kabalo man pud imo mga ahente na dili
gyud strikto, wala gyud mi mu pasagadug. We are
only selling in volume.
Xxx”
(The Transcript of the Special Stockholders Meeting on August 5,
2016 is attached as Annex “J” to the original Complaint.)
The breach of fiduciary duties could not be any clearer in the

case at bar, thus:
"Fiduciary Duties; Conflict of Interest
"A director, holding as he does a position of trust,
is a fiduciary of the corporation. As such, in case of
conflict of his interest with those of the corporation,
he cannot sacrifice the latter without incurring
liability for his disloyal act. The fiduciary duty has
many ramifications, and the possible
conflict-of-interest situations are almost
limitless, each possibility posing different
problems. There will be cases where a breach of
trust is clear. Thus, where a director converts for
his own use funds or property belonging to the
corporation, or accepts material benefits for
exercising his powers in favor of someone seeking
to do business with the corporation, no court will
allow him to keep the profit he derives from his
wrongdoing.32
C. THE U FAMILY MEMBERS WHO ARE MEMBERS OF

THE BOARD OF DIRECTORS ARE DISQUALIFIED FROM
OCCUPYING FIDUCIARY POSITIONS BY VIRTUE OF THEIR
OWNERSHIP OF PPP INC. WHICH COMMENCED ITS
32
Campos, commentaries on the Corporation Code.
29/62
COPRA AND RICE AND CORN BUSINESS IN THE SAME
YEAR THAT JJJ CORPORATION WAS CLOSED.
1. The Defendants EEE, RRR, TTT, CCC incorporated PPP,

Inc. even while Plaintiff JJJ still exists. They are both
members of the board of directors in Plaintiff JJJ and
Defendant PPP.
On May 16, 2016, the date when the Board Resolution to

shorten the corporate life of JJJ was passed, the Board of
JJJ was composed of five (5) members, namely: EEE, RRR,
TTT, CCC and AAA, the daughter of the Plaintiff, as reflected
in Plaintiff’s Exhibit “A”.33 As of July 14, 2016, the members
of the Board ofPPPwere EEE, RRR, TTT, CCC, Carlos P.
Tan, as reflected in plaintiff’s Exhibit “C-4”.34 TTT and
Carlos P. Tan are spouses.35
2. Based on the Articles of Incorporation of PTI, marked as

plaintiff’s Exhibit “B”, the principal office of the Corporation is
JJJ Compound, Tabuc-tubig, Dumaguete City, Negros
36
Oriental.
Even until 2019, PPP still uses the address of JJJ. Based on
the PTI’s Audited Financial Statement for 2019, the principal
office of PPPis at Tabuc-tubig, JJJ Compound, Dumaguete
City, Negros Oriental.37
3. On May 16, 2016, Defendants resolved and unanimously

voted to suspend the business operations of JJJ and to
shorten its corporate life.38 The Defendants implemented the
suspension of JJJ’s operations on September 30 2016
without rational business purpose. However, as of January
14, 2021, there is no formal approval from the Securities and
Exchange Commission to shorten the corporate term. In
effect, there is no formal dissolution of JJJ in accordance
with the proper procedure under the Corporation Code.39
4. JJJ was profitable and liquid at the time the Board of

Directors passed the Board Resolution of May of 2016,
shortening the corporate life.40 JJJ has an accumulated bank
33
TSN, Pre-Trial Conference dated October 9, 2020, pp. 37-38.
34
TSN, Pre-Trial Conference dated October 9, 2020, pp. 38-39
35
TSN, Pre-Trial Conference dated October 9, 2020, p. 56.
36
Ibid. p.60
37
Ibid. pp.61-62.
38
Exhibit “A”, see also TSN, Pre-Trial Conference dated October 9, 2020 p.60.
39
Ibid. p.58 .
40
TSN, Pre-Trial Conference dated October 9, 2020 page 16 and 39.
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deposit of about Five Hundred Million Pesos
(PHP500,000,000.00), more or less, with different
commercial banks in Dumaguete City.41
5. On April 2016, Defendant EEE, President and Gen. Manager

of JJJ, applied for a business permit for Defendant PPP to
operate in Sibulan, Negros Oriental.42 Earlier in January
2016, Defendant PPP started to engage in the same
business as Plaintiff JJJ venturing to the rice and corn,
fertilizer, salt, feeds, and copra business. As admitted by
Defendants, prior to the closure of JJJ, PPP was mainly a
supplier of margarine and lard in Dumaguete City.43
However, after the closure of JJJ, PPP ventured mainly in
copra, fertilizer, rice, and corn, in addition to lard and
margarine.44
That the herein Defendants (EEE, RRR, CCC, TTT) are all
principal stockholders of PPP, Inc. which is in direct competition with
JJJ Corporation after PPP, Inc. concurrently decided to expand its
line of business into Copra, Rice, and Corn at the same time that JJJ
Corporation was closed. The expansion of the business operations of
PPP, Inc. into the business lines of JJJ Corporation was executed in
the same year that JJJ Corporation was closed. PPP was a main
supplier of margarine and lard in Dumaguete City, but the Articles of
Incorporation of PPP encompasses a wider coverage. It provides that
the primary purpose of the corporation is “to carry on a general
mercantile and commercial business of trading,...and dealing in all
kinds of merchandise, agricultural or otherwise...and commodities of
all kinds and products which are or may become articles of
commerce.” Without restrictions to agricultural specific products, the
competing purpose of JJJ and PPP has been obvious and the conflict
of interest between their directors are glaring.
In Gokongwei vs SEC45, the court stated that “where two

corporations are competitive in a substantial sense, it would seem
improbable, if not impossible, for the director, if he were to discharge
his duty effectively, to satisfy his loyalty to both corporations and
place the performance of his corporation duties above his personal
41
TSN, Pre-Trial Conference dated October 9, 2020 p.40.
42
“Q” - Business Permit (new) dated August 24, 2016 for PPP Inc., Sibulan;
Photocopy Rollo,Vol.3, Page 147. Admitted as to genuineness and due execution
(Minutes of Preliminary Conference dated October 2, 2020, p.5; See also TSN,
Pre-Trial Conference dated October 9, 2020, pp. 22-24)
“R” to “R-1” - Application for Business License and Permit for tax year 2016,
PPP (Office of the Municipal Mayor of Sibulan)
43
44
45
Gokongwei vs SEC, GR NO. L-45911, APRIL 11, 1979.
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concerns.” Sitting as directors to two competing businesses would be
against public policy as it would stifle the competition. The director
would have access to confidential sales, pricing and marketing
information and would be in a position to coordinate policies or to aid
one corporation at the expense of another,
Moreover, the timing of the decision to indefinitely suspend the

business of JJJ, which coincided with the expansion of the business
lines of PPP, Inc. into the same business lines of JJJ, shows that this
act was well-planned by the members of the U family. The SSS
records likewise indisputably show that Forty (40) employees of JJJ
were immediately absorbed by PPP, Inc. after they were dismissed
on account of the closure of JJJ. PPPeven bought some of the unsold
and remaining stocks of JJJ for the purpose of disposing of those
stocks after the closure. The facts all show a pattern of siphoning off
the employees and customers of JJJ Corporation. This contributed to
the decline of Goodwill of the company.
As such, herein Defendants are disqualified from being

Members of the Board of Directors of JJJ Corporation since they
cannot faithfully exercise their fiduciary duties due to conflict of
interest.
This disloyalty already manifested itself when they abruptly

decided to indefinitely suspend and, in effect, close the lucrative
business of JJJ Corporation directly benefitting PPP, Inc., a direct
competitor of JJJ which emerged only in 2016. The clear intent was
for PPP, Inc. to absorb the customers and employees of JJJ
Corporation and for PPP, Inc., a new entrant in the copra, rice, and
com business, to be instantly catapulted to the top position in the
industry. There is no rational business purpose from the vantage
point of JJJ since its operations were doing exceptionally well at the
time of its abrupt closure. No rational businessman will kill the goose
that lays the golden eggs unless he will personally profit in some
other way, as in the case at bar.
The responsibilities of the Members of the Board of Directors as

set forth clearly in the REVISED CODE OF CORPORATE
GOVERNANCE (SEC Memorandum Circular No. 6, Series of 2009)
are as follows:
F. Responsibilities, Duties and Functions of the

Board
1. General Responsibility
It is the Board's responsibility to foster the
long-term success of the corporation and to
sustain its competitiveness and profitability in a
manner consistent with its corporate objectives
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and the best interest of its stockholders.
G) Specific Duties and Responsibilities of a
Director
A director's office is one of trust and confidence.
He should act in the best interest of the
corporation in a manner characterized by
transparency, accountability, and fairness. He
should exercise leadership, prudence, and integrity
in directing the corporation towards sustained
progress over the long term. A director assumes
certain responsibilities to different constituencies or
stakeholders, who have the right to expect that the
institution is being run in a prudent and sound
manner.
D. PPP INC. HAD THE MOST TO GAIN UPON THE
CLOSURE OF JJJ CORPORATION
The closure of JJJ immediately had an apparent impact on the

operations of PPP Incorporated. Upon its closure in 2016, the
business and, ultimately, the profits of JJJ Corporation were siphoned
off to PPP, Inc., as can be better appreciated by looking at the
financial performance of PPP Inc. through its Financial Statements
during the periods involved (2016 during the closure of JJJ and in the
immediately succeeding year), the same Financial Statements
submitted by PPP Corporation to the Bureau of Internal Revenue and
subsequently submitted to the Securities and Exchange Commission.
Here is an excerpt of the pertinent portions of the comparative
Statement of Financial Performance (also known as the Income
Statement) of PPP Inc. in 2016 and 2017:
PPP INC
Statement of Financial Performance
For the Year Ended December 31

2017 2016
SALES 128,779,133.00 56,563,307.00
LESS: COST OF GOODS SOLD 105,107,588.00 48,341,271.00
GROSS PROFIT 23,671,545.00 8,222,036.00
TOTAL GROSS PROFIT 23,671,545.00 8,222,036.00
LESS: SELLING AND ADMIN EXPENSES 19,819,912.00 6,777,346.00
INCOME BEFORE TAX 3,851,633.00 1,444,690.00
INCOME TAX 1,155,490.00 433,407.00
NET INCOME 2,696,143.00 1,011,283.00
Based on the comparative statements, it is evident that PPP’s

business had dramatically increased in just one (1) year. The sales in
2017 increased by more than 100% or more than two-fold that of the
previous year’s sales. To better absorb the change in financial
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performance, the peso increase and percentage increase comparison
between 2016 and 2017 performance can be seen here:
PPP INC
Statement of Financial Performance
For the Year Ended December 31
Change
Change (Php) (%)
2017 2016

SALES 128,779,133.00 56,563,307.00 72,215,826.00 127.67%
LESS: COST OF GOODS SOLD 105,107,588.00 48,341,271.00 56,766,317.00 117.43%
GROSS PROFIT 23,671,545.00 8,222,036.00 15,449,509.00 187.90%
TOTAL GROSS PROFIT 23,671,545.00 8,222,036.00 15,449,509.00 187.90%

LESS: SELLING AND ADMIN
EXPENSES 19,819,912.00 6,777,346.00 13,042,566.00 192.44%
INCOME BEFORE TAX 3,851,633.00 1,444,690.00 2,406,943.00 166.61%
INCOME TAX 1,155,490.00 433,407.00 722,083.00 166.61%
NET INCOME 2,696,143.00 1,011,283.00 1,684,860.00 166.61%
The Sales of PPP Incorporated in 2017 increased by

Php72,215,826.00 from its immediately preceding year. In fact, the
increase was so significant because the single-year increase of
Php72,215,826.00 was more than the actual and full-year Sales of
the prior year (the total sales in 2016 was only Php56,563,307.00).
This translates to a 127.67% increase in sales. The sales and other
related amounts are reflected in the Statement of Financial
Performance (Comparative for 2016 and 2017), as reflected in the
plaintiff’s Exhibit “QQ”.46 It was admitted by the defendants that
there was a two (2) fold increase, more or less, of sale and net
income based on the the Statement of Fianncial Performance for the
years 2016 and 2017 of PPP Incorporated.47
It is not difficult to surmise that the dramatic increase in

business operations of PPP Incorporated in 2017 from the previous
year is founded on the closure of JJJ on May 16, 2016. Itcan also be
deduced that the increase in operations can be attributed to the
expansion of the ventures into copra, fertilizer, and cement upon the
closure of JJJ. The Board of Directors of PPP Incorporated who were
essentially the same Board of Directors of JJJ who surreptitiously
46
TSN, Continuation of Pre-Trial Conference dated January 14, 2021, pp.45-47.
47
Pre-Trial Order – Page Four.
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decided on its immediate closure had gained the most from the said
closure. It is readily apparent based on the foregoing that JJJ’s
closure was tainted with badges of fraud.
Even the merchandise inventory held for sale of JJJ was

transferred to PPP. The Inventory of PPP Incorporated also had a
remarkable increase in the year 2017 compared to the previous year.
It was admitted by the defendants during the Pre-trial that based on
the Comparative Statement of Financial Position (Balance Sheet) of
PPP for 2016 and 2017, the merchandise inventory increased from
Three Million One Hundred Eighty-Seven Thousand Four Hundred
Ten (Php3,187,410.00) to Ninety-seven Million (Php97,000,000.00)48
as reflected in the entry marked as Exhibit “RR”.49 A comparison of
the Current Asset portion of PPP Inc’s Statement of Financial
Position, including the Merchandise Inventory, for 2016 and 2017
shows:
PPP INC
Statement of Financial Position
As of December 31
Change
Change (Php) (%)
2017 2016
ASSETS
Current Assets
Cash 2,425,075.00 1,362,378.00 1,062,697.00 78.00%

Accounts Receivable -
Trade 6,642,435.00 3,278,892.00 3,363,543.00 102.58%
Merchandise Inventory 97,600,867.00 3,187,410.00 94,413,457.00 2962.07%

Total Current
Assets 106,960,193.00 7,963,012.00 98,997,181.00 1243.21%
The increase of Ninety-four Million Four Hundred Thirteen

Thousand Four Hundred Fifty Seven Pesos (Php94,413,457.00) in
the merchandise inventory balance of PPP Inc. in the year 2017
represents a 2,962.07% increase. Likewise, it represents a massive
increase in its prospective business operations in the years
forthcoming. The inventory of a corporation represents its goods
available for sale, therefore, the significant increase in PPP’s
48
Pre-trial Order – Page Four.
49
TSN, Continuation of Pre-Trial Conference dated January 14, 2021, pp.48.
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inventory would translate into an increase in the sales and overall
business operations of the company. The increase in PPP’s inventory
could also be attributed to the transfer of inventory from JJJ.
JJJ’s inventory for the year 2016 was emptied from the previous
year’s inventory balance of Eight Million Five Hundred Ninety-nine
Thousand One Hundred Nineteen Pesos (Php8,599,199.00). These
are reflected in the Statement of Financial Position (Balance Sheet)
entries marked as Plaintiff’s Exhibits “SS-1” and “SS-2”.50 This was
also admitted by the defendants during the Pre-trial.51 JJJ
Corporation’s Statement of Financial Position Current Assets Portion
for Fiscal Years 2016 and 2017 discloses the following:
JJJ CORPORATION
As of December 31
Change Change
(Php) (%)
2016 2015
ASSETS
Current Assets
10,108,083.0
Cash 0 2,117,710.00 7,990,373.00 377.31%
(8,596,755.00
Accounts Receivable 1,347,900.00 9,944,655.00 ) -86.45%
Merchandise Inventory - 8,599,119.00 (8,599,119.00) -100.00%
Other Current Assets - 57,600.00 (57,600.00) -100.00%
Total Current 11,455,983.0 (9,263,101.00

Assets 0 20,719,084.00 ) -44.71%
The Merchandise Inventory was completely cleaned out along

with the Other Current Assets (whatever the composition of the same
would have been) having decreased for the entire 100% of the
balance of the previous year. The Accounts Receivable balance was
almost fully expended as well, having a sudden decline of
50
51
Pre-trial Order – Pages Four & Five.
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Php8,596,755.00, a sharp 86.45% decrease from the previous year
2015. All these while only having an increase in cash of
P10,108,083.00 – significantly 58.78% less than what would have
been raised from the decrease from Accounts Receivable and
Merchandise Inventory which totals Php17,195,874.00. Based on
this, it can only be surmised that the accounts receivable and
merchandise inventory balances were mischievously transferred to
PPP Incorporated at an unreasonably discounted price to the
detriment of JJJ Corporation. It was admitted by defendants that PPP
bought the unsold and remaining stocks on hand of JJJ allegedly for
the purpose of disposing of the same after the closure of JJJ.52 To
allow the write-off of inventory at an unreasonable discount
demonstrates the purposeful objective of Defendants to damage the
finances of JJJ without any justifiable reason other than to bolster the
stocks of PPP Inc. and solidify its financial performance going
forward.
The breach of JJJ’s Board of Directors of their fiduciary duty to

uphold the best interest of the corporation can be further seen in their
intentional financial mismanagement of the corporation upon its
closure in 2016. It was admitted by the defendants during the
Pre-Trial that based on the Statement of Financial Position (Balance
Sheet) of JJJ in the year 2016, the company had a NEGATIVE
balance in its Retained Earnings account amounting to a negative
Two Million Two Hundred Eleven Thousand Four Hundred
Ninety-Four (Php-2,211,494.00).53 This is a considerable reduction
from the previous year’s balance of Six Million Six Hundred Eleven
Thousand One Hundred Four (Php6,611,104.00). This is reflected in
Plaintiff’s Exhibit “SS”54. JJJ Corporation’s Statement of Financial
Position Equity Portion for Fiscal Years 2016 and 2017 shows the
following:
JJJ CORPORATION
As of December 31
Change Change
(Php) (%)
2016 2015
Equit
y
Share Capital 5,000,000.00 5,000,000.00 - 0.00%

Retained
Earnings (2,211,494.00) 6,611,104.00 (8,822,598.00) -133.45%
Total Equity -75.98%
52
TSN, Pre-Trail Conference dated October 9, 2020, pp. 45-48.
53
Pre-trial Order – Page Four.
54
TSN, Continuation of Pre-Trial Conference dated January 14, 2021, pp.49.
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2,788,506.00 11,611,104.00 (8,822,598.00)
These figures, taken as is, exhibit the deliberate mishandling of

the assets and, consequently, the earnings of the corporation in the
year of its closure. This Statement of Financial Position reveals a
picture of a lucrative going concern enterprise in one year to a
mismanaged business in the next. A business’ Retained Earnings
account should never reflect a NEGATIVE amount. Retained
Earnings represent all the earnings since the inception of the
corporation not released as dividends to its stockholders. Therefore,
this shows that the Board of Directors of JJJ Corporation allowed
Eight Million Eight Hundred Twenty - Two Thousand Five Hundred
Ninety - Eight Pesos (Php8,822,598.00) to be taken from the
Retained Earnings, clearly exceeding the amount accumulated as
earnings since the start of operations of the corporation. The only
purpose of which is to apparently show that the corporation had
suffered losses (simulated) in its last years of operations and further
shows that all the turnover of assets (including Accounts Receivables
and Merchandise Inventory) were done at grossly inadequate and
discounted prices.
Defendants used their power for their personal gain by fully and
completely diverting all the business of JJJ to PPP. The Defendants
orchestrated a mass transfer of the staff, clients, and customers of
JJJ to PPP, which is why they amended the suspension and closure
of JJJ to earlier dates. These actions are detrimental to JJJ
Corporation and its stockholders who trusted that the fiduciary
officers will look after the long-term interests of the company. During
the Special Stockholders Meeting on August 5, 2016, Plaintiff Lee
asked Private Defendant EEE to confirm from him if he really had
transferred JJJ’s customers to PPP. Private Defendant EEE
responded that they did not get all of them. (ECU: Wala man namo
kuha-a tanan. Wala pud na ku-ana ang uban Hia Boy.). Such
statement from Defendant EEE is an admission that they were able to
get customers from JJJ to transfer to PPP.55 JJJ was occupying a
dominant market position in the industry in which it was operating
prior to the abrupt suspension of its operations. And by August 5,
2016, as admitted by Private Defendant EEE, they had already gotten
some of the customers of JJJ even while it was still operating.
Not only did the Defendants transferred JJJ’s customer base

to PPP, but they also transferred JJJ’s employees to PPP.
Immediately after suspension of its operations, more than eighty of
55
Exhibit “J” to “J-14” - Minutes of Special Meeting of the Board of Directors of
JJJ dated August 5, 2016 in Civil Case No. 15196; Photocopy Rollo,Vol.3,
Pages 110-124. Admitted as to genuineness and due execution (Minutes of
Preliminary Conference dated October 2, 2020, p.5).
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Plaintiff JJJ’s employees were dismissed by Defendants on
October 3, 2016. The same employees were hired by Defendant
PPP sometime in December 2016.56 This fact can be gleaned from
the SSS record of JJJ Corporation employees as of October 14,
2016 and SSS record of PPP.57 A schedule of the date when the
employees were terminated by JJJ Corporation and the date when
they were employed by PPP, Inc. based on SSS Records, is
reproduced herein thus:
Date Employed
Date Terminated from
Name of Employees by PPP Inc. (per
JJJ Corp.
SSS Record)
Academia, Inyace October 3, 2016 December 2016
Alagao,Inocencio October 3, 2016 December 2016
Alcancia, Johnny
October 3, 2016 December 2016
Marcel
Amaro, Dominador October 3, 2016 December 2016
Amario, Mario October 3, 2016 December 2016
Amorganda, Rhyan October 3, 2016 December 2016
Anes, Eugene October 3, 2016 December 2016
Babor, Isidro Librando October 3, 2016 December 2016
Babor, Jonathan October 3, 2016 December 2016
Babor, Jose Allan October 3, 2016 December 2016
Babor, Mary Jen October 3, 2016 December 2016
Badon, Leonila October 3, 2016 December 2016
Baldado, Alberto October 3, 2016 December 2016
Bangcal, Marissa October 3, 2016 December 2016
Bendijo, Claudia October 3, 2016 December 2016
Benitez, Jason October 3, 2016 December 2016
Bentolero, Renegen October 3, 2016 December 2016
Briones, Abel October 3, 2016 December 2016
Briones, Ryan October 3, 2016 December 2016
Bucad, Ma. Vilma October 3, 2016 December 2016
Buenvenida, Rico October 3, 2016 December 2016
Cabajon, Janice October 3, 2016 December 2016
Cabanas, Noel October 3, 2016 December 2016
Cabual, Ira Gene October 3, 2016 December 2016
Cadayona, Donard October 3, 2016 December 2016
Carbas, Irish Joy October 3, 2016 December 2016
Cardenas, Lyndon October 3, 2016 December 2016
De Los Santos, Harry October 3, 2016 December 2016
56
Exhibit “T” - SSS record of JJJ Corporation employees as of October 14,
2016; Photocopy Rollo,Vol.3, Page 149. Admitted as to genuineness and due
execution (Minutes of Preliminary Conference dated October 2, 2020, p.5).
Exhibit “U” to “U-1” - SSS record of PPP Inc. for January 13, 2017.
Photocopy Rollo,Vol.3, Pages 150-151. Admitted as to genuineness and due
execution (Minutes of Preliminary Conference dated October 2, 2020, p.5)
57
Id.
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Jones
Delbo, Jubenalio October 3, 2016 December 2016
Devero, Reneboy October 3, 2016 December 2016
Dumalo, Albert October 3, 2016 December 2016
Duran, Federico October 3, 2016 December 2016
Duran, Renante October 3, 2016 December 2016
Elloren, Dave October 3, 2016 December 2016
Enolpe, Hazel Ann October 3, 2016 December 2016
Enriquez, Jesus Isidro
EU
Esmaela, Larry October 3, 2016 December 2016
Esmaila, Ermedio October 3, 2016 December 2016
Esmayla, Alberto October 3, 2016 December 2016
Estrellanes, Rey October 3, 2016 December 2016
Fabiosa, Arnold October 3, 2016 December 2016
Fabiosa, Bernie October 3, 2016 December 2016
Gallego, Carole Fern October 3, 2016 December 2016
Godio, Adeline October 3, 2016 December 2016
Godio, Edeboy October 3, 2016 December 2016
Lagunero, Joseph October 3, 2016 December 2016
Lastimosa, Marilou October 3, 2016 December 2016
Leong, Diover October 3, 2016 December 2016
Lindayao, Rizaldo October 3, 2016 December 2016
Luang, Rodger October 3, 2016 December 2016
Maglinao, Nelan October 3, 2016 December 2016
Malalay, Mitchell October 3, 2016 December 2016
Mananquil, Francisco
Jr.
Mejares, Irish October 3, 2016 December 2016
Miparanum, Alberto October 3, 2016 December 2016
Miparaunm, Gerry October 3, 2016 December 2016
Miparanum, Victorino October 3, 2016 December 2016
Navarro, Rolando October 3, 2016 December 2016
Nuique, Kathelyn October 3, 2016 December 2016
Oftana, Leonardo October 3, 2016 December 2016
Oftana, Leonardo Jr. October 3, 2016 December 2016
Omiping, Albert October 3, 2016 December 2016
Pantillano, Fernando
Jr.
Pinero, Wilma Rose October 3, 2016 December 2016
Pionela, Enrique October 3, 2016 December 2016
Pionela, Jombee October 3, 2016 December 2016
Pionela, Jose October 3, 2016 December 2016
Rapon, Michael October 3, 2016 December 2016
Rodriguez, Fernando October 3, 2016 December 2016
Sabanal, Ricky October 3, 2016 December 2016
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Salig, Cyril Adrian October 3, 2016 December 2016
Sardan, Jorge October 3, 2016 December 2016
Sardan, Joseph October 3, 2016 December 2016
Sojor, Roderick October 3, 2016 December 2016
Taguiam, Jecito October 3, 2016 December 2016
Tiengo, Julito October 3, 2016 December 2016
Tiongco, Jeanbert October 3, 2016 December 2016
Tising, Herminio October 3, 2016 December 2016
Tolentin, Joe Fel October 3, 2016 December 2016
Uy, Duke Stefan October 3, 2016 December 2016
Uy, Earl Christian October 3, 2016 December 2016
Uy, Edward October 3, 2016 December 2016
Vailoces, Jimmy October 3, 2016 December 2016
Venenoso, Johnry October 3, 2016 December 2016
Ventero, Catalino October 3, 2016 December 2016
Villamor, Juwen October 3, 2016 December 2016
Ybiosa, Jonry October 3, 2016 December 2016
It can be gleaned from DEFENDANTS’ COMPLIANCE dated

March 9, 2018 that there are a significant number of customers and
employees of PPP who came from JJJ. There are Four Hundred
Thirty (430) PPP customers who were former customers of JJJ,
Forty (40) walk-in PPP customers were former customers of JJJ,
and Forty (40) PPP employees were former employees of JJJ, viz:
PPP CUSTOMERS WHO WERE FORMER CUSTOMERS OF

JJJ:
1 . 2 STORY KITCHEN 51 . BATION, MERLYN
2 . ABELLAR, FRUNNIE 52 . BAUTISTA, SUZETTE
3 . ABINES, CANDILARIO 53 . BAYAWA, MARK
4 . ABRASALDO, ROLANDO 54 . BELNAS, LANI
5 . ABRIO, EPEN (EPENITO) 55 . BELTRAN, LINDA
6 . ABSIN, DR. RICO 56 . BENGOECHIA, JOY (JOCELYL)
7 . AC-AC, RACHEL 57 . BESAS, RAFAEL
8 . ACME TRADERS 58 . BETHEL GUEST HOUSE
9 . ADALID, TERESITA 59 . BILAGANTOL, MARIA
10 . ADIGUE, LEONCIA 60 . BILANGDAL, BELINDA
11 . AGUSTINO, MARILOU 61 . BILOCURA, JAYME
12 . ALABAN, VITALIANA 62 . BLUE PEARL KOREAN RESTAURANT
13 . ALDENESE, TEODORO 63 . BONDA, ALLAN
ALEJANDRO, R/LOPEZ, C
14 . (ROSALINDA) 64 . BOOC, JUDY
15 . ALJAS, AL ANTHONY 65 . BORREROS, JONATHAN
16 . AMADA, GLADE 66 . BRACERO, NILA
17 . AMADA, LILIBETH 67 . BULANDRES, EMMA
18 . AMARO, BOY 68 . BULGADO, RICHELLE
19 . AMARO, CLEOTILDE 69 . BUMANLAG, CARMEN
20 . AMISTOSO, CHARISMA 70 . BUMBLE BEE
21 . AMORGANDA, IKE 71 . BUTALID, VICTOR
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22 . AMORGANDA, RAFAEL 72 . BVL TRADING
23 . ANGEL BUNS BAKESHOP 73 . CABASAG, ROSALYN
24 . ANIL, MERLINDA 74 . CABRERA, HENRY
25 . ANN MICHELLE VENTURES 75 . CABUS, PONCIANO
26 . ANTAGOP, GINA 76 . CADIS, DELIA (D&C CHICKEN)
27 . ARAGONES, AGUSTIN 77 . CADORNA, ANALYN
28 . ARBEES BAKESHOP 78 . CAL, ERLINDA
29 . ARENAS, ALMARIO 79 . CALDAMO, JUNNY
30 . ARMAN'S BAKESHOP - DGTE 80 . CALIMBAS, JOHN
31 . ARTUS, TITA 81 . CALINAWAGAN, EDGAR
32 . ASKIN, EPIFACIA (EPIFANIA) 82 . CALINGACION, BETTY
33 . ATHUR COMMERCIAL 83 . CALUMPANG, FRANK (FRANCISCO)
34 . AVANZADO, VICTOR LU (LOVICTOR) 84 . CANG'S INC.
35 . AVF PHARMACY 85 . CANILLO, EDWARD
36 . AYUNGON TRADING 86 . CARBALLO, ANTONIO SR.
37 . AZALEA RESTAURANT 87 . CARDOSA, MICHAEL
38 . BABOR, ALBERT 88 . CARIDO, ROSELYN
39 . BAGUIO, CARMELINA 89 . CASA BLANCA
40 . BAHURA BEACH RESORT 90 . CASAL, ANTONIO
41 . BALAHAN, BONI (BONIFACIA) 91 . CASAL, MAXIMA
42 . BALDADO, AQUILLA 92 . CASUSE, ARTHUR
43 . BALDERAS, PAULINA 93 . CATAN, MILA
44 . BALDOZA, WILSON 94 . CB GRILL
45 . BALOMA, GERALDINE 95 . CENAS, ANITA
46 . BANGCA, FELIX 96 . CERES MART
47 . BARANDOG, NILO 97 . CHONGBIAN STORE
48 . BARBECUE JONES 98 . CHOWKING PERDICES
49 . BAROT, JENNIFER 99 . CHOWKING ROBINSONS
50 . BARTOCES, ESTER 100 . CHUA, ANA MAE
101 . CHUA, JERIC 151 . FREEMONT FOODS-NORTH ROAD

102 . CHUA, VERLINE 152 . FREEMONT FOODS-PERDICES
103 . CO, GENESIS 153 . FREEMONT FOODS-ROBINSONS
104 . COCO AMIGOS 154 . FUA, DEMOCRITA
105 . COCO GRANDE 155 . FUA, NIERY
106 . COCO GROVE 156 . GADINGAN, EMELYN
107 . COLOYAN, NENITA 157 . GARCIA, NELIA
108 . CONCHITA STORE 158 . GARET, BONIFACIA
109 . CREDO, MARGARITO 159 . GAURAN, ELAINE
110 . CREDO, PACIENCIA 160 . GENTILES, AUDIE
111 . CRISMUNDO, ERWIN 161 . GING-GING COMM'L
112 . CRUSPERO, BENNY 162 . GO, ALICE
113 . CUEVAS, ALIE 163 . GO, INOCENCIO
114 . CUEVAS, MARCELINO 164 . GOBONSENG, VICTORIA
115 . DAGOY, GERLIE 165 . GOLD LABEL
116 . DAYON, SULPICIA 166 . GOLDEN ROYS
117 . DAYUDAY, ENGELEN 167 . GOLDEN RULE
118 . DCCCO 168 . GOOD LUCK STORE
119 . DELA LINA, LADISON 169 . GREAT WALL MARKETING
120 . DEVIBAR, ARNULFA 170 . GRINGIO, SHIRLYE
121 . DIAGO, INAKI 171 . GUBUAN, ALEXANDER
122 . DIAO, EDUARDO 172 . GUINITARAN, DANILO
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123 . DIAZ, RODRIGO 173 . GUMBA, PINKY
124 . DIVINAGRACIA, CRISANTO 174 . GUTANG, ANECITO
125 . DOLOR, ELADIA 175 . GUTIB, MARDENIO
126 . DON ATILANO 176 . GUTIB, MARIVIC
127 . DONG JUAN 177 . GUTUAL, DIONELA
128 . DORIA, ARIEL 178 . HANS STORE
129 . DU, JOSEFINA 179 . HAROLD'S MANSION
130 . DUCOMI 180 . HERRERA, PILAR
131 . DY, EDITHA 181 . HO, HELEN
132 . DY, HENRY 182 . HONGAYO, ALETA
133 . DY, JUN 183 . HOS ART MKTG
134 . DY, LEE 184 . HOTEL ESSENCIA
135 . EBAO, CEASAR 185 . HOY LUGAW
136 . EDDIE COMM'L 186 . HUMBE, VALY EDEN
137 . ENARDECIDO, KAREN 187 . HYPERMART
138 . ENHANCE LAYER FARM 188 . IGOS, FELIPA
139 . ERAMES, ARMANDO 189 . INQUIG, ARLENE
140 . EROLON, VERONICA 190 . JABAGAT, INIEGO
141 . EVASAN, WILMYR 191 . JALADOON, HERBERT
142 . FAROLE, ALY 192 . JANIPIN, TEODORO
143 . FAUSTORILLA, VIRGINIA 193 . JESS AND SOL
144 . FELASOL, NELLY 194 . JO, MARIANO
145 . FEMAS AGRIVET 195 . JOE STORE
146 . FLORENTINA HOMES 196 . JORGIO, ROMEO
147 . FLORES, HILARIO 197 . JOS II
148 . FORTUGA, ANIAS JR 198 . JUMAWAN, ALLEN
149 . FREEMONT FOODS CORP - TANJAY 199 . KHO, ERNESTO
150 . FREEMONT FOODS-CATHEDRAL 200 . KHO, MARCIANO
201 . KHO, MARIA CHRISTINA 251 . MOSO, JEFFERSON

202 . KHO, OSCAR 252 . MUNOZ, EDITH
203 . KRI RESTAURANT 253 . NACIONAL, RONALDO
204 . LABANG, MARILOU 254 . NARCISO, ESTRELLITA
205 . LABE, LUCENO 255 . NASARA, ANN
206 . LABIS, FLORENTINO 256 . NEGROS BUILDERS
207 . LABORADA, MARLYN 257 . NELLAS, JOY
208 . LADO, ROBERT 258 . NEVAS PIZZA
209 . LAGUNSAD, ELSA 259 . NEW YAN-YAN COMM'L
210 . LANGCO, IGNACIO 260 . NG, ROTCHE
211 . LAO, CHU-CHU 261 . NOHHSCO C/O RUIZ, FELLY
212 . LEE PLAZA 262 . NOLA, CHRIS (NOLAN)
213 . LEONG, ALFREDO 263 . OCHOCO, ARTEMIO
214 . LIM, CINDY (ROBERT) 264 . ODESSA TRADING
215 . LIM, RICHARD 265 . OLASIMAN, ERGELIA
216 . LIMAN, BOY 266 . OMEGA STORE
217 . LINDAIS CATERING 267 . ONG, CRESENTE
218 . LNH ENT. 268 . ONGKINGCO, RAY
219 . LOPENA, EUFRONIO 269 . ONTOLAN, HERMINIGILDA
220 . LOPEZ, ADOLFO 270 . OPEÑA, RANULFO
221 . LOPEZ, GRACE 271 . ORCULLO, RULLY
222 . LOPEZ, TRIFON 272 . ORLINO, SALLY
223 . LUANG, JURENDA 273 . OROC, GONZALO
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224 . LYNOEL COMM'L 274 . PACILAN, MARIA DIMPLE
225 . LYNOEL GEN MDSE 275 . PACULANANG, NILO
226 . MAAYO SHIPPING 276 . PACURIBOT, ARNA LISA
227 . MACAY, RICHARD 277 . PAERA, NILDA
228 . MAGALSO, EVELYN 278 . PALISPIS, MAXIMA
229 . MAGSAYO, ANALEE 279 . PALUMAR, CHONA
230 . MAJESTAD, MICHELLE 280 . PANDA ICE CREAM
231 . MANG INASAL-BAYAWAN 281 . PARALLON, EDITHO
232 . MANG INASAL-REAL 282 . PARAS, ROSA
233 . MANG INASAL-ROBINSONS 283 . PATHWAY KOREAN FOODCOURT
234 . MANILA, BEDDY 284 . PAULIN, WENDYL
235 . MANUEL TEVES INC 285 . PERDICES, LISA
236 . MAPUTI, MARGARITA 286 . PEREZ, VIRGINIA
MARAVILLA, MARCIANO
237 . (MARAVILLAS) 287 . PESCADILLA, MELANIE
238 . MARINO, JOY 288 . PHILSOUTH
239 . MARQUITA, MEL ANTHONY 289 . PIALAGO, REYNALDO
240 . MARTINEZ, CHARLIE 290 . PIALAGO, SELWYN
241 . MATIAO, ALVIN 291 . PLAZA MARIA LUISA
242 . MAX DGTE 292 . POLINO, SONIA
243 . MC DONALDS 293 . PONCE DE LEON, BEBE
244 . MELODIA, INES 294 . POST GROCERY/BAKERY
245 . MERCED, ANGELITA 295 . PUEBLO, JENNIFER
246 . MIRAFLOR, RUBY 296 . QUILICOT, CHERRYL
247 . MOGAR, WILBERT 297 . QUILLAO, ARTURO
248 . MONTANA, EUGENIA 298 . QUIO, LARRY
249 . MONTEDERAMOS, MOISES 299 . QUITOY, RESTITUTA
250 . MOON CAFE 300 . RADO, NARCISA
301 . RADONES, FELISA 351 . ST JUDE THADEU SARI2 STORE

302 . RAMAS UYPITCHING, RISHA 352 . ST PAUL COLLEGE
303 . RAMIREZ, ROLANDO 353 . STA ANA, MARILOU
304 . RAMOS, BEBING (PUB MRKT) 354 . STA CATALINA COOP
305 . REAL, JERRY 355 . SU FARM
306 . REDEMPTORIST 356 . SUMAEL, JULIETA
307 . REPEROGA, ROLAND 357 . SUMAGANG, SHIRLEY
308 . REQUINA, HERNA 358 . SUMANOY, FAUSTO
309 . REYES, ERNESTO MAYOR 359 . SUNBURST FRIED CHICKEN
310 . RICARTE, EMY ROSE 360 . SUSUBAN, RICKY
311 . RICE BOX STATION 361 . SY, JONATHAN
312 . RICKY'S GROCERY 362 . SYCIP, MANJOE
313 . ROBINHOOD 363 . TABER, ANALISA
314 . RODRIGUEZ, CRESILDA 364 . TADERS LUCKY MART (TRADERS)
315 . RODRIGUEZ, MADILYN 365 . TAN, BOY
316 . ROMERAL, FULGENCIO 366 . TAN, CLIFFORD
317 . ROSALES, RAIN 367 . TAN, EDDIE
318 . RUALES, HERBERT 368 . TAN, ELVIS
319 . RUBIO, GENESIS 369 . TAN, ELY
320 . RUEDAS, JACHELENE 370 . TAN, VIRGILIO JR.
321 . RUIS, FIL CLINT 371 . TARING, PASTORA
322 . RUIZ, IGNACIO 372 . TENG, RAMON
323 . RUIZ, LINDA (ERLINDA) 373 . TEVES, CYNTHIA
324 . RUPERTO, NILO 374 . TEVES, MARK
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325 . RUSIANA, ISAIS 375 . TEVES, NILO
326 . SAGA, LUCENA 376 . TIMES MERCANTILE
327 . SAGA, THESSA ANN 377 . TINACO, ROLANDO
SAGABARRIA, CHIQUITING
328 . (MANUEL) 378 . TINDOC, ANDRES
329 . SAGANG, ROWEL (RUEL) 379 . TIU, VICTORIA
330 . SALLY PHARMACY 380 . TOLO, ROSALINA
331 . SALOMEO, JOVENCIA 381 . TOLOMIA, CONSTANTINO
332 . SALVORO, JESUS 382 . TONOGBANUA, NAIDA
333 . SAMBILAD, GREGORIO 383 . TOP-7
334 . SAMBILAD, QUIRINO 384 . TORILLO, ROY
335 . SANS RIVAL 385 . TRUMATA, MARIA
336 . SCOOBY'S-DGTE 386 . TUBIL, HERMANO
337 . SEDILLO, GASPAR 387 . TUBIO, GREGORIO
338 . SENADOR, MARLYN 388 . TUBIONA, NORA
339 . SERENCIO, JAMES 389 . TUBOG, MERLY
340 . SERILLO, MARGIELEN 390 . TY, CARIDAD
341 . SG BANK 391 . UBANDO, JAY
342 . SHAKEY'S 392 . UNG, ZOSIMO
343 . SIBULAN ICE PLANT 393 . UNGS SUPERSTORE
344 . SIERRA, SANTIAGO JR (SR) 394 . UY, CONDEV
345 . SILABAY, WILFREDO 395 . UY, DENNIS
346 . SILVANO, ROSALYN 396 . UY, JAMES
347 . SING, ARLYN 397 . UY, LESLIE
348 . SIPLON, DELING (ADELINA) 398 . UY, LITO
349 . SOLANA, JAVIER 399 . UY, MARITES
350 . SOLON, CANA 400 . UY, TACIANA
401 . UYMATIAO, DANTE

402 . VALENCIA, ANACORITA
403 . VAMENTA, SHELLA
404 . VANDE VUSSE, REMY
405 . VANSON MARKETING
406 . VELEZ, FREDERICK
407 . VICENTINO, GERLIE
408 . VILLAFLORES, MARIA LEILA
409 . VILLALON, AILYN
410 . VILLAREAL, GUILLERMO
411 . VILLAROJO, ADELAIDA
412 . VILLASAN, GODOFREDA
413 . VILLEGAS, BONIFACIO
414 . VIOLANGO, JANICE
415 . VIRGIE'S GROCERY 1
416 . WOO, RENE
417 . YACO, VIRGENCITA
418 . YANG, LYNN
419 . YAP, LEVI
420 . YAP, MELQUIADES
421 . YAP, NENITA
422 . YAP, RUDY
423 . YAP, VALENTIN
424 . YEE, CHARLEE
425 . YEE, ROVIC (GOLD/JADE)
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426 . YOUNG, NANCY
427 . YURONG, TESSIE
428 . ZERNA, FRANCK (FRANCISCO)
429 . ZERNA, JUVY
430 . ZERNA, NORMA
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WALK-IN PPP CUSTOMERS WHO WERE FORMER CUSTOMERS OF JJJ:
1 . ABRASALDO, DODON (ROLANDO)

2 . ALAS-AS, TEODORO (DODOY)
3 . ALCANCIA, MARCEL
4 . AMAHIT, LILIBETH
5 . AMPARADO, MAURO
6 . ANIL, MERLINDA
7 . BELNAS, LANI
8 . BORREROS, JONATHAN
9 . CARBALLO, IOLANI
10 . DESOR, ZALDY
11 . HERRERA, ALYN
12 . JAYME, ANANSON (ANARSON)
13 . KITANE, FELISA
14 . KYLEE 888 STORE
15 . LOPEZ, ALEX
16 . SOMOZA, RICARDO
17 . TABANGAN, LOUIE
18 . TEMPROSA, BOYET
19 . UYPITCHING, SEGUNDINO
20 . AMLAN TRADING
21 . CHUYTE
22 . BASI, MELBA
23 . YUPO, TEOPISTA
24 . TAAN, ROBERTA
25 . SUELTO, SILVESTRA
26 . EBROLE, RENATO
27 . ELMAN, RUFINA
28 . CATARATA, ROSITA
29 . BANTAYA, CRECENCIANA
30 . TIU, WILLIAM
31 . VENTOLERO, LUCIO
32 . RAMAS UYPITCHING, DON (SEGUNDINO)
33 . CATACUTAN, SABRINA
34 . JOHN RAY STORE
35 . BANGALANDO, GREGORIA
36 . SOJOR, VICTORIA
37 . DRILON, MARITES
38 . SILANGAN, ALEJANDRO
39 . LIM, NICK
40 . NG, KHONG KEE
PPP EMPLOYEES WHO WERE FORMER EMPLOYEES OF JJJ:
1 . ACADEMIA, INYACE
2 . ALAGAO, INOCENCIO
3 . ALCANCIA, MARCEL
4 . AMORGANDA, RYAN
5 . ANES, EUGENE
6 . BABOR, MARY JEN
7 . BABOR, ISIDRO
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8 . BABOR, JONATHAN
9 . BADON, LEONILA
10 . BANGCAL, MARISSA
11 . BENDIJO, CLAUDIA
12 . BUCAD, VILMA
13 . BUENVINIDA, RICO
14 . CABAJON, JANICE
15 . CABUAL, IRA GENE
16 . CARBAS, IRISH JOY
17 . DELBO, JUVENALIO
18 . DELOS SANTOS, HARRY
19 . DURAN, FEDERICO
20 . ENOLPE, HASEL ANNE
21 . ESMAEL, LARRY
22 . FABIOSA, BERNIE
23 . GALLEGO, CAROLE
24 . GODIO, ADELINE
25 . LAGUNERO, JOSEPH
26 . LASTIMOSA, MARILOU
27 . MEJARES, IRISH
28 . OFTANA, LEONARDO
29 . OMIPING, ALBERT
30 . PINERO, WILMA ROSE
31 . PIONELA, JOSE
32 . PIONELA, ENRIQUE
33 . RAPON, MICHAEL
34 . SARDAN, JORGE
35 . SOJOR, RODERICK
36 . TAGUIAM, JECITO
37 . TIENGO, JULITO
38 . UY, EDWARD
39 . UY, DUKE
40 . VENTERO, CATALINO
It is also worth mentioning that in an attempt to prevent

discovery that the customers, who had account balances with JJJ
were effectively transferred to PPP Inc. and its records, defendants
deliberately concealed the Accounts Receivable balances records of
JJJ’s customers. The records of Accounts Receivables balances of
JJJ and PPP, among others, were ordered by the Honorable Court to
be produced by defendants, however, defendants did not comply with
the Subpoena and failed to furnish copies of the same to the plaintiff.
Defendants only submitted the Accounts Receivable Records58 of
PPP Inc as of December 31, 2016 on the Pre-Trial date January 24,
2021. This caused both parties to attempt to extract copies of JJJ
Accounts Receivable records from JJJ Compound after the Pre-trial
on January 24, 2021. While at the site, a document labeled as PPP’s
58
Exhibit “TT”
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Customer’s Receivable Report with a report date of June 24, 201659
was retrieved from one of the tables inside the office of JJJ
compound. Upon a simple glance, the Accounts Receivable list
submitted by defendants on January 24, 2021 during the Pretrial
Conference as compared to the schedule of Accounts Receivable
balances from PPP customers found at JJJ compound does not
reflect the same names nor similar (or even approximating) balances
of the customers of PPP Inc in the year 2016.
Apart from proving the discrepancy of the list of names of

customers with their respective balances in the Accounts Receivable
Report submitted by Defendants during the Pre-Trial on January 14,
2021 as compared with the Customer’s Receivable Report (with
Report date: June 24, 2016) found in the conference room table upon
the site visit at JJJ compound still on January 14, 2021, the document
submitted before the Honorable Court (Exhibit “TT”) as opposed to
the document found in JJJ compound (Exhibit “UU”) prove bad faith
on the part of defendants by submitting significantly different lists of
PPP’s Account Receivables and the corresponding amounts found
therein based on the two documents. There is evident refusal to be
truthful about the operations of PPP Inc. and signifies an attempt to
conceal the complete transfer of customers from JJJ to PPP upon its
closure in 2016.
E. DEFENDANTS DID NOT BOTHER TO DENY ANY

INCIDENT OF DIVERSION OF THE COMPANY’S PHYSICAL
ASSETS.
Qui tacet consentire videtur (silence gives consent). The Defendants

readily admitted in one of their pleadings the allegation of Plaintiff that
some of the company's remaining physical assets (Merchandise
Inventory) were physically transported to the premises of PPP, Inc.
and paid only after the filing of the instant derivative suit. The
pertinent portion of the pleading is reproduced herein as follows:
“xxx
10. Insofar as PPP buying stocks from JJJ. It was all meant to
benefit JJJ because “old stocks” were bought rather than be
rotten and be rendered useless.
(Please refer to the Defendants' MANIFESTATION with REJOINDER

to the Reply)
On October 9, 2020, Defendant EEE admitted that PPP

bought the unsold and remaining “old stocks” of JJJ after the
closure. The very same “old stocks” (Merchandise Inventory) that
could have been sold by JJJ Corporation, if the directors of JJJ at
59
Exhibit “UU”
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that time, herein defendants, did not amend the suspension and
closure of JJJ to earlier dates thereby avoiding such Merchandise
Inventory to rot and be rendered useless. There is no just rationale
or even a reasonable justification as to why they had to amend the
suspension and closure of JJJ to earlier dates when JJJ was still
carrying a high amount of Merchandise Inventory, the only reason
for such amendment was to sell such Merchandise Inventory at an
unreasonable discounted price, it is also important to note that such
unreasonable discounted price was only paid after the filing of the
derivative suit.
Thereby reinforcing the argument of the Defendants’ breach

of their fiduciary duties by selling such Merchandise Inventory to
PPP at an unreasonable discount for PPP to sell the same at a
higher gain.60
To reiterate, JJJ’s inventory for the year 2016 was emptied from
the previous year’s inventory balance of Eight Million Five Hundred
Ninety-nine Thousand One Hundred Nineteen Pesos
(Php8,599,199.00). These are reflected in the Statement of Financial
Position (Balance Sheet) entries marked as Plaintiff’s Exhibits
“SS-1” and “SS-2”.61 JJJ Corporation’s Statement of Financial
Position Current Assets Portion for Fiscal Years 2016 and 2017
discloses the following:
JJJ CORPORATION
As of December 31
Change (Php) Change (%)
2016 2015
ASSETS

Current Assets
Cash 10,108,083.00 2,117,710.00 7,990,373.00 377.31%
Accounts Receivable 1,347,900.00 9,944,655.00 (8,596,755.00) -86.45%
Merchandise Inventory - 8,599,119.00 (8,599,119.00) -100.00%
Other Current Assets - 57,600.00 (57,600.00) -100.00%

Total Current
Assets 11,455,983.00 20,719,084.00 (9,263,101.00) -44.71%
The Merchandise Inventory was completely cleaned out along

with the Other Current Assets (whatever the composition of the same
60
TSN, Pre-Trial Conference dated October 9, 2020 pp.45-48.
61
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would have been) having decreased for the entire 100% of the
balance of the previous year. All these while only having an increase
in cash of P10,108,083.00 only – significantly 58.78% less than what
would have been raised from the decrease from Accounts Receivable
and Merchandise Inventory which totals Php17,195,874.00.
The circumstances above-mentioned lead to no other

conclusion. Defendants’ intent in their attempt to wind up Plaintiff JJJ
was to take its employees, its customers, and essentially Plaintiff
JJJ’s business in violation of Section 31 of the Corporation Code.
Indeed, it is plain to see that their acts which led to the suspension of
the operations of JJJ, with the end goal of closing shop, cannot be
merely characterized as an honest error, negligent or shortsighted.
But their acts are characterized by abuse, evident bad faith, and
disloyalty. Defendants suspended the operations of JJJ, and
eventually closed down the business, because by doing so,
Defendant PPP will be benefited, thereby enriching themselves more
at the expense of Plaintiff JJJ and Lee. Consequently, the act of
dissolving the corporation, suspending its operations and selling of
the assets must be deemed invalid for constituting betrayal of
fiduciary duties.
DEFENDANTS BREACH THEIR DUTY

OF LOYALTY TO THE CORPORATION
AS ITS BOARD OF DIRECTOR
It is crystal clear that JJJ Corporation has a legal right to be

protected from the disloyalty of its own directors and officers (who are
in a conflict of interest position) who abruptly decided to shut down its
business and shorten its corporate life. Such a decision was made by
those officers who would directly and personally benefit from the
decision.
It is clear from the foregoing discussion that a concert of action
was contemplated and that the Defendants executed acts detrimental
to JJJ’s interest. Further, sound principles of public policy and
management, disqualifies the Defendants from sitting as a Director of
another competing corporation. Thus, JJJ Corporation should be
protected from the atrocious breach and disloyalty of its corporate
directors and officers by restraining them from engaging in the
competing business while at the same time purportedly serving as
directors and officers of JJJ Corporation.
The jurisprudence on the matter of fiduciary duties of the
Members of the Board of Directors, both here and in the U.S., is clear
on the matter.
“A director of a corporation holds a position of trust
and as such, he owes a duty of loyalty to his
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corporation. In case his interests conflict with those
of the corporation, he cannot sacrifice the latter to
his own advantage and benefit. As corporate
managers, directors are committed to seek the
maximum amount of profits for the corporation.
This trust relationship "is not a matter of statutory
or technical law. It springs from the fact that
directors have the control and guidance of
corporate affairs and property and hence of the
property interests of the stockholders."62 In the
case of Gokongwei v. Securities and Exchange
Commission, this Court quoted with favor from
Pepper v. Litton,thus:
. . . He cannot by the intervention of a
corporate entity violate the ancient precept
against serving two masters. . . . He cannot
utilize his inside information and his strategic
position for his own preferment. He cannot
violate rules of fair play by doing indirectly
through the corporation what he could not do
directly. He cannot use his power for his
personal advantage and to the detriment of
the stockholders and creditors no matter how
absolute in terms that power may be and no
matter how meticulous he is to satisfy
technical requirements. For that power is at all
times subject to the equitable limitation that it
may not be exercised for the aggrandizement,
preference, or advantage of the fiduciary to
the exclusion or detriment of the cestuis . . . .”.
“A corporation's board of directors is understood to
be that body which (1) exercises all powers
provided for under the Corporation Code; (2)
conducts all business of the corporation; and (3)
controls and holds all the property of the
corporation. Its members have been characterized
as trustees or directors clothed with fiduciary
character.
It is ineluctably clear that the fiduciary relation is
between the stockholders and the board of
directors and who are vested with the power to
manage the affairs of the corporation. The ordinary
trust relationship of directors of a corporation and
stockholders is not a matter of statutory or
technical law. It springs from the fact that directors
62
Ibid.
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have the control and guidance of corporate affairs
and property and hence of the property interests of
the stockholders.
It is settled that a stockholder’s right to institute a
derivative suit is not based on any express
provision of the Corporation Code, or even the
Securities Regulation Code, but is impliedly
recognized when the said laws make corporate
directors or officers liable for damages suffered by
the corporation and its stockholders for violation of
their fiduciary duties.
Under the Code of Corporate Governance, "it is the Board's
responsibility to foster the long-term success of the corporation, and
to sustain its competitiveness and profitability in a manner consistent
with its corporate objectives and the best interests of its
stockholders." Also under the Code of Corporate Governance:
"Specific Duties and Responsibilities of a Director. "A director's office
is one of trust and confidence. A director should act in the best
interest of the corporation in a manner characterized by transparency,
accountability and fairness. He should also exercise leadership,
prudence and integrity in directing the corporation towards sustained
progress. A director should observe the following norms of conduct:
(i) Conduct fair business transactions with the corporation, and
ensure that his personal interest does not conflict with the interests of
the corporation. The basic principle to be observed is that a director
should not use his position to profit or gain some benefit or advantage
for himself and/or his related interests" (SEC Memorandum Circular
No. 6 Series of 2009).
The triad duties of Due Care, Loyalty and Good faith of
Corporate Directors was explained by Honorable Justice Randy
Holland, as follows:
Duty of Care
To receive the business judgment rule’s
presumptive protection, directors must inform
themselves of all material information and then act
with care. In Delaware, the applicable standard of
care is gross negligence.63 Interestingly, in the
1742 Sutton decision, the Lord Chancellor
determined that the directors of the Charitable
Corporation had failed to monitor the corporation’s
loan procedures in making unsecured loans to
directors.64 He held the directors liable for the
resulting losses after concluding that their actions
63
Van Gorkom, 488 A.2d 858, 873 (Del. 1985).
64
Horsey, supra note , at 973 (citing Sutton, 2 Atk. at 406, 26 Eng. Rep. at 645).
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constituted gross negligence.65
The duty of care requires that directors inform
themselves of all material information reasonably
available before voting on a transaction.66 To
become informed, a board can retain consultants
or other advisors and can be protected by relying
on statements, information and reports furnished
by those advisors, if their reliance is in good faith
and the advisors were selected with reasonable
care.67 The most significant duty of care case is
the 1985 decision of Smith v. Van Gorkom.68 that
case, the Delaware Supreme Court held that the
directors of Trans Union had breached their duty of
care,69 because the board had failed to act on an
informed basis.70
Duty of Loyalty
The fiduciary duty of loyalty, as a concept in
Delaware corporation law, has been traced to Guth
v. Loft, a case in which the Delaware Supreme
Court held that “[corporate officers and directors
are not permitted to use their position of trust and
confidence to further their private interests.”71 The
duty of loyalty is premised on the idea that
directors are fiduciaries who have a “quasi-trustee
and agency relationship” to the corporation and its
stockholders.72
The importance of focusing on the fiduciary duty of
loyalty was made clear in Aronson when the
Delaware Supreme Court stated that the
protections of the business judgment rule “can only
be claimed by disinterested directors whose
conduct otherwise meets the tests of business
judgment.” From the standpoint of interest,
Aronson explained that disinterested directors
means that “directors can neither appear on both
sides of a transaction nor expect to derive any
personal financial benefit from it in the sense of
self-dealing, as opposed to a benefit which
65
Ibid.
66
Van Gorkom, supra note 488 A.2d at 872 (quoting Kaplan, 284 A.2d at 124).
67
Del. Code Ann. tit. 8, § 141(e) (2008); Grossman, supra note 12, at 402.
68
Van Gorkom, 488 A.2d at 858;
69
Van Gorkom, 488 A.2d at 893.
70
Ibid.
71
Guth, 5 A.2d at 510; see also .
72
Schoon, 953 A.2d at 206 (citingMoran v. HouseholdInt’l, Inc., 500 A.2d 1346,
1357 (Del. 1985)).
54/62
devolves upon the corporation or all stockholders
generally.”73 Accordingly, Aronson held that “if such
director interest is present, and the transaction is
not approved by a majority consisting of the
disinterested directors, then the business judgment
rule has no application . . . ,”74
Loyalty and Good Faith
In In re Walt Disney Co. Derivative Litigation, the
Delaware Supreme Court held that grossly
negligent conduct, without more, does not and
cannot constitute a breach of the fiduciary duty to
act in good faith. The Supreme Court
acknowledged that conduct that is the subject of
due care “may overlap with the conduct that
comes within the rubric of good faith in a
psychological sense, but from a legal standpoint
those duties are and must remain quite distinct.”
In Disney, the Supreme Court held that a failure to
act in good faith may be shown (1) where the
director intentionally acts with a purpose other than
that of advancing the best interests of the
corporation; (2) where the director acts with the
intent to violate applicable positive law; or (3)
where the director intentionally fails to act in the
face of a known duty to act, demonstrating a
conscious disregard for his or her duties.
A few months after explaining the distinction
between care and good faith in Disney, the
Delaware Supreme Court addressed the
relationship between the directors’ duty of loyalty
and good faith when it decided Stone v. Ritter:75
That clarification came in the context of deciding
directors’ oversight responsibilities.
In Stone, the Supreme Court stated:
[Although good faith may be described colloquially
as part of a “triad” of fiduciary duties that includes
the duties of care and loyalty, the obligation to act
in good faith does not establish an independent
fiduciary duty.
The fiduciary duty of loyalty is not limited to cases
73
27Id, (citing Levien, 280 A.2d at 720; Cheff v. Mathes, 199 A.2d 548, 554
(Del. 1964); David J. Greene & Co. v. DunhillInt’l, Inc.. 249 A.2d 427, 430
(Del. Ch. 1968)); see also Del. Code Ann. Tit. 8 § 144.
74
Aronson, 473 A.2d at 812.
75
Stone, 911 A.2d at 362
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involving a financial or other cognizable fiduciary
conflict of interest. It also encompasses cases
where the fiduciary fails to act in good faith.76
“[A] director cannot act loyally towards the
corporation unless she acts in the good faith belief
that her actions are in the corporation’s best
interest.”
In Stone, consistent with its opinion in Disney, the
Delaware Supreme Court held that Caremark
articulated the two “necessary conditions for
assessing director oversight liability”:77 (1) the
directors utterly failed to implement any reporting
or information system or controls or (2) having
implemented such a system or controls, the
directors consciously failed to monitor or oversee
its operations thus disabling themselves from
being informed of risks or problems requiring their
attention.78
In the 1742 Sutton decision, the Lord Chancellor
stated that “it is by no means just in a judge, after
bad consequences have arisen from [any exercise
of] power, to say [the fiduciary] foresaw at the time
what [would] happen, and therefore were guilty of
a breach of trust.”79 In the 2006 Stone decision, the
Delaware Supreme Court held that “[i]n the
absence of red flags, good faith in the context of
oversight must be measured by the directors’
actions ‘to assure a reasonable information and
reporting system exists’ and not by
second-guessing after the occurrence of employee
conduct that results in an unintended adverse
outcome.”80
It was an admitted fact that JJJ was profitable and liquid at the
time the Board of Directors passed the Board Resolution of May of
2016, shortening the corporate life.81 JJJ has an accumulated bank
deposit of about Five Hundred Million Pesos (PHP500,000,000.00),
more or less, with different commercial banks in Dumaguete City.82
This does not explain the significant decrease of the retained
earnings of JJJ in just a span of a year.
76
Ibid., at 370
77
Stone, 911 A.2d at 365.
78
Ibid., at 370-71.
79
Sutton, 2 Atk. at 405, 26 Eng. Rep. at 644.
80
Stone, 911 A.2d at 373 (quoting In re Caremark Intl Deriv. IJtig.. 698 A.2d
959, 967-68, 971 (Del. Ch. 1996)).
81
TSN, Pre-Trial Conference dated October 9, 2020 page 16 and 39.
82
56/62
Applying the foregoing principles to the case at bar, the mere
act of Defendants who, as members of the board of directors of JJJ,
suddenly and abruptly decided to close the business of JJJ when the
business was thriving and successfully occupying its position as
market leader is already an act of disloyalty and a breach of their
fiduciary obligation to its stockholders. PPP, Inc., as a new competitor
of JJJ, directly benefited from the questioned decision together with
its owners, the herein Defendants U family. As corporate managers,
directors are committed to seeking the maximum amount of
profits for the corporation. Hence, closing down an extremely
profitable corporation is anathema to the fiduciary obligation of
loyalty and good faith in directing the affairs of the corporation.
Likewise, their sudden and abrupt decision to shorten the
corporate life of the business is likewise a violation of its fiduciary
duties since under the Code of Corporate Governance: "it is the
Board's responsibility to foster the long-term success of the
corporation, and to sustain its competitiveness and profitability
in a manner consistent with its corporate objectives and the best
interests of its stockholders." At the risk of being repetitive, JJJ's
business was thriving to such an extent that it was the market leader
in the industry. It had more than enough resources to continue
operating as a going concern. But instead of fostering the long-term
success of the corporation, the defendants decided to terminate its
corporate life abruptly without any economic justification whatsoever.
The transfer of JJJ's employees and customers,83 including the
surreptitious transport of commodities of JJJ to PPP, are considered
aggravating circumstances that increase the gravity of the violation.
Likewise, it shows the fraudulent nature of their decision and
renders the breach of their fiduciary duties as serious, wanton, and
flagrant violations which shamelessly carried out for personal
advantage.
If Defendants, who own a competing business in PPP, Inc.,
would be allowed to occupy their positions as Directors of JJJ
Corporation, then they would have the best of both worlds and would
be at the height of unjust enrichment. And should their decision to
close down the lucrative business of JJJ Corporation be sustained
when the Defendants, as the decision-makers, personally benefited
from the same, this would literally reward dishonesty, disloyalty, and
bad faith in directing the affairs of the Corporation.
A corporation is a juridical person vested with statutory rights. In
83
Exhibit “JJ”- DEFENDANTS’ COMPLIANCE dated March 9, 2018. There are
Four Hundred Thirty (430) PPP customers who were former customers of JJJ,
Forty (40) walk-in PPP customers were former customers of JJJ, and Forty
(40) PPP employees were former employees of JJJ
57/62
this jurisdiction, a director of a corporation owes a fiduciary duty to
the corporation and its stockholders, including minority stockholders,
to wit:
Section 31. Liability of directors, trustees or
officers. - Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful
acts of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of
the corporation or acquire any personal or
pecuniary interest in conflict with their duty as such
directors or trustees shall be liable jointly and
severally for all damages resulting therefrom
suffered by the corporation, its stockholders or
members and other persons.
When a director, trustee or officer attempts to
acquire or acquire, in violation of his duty, any
interest adverse to the corporation in respect of
any matter which has been reposed in him in
confidence, as to which equity imposes a disability
upon him to deal in his own behalf, he shall be
liable as a trustee for the corporation and must
account for the profits which otherwise would have
accrued to the corporation. (Corporation Code of
the Philippines).
It is indubitable that the law has accorded any corporation a
right to be protected against any unfaithful act of any member of the
board of directors, individually or collectively. The Supreme Court in
Yu, et al. vs Yukayguan, et al., G.R. No. 177549 (2009) reminded us
of the general rule: "that where a corporation is an injured party, its
power to sue is lodged with its board of directors or trustees."
Notwithstanding the Supreme Court in the same case affirmed that:
[a] stockholder is permitted to institute a derivative
suit on behalf of the corporation wherein he holds
stocks in order to protect or vindicate corporate
rights, whenever the officials of the corporation
refuse to sue, or are the ones to be sued, or hold
the control of the corporation. In such actions, the
suing stockholder is regarded as a nominal party,
with the corporation as the real party in interest . . .
Similarly, if a corporation has a defense to an
action against it and is not asserting it, a
stockholder may intervene and defend on behalf of
the corporation.
The Defendants are members of the Board of Directors of JJJ.
They, therefore, have the fiduciary duty to act in the best interest of
JJJ and its stockholder, and they may be held liable to JJJ for any
58/62
violation of said fiduciary duty.
It is a settled principle that if the acts of the directors constitutes

an abuse of discretion, against public policy, a fraud against minority
stockholders, or will result in dissipation or misapplication of
corporation assets, the court has the power to grant the appropriate
relief.
III. THE RESOLUTION TO AND PROCESS IN SHORTENING THE

CORPORATE EXISTENCE OF JJJ CORPORATION, INCLUDING
ITS WINDING UP, WAS NOT DONE IN ACCORDANCE WITH LAW
AND PROPER PROCEDURE.
The decision to shorten JJJ's corporate life has not been

approved by the Securities and Exchange Commission (SEC). As of
January 14, 2021, there is no formal approval from the Securities and
Exchange Commission to shorten the corporate term, in accordance
with the proper procedure under the Corporation Code.
Dissolution of a corporation under the Corporation Code
involuntary upon SEC complaint or voluntary upon application of the
corporation with SEC. In voluntary dissolution by shortening of
corporate term, Section 120 of the Corporation Code provides:
Sec. 120. Dissolution by shortening corporate term. - A
voluntary dissolution may be effected by amending the articles
of incorporation to shorten the corporate term pursuant to the
provisions of this Code. A copy of the amended articles of
incorporation shall be submitted to the Securities and Exchange
Commission in accordance with this Code. Upon approval of
the amended articles of incorporation of the expiration of
the shortened term, as the case may be, the corporation
shall be deemed dissolved without any further
proceedings, subject to the provisions of this Code on
liquidation.
Prior to submission to SEC, the amended articles of

incorporation should be approved by a majority vote of the board of
its directors/trustees and ratified at a meeting of its stockholders.
Upon submission to SEC, these amendments are subject to rejection
if deemed objectionable by the SEC according to Section 17 of the
Code. If approved, then the corporation shall be deemed dissolved
subject to provisions on liquidation.
Liquidation in our jurisdiction refers to the process of winding up
Corporate affairs. Winding up is the sole activity of a dissolved
59/62
corporation that does not intend to incorporate anew.84It involves the
collection of all assets, the payment of all its creditors, and the
distribution of the remaining assets, if any among the stockholders in
accordance with their contracts, or if there be no special contract, on
the basis of their respective interests. 85
After the Defendants have successfully accomplished their
fraudulent scheme and dried up JJJ’s resources, they just left the
company as it is. The SEC has not approved the articles of
incorporation with the shortened corporate term yet. Since there was
no proper winding up until now, every single day that the anomalous
situation of the members of the U family occupying positions as
Members of the Board of Directors of JJJ while at the same time
being the owners of PPP, Inc., a recent and direct competitor of JJJ,
results in irreparable damage to JJJ since they are continually
executing their decision to suspend the business operations of JJJ
while at the same time benefiting as owners of PPP, Inc.
Plaintiff, as the founder and former President of JJJ, has

exerted years of hard work and has invested substantially towards
the success of the business. In fact, as shown by the financial
statements in the previous discussion, the business of JJJ has been
thriving economically until the corporate decision to suspend the
booming business operation without any legal or rational purpose.
Without doubt, the decision to shorten the corporate life of JJJ
Corporation has caused and will continue to cause prejudice and
damage, not only to the Plaintiff who is significantly affected by the
decision, but also to JJJ and its stockholders.
The following facts and circumstances prove the disloyalty

and breach of the Defendants’ fiduciary duty:
1. Defendants' theory of the case in the pre-trial order stated
that shareholders wanted to sell their shares prior to the May 2016
resolution, when, it was an admitted fact that JJJ was still profitable
and liquid by the time the may 2016 resolution was passed to shorten
its term.
2. Four of the five directors that voted to shorten the corporate
life of JJJ were also directors of PPP.
3.PPPengaged in copra, fertilizer, rice and corn business
immediately after closure of JJJ.
4.PPPbought some of the unsold and remaining stocks of
JJJ(Probably at a less fair market value) to increase the leverage or
the number of votes to shorten the term of JJJ to reach the required
84
Bio vs IAC, G.R. No. 71837, July 26, 1988
85
Yu v. Yukayguan, et al., GR 177549, June 18, 2009
60/62
2/3 votes of outstanding stocks then immediately disposed of it right
after the closure of JJJ.
5. Based on the Statement of Financial Position ofPPPduring
2016-2017, their merchandise inventory increased from 3M to 97M, it
was further admitted that a portion of this merchandise inventory was
from JJJ.
6. Based on PTI's audited financial statement in 2019, their
principal office was located at JJJ Compound, Tabuc-Tubig,
Dumaguete City, Negros Oriental. The same principal office of JJJ.
PRAYER
WHEREFORE, premises considered, Plaintiff respectfully prays
unto this Honorable Court to:
1. Declare Defendants in breach of their fiduciary duties to
JJJ;
2. Declare Defendants to have abused their management

control of JJJ for their personal benefit and to account for all
revenues and profits which should have accrued to JJJ for remainder
of its corporate term prior to its amendment;
3. Award JJJ compensatory damages in the amount of Two

Million Pesos (2,000,000.00);
4. Order Uy Defendants, severally with PPP, Inc., to render

to JJJ an account of the profits they have received from the business
of JJJ after the customers of JJJ were diverted to them, and
thereafter, to disgorge such profits to JJJ;
5. Order Defendants to pay JJJ punitive damage in the

amount of One Million Pesos (1,000,000.00) for their malicious and
wrongful conduct;
6. Order SEC to hold in abeyance any action on the

application for approval by Defendants to shorten the corporate life of
JJJ Corp;
Other reliefs just and equitable are likewise prayed for.
Respectfully submitted.
Dumaguete City, Philippines, July 30, 2021.
61/62
KARISSA FAYE TOLENTINO-MAXINO
Roll of Attorneys No. 62771
IBP Lifetime No. 013596
PTR No. 2725288 A (1/5/21) Dumaguete City
MCLE Compliance No. VI-0008070
valid from until 14 April 2022
Rm 404, Portal West Bldg., cor. Silliman and Hibbard aves.,
Dumaguete City, Negros Oriental
Email: attyktm.law@gmail.com
JENNILENE V. LORICO
CO-COUNSEL FOR PLAINTIFF
Rm 404, 4th Floor, Portal West Building
Corner Silliman and Hibbard Avenues, Dumaguete City
Roll of Attorneys No. 62733; IBP Lifetime No. 015935
PTR No. 2725286A (1/5/2021) Dumaguete City
MCLE No. VI-0001041; 11-11-2016 (valid until 4-14-2022)
E-mail: jennilorico@gmail.com | Mobile: 09273108560
Copy furnished:
Atty. RM ----- furnished through

Atty. GG electronic mail
MMM Law Firm
RRR, North National Highway
Corner East Rovira Road, Bantayan
62/62

Memorandandum Breach Case

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Memorandandum Breach Case

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‘Republic of the Philippines

Supreme Court of the Philippines

Hall of Justice, E.J. Blanco Drive, Dumaguete City, Negros

XXX, CIVIL CASE No. 00000

The Plaintiff, by collaborating counsel, respectfully states that:

The legal issues, as defined by the court, are:

I. Whether Plaintiff is estopped from questioning the corporate

II. Whether the defendants breached their fiduciary duties as

III. Whether the dissolution to and process observed in

The above-mentioned legal issues, as framed by the court, are

I. Whether PPP, Inc. was already in existence at the time the

II. Whether the business of JJJ, at the time of the decision to

III. Whether the decision to close down JJJ Corporation was

IV. Whether PPP, Inc. Is a direct competitor of JJJ, such that,

While the legal issues must be given utmost priority, we find it

ARGUMENTS FOR FACTUAL ISSUES

I. PPP, INC. WAS ALREADY IN EXISTENCE AT THE TIME THE

It is an admitted fact that PPP was established and duly

II. THE BUSINESS OF JJJ CORPORATION, AT THE TIME OF THE

It is an admitted fact that JJJ Corporation was profitable

Lucrative means profitable and a corporation is said to be

JJJ Corporation has an accumulated bank deposit of

Further, the Financial Statement of JJJ for the year 2015

III. THE DECISION TO CLOSE DOWN JJJ CORPORATION WAS

It is an admitted fact that the Board Resolution No.

The Corporation has stopped selling rice, corn, fertilizer,

JUL: Then December 27, refers to the amendment. In

ECU: Not yet. So that’s why we are going to decide this

JUL: So why did we already stop selling rice and corn,

The U family got the majority of the seats in the board of

The business operations were suspended on 30

It is also an admitted fact that there was a two-fold

Evidently, PPP, Inc. has benefitted from the closure of

There is certainly no doubt that the shortening of the

Without any justifiable reason and even with the

Defendants, as directors of JJJ Corporation, have a

The decision to suspend the business operation and

IV. PPP, INC IS A DIRECT COMPETITOR OF JJJ CORPORATION,

It is an established fact that PPP was duly authorized to engage

The fundamental principle of equity imposes a fiduciary duty on

However, not every person or entity engaged in a business of

In this case, although the Articles of Incorporation of PPP only

Although the principal office of PPP, as indicated in its Articles

Furthermore, the incorporators of PPP are Cherrie Ang, Carlos

One’s loyalty must be undivided. As they say, “No one can

The Directors of JJJ Corporation have the fiduciary duty to

Having established that JJJ Corporation is a direct competitor of

ARGUMENTS FOR LEGAL ISSUES

I. PLAINTIFF IS NOT ESTOPPED FROM QUESTIONING THE

Plaintiff is not estopped from questioning the corporate decision to

Appraisal right is not available to Plaintiff Lee for the following

A. Appraisal rights are not available in a derivative suit.

B. Requiring Plaintiff to exercise his appraisal right after the

A.1. Plaintiff, while being the registered owner of only

A.2. The shares of stock registered in the name of AAA

C. Appraisal right is not available for indefinite suspension of

D. There is no appraisal right for a breach of fiduciary duty.

A. APPRAISAL RIGHTS ARE NOT AVAILABLE IN A

A corporation is an entity with a legal personality separate and

A derivative suit is an equitable remedy and one of last resort.20

All the four requisites are present in this case. It is

Prior to filing this instant case, Plaintiff has exerted all

B.1. PLAINTIFF WHILE BEING THE REGISTERED OWNER OF

.2. THE SHARES OF STOCK REGISTERED IN THE NAME OF

B. THE BUSINESS OF THE CORPORATION WAS

C. THE U FAMILY MEMBERS WHO ARE MEMBERS OF