Chim v. Sy Siy Ho & Sons

SR., J.:

The Sy Siy Ho & Sons, Inc. (hereinafter referred to as the corporation) is a domestic corporation which was organized in the 1940s,1 engaged primarily in importing, buying and selling hardware, machineries, spare parts, supplies and other allied products and merchandise to be sold exclusively on wholesale basis. It was doing business under the name and style Guan Yiac Hardware2 with office at No. 453-455 T. Pinpin Street, Binondo, Manila. The corporation was owned and controlled by Sy Chim and his children.

Sometime in 1990, a controversy ensued between Sy Chim's two sons, Sy Tiong Shiou and Sy Tiong Bio who was then the Vice President for Finance. Sy Chim sided with Sy Tiong Shiou. The intra-corporate dispute reached the Securities and Exchange Commission (SEC), docketed as SEC Case No. 04443.

On May 31, 1993, the stockholders of record, Sy Chim and Sy Tiong Shiou (Sy Chim Group), on the one hand, and Sy Tiong Bio, Sy Tiong Gue, Sy Tiong Sim, Sy Tiong Han and Sy Tiong Yan (Sy Tiong Bio Group), on the other, executed a Compromise Agreement,3 where the latter group relinquished their shares to Sy Chim. The parties also agreed to divide and distribute the assets and liabilities of the corporation as follows: (a) Mr. SY CHIM GROUP - Four (4) parts, or three (3) parts Sy Chim, one (1) part Sy Tiong Shiou. (b) Mr. SY TIONG BIO GROUP - Five (5) parts at the rate of one (1) each.4 Some of the shares of stocks were assigned to Felicidad Chan Sy, wife of Sy Chim.

The spouses Sy Chim and Felicidad Chan Sy, and spouses Sy Tiong Shiou and Juanita Tan Sy, and their children, Charlie, Romer and Jesse James Tan, then became stockholders and members of the Board of Directors of the corporation. The officers of the corporation were as follows: Sy Chim, President; Felicidad Chan Sy, Assistant Treasurer; Sy Tiong Shiou, Vice President and General Manager; Juanita Tan Sy (wife of Sy Tiong Shiou), Corporate Treasurer; and Charlie Tan (son of spouses Sy Tiong Shiou), Assistant General Manager. As of the year 2000, the corporation had a gross profit of ~~P~~ 45,084,908.11 and ~~P~~ 42,954,252.32 in 2001.5 As of April 19, 2002, it had a capital stock of ~~P~~ 150,000,000.00, divided into 150,000 shares, with a par value of ~~P~~ 1,000.00 per share.

The treasury stocks amounted to ~~P~~ 70,720,000.00. It had a subscribed and paid-up capital of 103,733 shares and ~~P~~ 103,733,000.00 respectively. The stockholders and the respective shareholdings were as follows: Stockholder No. of Shares Subscribed Amount Subscribed and Paid (PHP) SY CHIM 35,013 35,013,000 FELICIDAD CHAN SY 17,509 17,509,000 CHARLIE TAN 20,338 20,338,000 ROMER TAN 19,636 19,636,000 JESSE JAMES TAN 11,233 11,233,000 SY TIONG SHIOU 2 2,000 JUANITA TAN SY 2 2,000 TOTAL