Simny G. Guy, Et Al., v. Gilbert Guy

SIMNY G. GUY, et al., v. GILBERT G.
GUY
G.R. No. 189486, Sept. 5, 2012, Second Division (Perez, J.)
DOCTRINE
Settled is the rule that joinder of indispensable parties is compulsory being a sine qua
non for the exercise of judicial power, and, it is precisely “when an indispensable party is not
before the court that the action should be dismissed” for such absence renders all subsequent
actions of the court null and void for want of authority to act, not only as to the absent parties
but even as to those present.
FACTS
With 519,997 shares of stock as reflected in Stock Certificate Nos. 004-014,
respondent Gilbert G. Guy practically owned almost 80 percent of the 650,000 subscribed
capital stock of GoodGold Realty & Development Corporation, one of the multi-million
corporations which Gilbert claimed to have established in his 80s. GoodGold’s remaining
shares were divided among Francisco Guy with 130,000 shares, Simny Guy, Benjamin Lim,
and Paulino Delfin Pe, with one share each, respectively.
Gilbert is the son of the spouses Francisco and Simny. Simny, however, alleged that
it was she and her husband who established GoodGold, putting the bulk of its shares under
Gilbert’s name. She further claimed that upon the incorporation of GoodGold, they issued
stock certificates reflecting the shares held by each stockholder duly signed by Francisco as
President and Atty. Emmanuel Paras as Corporate Secretary, with corresponding blank
endorsements at the back of each certificate – including Stock Certificate Nos. 004-014
under Gilbert’s name.
In 1999, Francisco instructed Benjamin Lim, a nominal shareholder of GoodGold and

his trusted employee, to collaborate with Atty. Paras, to redistribute GoodGold’s
shareholdings evenly among his children, namely, Gilbert, Grace Guy-Cheu, Geraldine Guy,
and Gladys Guy, while maintaining a proportionate share for himself and his wife, Simny.
Accordingly, some of GoodGold’s certificates were cancelled and new ones were issued to
represent the redistribution of GoodGold’s shares of stock. The shares of stock were
distributed among the following stockholders: (a) Francisco and Simny, with 195,000
shares each, and (b) Gilbert, Geraldine, Grace, and Gladys with 65,000 shares each.
In September 2004 or five years after the redistribution of GoodGold’s shares of

stock, Gilbert filed with the Regional Trial Court (RTC) a Complaint for the “Declaration
of Nullity of Transfers of Shares in GoodGold and of General Information Sheets and
Minutes of Meeting, and for Damages with Application for a Preliminary Injunctive
Relief” against his mother, Simny, and his sisters, Geraldine, Grace, and Gladys. He alleged
that no Stock Certificate Nos. 004-014 ever existed, and that the spurious stock certificate
which purportedly endorsed the same and that of Atty. Paras, at the obverse side of the
certificates were forged, and hence should be nullified. However, he withdrew the
complaint, after the National Bureau of Investigation (NBI) submitted a report to the RTC
authenticating Gilbert’s signatures in the endorsed certificates.
In 2008, three years after the complaint with the RTC was withdrawn, Gilbert again
filed a complaint captioned as “Intra-Corporate Controversy: For the Declaration of Nullity
of Fraudulent Transfers of Shares of Stock Certificates, Fabricated Stock Certificates,
Falsified General Information Sheets, Minutes of Meetings, and Damages with Application
for the Issuance of a Writ of Preliminary and Mandatory Injunction” against his mother,
Simny, his sisters, Geraldine, Gladys, and the heirs of his late sister Grace. Meanwhile,
Gilbert’s siblings filed a manifestation claiming that the complaint is a nuisance and
harassment suit. The RTC subsequently dismissed the case, declaring it a nuisance and
harassment suit. The Court of Appeals, however, held that the complaint should be heard
on the merits.
It was noted by the Court that Francisco and GoodGold were omitted as
indispensable parties in both the 2004 and 2008 complaints.
ISSUE
Whether the omission of Francisco and GoodGold as indispensable parties in both
the 2004 and 2008 complaints renders all subsequent actions of the court null and void,
warranting the outright dismissal of the 2008 complaint (YES).
RULING
YES. The definition in Section 7, Rule 3 of the Rules of Court of indispensable parties
as “parties in interest without whom no final determination can be had of an action” has
been jurisprudentially amplified. In Sps. Garcia v. Garcia, et al., the Court held that:
An indispensable party is a party who has such an interest in the controversy

or subject matter that a final adjudication cannot be made, in his absence,
without injuring or affecting that interest, a party who has no only an interest in the
subject matter of the controversy, but also has an interest of such nature that a final
decree cannot be made without affecting his interest or leaving the controversy in
such a condition that its final determination may be wholly inconsistent with equity
and good conscience. It has also been considered that an indispensable party is a
person in whose absence there cannot be a determination between the parties
already before the court which is effective, complete, or equitable. Further, an
indispensable party is one who must be included in an action before it may properly
go forward.
Settled is the rule that joinder of indispensable parties is compulsory, being a

sine qua non for the exercise of judicial power, and, it is precisely “when an indispensable
party is not before the court that the action should be dismissed” for such absence renders
all subsequent actions of the court null and void for want of authority to act, not only as to
the absent parties but even as to those present.
Gilbert’s complaint essentially prayed for the return of his original 519,997 shares
in GoodGold, by praying that the court declare that “there were no valid transfers of the
contested shares to defendants and Francisco.” It baffles this Court, however, that Gilbert
omitted Francisco as defendant in his complaint. While Gilbert could have opted to waive
his shares in the name of Francisco to justify the latter’s non-inclusion in the complaint,
Gilbert did not do so, but instead, wanted everything back and even wanted the whole
transfer of shares declared fraudulent. This cannot be done, without including Francisco as
defendant in the original case. The transfer of the shares cannot be, as Gilbert wanted,
declared entirely fraudulent without including those of Francisco who owns almost a third
of the total number.
Francisco, in both the 2004 and 2008 complaints, is an indispensable party without
whom no final determination can be had for the following reasons: (a) the complaint prays
that the shares now under the name of the defendants and Francisco be declared
fraudulent; (b) Francisco owns 195,000 shares some of which, Gilbert prays be returned to
him; (c) Francisco signed the certificates of stocks evidencing the alleged fraudulent shares
previously in the name of Gilbert. The inclusion of the shares of Francisco in the
complaint makes Francisco an indispensable party. Moreover, the pronouncement
about the shares of Francisco would impact on the hereditary rights of the contesting
parties or on the conjugal parties of the spouses to the effect that Francisco, being husband
of Simny and father of the other contesting parties, must be included for, otherwise, in his
absence, there cannot be a determination between the parties already before the court
which is effective, complete, or equitable.
It bears emphasis that Gilbert, while suing as a stockholder against his co-
stockholders, should have also impleaded GoodGold as defendant. His complaint also
prayed for the annulment of the 2004 stockholders’ annual meeting, the annulment of the
2004 election of the board of directors and of its officers, the annulment of 2004 General
Information Sheets (GIS) submitted to the Securities and Exchange Commission (SEC),
issuance of an order for the accounting of all monies and rentals of GoodGold, and the
issuance of a writ of preliminary and mandatory injunction. GoodGold is a separate
juridical entity distinct from its stockholders and from its directors and officers. The trial
court, acting as a special commercial court, cannot settle the issues with finality
without impleading GoodGold as defendant. Like Francisco, and for the same reasons,
GoodGold is an indispensable party which Gilbert should have impleaded as defendant in
his complaint.

Simny G. Guy, Et Al., v. Gilbert Guy

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Simny G. Guy, Et Al., v. Gilbert Guy

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SIMNY G. GUY, et al., v. GILBERT G.

In 1999, Francisco instructed Benjamin Lim, a nominal shareholder of GoodGold and

In September 2004 or five years after the redistribution of GoodGold’s shares of

An indispensable party is a party who has such an interest in the controversy

Settled is the rule that joinder of indispensable parties is compulsory, being a

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