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GILBERT G. GUY v. CA

FACTS:

This case involves a family feud over the ownership and control of 20,160 shares of stock of Northern Islands Co., Inc. The stock certificates were initially transferred to Gilbert's sisters and registered in their names. A special meeting of stockholders elected Gilbert's mother and sisters to key positions in the company, leading to a conflict between Gilbert and his sisters. Lincoln Continental, a holding company established by Gilbert's parents, filed a complaint for annulment of the transfer of shares against the respondents. The trial court issued a TRO in favor of Gilbert, but the Court of Appeals later issued their own TRO enjoining the trial court from enforcing their order. Lincoln Continental also obtained a writ of preliminary mandatory injunction.

The case involves disputes concerning the management and possession of the assets and records of Northern Islands Incorporated. Lincoln Continental filed a complaint for injunction and damages against Gilbert, his family members, and Northern Islands. The trial court issued a writ of preliminary injunction in favor of Lincoln Continental, but the respondents filed various motions and petitions to challenge the orders. The Court of Appeals issued a TRO enjoining the implementation of the writ of preliminary injunction and directing Lincoln Continental to turn over the assets and records of Northern Islands to the respondents. The Eighth Division of the Court of Appeals also issued a writ of preliminary injunction in favor of the respondents, nullifying the trial court's initial injunction. The trial court eventually dismissed the complaint filed by Lincoln Continental.

Multiple appeals and petitions for certiorari were filed by the different parties involved. The trial court held that the disputed shares of stock were held by Gilbert for the benefit of the family members and that the shares were registered in the names of the other family members when Gilbert started disposing of the corporation assets without their knowledge. The Court of Appeals affirmed the trial court's decision, with modifications, dismissing the complaints of Lincoln Continental and Gilbert. Motions for reconsideration were denied by the Court of Appeals. Various parties filed petitions for review and petitions for certiorari before the Supreme Court, raising issues such as forum shopping, entitlement to injunctive relief, and the propriety of the Court of Appeals' decisions. The Supreme Court ordered the consolidation of the cases and proceedings.

ISSUES:

  1. Whether respondents are guilty of forum shopping.

  2. Whether the Court of Appeals committed grave abuse of discretion in giving due course to respondents' petition.

  3. Whether the Court of Appeals committed grave abuse of discretion in issuing a writ of preliminary injunction and making the injunction permanent in favor of the respondents.

  4. Whether the Court of Appeals acquired jurisdiction over the petitioners in the case.

  5. Whether the parties were deprived of due process.

  6. Whether the Court of Appeals could amend its Resolution to include the petitioners.

  7. Who owns the disputed shares of stock in Northern Islands.

RULING:

  1. No, respondents are not guilty of forum shopping. While the first element of litis pendentia - identity of parties - is present, the second element - identity of reliefs sought - is lacking. The relief sought in CA-G.R. SP No. 85069 is different from the relief sought in CA-G.R. SP No. 87104. Therefore, there is no forum shopping.

  2. No, the Court of Appeals did not commit grave abuse of discretion in giving due course to respondents' petition. The Court of Appeals properly considered that the petitions filed by respondents did not constitute forum shopping.

  3. The Court of Appeals did not commit grave abuse of discretion in issuing the injunctive relief. The respondents have shown their clear and established right to the disputed shares of stock, and there was an urgent necessity to issue an injunctive writ to prevent serious damage to their rights and to Northern Islands.

  4. The Court of Appeals validly acquired jurisdiction over the petitioners through the service of its order or resolution indicating its initial action on the petitions or through the petitioners' voluntary submission to such jurisdiction. Thus, the Court of Appeals did not commit grave abuse of discretion in including the petitioners in the coverage of its injunctive writ.

  5. The parties were not deprived of due process. The Court held that when a party fails to participate in the proceedings despite being given the opportunity to do so, they are deemed to have waived their right to be heard and cannot complain of deprivation of due process.

  6. The Court of Appeals had the power to amend its Resolution to include the petitioners. The court relied on Section 5 (g), Rule 135 of the Revised Rules of Court, which grants inherent powers to courts to amend and control its process and orders in order to make them conformable to law and justice.

  7. The Court ruled that the Guy sisters own the disputed shares of stock in Northern Islands. The trial court and the Court of Appeals found that Lincoln Continental held the shares in trust for the Guy sisters, and this finding was supported by evidence. Therefore, it was held that Gilbert, who claimed legal title to the shares, was a mere trustee for the Guy sisters.

PRINCIPLES:

  • Forum shopping is the repetitive availing of several judicial remedies in different courts, simultaneously or successively, founded on the same transactions and issues. It is prohibited because it burdens the courts, taxes the resources of the judiciary, and mocks judicial processes. The primary evil sought to be proscribed is the possibility of conflicting decisions.

  • Litis pendentia, as a ground for dismissing a civil action, exists when another action is pending between the same parties for the same cause of action, making the second action unnecessary and vexatious. The elements of litis pendentia are: (a) identity of parties; (b) identity of rights asserted and relief prayed for, founded on the same facts; and (c) identity of the two cases, such that judgment in one would amount to res judicata in the other. Without litis pendentia or res judicata, there is no forum shopping.

  • In order to be entitled to an injunctive writ, a party must show the existence of a right to be protected and that the acts against which the injunction is directed are violative of this right.

  • The court acquires jurisdiction over the person of the respondent in cases covered by Rule 46 of the 1997 Rules of Civil Procedure through the service upon them of its order or resolution indicating its initial action on the petitions or through their voluntary submission to such jurisdiction.

  • When a party fails to participate in the proceedings despite being given the opportunity to do so, they are deemed to have waived their right to be heard and cannot complain of deprivation of due process.

  • Courts have inherent powers to amend and control their process and orders to make them conformable to law and justice.

  • A trust is a fiduciary relationship with respect to property, subjecting the person holding the property to the obligation of dealing with it for the benefit of another person.

  • Fraud is never presumed but must be established by clear and convincing evidence.