G.R. No. 74306 & 74315 March 16, 1992
ENRIQUE RAZON, petitioner, vs. INTERMEDIATE APPELLATE COURT and VICENTE B. CHUIDIAN, in his capacity as Administrator of the Estate of the Deceased JUAN T. CHUIDIAN, respondents. / VICENTE B. CHUIDIAN, petitioner, vs. INTERMEDIATE APPELLATE COURT, ENRIQUE RAZON, and E. RAZON, INC., respondents.

FACTS

The consolidated petitions center on the ownership of 1,500 shares of stock in E. Razon, Inc., covered by Stock Certificate No. 003 issued on April 23, 1966, and registered in the name of Juan T. Chuidian. The Regional Trial Court declared Enrique Razon as the owner. The Intermediate Appellate Court (now Court of Appeals) reversed this, ruling that Juan T. Chuidian was the owner. Both parties filed motions for reconsideration, which were denied, leading to these petitions.
E. Razon, Inc. was organized in 1962 by Enrique Razon. In 1966, stock certificate No. 003 for 1,500 shares was issued in the name of Juan T. Chuidian. Based on these shares, Chuidian and later his son Vicente were elected and served as directors. The certificate was delivered by Chuidian to Razon in July 1966 and remained in Razon’s possession until deposited in a bank under joint custody.
Vicente B. Chuidian, as administrator of his father’s estate, filed a complaint to recover the shares. Enrique Razon claimed he paid for all subscriptions, that Chuidian was a nominal stockholder, and that ownership remained with Razon unless Chuidian opted to pay, which he never did.

ISSUE

The main issue is the ownership of the 1,500 shares of stock. Sub-issues include: (1) the applicability of the “dead man’s statute” (Section 20(a), Rule 130 of the Rules of Court) to Razon’s testimony about his agreement with the deceased Chuidian; and (2) whether cash/stock dividends and pre-emptive rights accruing to the shares belong to Chuidian’s estate.

RULING

The Supreme Court ruled as follows:
1. On the “dead man’s statute”: The Court held the rule was not applicable. The case was filed by the administrator of the estate to recover shares, not against the administrator upon a claim against the estate. Furthermore, the private respondent did not object to Razon’s testimony and subjected him to cross-examination, thereby waiving any objection.
2. On the ownership of the shares: The Court affirmed the appellate court’s finding that Juan T. Chuidian was the owner. The certificate was registered in his name and never indorsed to Razon, which is a mandatory requirement for a valid transfer. The preponderance of evidence showed the shares were given to Chuidian for value, in payment for legal services he rendered to the corporation.
3. On the dividends and pre-emptive rights: The Court granted Vicente Chuidian’s petition. Cash and stock dividends and pre-emptive rights are incidents of stock ownership. Therefore, all such dividends and rights accruing to the 1,500 shares since 1966 belong to the estate of Juan T. Chuidian.
DISPOSITIVE:
a) In G.R. No. 74306 (Razon’s petition), the petition was DISMISSED. The decision and resolution of the Intermediate Appellate Court were AFFIRMED.
b) In G.R. No. 74315 (Chuidian’s petition), the petition was GRANTED. The appellate court’s resolution was REVERSED and SET ASIDE. Its decision was MODIFIED to declare that all cash and stock dividends, as well as all pre-emptive rights accruing to the 1,500 shares since 1966, belong to the estate of Juan T. Chuidian.