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Razon v. IAC.docx

Razon v. IAC.docx

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Published by temporiari
Evidence digest
Evidence digest

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Categories:Types, Business/Law
Published by: temporiari on Nov 04, 2013
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ENRIQUE RAZON v. IAC and VICENTE CHUIDIAN
 [Administrator of Juan Chuidian's estate] +
CHUIDIAN v. IAC, RAZON, and E. RAZON, INC.
 1992 / Gutierrez, Jr. / Relative incompetencies > Dead Man's Statute
The main issue in these consolidated petitions is 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 under the name of Juan Chuidian.
 
FACTS
 
 
1962 - Enrique Razon organized E. Razon, Inc. (Purpose: bidding for arrastre services in South Harbor, MLA)
 
 
1966 - Stock Certificate No. 003 for 1,500 shares of stock of E. Razon was issued in Juan Chuidian's name.
 
 
Juan and Vicente Chuidian were elected as E. Razon's, Inc. directors and they were compensated as such.
 
 
From 1966 to 1971, Enrique Razon had not questioned Juan Chuidian's ownership of the shares, nor did Enrique bring any action to have the certificate of stock over the shares cancelled.
 
On the possession of the certificate of stock
 
 
Vicente Chuidian's allegation:
 The certificate of stock was in the possession of Enrique Razon, who refused to deliver the shares to Vicente Chuidian, until the same was surrendered by Enrique Razon and deposited in a Philippine Bank of Commerce safety box.
 
 
IMPORTANT: THIS WAS THE ORAL TESTIMONY OF ENRIQUE RAZON WHICH WAS EXCLUDED BY IAC
 
o
 
The stock certificate was personally delivered by Juan Chuidian to the corporate secretary of Atty. De Leon [an associate of the Chuidian Law Office).
 
The delivery was made because it was Enrique who paid for all the subscription on the shares.
 
The agreement was that Enrique Razon was the owner of the shares and he would have possession thereof until such time that he was paid therefor by the other nominal incorporators or stockholders.
 
o
 
Since then, Enrique Razon was in possession of the stock certificate. By agreement of the parties, it was delivered for deposit with the bank under the joint custody of the parties.
 
Vicente Chuidian filed a
complaint
 against Razon, E. Razon, Inc., et al. These were included in his prayer:
 
An order to have the defendants deliver stock certificate representing Juan Chuidian's share in E. Razon's Inc.
 
 
Issuance of an order restraining the defendants from disposing of said shares
 
 
Issuance of a writ of preliminary attachment against
defendants’ properties
 having possession of the shares
 
 
Receivership of the properties of E. Razon's Inc.
 
The defendants, in their
answer
 alleged the following:
 
All shares of stock in the name of stockholders of record were fully paid by Razon
 
 
Saids shares are subject to the agreement between the defendants and incorporators
 
 
The shares were actually owned by and remained in the possession of Razon
 
 
Neither Juan nor his son Vicente paid any amount for the shares in question
 
The Razons allege
that after organizing the corporation, Enrique Razon distributed shares previously placed in the names of the withdrawing nominal incorporators to some friends, including Juan Chuidian.
CFI
 - Enrique Razon owns the shares of stock.
IAC - Juan Chuidian (deceased father of Vicente Chuidian) owns the shares of stock.
 
 
The dead man's statute rule is applicable in this case
 
o
 
IAC excluded Enrique Razon's testimony (see above)
 
 
IAC rulings on the parties' respective MRs
 
o
 
Razon's MR (asking for reversal of IAC decision) DENIED
 
o
 
Chuidian's MR (asking for delivery of all cash and stock dividends and all the pre-emptive rights accruing to the 1,500 shares of stock) DENIED.
 
Razon says that contrary to IAC's ruling, the dead man's statute is NOT applicable.
 
 
Chuidian did not object to his oral testimony regarding the oral agreement between him and Juan Chuidian that the ownership of the shares of stock was actually vested in Razon, unless Juan opted to pay the same
 
 
Razon was subjected to a rigid cross examination regarding such testimony
 
 
ISSUES & HOLDING
 
 
WON Razon's testimony is within the prohibition of the dead man's statute.
NO. The case was not filed
against
the administrator of the estate, nor was it filed upon claims
against 
 the estate.
[The case was filed by the
administrator
Vicente Chuidian to recover the shares of stock.]
 Therefore, Razon's testimony is ADMISSIBLE.
 
 
WON Razon's oral testimony as regards the true nature of his agreement with the late Juan Chuidian is sufficient to prove his ownership over the said 1,500 shares of stock.
NO.
 
 
Who is the owner of the shares of stock?
Juan Chuidian. He gets the cash and stock dividends plus pre-emptive rights (as prayed for in the MR at IAC).
 
EVIDENCE-RELATED: THE DEAD MAN'S STATUTE
 
Section 20(a) Rule 130 of the Rules of Court
 Sec. 20.
Disqualification by reason of interest or relationship
 
 The following persons cannot testify as to matters in which they are interested directly or indirectly, as herein enumerated.
 
(a) Parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted,
against an executor 
 
or administrator 
 or other representative of a deceased person, or against a person of unsound mind,
upon a claim or demand against the estate of such deceased person
or against such person of unsound mind, cannot testify as to any matter of fact accruing before the death of such deceased person or before such person became of unsound mind.
Section 23, Rule 130, of the Revised Rules on Evidence
 SEC. 23.
Disqualification by reason of death or insanity of adverse party.
 —
Parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted, against an executor or administrator or other representative of a deceased person, or against a person of unsound mind, upon a claim or demand against the estate of such deceased person or against such person of unsound mind, cannot testify as to any matter of fact occurring before the death of such deceased person or before such person became of unsound mind.(20a)
 
Purpose of the rule
 
 
If persons having a claim against the estate of the deceased or his properties were allowed to testify as to the supposed statements made by him (deceased person), many would be tempted to falsely impute statements to deceased persons as the latter can no longer deny or refute them, thus unjustly subjecting their properties or rights to false or unscrupulous claims or demands.
 
The purpose of the law is to guard against the temptation to give false testimony in regard to the transaction in question on the part of the surviving party.
 
When the rule is applicable
 It is applicable to a case
against 
 the administrator or its representative of an estate upon a claim
against 
 the estate of the deceased person.
In this case
 
 
The case was filed by the
administrator
Vicente Chuidian to recover shares allegedly owned by Juan Chuidian.
 
 
Remember that the IAC excluded Enrique Razon's testimony.
 
Chuidian never objected to Razon's testimony. Razon's testimony was subject to cross-examination by Vicente Chuidian's counsel. Granting that Razon's testimony is within the prohibition of the dead man's statute, Chuidian is deemed to have waived the rule.
o
 
Cruz v. CA
 - The court cannot disregard evidence which would ordinarily be incompetent under the rules but has been rendered admissible by the failure of a party to object thereto
 
o
 
Marella v. Reyes
- Once admitted, the testimony is in the case for what it is worth and the judge has no power to disregard it for the sole reason that it could have been excluded, if it had been objected to, nor to strike it out on its own motion
THE MAIN CASE (RE: OWNERSHIP OF THE SHARES OF STOCK)
 
Relevant rules re: transfer of shares of stock
 
 
Embassy Farms, Inc. v. Court of Appeals
 
o
 
Shares of stock may be transferred by delivery to the transferee of the certificate properly indorsed. Title may be vested in the transferee by the delivery of the duly indorsed certificate of stock [BP 68, Sec. 3 (Corporation Code)]
o
 
However, no transfer shall be valid, except as between the parties until the transfer is properly recorded in the books of the corporation [Corporation Code, Sec. 63; Corporation Law, Sec. 35]
 

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