Razon vs.

IAC

The petitioner in this case is Enrique Razon while the respondents in this case are the Intermediate Appellate
Court, and Vicente Chuidian as the Administrator of the Estate of the deceased, Juan Chuidian, his father.

Facts:
 Petitioner Razon organized the E. Razon, Inc. wherein he distributed stocks of the said corporation among his
friends, including the deceased Juan Chuidian, to whom he gave 1,500 shares of stock.
 The shares of stocks were registered in the name of Chuidian only as nominal stockholder and with the
agreement that the said shares of stock were owned and held by Razon, but Chuidian was given the option to
buy the same, but Chuidian never did.
 Chuidian then delivered the stock certificate representing the 1,500 shares to Razon. Razon then had in his
possession the stock certificate until he delivered it for deposit with the Philippine Bank of Commerce, under
the parties’ joint custody pursuant to their agreement, as embodied in the trial court’s order.
 Razon maintains that his aforesaid oral testimony as regards the true nature of his agreement with Chuidian
on the 1,500 shares of stock of E. Razon, Inc. is sufficient to prove his ownership over the said shares of stock.
 The RTC ruled in favor of Razon and declared him the owner of the said shares of stock. However, the IAC,
reversed the RTC’s decision and ruled that Juan Chuidian, the father of private respondent Vicente Chuidian is
the owner of the shares of stock.
 Razon wanted the IAC’s decision reversed and the RTC’s decision affirmed. Hence, the current petition.

Issue:
 The fundamental issue raised in this case is whether or not the ownership of the 1,500 shares of stock belong
to petitioner Enrique Razon

Held:
1.) The Court ruled that no, the shares of stock do not belong to Enrique Razon, but rather, to the deceased Juan
Chuidian. According to the SC, for an effecticve transfer of shares of stock, the mode and manner of transfer
prescribed by law must be followed. Under the Corporation Code, shares of stock may be transferred by
delivery to the transferee of the certificate, properly indorsed.
2.) In this case, there was no dispute that the questioned 1,500 shares of stock are in the name of Juan Chuidian
in the books of the corporation. Moreover, records show that he was an elected member of the Board of
Directors of the corporation, which, according to the SC, clearly shows that he was a stockholder of the
corporation. Therefore, from the point of view of the corporation, Chuidian was the owner of the 1,500
shares of stock.
3.) Further, the SC ruled that the petitioner, Razon, who claims ownership over the said shares of stock must
show that the same was transferred to him by proving that all the requirements for the effective transfer of
stock in accordance with the corporation’s by-laws, if any, were followed, or in accordance with the
provisions of the law, particularly the Corporation Code. Razon failed in both instances. He was not able to
present any by-laws showing the transfer of the shares of stock to him, so the provisions of the Corporation
Code were made applicable to the instant case.
4.) Under Sec. 62 of the Revised Corporation Code, it is clear that in order for a transfer of stock certificate to be
effective, the stock certificate must be properly indorsed to the transferee. Since the stock certificate
covering the questioned shares of stock registered in the name of the late Juan Chuidian was never indorsed
to the Razon, the inevitable conclusion made by the Court is that the questioned shares of stock belong to
Chuidian.
5.) Moreover, the Court supports the findings of the appellate court that the shares of stock were given to
Chuidian for value, as payment of his legal services, since he was the legal counsel of the corporation.
6.) The Court ordered that all the cash and stock dividends, as well as pre-emptive rights that have accrued and
attached to the 1,500 shares in E. Razon, Inc. be declared to belong to the estate of Juan Chuidian.