G.R. No. 74306 March 16, 1992 ENRIQUE RAZON, petitioner, vs. INTERMEDIATE APPELLATE OURT a!

" #I ENTE $. %UIDIAN, &! h&' ca(ac&)* a' A"+&!&')ra)or o, )h- E')a)- o, )h- D-c-a'-" .UAN T. %UIDIAN, respondents. /A T01 E. Razon, Inc. was organized by Enrique Razon. Some of its nominal incorporators withdrew, thus Razon distributed their shares to some of his friends, which included Juan . !huidian, to whom he transferred ",#$$ shares of stoc%. It was agreed between the two that !huidian was only given the option to buy the said shares, but Razon would be the owner. & stoc% certificate was issued by the !orporation in the name of !huidian, covering the ",#$$ shares of stoc%. boo%s of the !orporation. he said transfer was also recorded in the corporate he said certificate, however, was held by Razon, who delivered it to the

'hilippine (an% of !ommerce. !huidian thereafter died, and his administrator filed an action to recover the certificate of shares of stoc% from Razon, representing !huidian)s shareholdings in the !orporation. he !*I declared Razon as the owner of the said shares. corporate boo%s. I00UE1 +,- !huidian is the owner of the contested shares of stoc% as evidenced by the certificate and the record in the corporate boo%s. RULING1 .es. Razon)s oral testimony alleging the e/istence of an agreement between the two parties cannot prevail over what appear in the certificate of shares of stoc% and the corporate boo%s. he law is clear that in order for a transfer of stoc% certificates to be effective as between the parties, the certificate must be properly indorsed and that the title to such certificate of stoc% is vested in the transferee by the delivery of the duly indorsed certificate of stoc%. Since the certificate of stoc% covering the questioned ",#$$ shares of stoc% registered in the name of the late !huidian was never indorsed to Razon, the inevitable conclusion is that the questioned shares of stoc% belong to !huidian. he indorsement of the certificate of shares of stoc% is a mandatory requirement of law for an effective transfer of a certificate of stoc%. he I&! however reversed, and ruled that !huidian was the owner of the said shares of stoc% as evidence by the certificate, and as recorded in the