DEL SAZ OROZCO vs. ARANETA (1951)
JUGO, J.:
FACTS
·
Eugenio del Saz Orozco died on
February 7, 1922, leaving a will which he had executed on March 5, 1921 à will provided that certain properties should be given
in life usufruct to his son Jacinto del Saz Orozco with the obligation on his
part to preserve said properties in favor of the other heirs who were declared the
naked owners thereof. Among these properties were 5,714 shares of stock of the
Benguet Consolidated Mining Company.
·
SEPT 11, 1934, the Benguet
Consolidated Mining Company declared and distributed stock dividends out of its
surplus profits, Jacinto receiving his proportionate portion of 11,428 shares.
·
NOV 17, 1939, said Mining Company
again declared stock dividends out of its surplus profits, of which the Jacinto
received 17,142 shares, making a total of 28,570 shares.
ISSUE:
WON the stock dividend is part of the capital which should be preserved in
favor of the owners or an income of fruits of the capital which should be given
to and enjoyed by the life usufructuary, Jacinto, as his own exclusive
property?
COURT
LOOKS AT “in re: Testate Estate of Emil Maurice Bachrach” AS BASIS à Is a stock dividend fruit or income, which belongs to
the usufructuary, or is it capital or part of the corpus of the estate, which
pertains to the remainderman.
·
Justice Ozaeta ruled that a
dividend, whether in the form of cash or stock, is income and, consequently,
should go to the usufructuary, taking into consideration that a stock dividend
as well as a cash dividend can be declared only out of profits of the
corporation, for it were declared out of the capital it would be a serious
violation of the law.
IN
THIS CASE
·
Araneta and his clients attempt to
differentiate the present case from that case, contending that, while the
doctrine in that case effected a just and equitable distribution, the
application of it in the present case would cause an injustice à quoting Justice Holmes, "abstract propositions do
not decide concrete cases."
o
Difference pointed out à by the declaration of stock dividends the voting power
of the original shares of stock is considerably diminished, and, if the stock
dividends are not given to the remaindermen, the voting power of the latter
would be greatly impaired
o
Bearing in mind that the number of
shares of stock of the Benguet Consolidated Mining company is so large, the
diminution of the voting power of the original shares of stock in this case
cannot possibly affect or influence the control of the policies of the
corporation which is vested in the owners of the great block of shares. à not significant enough a reason to change doctrine
·
We have examined the two cases carefully and we have
not perceived any difference which would justify a reversal or modification of
the doctrine in the Bachrach case.
·
With regard to the sum of
P3,428.40 which is alleged to have been received by Jacinto from the Benguet
Consolidated Mining Company, as a result of the reduction of its capital à not proven à on the contrary, it was denied by
him as soon as he arrived in the Philippines from Spain. There is no ground,
therefore, for ordering the plaintiff to deliver such sum to the defendants.
DECISION:
Reversed, and it is declared that the stock dividends amounting to 28,570
shares belongs to Jacinto del Saz Orozco exclusively and in absolute ownership.
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