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Republic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-34655 March 5, 1932

SIY CONG BIENG & CO., INC., plaintiff-appellee,vs.HONGKONG & SHANGHAI BANKING CORPORATION, defendant-appellant.

DeWitt, Perkins & Brandy for appellant.

Feria & La O for appellee.

OSTRAND, J.:

This action was brought in the Court of First Instance of Manila to recover the sum of P31,645,the value of 464 bales of hemp deposited in certain bonded warehouses as evidenced by thequedans (warehouse receipts) described in the complaint, said quedans having been delivered aspledge by one Otto Ranft to the herein defendant, the Hongkong and Shanghai BankingCorporation, for the guarantee of a preexisting debt of the former to the latter. The record showsthat both parties, through their respective counsel, subscriber and submitted to the court belowthe following agreement of facts:

STIPULATION OF FACTS

(Translated into English)

Come now the parties, both the plaintiff and the defendant Hongkong & ShanghaiBanking Corporation, through their respective counsel in the above entitled case,and respectfully submit to the court the following agreed statements of facts:

1. That both the plaintiff and the defendant Hongkong & Shanghai BankingCorporation are corporations domicile in the City of Manila and duly authorizedto transact business in accordance with the laws of the Philippine Islands.

2. That the plaintiff is a corporation engaged in business generally, and that the

defendant Hongkong & Shanghai Banking Corporation is a foreign bankauthorized to engage in the banking business in the Philippines.

3. That on June 25, 1926, certain negotiable warehouse receipts described belowwere pledge by Otto Ranft to the defendant Hongkong & Shanghai BankingCorporation to secure the payment of his preexisting debts to the latter:

No. Warehouseman Depositor Bales

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1707 Public Warehouse Co Siy Cong Bieng & Co., Inc. 27

133 W.F. Stevenson Co do 67

1722 Public Warehouse Co do 60

1723 do do 4

1634 The Philippine Warehouse Company do 99

1918 Public Warehouse Co O. Ranft 166

2 Siy Cong Bieng & Co., Inc do 2

1702 The Philippine Warehouse Company Siy Cong Bieng & Co., Inc. 39

And that the baled hemp covered by these warehouse receipts was worth P31,635;receipts number 1707,133,1722, 1723, 1634, and 1702 being endorsed in blank by the

plaintiff and Otto Ranft, and numbers 1918 and 2, by Otto Ranft alone.

4. That in the night of June 25, 1926, said Otto Ranft died suddenly at his house inthe City of Manila.

5. That both parties submit this agreed statement of facts, but reserve their right tohave in evidence upon other points not included herein, and upon which theycannot come to an agreement.

Manila, August 7, 1929.

The evidence shows that on June 25, 1926, Ranft called at the office of the herein plaintiff topurchase hemp (abaca), and he was offered the bales of hemp as described in the quedans abovementioned. The parties agreed to the aforesaid price, and on the same date the quedans, togetherwith the covering invoice, were sent to Ranft by the plaintiff, without having been paid for thehemp, but the plaintiff's understanding was that the payment would be made against the samequedans, and it appear that in previous transaction of the same kind between the bank and theplaintiff, quedans were paid one or two days after their delivery to them.

In the evening of the day upon which the quedans in question were delivered to the hereindefendant, Ranft died, and when the plaintiff found that such was the case, it immediatelydemanded the return of the quedans, or the payment of the value, but was told that the quedans

had been sent to the herein defendant as soon as they were received by Ranft.

Shortly thereafter the plaintiff filed a claim for the aforesaid sum of P31,645 in the intestateproceedings of the estate of the deceased Otto Ranft, which on an appeal form the decision of thecommittee on claims, was allowed by the Court of First Instance in case No. 31372 (City ofManila). In the meantime, demand had been made by the plaintiff on the defendant bank for thereturn of the quedans, or their value, which demand was refused by the bank on the ground that itwas a holder of the quedans in due course. Thereupon the plaintiff filed its first complaint against

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the defendant, wherein it alleged that it has "sold" the quedans in question to the deceased O.Ranft for cash, but that the said O. Ranft had not fulfilled the conditions of the sale. Later on,plaintiff filed an amended complaint, wherein they changed the word "sold" referred to in thefirst complaint to the words "attempted to sell".

Upon trial the judge of the court below rendered judgment in favor of the plaintiff principally onthe ground that in the opinion of the court the defendant bank "could not have acted in good faithfor the reason that according to the statements of its own witness, Thiele, the quedans weredelivered to the bank in order to secure the debts of Ranft for the payment of their value andfrom which it might be deduced that the said bank knew that the value of the said quedans wasnot as yet paid when the same were endorsed to it, and its alleged belief that Ranft was the ownerof the said quedans was not in accordance with the facts proved at the time"; and that, moreover,the circumstances were such that "the bank knew, or should have known, that Ranft had not yetacquired the ownership of the said quedans and that it therefore could not invoke thepresumption that it was acting in good faith and without negligence on its part".

In our opinion the judgment of the court below is not tenable. It may be noted, first, that thequedans in question were negotiable in form;second, that they were pledge by Otto Ranft to thedefendant bank to secure the payment of his preexisting debts to said bank (paragraph 3 of theStipulation of Facts); third, that such of the quedans as were issued in the name of the plaintiffwere duly endorsed in blank by the plaintiff and by Otto Ranft; and fourth, that the tworemaining quedans which were duly endorsed in blank by him.

When these quedans were thus negotiated, Otto Ranft was indebted to the Hongkong &Shanghai Banking Corporation in the sum of P622,753.22, which indebtedness was partlycovered by quedans. He was also being pressed to deposit additional payments as a furthersecurity to the bank, and there is no doubt that the quedans here in question were received by the

bank to secure the payment of Ranft's preexisting debts; it is so stated in paragraph 3 of thestipulation of the facts agreed on by the parties and hereinbefore quoted.

It further appears that it has been the practice of the bank in its transactions with Ranft that thevalue of the quedans has been entered in the current accounts between Ranft and the bank, butthere is no evidence to the effect that the bank was at any time bound to pay back to Ranft theamount of any of the quedans, and there is nothing in the record to show that the bank haspromised to pay the values of the quedans neither to Ranft nor to the herein plaintiff; on thecontrary, as stated in the stipulation of facts, the "negotiable warehouse receipts were pledgedby Otto Ranft to the defendant Hongkong & Shanghai Banking Corporation secure the paymentof his preexisting debts to the latter", and taking into consideration that the quedans werenegotiable in form and duly endorsed in blank by the plaintiff and by Otto Ranft, it follows thaton the delivery of the qeudans to the bank they were no longer the property of the indorser unlesshe liquidated his debt with the bank.

In his brief the plaintiff insists that the defendant, before the delivery of the quedans, should haveascertained whether Ranft had any authority to negotiate the quedans.

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We are unable to find anything in the record which in any manner would have compelled thebank to investigate the indorser. The bank had a perfect right to act as it did, and its action is inaccordance with sections 47, 38, and 40 of the Warehouse Receipts Act (Act No. 2137), whichread as follows:

SEC. 47. When negotiation not impaired by fraud, mistake, or duress.

The validity ofthe negotiation of a receipt is not impaired by the fact that such negotiation was a breachof duty on the part of the person making the negotiation, or by the fact that the owner ofthe receipt was induced by fraud, mistake, or duress to intrust the possession or custodyof the receipt was negotiated, or a person to whom the receipt was subsequent negotiated,paid value therefor, without notice of the breach of duty, or fraud, mistake, or duress.

SEC. 38.Negotiation of negotiable receipts by indorsement.A negotiable receipt maybe negotiated by the indorsement of the person to whose order the goods are, by the termsof the receipt, deliverable. Such indorsement may be in blank, to bearer or to a specifiedperson. . . . Subsequent negotiation may be made in like manner.

SEC. 40. Who may negotiate a receipt.A negotiable receipt may be negotiated:

(a) By the owner thereof, or

(b) By any person to whom the possession or custody of the receipt has been entrusted bythe owner, if, by the terms of the receipt, the warehouseman undertakes to deliver thegoods to the order of the person to whom the possession or custody of the receipt hasbeen entrusted, orif at the time of such entrusting the receipt is in such form that it maybe negotiated by delivery.

The question as to the rights the defendant bank acquired over the aforesaid quedans afterindorsement and delivery to it by Ranft, we find in section 41 of the Warehouse Receipts Act(Act No. 2137):

SEC. 41.Rights of person to whom a receipt has been negotiated.A person to whom anegotiable receipt has been duly negotiated acquires thereby:

(a) Such title to the goods as the person negotiating the receipt to him had or had abilityto convey to a purchaser in good faith for value, and also such title to the goods as thedepositor of person to whose order the goods were to be delivered by the terms of the

receipt had or had ability to convey to a purchaser in good faith for value, and. . . .

In the case of the Commercial National Bank of New Orleans vs. Canal-Louisiana Bank & TrustCo. (239 U.S., 520), Chief Justice Hughes said in regard to negotiation of receipts:

It will be observed that "one who takes by trespass or a finder is not included within thedescription of those who may negotiate." (Report of Commissioner on Uniform StatesLaws, January 1, 1910, p. 204.) Aside from this, the intention is plain to facilitate the useof warehouse receipts as documents of title. Under sec. 40, the person who may negotiate

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the receipt is either the "owner thereof", or a "person to whom the possession or custodyof the receipt has been intrusted by the owner" if the receipt is in the form described. Thewarehouse receipt represents the goods, but the intrustion of the receipt, as stated, is morethan the mere delivery of the goods; it is a representation that the one to whom thepossession of the receipt has been so intrusted has the title to the goods. By sec. 47, the

negotiation of the receipt to a purchaser for value without notice is not impaired by thefact that it is a breach of duty, or that the owner of the receipt was induced "by fraud,mistake, or duree" to intrust the receipt to the person who negotiated it. And, under sec.41, one to whom the negotiable receipt has been duly negotiated acquires such title to thegoods as the person negotiating the receipt to him, or the depositor or person whose orderthe goods were delivered by the terms of the receipt, either had or "had ability to conveyto a purchaser in good faith for value." The clear import of these provisions is that if theowner of the goods permit another to have the possession or custody of negotiablewarehouse receipts running to the order of the latter, or to bearer, it is a representation oftitle upon which bona fidepurchasers for value are entitled to rely, despite breaches oftrust or violations of agreement on the part of the apparent owner.

In its second assignment of error, the defendant-appellant maintains that the plaintiff-appellee isestopped to deny that the bank had a valid title to the quedans for the reason that the plaintiff hadvoluntarily clothed Ranft with all the attributes of ownership and upon which the defendant bankrelied. In our opinion, the appellant's view is correct. In the National Safe Deposit vs. Hibbs (229U.S., 391), certain certificates of stock were pledged as collateral by the defendant in error to theplaintiff bank, which certificates were converted by one of the trusted employees of the bank tohis own use and sold by him. The stock certificates were unqualified endorsed in blank by thedefendant when delivered to the bank. The Supreme Court of the United States through JusticeDay applied the familiar rule of equitable estoppel that where one of two innocent persons mustsuffer a loss he who by his conduct made the loss possible must bear it, using the followinglanguage:

We think this case correctly states the principle, and, applied to the case in hand, isdecisive of it. Here one of two innocent person must suffer and the question at last is,Where shall the loss fall? It is undeniable that the broker obtained the stock certificates,containing all the indicia of ownership and possible of ready transfer, from one who hadpossession with the bank's consent, and who brought the certificates to him, apparentlyclothed with the full ownership thereof by all the tests usually applied by business men togain knowledge upon the subject before making a purchase of such property. On theother hand, the bank, for a legitimate purpose, with confidence in one of its ownemployees, instrusted the certificates to him, with every evidence of title andtransferability upon them. The bank's trusted agent, in gross breach of his duty, whetherwith technical criminality or not is unimportant, took such certificates, thus authenticatedwith evidence of title, to one who, in the ordinary course of business, sold them to partieswho paid full value for them. In such case we think the principles which underlieequitable estoppel place the loss upon him whose misplaced confidence has made thewrong possible. . . .

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We regret that the plaintiff in this case has suffered the loss of the quedans, but as far as we cansee, there is now no remedy available to the plaintiff. The bank is not responsible for the loss; thenegotiable quedans were duly negotiated to the bank and as far as the record shows, there hasbeen no fraud on the part of the defendant.

The appealed judgment is reversed and the appellant is absolved from the plaintiff's complaint.Without costs. So ordered.

Johnson, Street, Malcolm, Villamor, Villa-Real and Imperial, JJ., concur.

Separate Opinions

ROMUALDEZ, J., dissenting:

With due respect for the majority opinion, I dissent and vote for the confirmation of the appealedjudgment.

Republic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-17825 June 26, 1922

In the matter of the Involuntary insolvency of U. DE POLI.

FELISA ROMAN, claimant-appellee,vs.ASIA BANKING CORPORATION, claimant-appellant.

Wolfson, Wolfson and Schwarzkopf and Gibbs, McDonough & Johnson for appellant.

Antonio V. Herrero for appellee.

OSTRAND, J.:

This is an appeal from an order entered by the Court of First Instance of Manila in civil No.19240, the insolvency of Umberto de Poli, and declaring the lien claimed by the appellee Felisa

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Roman upon a lot of leaf tobacco, consisting of 576 bales, and found in the possession of saidinsolvent, superior to that claimed by the appellant, the Asia Banking Corporation.

The order appealed from is based upon the following stipulation of facts:

It is hereby stipulated and agreed by and between Felisa Roman and Asia BankingCorporation, and on their behalf by their undersigned attorneys, that their respectiverights, in relation to the 576 bultos of tobacco mentioned in the order of this court datedApril 25, 1921, be, and hereby are, submitted to the court for decision upon thefollowing:

I. Felisa Roman claims the 576 bultos of tobacco under and by virtue of the instrument, acopy of which is hereto attached and made a part hereof and marked Exhibit A.

II. That on November 25, 1920, said Felisa Roman notified the said Asia BankingCorporation of her contention, a copy of which notification is hereto attached and made a

part hereof and marked Exhibit B.

III. That on November 29, 1920, said Asia Banking Corporation replied as per copyhereto attached and marked Exhibit C.

IV. That at the time the above entitled insolvency proceedings were filed the 576 bultosof tobacco were in possession of U. de Poli and now are in possession of the assignee.

V. That on November 18, 1920, U. de Poli, for value received, issued a quedan, coveringaforesaid 576 bultos of tobacco, to the Asia Banking Corporation as per copy of quedanattached and marked Exhibit D.

VI. That aforesaid 576 bultos of tobacco are part and parcel of the 2,777 bultos purchasedby U. de Poli from Felisa Roman.

VII. The parties further stipulate and agree that any further evidence that either of theparties desire to submit shall be taken into consideration together with this stipulation.

Manila, P. I., April 28, 1921.

(Sgd.) ANTONIO V. HERREROAttorney for Felisa Roman

(Sgd.) WOLFSON, WOLFSON & SCHWARZKOPFAttorney for Asia Banking Corp.

Exhibit A referred to in the foregoing stipulation reads:

1. Que la primera parte es duea de unos dos mil quinientos a tres mil quintales detacabo de distintas clases, producidos en los municipios de San Isidro, Kabiaw y Gapan

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adquiridos por compra con dinero perteneciente a sus bienes parafernales, de los cuales esella administradora.

2. Que ha convenido la venta de dichos dos mil quinientos a tres mil quintales de tabacomencionada con la Segunda Parte, cuya compraventa se regira por las condiciones

siguientes:

(a) La Primera Parte remitira a la Segunda debidamente enfardado el tabaco de que ellaes propietaria en bultos no menores de cincuenta kilos, siendo de cuenta de dicha PrimeraParte todos los gastos que origine dicha mercancja hasta la estacion de ferrocarril deTutuban, en cuyo lugar se hara cargo la Segunda y desde cuyo instante seran de cuenta deesta los riesgos de la mercancia.

(b) El precio en que la Primera Parte vende a la Segunda el tabaco mencionada es el deveintiseis pesos (P26), moneda filipina, por quintal, pagaderos en la forma que despues seestablece.

(c) La Segunda Parte sera la consignataria del tabaco en esta Ciudad de Manila quien sehara cargo de el cuando reciba la factura de embarque y la guia de Rentas Internas,trasladandolo a su bodega quedando en la misma en calidad de deposito hasta la fecha enque dicha Segunda Parte pague el precio del mismo, siendo de cuenta de dicha SegundaParte el pago de almacenaje y seguro.

(d) LLegada la ultima expedicion del tabaco, se procedera a pesar el mismo conintervencion de la Primera Parte o de un agente de ella, y conocido el numero total dequintales remitidos, se hara liquidacion del precio a cuenta del cual se pagaran quince milpesos (P15,000), y el resto se dividira en cuatro pagares vencederos cada uno de ellos

treinta dias despues del anterior pago; esto es, el primer pagare vencera a los treinta diasde la fecha en que se hayan pagado los quince mil pesos, el segundo a igual tiempo delanterior pago, y asi sucesivamente; conviniendose que el capital debido como precio deltabaco devengara un interes del diez por ciento anual.

Los plazos concedidos al comprador para el pago del precio quedan sujetos a la condicionresolutoria de que si antes del vencimiento de cualquier plazo, el comprador vendieseparte del tabaco en proporcion al importe de cualquiera de los pagares que restasen porvencer, o caso de que vendiese, pues se conviene para este caso que desde el momento enque la Segunda Parte venda el tabaco, el deposito del mismo, como garantia del pago delprecio, queda cancelado y simultaneamente es exigible el importe de la parte por pagar.

Leido este documento por los otorgantes y encontrandolo conforme con lo por ellosconvenido, lo firman la Primera Parte en el lugar de su residencia, San Isidro de NuevaEcija, y la Segunda en esta Ciudad de Manila, en las fechas que respectivamente al pie deeste documento aparecen.

(Fdos.) FELISA ROMAN VDA. DE MORENOU. DE POLI

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Firmado en presencia de:

(Fdos.) ANTONIO V. HERREROT. BARRETTO

("Acknowledged before Notary")

Exhibit D is a warehouse receipt issued by the warehouse of U. de Poli for 576 bales of tobacco.The first paragraph of the receipt reads as follows:

Quedan depositados en estos almacenes por orden del Sr. U. de Poli la cantidad dequinientos setenta y seis fardos de tabaco en rama segun marcas detalladas al margen, ycon arreglo a las condiciones siguientes:

In the left margin of the face of the receipts, U. de Poli certifies that he is the sole owner of themerchandise therein described. The receipt is endorced in blank "Umberto de Poli;" it is not

marked "non-negotiable" or "not negotiable."

Exhibit B and C referred to in the stipulation are not material to the issues and do not appear inthe printed record.

Though Exhibit A in its paragraph (c) states that the tobacco should remain in the warehouse ofU. de Poli as a deposit until the price was paid, it appears clearly from the language of the exhibitas a whole that it evidences a contract of sale and the recitals in order of the Court of FirstInstance, dated January 18, 1921, which form part of the printed record, show that De Polireceived from Felisa Roman, under this contract, 2,777 bales of tobacco of the total value ofP78,815.69, of which he paid P15,000 in cash and executed four notes of P15,953.92 each for the

balance. The sale having been thus consummated, the only lien upon the tobacco which FelisaRoman can claim is a vendor's lien.

The order appealed from is based upon the theory that the tobacco was transferred to the AsiaBanking Corporation as security for a loan and that as the transfer neither fulfilled therequirements of the Civil Code for a pledge nor constituted a chattel mortgage under Act No.1508, the vendor's lien of Felisa Roman should be accorded preference over it.

It is quite evident that the court below failed to take into consideration the provisions of section49 of Act No. 2137 which reads:

Where a negotiable receipts has been issued for goods, no seller's lien or right ofstoppage in transitu shall defeat the rights of any purchaser for value in good faith towhom such receipt has been negotiated, whether such negotiation be prior or subsequentto the notification to the warehouseman who issued such receipt of the seller's claim to alien or right of stoppage in transitu. Nor shall the warehouseman be obliged to deliver orjustified in delivering the goods to an unpaid seller unless the receipt is first surrenderedfor cancellation.

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The term "purchaser" as used in the section quoted, includes mortgagee and pledgee. (Seesection 58 (a) of the same Act.)

In view of the foregoing provisions, there can be no doubt whatever that if the warehouse receiptin question is negotiable, the vendor's lien of Felisa Roman cannot prevail against the rights of

the Asia Banking Corporation as the indorse of the receipt. The only question of importance tobe determined in this case is, therefore, whether the receipt before us is negotiable.

The matter is not entirely free from doubt. The receipt is not perfect: It recites that themerchandise is deposited in the warehouse "por orden" instead of "a la orden" or "sujeto a laorden" of the depositor and it contain no other direct statement showing whether the goodsreceived are to be delivered to the bearer, to a specified person, or to a specified person or hisorder.

We think, however, that it must be considered a negotiable receipt. A warehouse receipt, like anyother document, must be interpreted according to its evident intent (Civil Code, arts. 1281 et

seq.) and it is quite obvious that the deposit evidenced by the receipt in this case was intended tobe made subject to the order of the depositor and therefore negotiable. That the words "pororden" are used instead of "a la orden" is very evidently merely a clerical or grammatical error. Ifany intelligent meaning is to be attacked to the phrase "Quedan depositados en estos almacenespor orden del Sr. U. de Poli" it must be held to mean "Quedan depositados en estos almacenes ala orden del Sr. U. de Poli." The phrase must be construed to mean that U. de Poli was the personauthorized to endorse and deliver the receipts; any other interpretation would mean that no onehad such power and the clause, as well as the entire receipts, would be rendered nugatory.

Moreover, the endorsement in blank of the receipt in controversy together with its delivery by U.de Poli to the appellant bank took place on the very of the issuance of the warehouse receipt,

thereby immediately demonstrating the intention of U. de Poli and of the appellant bank, by theemployment of the phrase "por orden del Sr. U. de Poli" to make the receipt negotiable andsubject to the very transfer which he then and there made by such endorsement in blank anddelivery of the receipt to the blank.

As hereinbefore stated, the receipt was not marked "non-negotiable." Under modern statutes thenegotiability of warehouse receipts has been enlarged, the statutes having the effect of makingsuch receipts negotiable unless marked "non-negotiable." (27 R. C. L., 967 and cases cited.)

Section 7 of the Uniform Warehouse Receipts Act, says:

A non-negotiable receipt shall have plainly placed upon its face by the warehousemanissuing it 'non-negotiable,' or 'not negotiable.' In case of the warehouseman's failure so todo, a holder of the receipt who purchased it for value supposing it to be negotiable may,at his option, treat such receipt as imposing upon the warehouseman the same liabilitieshe would have incurred had the receipt been negotiable.

This section shall not apply, however, to letters, memoranda, or writtenacknowledgments of an informal character.

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This section appears to give any warehouse receipt not marked "non-negotiable" or "notnegotiable" practically the same effect as a receipt which, by its terms, is negotiable provided theholder of such unmarked receipt acquired it for value supposing it to be negotiable,circumstances which admittedly exist in the present case.

We therefore hold that the warehouse receipts in controversy was negotiable and that the rightsof the endorsee thereof, the appellant, are superior to the vendor's lien of the appellee and shouldbe given preference over the latter.

The order appealed from is therefore reversed without costs. So ordered.

Araullo, C.J., Malcolm, Avancea, Villamor, Johns and Romualdez, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 90888 September 13, 1990

FRUCTUOSO R. CAPCO, petitioner,vs.MANUEL R. MACASAET, JACOBO FELICIANO, and HONORABLE COURT OFAPPEALS, respondents.

Florentino I. Capco for petitioner.

Pacifico Sotelo for M.R. Macasaet.

Edilberto Barot, Jr. for J. Feliciano.

GUTIERREZ,JR., J.:

The petitioner submits to us for review the propriety of the Court of Appeals'disregarding the findings of fact and the award of damages made by the trial court.

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This petition is an offshoot of an action for damages filed by the petitioner against theprivate respondents docketed as Civil Case No. 24105 and decided by the RegionalTrial Court, National Capital Judicial Region, Branch 151 of Pasig, Metro Manila whichruled as follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendantManuel Macasaet, sentencing the latter to pay the former, the following sums:

a) Three Hundred Two Thousand Six Hundred Fifty-Eight Pesos and Twenty Centavos(P302,658.20) for and as actual damages;

b) One Hundred Thousand Pesos (P100,000.00) for and as moral damages;

c) Fifty Thousand Pesos (P50,000.00) for and as exemplary damages; and

d) Fifty Thousand Pesos (P50,000.00) for and as attorney's fees and litigation expenses.

The complaint and defendant Macasaet's cross claim against defendant Jacobo Feliciano

are dismissed.

Defendants Manuel Macasaet's and Jacobo Feliciano's counterclaims are likewisedismissed.

Costs against defendant Manuel Macasaet. (Rollo, pp. 55-56)

The petitioner was a stockholder of record, director and executive vice-president ofMonte Oro Mineral Resources, Inc. (Monte Oro for brevity'sake), a local miningcompany whose shares were traded in the stock market. He owned 56,588,358 sharesof the capital stock of Monte Oro with par value of P0.01 per share or a total par value

of P565,883.58 as evidenced by Stock Certificate No. 002 (Exhibit "A") for 14,159,583shares and Stock Certificate No. 026 (Exhibit "B") for 42,428,775 shares.

On February 18, 1976, the petitioner indorsed and delivered Stock Certificates Nos. 002and 026 to private respondent Manuel Macasaet, board chairman and President ofMonte Oro, who personally received the said certificate in the following tenor:

ACKNOWLEDGMENT RECEIPT

I hereby certify that I have personally received from Mr. Fructuoso R. Capco the followingMonte Oro Certificates in trust and for safe keeping only to be delivered and/orsurrendered to him and/or his heirs or duly authorized representative on demand. (Exhibit

"C")

Cert. No. Amount Date Remarks

002 14,159,583 12/04/74 'Already Indorsed'

026 42,428,775 04/16/75 'Already Indorsed'________

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Total 56,588,358

Received as stated:

[Sgd) MANUEL R.MACASAET'

(Exhibit "C")

On April 26,1976, the petitioner demanded the return of his stock certificates fromrespondent Macasaet who failed to produce them because he had given them to theother private respondent Jacobo Feliciano, another officer of Monte Oro, allegedly inconnection with a contemplated joint venture with the group of one Leonilo Esguerra.

On April 28, 1976, respondent Macasaet replaced the petitioner's Stock Certificate No.026 with his own Stock Certificate No. 025 covering 42,578,700 shares. The petitionerduly acknowledged the receipt of the said replacement (Exhibit "3").

On May 4, 1976, Stock Certificate No. 002 was returned by respondent Macasaet to thepetitioner as evidenced by the handwritten receipt signed by the latter (Exhibit "2") wholikewise made a handwritten notation stating "all cleared" at the left hand marginthereof.

On August 12, 1976, the petitioner filed a complaint for damages against the privaterespondents alleging, among others, that at the time he demanded his Stock CertificateNos. 002 and 026 totalling 56,588,358 shares from respondent Macasaet the petitionerhad a ready buyer for 0.014 per share for all shares; that due to the private respondents'failure to return the said stock certificates upon demand, the petitioner lost P306,115.25

representing the difference between the amount of P792,237.01 which he would haverealized had his stock certificates been promptly given back and the sum ofP486,121.76, the actual net proceeds from the subsequent sale of P42,550,000 sharesat various prices after respondent Macasaet delivered his own Stock Certificate No. 025in exchange for the petitioners Stock Certificate No. 026; that the aforesaid amount of P306,115.25 had long been overdue and unpaid and despite repeated demands from theprivate respondents for the payment thereof, the latter had failed and refused to pay thesame to the petitioner's damage and prejudice; and that due to the private respondents'intentional, deliberate and malicious acts, moral and exemplary damages could beawarded to the petitioner.

Respondent Macasaet counter-alleged, among others, that he had in turn entrustedStock Certificate Nos. 002 and 026 of the petitioner to his co-defendant, respondentFeliciano to be shown to a certain group for the purpose of a joint venture; thatrespondent Macasaet had actually made several demands for the return of the saidstock certificates from respondent Feliciano who refused and failed to do so; that twodays after the petitioner made the demand, respondent Macasaet replaced thepetitioner's Stock Certificate No. 026 with his own Stock Certificate No. 025 whichcovered 149,925 shares more than those of the petitioner's Stock Certificate No. 026;

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that the respondent Macasaet returned the petitioner's Stock Certificate No. 002 on May4, 1976 after he recovered the game from respondent Feliciano; and that the words"ALL CLEARED" written by the petitioner himself on his acknowledgment receipt as hereceived Stock Certificate No. 002 from respondent Macasaet undoubtedly meant todischarge private respondent Macasaet from any responsibility or liability regarding the

petitioner's stock certificates.

On August 8, 1983, the lower court rendered a judgment favorable to the petitioner. Italso dismissed the complaint and respondent Macasaet's cross-claim againstrespondent Feliciano and likewise dismissed private respondents' counter-claimsagainst the petitioner.

On appeal by respondent Macasaet, the Court of Appeals on June 19, 1989, reversedand set aside the trial court's judgment for lack of merit and supporting proof. Thepetitioner's complaint as well as the cross-claims and counter-claims of privaterespondents were all dismissed.

After the petitioner's subsequent motion for reconsideration was denied on October 23,1989, the present petition was filed assigning as errors, to wit:

I

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BLINDLY SUPPORTINGTHE FIRST AND SECOND THEORY OF PRIVATE RESPONDENT THAT THEWRITTEN ANNOTATION OF 'ALL CLEARED IN STOCK CERTIFICATE NO. 002NECESSARILY INCLUDED ANOTHER SEPARATE AND DIFFERENT STOCKCERTIFICATE NO. 026 AND ASSUMING THERETO 'PAYMENT' OF LIABILITY OFPRIVATE RESPONDENT TO PETITIONER.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN CLEARING PRIVATERESPONDENT OF RESPONSIBILITIES BY DISREGARDING OR ABROGATING AVOLUNTARY CONTRACT OF TRUST, (ACKNOWLEDGMENT RECEIPT, DATEDFEBRUARY 18,1976, ANNEX "C" PLAINTIFF'S COMPLAINT; EXH. "C"-PLAINTIFF)ALSO ON MERE ASSUMPTIONTHAT THE ENDORSEMENT ON THE SUBJECTSTOCK CERTIFICATES CONSTITUTE FULL AUTHORITY TO PRIVATERESPONDENT TO DELIVER, CONVEY AND SELL THE SAME.

III

THE HONORABLE COURT OF APPEALS LIKEWISE COMMITTED GROSS ERROR INCLEARING THE PRIVATE RESPONDENT OF LIABILITY FOR ALL DAMAGESALREADY SUFFERED AND INCURRED BY PETITIONER.

IV

THE HONORABLE COURT OF APPEALS ALSO COMMITTED GRAVE ERROR BYCONCLUDING LACK OF EVIDENCE TO SUPPORT CLAIM OF DAMAGES AND

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DISREGARDING THE FACTS AND EVIDENCE DULY ADMITTED AND PROVEN AT AFORMAL TRIAL IN THE LOWER COURT." (Petition, pp. 5-6, Rollo, pp. 16-17)

The petitioner's main argument rests on the oft-repeated pronouncement that theconclusions and findings of fact by the trial court are entitled to great weight on appealand should not be disturbed unless for strong and cogent reasons because the trialcourt is in a better position to examine real evidence as well as observe the demeanorof the witnesses while testifying citing the case ofChase v. Buencamino (136 SCRA605 [1985]). The petitioner faults the respondent court for side-stepping the literalinterpretation of the Acknowledgment Receipt dated February 18, 1972 signed by therespondent Macasaet which allegedly serves as a clear proof that Stock Certificate Nos.002 and 026 were held by the latter in trust and for safekeeping only. The petitionerfurther labels as capricious the respondent court's act of completely ignoring all theestablished evidence, both documentary and testimonial, duly admitted and consideredby the trial court.

The rule that the trial court's findings of facts are accorded due respect on appeal is not

without exceptions. It is not applicable where there are strong and cogent reasons aswhen the trial court's findings are not supported by the evidence or when the trial courtfailed to consider material facts which would have led to a conclusion different fromwhat was stated in its judgment or when the trial court's decision was attended by graveabuse of discretion amounting to lack of jurisdiction. A review of the bases for the trialcourt's decision shows that the appellate court was justified in being skeptical as it wentover both the facts and the law.

The instant case was given due course to enable a more thorough presentation by theparties and review of the records considering the petitioner's stress on the disparitybetween the factual findings of the trial court which found respondent Macasaet liable

for actual, moral and exemplary damages and the respondent appellate court whichdischarged the said respondent from any liability regarding the petitioner's StockCertificate Nos. 002 and 026.

It is true that when the petitioner delivered Stock Certificate Nos. 002 and 026 torespondent Macasaet the latter acknowledged receiving them "in trust and forsafekeeping only." This acknowledgment, however, cannot outweigh the legal effects ofthe stock certificates having been "already indorsed". There is no dispute thatrespondent Macasaet received the petitioner's certificates in that condition as evidencedby the same Acknowledgment Receipt dated February 18, 1976.

Certificates of stocks are considered as "quasi-negotiable" instruments. When theowner or shareholder of these certificates signs the printed form of sale or assignmentat the back of every stock certificate without filling in the blanks provided for the name ofthe transferee as well as for the name of the attorney-in-fact, the said owner orshareholder, in effect, confers on another all the indicia of ownership of the said stockcertificates. (Campos and Lopez-Campos, Notes and Selected Cases on NegotiableInstruments Law, 1971 ed., p. 605). In the case at bar, the petitioner signed the printedform at the back of both Stock Certificate Nos. 002 and 026 without filling in the blanks

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at the time the said stock certificates were delivered to respondent Macasaet. Hence,the petitioner's acts of indorsement and delivery conferred on respondent Macasaet theright to hold them as though they were his own. On account of this apparent transfer ofownership, it was not irregular on the part of respondent Macasaet to deliver the stockcertificates in question to respondent Feliciano for consideration in connection with a

contemplated tie-up between two business groups.

At this juncture, it is worth noting that in view of the petitioner's concurrent positions asdirector, Executive Vice-President and General Manager of Monte Oro at the time of theincident under consideration, he could not have been unaware of the consequences ofthe delivery coupled with the indorsement of his two stock certificates to respondentMacasaet, notwithstanding the tenor of the Acknowledgment Receipt. Moreover, it ishard to believe that the petitioner's delivery of the subject stock certificates torespondent Macasaet was strictly for safe-keeping purposes only because if that werehis real and only intention, there is neither logic nor reason for the indorsement of thesaid certificates.

After a careful perusal and examination of the records of this case, we find no legalground that will constrain us to depart from the rule that the Court of Appeals' findings offact are deemed final, conclusive and binding on us if supported by substantialevidence. We reiterate our ruling in the case ofHermo v. Court of Appeals, (155 SCRA24 [1987]) that:

At once apparent is that the factual findings of the Court of Appeals are diametrically atodds with those of the Trial Court,.... And basic is the rule that the conclusions of fact of atrial court are entitled to great weight, and should not generally be disturbed on appeal,because it is in a better position than the appellate tribunal to examine the evidencedirectly, and to observe the demeanor of the witnesses while testifying. Withal, its

findings of fact, though entitled to great respect, are not conclusive on the Court ofAppeals. In the exercise of its appellate jurisdiction, the Court of Appeals may affirm,reverse, or modify the judgment or order appealed from, and may direct a new trial orfurther proceeding to be had. It is indeed the duty of that Court chiefly though notexclusively to review a Trial Court's findings of fact and correct such serious errorsaffecting them as may have been properly assigned and as may be established by areexamination of the recorded evidence.And it is the findings of fact of the Court ofAppeals, not those of the trial court that are as a rule deemed final, and conclusive evenon this Court. (Emphasis Supplied) (At p. 27)

We find no reversible error in the respondent Court's holding that the petitioner failed tosupport his claim that he suffered the claimed damages as a result of respondentMacasaet's failure to return Stock Certificate Nos. 002 and 026 upon demand. The

alleged "unrealized profits" representing actual and compensatory damages must besupported by substantial and convincing proof. The records are bereft of such kind ofproof. Mere allegation that there was a "ready and willing buyer' of all the petitionersshares covered by Stock Certificate Nos. 002 and 026 for P0.014 per share at the timethe demand for the return of the said certificates was made cannot suffice to allow thepetitioners claim for unrealized profits to prosper. Such claim is clearly speculative innature.

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Actual or compensatory damages are those recoverable because of pecuniary loss inbusiness, trade, property, profession, job or occupation, and the same must be proved;otherwise, if the proof is flimsy and non-substantial, no damages will be given (Danao v.Court of Appeal, 154 SCRA 447 [19871]; Rubio v. Court of Appeals, 141 SCRA 488[1986]; Perfecto v. Gonzales, 128 SCRA 635 [1984]). Actual and compensatory

damages require evidentiary proof. They cannot be presumed. (Dee Hua LiongElectrical Equipment Corporation v. Reyes, 145 SCRA 713 [1986])

The good faith of respondent Macasaet is shown by the fact that after trying to recoverthe missing certificates, he immediately substituted Stock Certificate No. 026 with hisown Stock Certificate No. 025 which covered more shares than the petitioner's replacedcertificate. The petitioner's other Stock Certificate No. 002 was subsequently returnedand received by the petitioner with the notation "All Cleared" on the acknowledgmentreceipt duly signed and personally written by him. We agree with the respondent court'sruling that the said notation meant to discharge respondent Macasaet' together with hisco-respondent Feliciano) from any liability with respect to the stock certificates in

question as there can be no other plausible interpretation therefor. He would not havewritten "all cleared" if he was unhappy at that time about the substitution of the highervalue certificate for his other certificate.

In fine, considering that in the absence of malice and bad faith, moral damages cannotbe awarded (Philippine National Bank v. Court of Appeals, 159 SCRA 433 [19881) andthat the grant of moral and exemplary damages has no basis if not predicated upon anyof the cases enumerated in the Civil Code (Bagumbayan Corporation v. Intermediate

Appellate Court, 132 SCRA 441 [19841), we hold that the respondent court properly setaside the award of actual, moral and exemplary damages given by the trial court infavor of the petitioner.

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED. Theassailed decision dated June 19, 1989 and the resolution dated October 23, 1989 of theCourt of Appeals are AFFIRMED.

SO ORDERED.

Bidin and Cortes, JJ., concur.

Fernan (Chairman), is on leave.

Separate Opinions

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FELICIANO, J ., concurring:

I concur in the result reached by Mr. Justice Hugo E. Gutierrez, Jr. I should merely liketo render a brief note in respect of his statement that: "it is hard to believe thatpetitioners' delivery of the subject stock certificates to respondent Macasaet was strictly

for safekeeping purposes only because if that were his real and only intention. there isneither logic nor reason for the indorsement of the said certificates.

Petitioner was very probably not unaware of the consequences of delivering stockcertificates which had been indorsed in blank. However, awareness of suchconsequences may precisely explain why the Acknowledgment Receipt executed byprivate respondent Macasaet specifically stated that he had received the stockcertificates in question "for safekeeping only to be deliveredand/or surrendered to him... on demand". In other words, there was here no unrestricted delivery of the stockcertificates. On the contrary, the delivery of the stock certificates to private respondentMacasaet was clearly a limited or qualified delivery, for a specified purpose only. If the

Acknowledgment Receipt had not been a restricted receipt, full authority or absoluteownership over the stock certificates would have been transferred to private respondentMacasaet. The restricted Acknowledgment Receipt thus had a qualifying andcountervailing effect upon the indorsement in blank of the stock certificates involved.

Although indorsed in blank, the stock certificates are notthen intended to be transferredto and cannotbe disposed of by petitioner-holder.

There are a number of possible reasons why petitioner should have wanted to indorsethe stock certificates in blank while delivering them to private respondent under arestricted receipt: for one thing, the petitioner could go out of town or out of the countryon business or otherwise; during his trip, he would be in a position to instruct private

respondent to sell the shares already indorsed in blank when it might be profitable orconvenient to do so without need of executing and sending back a special power ofattorney, by the simple expedient of lifting the restriction found in the AcknowledgmentReceipt. Indorsement in blank of stock certificates facilitates the ready transferability ofthe stock certificates; at the same time, the restricted Acknowledgment Receipteffectively constituted private respondent a bailee or trustee vis-a-vis petitioner. Thearrangement may be seen to have both a judiciary quality and a certain flexibility, acombination of substantial utility in the trading of corporate securities.

Separate Opinions

FELICIANO, J ., concurring:

I concur in the result reached by Mr. Justice Hugo E. Gutierrez, Jr. I should merely liketo render a brief note in respect of his statement that: "it is hard to believe thatpetitioners' delivery of the subject stock certificates to respondent Macasaet was strictly

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for safekeeping purposes only because if that were his real and only intention. there isneither logic nor reason for the indorsement of the said certificates.

Petitioner was very probably not unaware of the consequences of delivering stockcertificates which had been indorsed in blank. However, awareness of such

consequences may precisely explain why the Acknowledgment Receipt executed byprivate respondent Macasaet specifically stated that he had received the stockcertificates in question "for safekeeping only to be deliveredand/or surrendered to him... on demand". In other words, there was here no unrestricted delivery of the stockcertificates. On the contrary, the delivery of the stock certificates to private respondentMacasaet was clearly a limited or qualified delivery, for a specified purpose only. If the

Acknowledgment Receipt had not been a restricted receipt, full authority or absoluteownership over the stock certificates would have been transferred to private respondentMacasaet. The restricted Acknowledgment Receipt thus had a qualifying andcountervailing effect upon the indorsement in blank of the stock certificates involved.

Although indorsed in blank, the stock certificates are notthen intended to be transferred

to and cannotbe disposed of by petitioner-holder.

There are a number of possible reasons why petitioner should have wanted to indorsethe stock certificates in blank while delivering them to private respondent under arestricted receipt: for one thing, the petitioner could go out of town or out of the countryon business or otherwise; during his trip, he would be in a position to instruct privaterespondent to sell the shares already indorsed in blank when it might be profitable orconvenient to do so without need of executing and sending back a special power ofattorney, by the simple expedient of lifting the restriction found in the AcknowledgmentReceipt. Indorsement in blank of stock certificates facilitates the ready transferability ofthe stock certificates; at the same time, the restricted Acknowledgment Receipt

effectively constituted private respondent a bailee or trustee vis-a-vis petitioner. Thearrangement may be seen to have both a judiciary quality and a certain flexibility, acombination of substantial utility in the trading of corporate securities.

The Lawphil Project - Arellano Law Foun

Republic of the Philippines

SUPREME COURTManila

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EN BANC

G.R. No. L-4818 February 28, 1955

APOLINARIO G. DE LOS SANTOS and ISABELO ASTRAQUILLO, plaintiffs-appellees,

vs.J. HOWARD MCGRATH ATTORNEY GENERAL OF THE UNITED STATES,SUCCESSOR TO THE PHILIPPINE ALIEN PROPERTY ADMINISTRATION OF THE

UNITED STATES, defendant-appellant.REPUBLIC OF THE PHILIPPINES, intervenor-appellant.

Jose P. Laurel, Adolfo A. Scheerer, Antonio Quirino, and J. C. Orendain, for appellees.Harold I. Baynton, Stanley Gilbert, Juan T. Santos, and Lino M. Patajo, and Perkins, Ponce

Enrile & Associates, for appellant.

Office of the Solicitor General Pompeyo Diaz and Solicitor Pacifico P. de Castro for intervenor-

appellant.

CONCEPCION, J.:

This action involves the title to 1,600,000 shares of stock of the Lepanto Consolidated MiningCo., Inc., a corporation duly organized and existing under the laws of the Philippines, hereinafterreferred to, for the sake of brevity, as the Lepanto. Originally, one-half of said shares of stockwere claimed by plaintiff, Apolinario de los Santos, and the other half, by his co-plaintiff IsabeloAstraquillo. During the pendency of this case, the latter has allegedly conveyed and assigned hisinterest in and to said half claimed by him to the former. The shares of stock in question arecovered by several stock certificates issued in favor of Vicente Madrigal, who is registered in thebooks of the Lepanto as owner of said stocks and whose indorsement in blank appears on the

back of said certificates, all of which, except certificates No. 2279

marked Exhibit 2

covering 55,000 shares, are in plaintiffs' possession. So was said Exhibit 2, up to sometime in1945 or 1946 when said possession was lost under the conditions set forth in subsequent pages.

Briefly stated, plaintiffs contend that De los Santos bought 55,000 shares from Juan Campos, inManila, early in December, 1942; that he bought 300,000 shares from Carl Hess, in the samecity, several days later; and that, before Christmas of 1942, be bought 800,000 shares from CarlHess, this time for the account and benefit of Astraquillo. By virtue of vesting P-12, datedFebruary 18, 1945, title to the 1,600,000 shares of stock in dispute was, however, vested in theAlien Property Custodian of the U. S. (hereinafter referred to as the Property Custodian) asJapanese property. Hence, plaintiffs filed their respective claims with the Property Custodian. Indue course, the Vested Property Claims Committee of the Philippine Alien PropertyAdministration made a "determination," dated March 9, 1948, allowing said claims, which wereconsidered and heard jointly as Claim No. 535, but, upon personal review, the Philippine AlienProperty Administration made by said Committee and decreed that "title to the shares in questionshall remain in the name of the Philippine Alien Property Administrator." Consequently,plaintiffs instituted the present action to establish title to the aforementioned shares of stock. Intheir complaint, they pray that judgment be rendered declaring them lawful owners of said sharesof stock, with such dividends, profits and rights as may have accrued thereto; requiring the

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defendant to render accounts and to transfer said shares of stock to plaintiffs' names; andsentencing the former to pay the costs.

The defendant herein is the Attorney General of the U. S., successor to the "Administrator". Hecontends, substantially, that, prior to the outbreak of the war in the Pacific, said shares of stock

were bought by Vicente Madrigal, in trust for, and for the benefit of, the Mitsui Bussan Kaisha(hereinafter referred to as the "Mitsuis"), a corporation organized in accordance with the laws ofJapan, the true owner thereof, with branch office in the Philippines; that on or before March,1942, Madrigal delivered the corresponding stock certificates, with his blank indorsementthereon, to the Mitsuis, which kept said certificates, in the files of its office in Manila, until theliberation of the latter by the American forces early in 1945; that the Mitsuis had never sold, orotherwise disposed of, said shares of stock; and that the stock certificates aforementioned musthave been stolen or looted, therefore, during the emergency resulting from said liberation.

Inasmuch as, pursuant to the Philippine Property Act, all property vested in the United States, orany of its officials, under the Trading with the Enemy Act, as amended, located in the

Philippines at the time of such vesting, or the proceeds thereof, shall be transferred to theRepublic of the Philippines, the latter sought permission, and was allowed, to intervene in thiscase and filed an answer adopting in substance the theory of the defendant.

After due hearing, the Court of First Instance of Manila, presided over by Honorable Higinio B.Macadaeg, Judge, rendered a decision the dispositive part of which reads, as follows:

In view of the foregoing consideration, judgment is hereby rendered in favor of theplaintiffs and against the defendant, declaring the former the absolute owners of theshares of stock of the Lepanto consolidated Mining Company, covered by the certificatesof stock, respectively, in their (plaintiffs') possession. The transfer of said shares of stock

in favor of the Alien Property Custodian of the U. S. of America, now Philippine AlienProperty Administration, is hereby declared null and void and of no effect. Consequently,the Lepanto consolidated mining Company is ordered to cancel the certificates of stockissued in the name of the Philippine Alien Property Custodian or Philippine AlienProperty Administrator, as the case may be. Defendant shall pay the cost of theproceeding. (p. 67, R.A.)

The defendant and the intervenor have appealed from this decision. The main question fordetermination in this appeal is whether or not plaintiffs had purchased the shares of stock inquestion. In support of the negative answer, appellants have introduced the testimony of VicenteMadrigal, Matsune Kitajima, Kingy Miwa, Miguel Simon, E. A. Perkins and Victor E. Lednicky,as well as several pieces of documentary evidence.

Mr. Madrigal, whose testimony before the claims Committee of the Philippine Alien PropertyAdministration was admitted with plaintiffs' consent, stated that he purchased the shares of stockin question, among others, for the Mitsuis and at their request; that he paid with his own fundsthe corresponding price, which was later reimbursed to him by the Mitsuis; that he held thecorresponding stock certificates, which were issued in his name, with the understanding that hewould effect the necessary transfer, to the Mitsuis, upon demand; and that, shortly before the

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outbreak of war, he delivered said stock certificates, with his blank endorsement thereon, to theMitsuis, to whom said stock belonged.

Matsune Kitajima declared that in June 1941 he relieved one Kobayashi, as manager of thebranch office of the Mitsuis in Manila; that he then receive from Kobayashi the stock certificates

for about 1,900,000 shares of the Lepanto, belonging to the Mitsuis, but issued in favor of theVicente Madrigal, except the certificates for 200,000 shares, which were in the name of theMitsuis; that all these certificates were in kept in a steel safe in said office of the Mitsuis; that, inJuly 1941, he returned the stock certificates to Madrigal, with the request that he buy for theMitsuis, from time to time, some more shares of stock, in small lots; that Madrigal bought200,000 additional shares of the Lepanto for the Mitsuis; that, late in November or early inDecember, 1941, the stock certificates of the aforementioned 2,100,000 shares were returned tothe Mitsuis, which had decided to stop buying, in view of the strained international situation thenprevailing; that, as branch manager of the Mitsuis, he was the only official authorized to disposeof the shares in question, none of which was alienated by him; and that he had theaforementioned stock certificates in his possession continuously until early in April 1943, when

he delivered the same to his successor in office, Kingy Miwa.

Apart from corroborating Kitajima's testimony relative to said delivery of stock certificates inApril 1943, Kingy Miwa testified that he kept the latter in his possession, as branch manager ofthe Mitsuis; that said shares of stock were never sold or otherwise disposed of by the Mitsuis;that, late in September 1944, he bade his assistant, one Miyazawa, to transfer all importantdocuments to their residence and headquarters, at Taft Avenue, Manila, although he did notknow personally whether or not the transfer was actually carried out; and that in January 1945,when the Japanese were about to evacuate Manila, he told his Assistant Manager, one Shinoda,to burn all important papers before leaving the city.

Miguel Simon, brother of Carl Hess, from whom plaintiffs claim to have purchased 1,100,000shares of stock, affirmed that Hess lived in front of his (Simon's) house; that they were close toeach other and had long been associated in business; that he was the office manager of "Hess andZeitling" before the war; that Hess used to tell him his daily transactions during the occupation;that at that time, Hess did not have in possession any certificates of stock of the Lepanto in thename of Vicente Madrigal; that neither did Hess, during that period, operate as broker, for beingAmerican, he was under Japanese surveillance, and that Hess had made, during the occupation,no transaction involving mining shares, except when he sold 12,000 shares of the BenguetConsolidated, inherited from his mother, sometime in 1943.

E. A. Perkins, a member of the law firm DeWitt, Perkins & Ponce Enrile testified substantially asfollows: On October 27, 1945, Leonardo Recio brought stock certificate no. 2279 (Exhibit 2) andoffered the same for sale to Clyde DeWitt, who in turn, asked Perkins, whose room adjoined thatof DeWitt, to join them. Recio showed Exhibit 2 to DeWitt stating that he (Recio) wanted P0.13per share. DeWitt handed Exhibit 2 over to Perkins, who, after examining the instrument,returned it to DeWitt. The latter, thereafter, checked it with a communication of the PropertyCustodian and then advised Recio that said Exhibit 2 was one of the stock certificates lootedfrom the Mitsuis and that he (DeWitt) would have to report the matter to said official. AsDeWitt, thereupon, telephoned one Mr. Erickson, of the Property Custodian's office, Recio

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stepped out of the room without Exhibit 2, which neither he or plaintiffs had ever tried torecover.

Victor E. Lednicky, one of the organizers and prewar directors of the Lepanto, and present vice-president and member of its board of director, asserted that, having learned from a soldier of the

existence of mining papers and securities of the Lepanto in the offices of the Mitsuis at the AyalaBuilding, formerly known as the National city Bank Building in Manila, he went thereto inFebruary 1945 and saw many documents scattered on the desks and floor of said premises.Among said papers, he noticed two stock certificates of the Lepanto, one, in the name of either aJapanese or Chinese, and the other, in the name of Vicente Madrigal, endorsed in blank. Soon,however, he heard voices from the stairs, whereupon he departed hurriedly, for fear of beingmistaken for a looter.

After analyzing the foregoing evidence for the defense, the lower court found the same"inherently improbable" and seemingly concluded that, as a consequence, it should acceptplaintiffs' version, for which reason judgment was rendered as above stated. It is well settled, in

this jurisdiction, that the findings of fact

particularly those relating to the credibility of theopposing witnessesmade by the Judge a quo, should not be disturbed on appeal, in theabsence of strong and cogent reasons therefor. This policy is predicated upon the circumstancethat the trial court has had an opportunity, denied to the appellate court to observe the behaviourof the witnesses during the hearing, a potent factor in gauging their bias and veracity. In the caseat bar, however, we notice that, rejecting the theory of the defense, the court of origin wasguided, not by the conduct of the witnesses in the name course of their testimony, but by whatHis Honor, the trial Judge, regarded as the inherent weakness thereof, in the evaluation of whichcourt does not enjoy the advantage already adverted to.

Moreover, the decision appealed from appears to have assumed that plaintiffs' pretense must

necessarily be relied upon, owing to the infirmities said to have been found in the theory of thedefense. This view suffers from a fatal defect. It overlooks that fact that the burden of proof isupon the plaintiffs, and that, accordingly, a decision in their favor is not in order unless apreponderance of the evidence supports their claim. To put it differently, the allegedimprobabilities in the testimony of the witnesses for the defense will not justify a judgmentagainst the latter, if the evidence for the plaintiffs is more improbable than, or, at least, asimprobable as, that of the defense. Such is the situation obtaining in the case at bar. Indeed, uponcareful examination of the record before us, we find it impossible to share the conclusions, madein the decision appealed from, relative to the alleged flaws in the version of the defense.

Let us, first, examine the evidence for the plaintiffs, consisting, mainly, of their own testimonyand that of Primitivo Javier and Leonardo Recio.

According to De los Santos, on or about December 8, 1942, he purchased from Juan Campos, inManila, 500,000 shares of stock of the Lepanto, for the aggregate sum of P30,000.00, or aboutP0.06 each share, paid in cash, in exchange for the corresponding stock certificates, which weredelivered to him. Several days later, he bought from Carl Hess, in Manila, 300,000 shares of theLepanto, at the same rate. Soon after, he visited his daughter in Baguio, where he, likewise, sawhis co-plaintiff, and former secretary, Isabelo Astraquillo. Before leaving Astraquillo's house, De

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los Santos happened to mention his aforesaid purchases of Lepanto shares, at P0.06 each,whereupon, Astraquillo expressed the wish to buy 800,000 shares at the same price, the amountof which he delivered to De los Santos the next day. Upon his return to Manila, De los Santospurchased from Hess said 800,000 shares, the certificates of which were turned over by theformer to Astraquillo, in Baguio, at about Christmas time. Over 3 years later, or in January 1946,

De los Santos repaired to the offices of the Lepanto in Manila to ascertain whether it acceptedcertificates of stock for registration. He then received a negative answer. Upon further inquiry,he learned, in February 1946, that the shares in the name of Madrigal were blocked. So engagedthe services of Atty. A. Scheerer, who secured an order of release from the Freezing ControlOffice of the United States Treasury Department. As he brought a copy of this order to theoffices of the Lepanto, on or about May 1, 1946, he was advised that no transfer could beaffected without the authority of Clyde DeWitt, the company president. Thereupon, De losSantos caused to be filed, with the offices of the Property Custodian, the corresponding claim forthe shares of stock in question, with the result already adverted to.

Astraquillo tried to corroborate the testimony of De los Santos, concerning the purchase of

800,000 shares of stock on behalf of the former. Moreover, Astraquillo declared that, being inneed of money, he came to Manila in November or December 1945, and delivered to stockbroker Leonardo Recio stock certificate No. 2279 (Exhibit 2) for 55,000 shares, with a view todisposing of the same at a price ranging from P0.13 to P0.15 each. He advised Recio that, in theabsence of any buyer, hew could see Mr. DeWitt, who, probably, would be interested inpurchasing the shares. Sometime later, Astraquillo learned that, according to Recio, upon seeingExhibit 2, DeWitt retained it upon the ground that the shares represented therein had beenblocked by the United States and that he (Recio) got therefor a receipt, which wassubsequently lost in a fire that destroyed his (Recio's) dwelling. As Astraquillo hurried toManila, he was told that representatives of the CIC would go to Baguio to investigate. So, hereturned to Baguio, but he did not wait for the investigation in that city. Late in February or earlyin March, 1946, he came back to Manila and asked the assistance of De los Santos, whereuponboth contacted Atty. Scheerer for the purpose already stated.

Primitivo Javier narrated that, late in 1945, he received Exhibit 2 from his uncle, Astraquillo,who wanted to sell the 55,000 shares represented by said stock certificate (No. 2279) at a priceranging from P0.12 to P0.15 each share. He, in turn, delivered the certificate to Recio, a licensedbroker. Subsequently, Recio reported to him that he (Recio) had brought Exhibit 2 to the officeof Mr. DeWitt, whom he did not see on his first visit; that he then left Exhibit 2 in the hands of aperson who worked in said office, one Atty. Orlina, who issued a receipt therefor; that, whenRecio came back, later on, DeWitt told him that Exhibit 2 was defective; and that, accordingly,Exhibit 2 was left in the possession of Mr. DeWitt. Javier relayed this information to Astraquillo,who, thereupon, came to Manila. Both went to the temporary residence of Recio in Sampaloc,his house in San Juan del Monte, Rizal, having been destroyed by fire late in December 1945.Recio then advised them that said receipt had been burned with his house.

Leonardo Recio said that sometime in 1945, Javier gave him Exhibit 2, stating that it belonged tohis uncle, who wanted to alienate the corresponding shares of stock at P0.15, more or less, each,and suggesting that he offer the same to Mr. DeWitt: In the latter's office, Atty. Orlina told Reciothat DeWitt was busy and bade him (Recio) to return later. Recio delivered Exhibit 2 to Orlina,

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who gave him a receipt, which, subsequently, he showed to Javier. When, soon after, he wentback to Orlina, the latter introduced him to Mr. DeWitt, who stated that the shares of stockcovered by Exhibit 2 were included in the list of questioned shares. DeWitt, also, asked himwhether he would leave the certificate, to which Recio replied affirmatively. While he was away,several months later, or shortly before Christmas, his house at Blumentrit Street, San Juan del

Monte, Rizal, and everything contained therein, including the aforementioned receipt, which wasin his wallet, were destroyed by fire.

It thus appears that the only evidence on the alleged sale of the shares of stock in question to theplaintiffsthe main issue in the case at baris the testimony of Apolinario de los Santos,who now claims to be the sole owner thereof. Juan Campos and Carl Hess, the alleged vendors,could not take the witness stand, for Hess was executed by the Japanese, and Campos diedduring the liberation of Manila. Thus, death has sealed the lips of the only persons who couldhave positively corroborated or contradicted the aforementioned testimony of De los Santos.Was this a mere accident of fate, as plaintiffs would have us believe? Or were Campos and Hessnamed by the plaintiffs as their immediate predecessors in interest precisely because, as

contended by appellants, said deceased persons could no longer said testimony?

For obvious reasons, the Court can not answer these questions with absolute certainty. It canonly explore the possibilities and probabilities of the case, in the light of human experience. And,viewed from this angle, it can not be denied that the demise of Campos and Hess before thefiling of plaintiffs claim seriously impairs the weight thereof. That the Grim Reaper had chosento strike at one of the alleged predecessors of the plaintiffs is a matter that may be attributed tosheer fortuitousness. When, as in the case at bar, not one, but both have thus been eliminated,, itis clear, however, that this circumstances is most unusual, and most place the Court on guard.

The need for caution becomes more imperative when we bear in mind that an important piece of

documentary evidence, which allegedly existed after liberation, and could have effectivelycorroborated one phase of the plaintiff's contention, had, according to their evidence, disappearedthrough still another unfortunate turn of the wheel of fate. It will be recalled that late in 1945,Leonardo Recio, allegedly acting on behalf of Astraquillo, offered to sell to Atty. DeWitt the55,000 shares represented by stock certificate No. 2279 (Exhibit 2). Recio testified that, havingbeen unable to see DeWitt, when he (Recio) went to the latter's office, for the first time, saidExhibit 2 was left by him (Recio) in the hands of Atty. Orlina who worked therein and gave hima receipt therefor. This receipt, if produced, would have surely afforded us tangible proof of theveracity of, at least this part of plaintiffs' story. Yet, we are now told that, one day in December,1945, Recio's house accidentally caught fire, and that the latter consumed, also, said receipt, keptin a wallet, which, by accident, he had failed to bring with him. Aren't there too many accidentsin plaintiffs' version? At any rate, we have thus been deprived ofallmeans to check withreasonable certainty the truth ofany of the controverted portions of their pretense. In otherwords, the same is based, and must stand or fall, therefore, upon the uncorroborated testimony ofplaintiff Apolinario de los Santos, and the credence and weight that may be given thereto. Upona review of the record, we find, however, that said testimony is highly improbable and inherentlyweak, for, among other things:

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(1) De los Santos declared that, in December, 1942, he purchased 300,000 shares from JuanCampos and 1,300,000 shares from Carl Hess, at P0.06 each share. As an enterprise controlledby Americans, the Lepanto had been seized by the Japanese who, accordingly, were operating it.At that time, there were no clear, or, even, substantial, indications that changes would take place,either in the local or in the international situation in the near of foreseeable future. In deed, the

morale of the population in democratic countries, particularly in the Philippines, was then at itslowest ebb. Both in Europe and in the Pacific, the Axis powers had reached in enemy territoriesthe highest degree of penetration attained during the last war. Before the world had recoveredfrom the shock produced by the German blitzkrieg operations in the low countries and in France,the Nazis were already knocking at the gates of Stalingrad entrenched in New Guinea and theSoloman Islands. The people had a hazy notion about the facts pertinent to the Battle of Midway(June 3-6, 1942) and the implications thereof were by and large unknown. In other words, theconditions were such as to warrant the general belief that the Lepanto would remain under theauthority and management of the Japanese Imperial forces for an indefinite period of time. As aconsequence, the Lepanto stock had not merely a doubtful value, but as admitted by Santoseven, no market value at all (p. 132, t.s.n). Indeed, the stockholders could neither collect

dividends nor exercise their voting power, or otherwise participate in the operation of theenterprise. Moreover, there was a possibility of its assets being fully confiscated, for all practicalpurposes, should Japan emerge victorious in the was in the Pacific, which it appeared to bewinning easily up to that time (December, 1942).

(2) Inasmuch as citizens of the United States held a majority of the shares of stock of theLepanto, the same had from the view point of the Japanese, an enemy character, and thepurchase of said stocks was, therefore, a hostile act. As a matter of fact, in the proceedingsbefore the Vested Property Claims Committee, the partiesincluding plaintiffs hereinhadstipulated "that such transfers and dealings in said stock were prohibited by the Japanese duringthe occupation and hence were dangerous." (Record on Appeal, p. 110). Said transactions couldjeopardize the life of the parties thereto and De los Santos was aware of the "highly dangerous"or "very risky" nature of the "mere possession" of the stock certificates in question. (pp. 141,143, t. s. n.)

(3) Astraquillo is merely a former employee of De los Santos, who had, therefore, no reason torisk his neck, not only by allegedly buying 800,000 shares of stock for Astraquillo, but, also, byavowedly bringing with him (De los Santos) the corresponding stock certificates from Manila toBaguio, to make delivery thereof to Astraquillo, as the defense would have us believe,notwithstanding the many Japanese check points in the 250 kilometers highway connecting bothcities and the absence of any monetary or other gain he could have derived from the acts heprofesses to have performed.

(4) According to the Ballantyne schedule the accuracy of which has not been impugned byplaintiffs hereinthe Japanese war notes in the Philippines had thesame exchange of purchasevalue as the currency of our legitimate government, in December, 1942 and this wasconceded by De los Santos (p. 136, t. s. n.) when they claim to have purchased the Lepantostocks. The P48,000 supposedly paid by the De los Santos, and the identical sum allegedlydisbursed by Astraquillo, for their respective stock, represented, therefore, the same amount inlegal tender of the Commonwealth of the Philippines. In fact, according to the evidence for the

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plaintiffs, part of the price allegedly paid by Astraquillo, or P6,000, were in the genuinePhilippine money, representing his savings for 25 years. Said sum of P6,000 being insufficient tocover the cost of 800,000 shares of stock, Astraquillo, it is urged, alienated other properties toraise the amount necessary thereof. It is very difficult to believe that the plaintiffs would haveparted with P48,000 each precisely when, owing to the abnormal conditions brought about by

the occupation, said funds might be needed, at any time, to meet unforeseen emergencies of thegravest and most vital nature for shares of stock of dubious value then and in the foreseeablefuture.

(5) We are not satisfied that either De los Santos or Astraquillo possessed enough resources tohave P48,000, in cash, each, in December 1942. Their evidence on this point is too general apart from being based exclusively upon their respective oral testimonies, which are absolutelyuncorroboratedto support their contention. At any rate, De los Santos admitted that he is "notyet" rich (p. 134, t. s. n.), and his testimony suggests that he did not even own the house in whichhe lived.

(6) Campos offered to sell his stocks, according to De los Santos, at P0.06 each (although its parvalue was P0.10), stating that "he (Campos) needed money" (p. 43, t.s.n.), and advised him thatHess was, also, willing to dispose of his own stocks at the same price. Being, accordingly, awarethat Campos and Hess were in need of money and considering the risks attending the transaction,it is but logical to expect De los Santos, an experienced trader in stocks, to bargain for a lowerprice. Yet, the evidence for the plaintiffs shows that neither he nor Astraquillo tried to do so,contrary to the normal course of events.

(7) De los Santos could not have purchased 1,300,000 shares of stock, from Hess, and receivedfrom him the corresponding stock certificates, endorsed in blank by Vicente Madrigal, forHesshad never had such stock certificates in his possession during the occupation . There is no

plausible reason to doubt the veracity of the testimony of Miguel Simon to this effect, for thelatter had no possible motive to commit perjury, and was in a position to know what he wastalking about. Apart from being a brother-in-law of Hess, Simon was manager of the firm Hess& Zeitling, of which Hess was the senior partner, who used to inform him (Simon) of his (Hess)business transactions.

(8) Campos and Hess could not have delivered the stock certificates for the 1,600,000 shares ofstock in question, and, consequently, said shares of stock could not have been sold by them, toDe los Santos in December 1942, inasmuch as from December 1941 to April 1943, said stockcertificates were continuously in the custody of Matsume Kitajima, manager of the Mitsuis inManila, whose testimony was corroborated by his successor in office, Kingy Miwa, to whomKitajima turned over the stock certificates in April 1943. The sincerity of Matsume Kitajima andKingy Miwa can not doubted, for neither appears to have any possible reason to trifle with thefacts. Indeed, their testimony, if accepted as true, would ultimately result in the confiscation, bythe Republic of the Philippines, of the shares of stock in question and, thus, place the samebeyondthe reach of the Mitsuis.

It has been intimated that Kitajima and Kingy may have testified as they did, either to protectthemselves, because they might have disposed of the shares of stock in question for their

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personal benefit, or because there had been undue influence or pressure from the authoritiespresumably officers of the government of the United States. But these are mere speculations,without sufficient basis. Besides, judicial notice may be taken of the circumstance that, duringthe occupation, even minor Japanese officials could easily make money, in the Japaneseproperties. Again, in December, 1942, the Japanese in the Philippines appeared to have no

doubts that, in effect, Japan had already won the war. In short, Kitajima and Kingy must havethought that, sooner or later, Japan would own the Lepanto and that, therefore, they would haveto account for the shares of stock under consideration. Consequently, it is most unlikely thatneither would have misappropriated said shares of stock as suggested by the plaintiffs.

The benefits which the Mitsuis and Japan may derive from a decision against the plaintiffsinasmuch as the value of the shares of stock in question would then be credited in payment of thereparation which may be demanded by the Philippines and/or the United States has beenpointed out, in the dissenting opinion, as a possible motive for the commission of perjury byKitajima and Kingy. Besides being purely conjectural in nature, this line of thought which noteven the plaintiffs have taken would have no leg to stand on, unless we assume that the Mitsuis

had sold or otherwise disposed of said stocks during the year 1942, but before the allegedtransactions between Campos and Hess, on the one hand, and the plaintiffs on the other, inDecember of that year. It is inconceivable, however, that the Mitsuis would part with the stocksin question, precisely when Japanese was at the crest of its military and political victories.Indeed, even if its officers had already foreseen, at the time, the eventual defeat of the axispowersand everything then appeared to indicate the contrary the Mitsuis could not havedisposed of said stocks without thereby revealing their own lack of faith in the ability of Japan to

achieve final victory. Thus, the Mitsuis would have caused a grave injury upon the Japanesepropaganda and thereby earned severe punishment from the Imperial Government. Nothing,absolutely nothing, in the record, or in contemporary history, warrants the belief that the Mitsuis,who were closely associated with the Japanese Government, could be guilty of such folly.

Let us now turn our attention to the evidence for the defense, beginning with the testimony ofVictor E. Lednicky. It will be recalled that this witness claimed to have gone to the premises ofthe Mitsuis, sometime in February 1945, including two (2) Lepanto certificates of stock, one ofwhich was in the name of Vicente Madrigal, whose blank indorsement appeared thereon. Thus,the defense sought to prove that the certificates of the shares of stock involved in this case haveprobably been looted. The lower court found Lednicky's story inherently improbable and thenconcluded that the theory of the looting must, consequently, be "ruled out". To our mind,however, the testimony of Lednicky is not inherently improbable. Besides, it is a matter ofcommon knowledge, of which judicial notice may be taken, that many offices and dwellingswere looted during the liberation of Manila. The possibility that possession of the stockcertificates in question may have been secured by looting should not be "ruled out," therefore,irrespective of the credence and weight given to the testimony of Lednicky. Actually, saidcertificates are included in the list of stocks certificates of the Lepanto which, soon afterliberation, were reported and considered looted from the Mitsuis, and, accordingly, "blocked" or"frozen" by the authorities. Irrespective of the foregoing, De los Santos could not have obtainedthose certificates from Campos and Hess in December 1942, inasmuch, as, from December 1941to April 1943, Kitajima had been continuously in possession of said documents, none of whichhad been held by Hess during the occupation.

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The lower court considered against the defense the circumstance that Lednicky, Simon andPerkins had not testified before the Vested Property Claims Committee. There is no evidence,however, that any of them knew of the proceedings before said committee. Furthermore, none ofthem has any personal interest in the outcome of this action. Consequently, they have no possiblemotive to distort the truth, unlike De los Santos, who, as the present claimant of all shares of

stock in dispute, will de directly affected by the outcome of the case at bar. His testimony,therefore, cannot be more weighty than that of the aforementioned witnesses for the defense.

The decision appealed from criticizes the testimony of Perkins upon the following grounds:

(1) Having taken no part in the alleged looting of Exhibit 2, Recio had nothing to fear inconnection therewith and, so, he could not have left the office of Mr. DeWitt, while the latterwas talking over the telephone with a representative of the Alien Property Custodian; .

(2) Inasmuch as DeWitt had stated that Exhibit 2 was included in the list of looted stockcertificates, Perkins should have known that, as holder of the certificate, Recio is presumed to be

the one who stole the same. Why then

plaintiffs inquire

did Perkins fail to prevent Reciofrom leaving said office?

As regards the first observation, suffice it to say that, as bearer of the Exhibit 2, Recio who,according to the lower court, is an intelligent manmust have realized the danger, probablyunforeseen by him, of being considered a privy to the looting of said stock certificates, of whichhe might have been unaware before the conference with Mr. DeWitt. Hence, Recio's fright andvirtual flight. Verily, the testimony of Perkins on this point is borne out by the undisputed factthat Exhibit 2 was left by Recio in the hands of DeWitt, and that neither Astraquillo, nor hisalleged successor in interest, De los Santos, has ever demand from DeWitt the return of saidcertificate, or even recriminated Recio for having voluntarily parted with its possession, as he

would have us believe, without authority therefor, as a broker or agent who was supposed merelyto find a buyer.

As to the second observation, Perkins knew that Recio was acting solely as a broker or agent. Assuch, he was not the real holder of Exhibit 2, and, consequently, the presumption adverted to didnot apply to him. Even if it did, however, what could Perkins have done? Use force or violenceupon the person of Recio, or ask a policeman to detain him? Neither step, however, could havebeen taken without some risks. To begin with, Perkins could not have properly taken the law inhis own hands. Had he done so, Recio could have legally used force against force. Moreover,said presumption is rebuttable and would have easily been offset by the undeniable fact thatRecio had acted merely in a representative capacity. Again, why should Perkins take theinitiative in the matter? Was it not being handled by his associate in the law firm, Mr. DeWitt,one of the most able members of the Philippine Bar? It may not be amiss to add that the recordbefore us discloses absolutely nothing that may cast even a shadow of doubt upon the honesty ofMr. Perkins.

The language of the lower court in commenting on the testimony of Miwa was:

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. . . In general, the testimony of Miwa is unreliable. His behaviour in Court in denyingfirst and then in accepting later his own signature throws him to a position where theCourt must look upon him with suspicion and distrust. His prevarication before the Courtas to the genuineness of his own signature was probably due to the conscience of a manwho came to the Court with a mental reservation, but who may have been compelled

under the circumstances to play the role of a willing tool. (p. 54, R.A.)

The following portion of Miwa's testimony illustrates the point referred to in the decisionappealed from:

ATTY. QUIRINO:

Q. Will you please go over this paper which for purposes of identification we requestthat it be marked as Exhibit M for the plaintiffs and which was marked Exhibit 6-b beforethe Vested Property Claims Committee, and tell us if you know that document? A.

No. I do not remember this paper.

Q. Mr. Miwa, at the bottom of this certificate or Exhibit M, which was Exhibit 6b inthe committee and submitted by the Alien Property Administration, there is a typewrittenname, Kingy Miwa, and above it is a signature. Will you kindly tell th