FRUCTUOSO R. CAPCO, PETITIONER, VS. MANUEL R. MACASAET, JACOBO FELICIANO AND HONORABLE COURT OF APPEALS, RESPONDENTS.

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.

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

“WHEREFORE, judgment is hereby rendered in favor of plaintiff
and against defendant Manuel 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 likewise dismissed.

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

The petitioner was a stockholder of record, director and
executive vice-president of Monte Oro Mineral
Resources, Inc. (Monte Oro for brevity’s sake), a
local mining company whose shares were traded in the stock market.  He owned 56,588,358 shares of 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 14,159,583 share and Stock Certificate No. 026
(Exhibit “B”) for 42,428,775 shares.

On February 18, 1976,
the petitioner indorsed and delivered Stock Certificate Nos. 002 and 026 to
private respondent Manuel Macasaet, board chairman
and President of Monte 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 following Monte Oro Certificates in trust and for
safe keeping only to be delivered and/or surrendered 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’

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 from respondent Macasaet who failed to produce them because he had given
them to the other private respondent Jacobo
Feliciano, another officer of Monte Oro, allegedly in
connection 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 petitioner duly acknowledged
the receipt of the said replacement (Exhibit “3”).

On May 4, 1976,
Stock Certificate No. 002 was returned by respondent Macasaet
to the petitioner as evidenced by the handwritten receipt signed by the latter
(Exhibit “2”) who likewise made a handwritten notation stating
“all cleared” at the left hand margin thereof.

On August 12, 1976, the petitioner filed a complaint for damages
against the private respondents alleging, among others, that at the time he
demanded his Stock Certificate Nos. 002 and 026 totalling
56,588,358 shares from respondent Macasaet the
petitioner had a ready buyer for P0.014 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 have realized had his stock certificates
been promptly given back and the sum of P486,121.76, the actual net proceeds
from the subsequent sale of 42,550,000 shares at various prices after
respondent Macasaet delivered his own Stock
Certificate No. 025 in exchange for the petitioner’s Stock Certificate No. 026;
that the aforesaid amount of P306,115.25 had long been overdue and unpaid and
despite repeated demands from the private respondents for the payment thereof,
the latter had failed and refused to pay the same to the petitioner’s damage
and prejudice; and that due to the private respondents’ intentional, deliberate
and malicious acts, moral and exemplary damages could be awarded to the
petitioner.

Respondent Macasaet counter-alleged,
among others, that he had in turn entrusted Stock Certificate Nos. 002 and 026
of the petitioner to his co-defendant, respondent Feliciano to be shown to a
certain group for the purpose of a joint venture; that respondent Macasaet had actually made several demands for the return
of the said stock certificates from respondent Feliciano who refused and failed
to do so; that two days after the petitioner made the demand, respondent Macasaet replaced the petitioner’s Stock Certificate No.
026 with his own Stock Certificate No. 025 which covered 149, 925 shares more
than those of the petitioner’s Stock Certificate No. 026; that the respondent Macasaet returned the petitioner’s Stock Certificate No.
002 on May 4, 1976 after he recovered the same from respondent Feliciano; and
that the words “ALL CLEARED” written by the petitioner himself on his
acknowledgment receipt as he received Stock Certificate No. 002 from respondent
Macasaet undoubtedly meant to discharge 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.  It also dismissed the complaint and
respondent Macasaet’s cross?claim against
respondent Feliciano and likewise dismissed private respondents’ counter-claims
against the petitioner.

On appeal by respondent Macasaet, the
Court of Appeals on June 19, 1989, reversed and set aside the trial court’s
judgment for lack of merit and supporting proof.  The petitioner’s complaint as well as the
cross?claims and counter-claims of private respondents 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 SUPPORTING THE FIRST AND SECOND THEORY OF PRIVATE RESPONDENT THAT
THE WRITTEN ANNOTATION OF ‘ALL CLEARED’ IN STOCK CERTIFICATE NO. 002
NECESSARILY INCLUDED ANOTHER SEPARATE AND DIFFERENT STOCK CERTIFICATE NO. 026
AND ASSUMING THERETO ‘PAYMENT’ OF LIABILITY OF PRIVATE RESPONDENT TO PETITIONER.

II

THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN CLEARING PRIVATE RESPONDENT OF RESPONSIBILITIES BY DISREGARDING OR
ABROGATING A VOLUNTARY CONTRACT OF TRUST, (ACKNOWLEDGMENT RECEIPT, DATED
FEBRUARY 18, 1976, ANNEX “C” PLAINTIFF’S COMPLAINT; EXH. “C”
– PLAINTIFF) ALSO ON MERE ASSUMPTION THAT THE ENDORSEMENT ON THE
SUBJECT STOCK CERTIFICATES CONSTITUTE FULL AUTHORITY TO PRIVATE RESPONDENT TO
DELIVER, CONVEY AND SELL THE SAME.

III

THE HONORABLE COURT OF APPEALS LIKEWISE
COMMITTED GROSS ERROR IN CLEARING THE PRIVATE RESPONDENTS OF LIABILITY FOR ALL
DAMAGES ALREADY SUFFERED AND INCURRED BY PETITIONER.

IV

THE HONORABLE COURT OF APPEALS ALSO
COMMITTED GRAVE ERROR BY CONCLUDING LACK OF EVIDENCE TO SUPPORT CLAIM OF
DAMAGES AND DISREGARDING THE FACTS AND EVIDENCE DULY ADMITTED AND PROVEN AT A
FORMAL 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 the conclusions and findings of fact by the trial court are
entitled to great weight on appeal and should not be disturbed unless for
strong and cogent reasons because the trial court is in a better position to
examine real evidence as well as observe the demeanor of the witnesses while
testifying citing the case of Chase v. Buencamino
(136 SCRA 605 [1985]).  The petitioner
faults the respondent court for side-stepping the literal interpretation of the
Acknowledgment Receipt dated February 18, 1972 signed by the respondent 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 petitioner further
labels as capricious the respondent court’s act of completely ignoring all the
established evidence, both documentary and
testimonial, duly admitted and considered by the trial court.

The rule that the trial court’s findings of fact are accorded due
respect on appeal is not without exceptions. 
It is not applicable where there are strong and cogent reasons as when
the trial court’s findings are not supported by the evidence or when the trial
court failed to consider material facts which would have led to a conclusion
different from what was stated in its judgment or when the trial court’s
decision was attended by grave abuse of discretion amounting to lack of
jurisdiction.  A review of the bases for
the trial court’s decision shows that the appellate court was justified in
being skeptical as it went over both the facts and the law.

The instant case was given due course to enable a more thorough
presentation by the parties and review of the records considering the
petitioner’s stress on the disparity between the factual findings of the trial
court which found respondent Macasaet liable for
actual, moral and exemplary damages and the respondent appellate court which
discharged the said respondent from any liability regarding the petitioner’s
Stock Certificate Nos. 002 and 026.

It is true that when the petitioner delivered Stock Certificate
Nos. 002 and 026 to respondent Macasaet the latter
acknowledged receiving them “in trust and for safekeeping only.” This
acknowledgment, however, cannot outweigh the legal effects of the stock
certificates having been “already indorsed”.  There is no dispute that respondent Macasaet received the petitioner’s certificates in that
condition as evidenced by the same Acknowledgment Receipt dated February 18, 1976.

Certificates of stocks are considered as
“quasi-negotiable” instruments. 
When the owner or shareholder of these certificates signs the printed
form of sale or assignment at the back of every stock certificate without
filling in the blanks provided for the name of the transferee as well as for
the name of the attorney-in-fact, the said owner or shareholder, in effect,
confers on another all the indicia of ownership of the said stock
certificates.  (Campos
and Lopez-Campos, Notes and Selected Cases on Negotiable Instruments Law, 1971
ed., p. 605).  In the case at bar,
the petitioner signed the printed form at the back of both Stock Certificate
Nos. 002 and 026 without filling in the blanks 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 the right to hold them as though they were his
own.  On account of this apparent
transfer of ownership, it was not irregular on the part of respondent Macasaet to deliver the stock certificates 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 as director, Executive Vice-President and
General Manager of Monte Oro at the time of the
incident under consideration, he could not have been unaware of the consequences
of the delivery coupled with the indorsement of his
two stock certificates to respondent Macasaet,
notwithstanding the tenor of the Acknowledgment Receipt.  Moreover, it is hard to believe that the
petitioner’s delivery of the subject stock certificates to respondent Macasaet was strictly for safe-keeping purposes only
because if that were his real and only intention, there is neither logic nor
reason for the indorsement of the said certificates.

After a careful perusal and examination of the records of this
case, we find no legal ground that will constrain us to depart from the rule
that the Court of Appeals’ findings of fact are deemed final, conclusive and
binding on us if supported by substantial evidence.  We reiterate our ruling in the case of Hermo v. Court of Appeals,
(155 SCRA 24 [1987]) that:

“At once apparent is that the factual findings of the Court of
Appeals are diametrically at odds with those of the Trial Court, x x x.  And basic is the rule that the conclusions of
fact of a trial 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 evidence directly, 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 of Appeals.  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 or further
proceeding to be had.  It is indeed the
duty of that Court chiefly though not exclusively to review a Trial Court’s
findings of fact and correct such serious errors affecting them as may have
been properly assigned and as may be established by a re-examination of the
recorded evidence.  And it is
the findings of fact of the Court
of Appeals, not those of the trial
court, that are as a rule deemed
final, and conclusive even on this Court.”
(Underscoring Supplied) (At p. 27)

We find no reversible error in the respondent Court’s holding
that the petitioner failed to support his claim that he suffered the claimed
damages as a result of respondent Macasaet’s failure
to return Stock Certificate Nos. 002 and 026 upon demand.  The alleged “unrealized profits”
representing actual and compensatory damages must be supported by substantial
and convincing proof.  The records are
bereft of such kind of proof.  Mere
allegation that there was a “ready and willing buyer” of all the
petitioner’s shares covered by Stock Certificate Nos. 002 and 026 for P0.014
per share at the time the demand for the return of the said certificates was
made cannot suffice to allow the petitioner’s claim for unrealized profits to
prosper.  Such claim is clearly speculative
in nature.

Actual or  compensatory
damages are those recoverable because of pecuniary loss in business, 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 Appeals, 154 SCRA 447 [1987];
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 Liong Electrical Equipment
Corporation v. Reyes, 145 SCRA 713 [1986])

The good faith of respondent Macasaet
is shown by the fact that after trying to recover the missing certificates, he
immediately substituted Stock Certificate No. 026 with his own Stock Certificate
No. 025 which covered more shares than the petitioner’s replaced
certificate.  The petitioner’s other
Stock Certificate No. 002 was subsequently returned and received by the
petitioner with the notation “All Cleared” on the acknowledgment
receipt duly signed and personally written by him.  We agree with the respondent court’s ruling
that the said notation meant to discharge respondent Macasaet
(together with his co-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 have written “all
cleared” if he was unhappy at that time about the substitution of the
higher value certificate for his other certificate.

In fine, considering that in the absence of malice and bad faith,
moral damages cannot be awarded (Philippine National Bank v. Court of Appeals,
159 SCRA 433 [1988]) and that the grant of moral and exemplary damages has no
basis if not predicated upon any of the cases enumerated in the Civil Code (Bagumbayan Corporation v. Intermediate Appellate Court, 132
SCRA 441 [1984]), we hold that the respondent court properly set aside the
award of actual, moral and exemplary damages given by the trial court in favor
of the petitioner.

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

SO ORDERED.

Bidin and
Cortes, JJ., concur.

Fernan, C.J., (Chairman), on official leave.

Feliciano, J., see concurring statement.