Reflections on Delos Santos vs H.

McGrath Case
After the Japanese occupation, there were issues of looting. On the case of Delos
Santos and Astraquillo vs. the Republic of the Philippines, during the Japanese occupation,
the plaintiffs have secretly purchased shares of an American corporation, whose assets had
been seized by the enemy invader. Risking Japanese wrath, they staked their funds (perhaps
their freedom or lives) on the eventual return of the American forces. After two years, these
came back in victorious liberation; but oddly enough plaintiffs lose their money and the
shares.
The subject of the case are the stock certificates of the Lepanto Mining corporation
owned by presumably by Delos Santos and Astraquillo. They may have the physical
possession of the said certificates, and the certificates were indorsed in blanks, but the
certificates would not qualify it as a negotiable instrument. As stated in section 1 of Republic
Act No. 2301, the negotiable instruments law:
Section 1. Form of negotiable instruments. - An instrument to be negotiable must
conform to the following requirements:
a. It must be in writing and signed by the maker or drawer;
b. Must contain an unconditional promise or order to pay a sum certain in money;
c. Must be payable on demand, or at a fixed or determinable future time;
d. Must be payable to order or to bearer; and
e. Where the instrument is addressed to a drawee, he must be named or otherwise
indicated therein with reasonable certainty.
Certificates of stock are not negotiable instruments, and a transfer under a forged
assignment acquires no title which can be asserted against the true owner, unless his on
negligence has been such as to create an estoppel against him. If the owner of the certificate
has endorsed it in blank, and it is stolen from him, no title is acquired by an innocent
purchaser for value. Even though their purchase of the instrument has been a valid one, it
does not possess such negotiability to transfer ownership. The rights of ownership still
belong to Madrigal.
In this case study, I have learned that section 1 of the negotiable instruments law is
the most important section of the Negotiable instruments law. When the subject of the
matter qualifies with the requirements of section 1, then it will become negotiable. The
certificates of stock were not, and if I were in the shoes of the plaintiffs, I would try to know
my rights first before investing in such securities at such a trivial time. It was the Japanese
invasion and one who invests with such risks must be responsible enough to know the
responsibilities and rewards of their actions.
I also learned that the negotiability of an instrument is not an evidence of it being a
negotiable instrument. What is important is the section 1, which will give embodiment to the
instrument as it is negotiated from one to another. Lastly, I realized that the plaintiffs should
have known the background of the securities they are buying. As one may transact, one may
not be acquiring what they are paying for.