MAKATI STOCK EXCHANGE, INC., vs. MIGUEL V.

CAMPOS,
G.R. No. 138814 , April 16, 2009

FACTS: Respondent Miguel V. Campos filed a petition with the Securities,

Investigation and Clearing Department (SICD) of the Securities and Exchange
Commission (SEC) against the petitioners Makati Stock Exchange, Inc. (MKSE) The
petition sought: (1) to nullify the Resolution dated 3 June 1993 of the MKSE Board of
Directors, which allegedly deprived him of his right to participate equally in the
allocation of Initial Public Offerings (IPO) of corporations registered with MKSE; (2)
the delivery of the IPO shares he was allegedly deprived of, for which he would pay
IPO prices;.

essential to the rights of action or defense asserted, as distinguished from mere

conclusions of fact or conclusions of law.
The Respondent merely quoted in his Petition the MKSE Board Resolution, passed
sometime in 1989, granting him the position of Chairman Emeritus of MKSE for life.
However, there is nothing in the said Petition from which the Court can deduce that
respondent, by virtue of his position as Chairman Emeritus of MKSE, was granted by
law, contract, or any other legal source, the right to subscribe to the IPOs of
corporations listed in the stock market at their offering prices.

SICD granted the issuance of a Temporary Restraining Order to enjoin petitioners

from implementing or enforcing the resolution of the MKSE. they also issued a writ of
preliminary injunction for the implementation or enforcement of the MKSE Board
Resolution in question.
On March 11,1994, petitioners filed a motion to dismiss on the following grounds: (1)
Petition became moot due to the cancellation of the license of the MKSE (2) The
SICD had no jurisdiction over the petition and (3) the petition failed to state a cause
of action. However, the SICD denied petitioners motion to dismiss.
ISSUE: Whether or not the petition failed to state a cause of action.
HELD: The petition filed by respondent Miguel Campos should be dismissed for
failure to state a cause of action.
A cause of action is the act or omission by which a party violates a right of another.
It contains three essential elements: 1) the legal right of the plaintiff 2) the
correlative obligation of the defendant and 3) the act or omission of the defendant in
violation of said legal right. If these elements are absent, the complaint will be
dismissed on the ground of failure to state a cause of action. Furthermore, the
petition filed by respondent failed to lay down the source or basis of respondents
right and/or petitioners obligation.
Article 1157 of the Civil Code, provides that Obligations arise from: law, Contracts,
Quasi Contracts, Acts or omissions punished by law and quasi delicts. Therefore an
obligation imposed on a person and the corresponding right granted to another,
must be rooted in at least one of these five sources.
The mere assertion of a right and claim of an obligation in an initiatory pleading,
whether a Complaint or Petition, without identifying the basis or source thereof, is
merely a conclusion of fact and law. A pleading should state the ultimate facts

Consolidated Bank and Trust Corporation vs Court of Appeals and L.C. Diaz
and Company, CPAs

L.C. Diaz and Company (LC Diaz), an accounting firm, has a savings account with
Consolidated Bank and Trust Corporation (now called Solidbank Corporation).
On August 14, 1991, the firms messenger, a certain Ismael Calapre, deposited an
amount with the bank but due to a long line and the fact that he still needs to
deposit a certain amount in another bank, the messenger left the firms passbook
with a teller of Solidbank. But when the messenger returned, the passbook is already
missing. Apparently, the teller returned the passbook to someone else.
On August 15, 1991, LC Diaz made a formal request ordering Solidbank not to honor
any transaction concerning their account with them until the firm is able to acquire a
new passbook. It appears however that in the afternoon of August 14, 1991, the
amount of P300,000.00 was already withdrawn from the firms account.
LC Diaz demanded Solidbank to refund the said amount which the bank refused. LC
Diaz then sued Solidbank.
In its defense, Solidbank contends that under their banking rules, they are
authorized to honor withdrawals if presented with the passbook; that when the
P300k was withdrawn, the passbook was presented. Further, the withdrawer
presented a withdrawal slip which bore the signatures of the representatives of LC
Diaz.
The RTC ruled in favor of Solidbank. It found LC Diaz to be negligent in handling its
passbook. The loss of the P300k was not the result of Solidbanks negligence.
On appeal, the Court of Appeals reversed the decision of the RTC. The CA used the
rules on quasi-delict (Article 2176 of the Civil Code).
ISSUE: Whether or not the relations between Solidbank and LC Diaz, the depositor,
is governed by quasi-delict in determining the liability of Solidbank.

The act of the teller returning the passbook to someone else other than Calapre, the
firms authorized messenger, is a clear breach of contract. Such negligence binds
the bank under the principle of respondeat superior or command responsibility.
No contract of trust between bank and depositor
The Supreme Court emphasized that the contractual relation between the bank and
the depositor is that of a simple loan. This is despite the wording of Section 2 of
Republic Act 8791 (The General Banking Law of 2000) which states that the State
recognizes the fiduciary nature of banking that requires high standards of integrity
and performance. That the bank is under obligation to treat the accounts of its
depositors with meticulous care, always having in mind the fiduciary nature of their
relationship.
This fiduciary relationship means that the banks obligation to observe high
standards of integrity and performance is deemed written into every deposit
agreement between a bank and its depositor. The fiduciary nature of banking
requires banks to assume a degree of diligence higher than that of a good father of
a family.
However, the fiduciary nature of a bank-depositor relationship does not convert the
contract between the bank and its depositors from a simple loan to a trust
agreement, whether express or implied. Failure by the bank to pay the depositor is
failure to pay a simple loan, and not a breach of trust.
In short, the General Banking Act simply imposes on the bank a higher standard of
integrity and performance in complying with its obligations under the contract of
simple loan, beyond those required of non-bank debtors under a similar contract of
simple loan. The General Banking Law in no way modified Article 1980 of the Civil
Code.

HELD: No. Solidbank is liable for the loss of the P300k but its liability is grounded
on culpa contractual.
The contract between the bank and its depositor is governed by the provisions of the
Civil Code on simple loan (Article 1980, Civil Code). There is a debtor-creditor
relationship between the bank and its depositor. The bank is the debtor and the
depositor is the creditor. The depositor lends the bank money and the bank agrees
to pay the depositor on demand. The savings deposit agreement between the bank
and the depositor is the contract that determines the rights and obligations of the
parties.
Under their contract, it is the duty of LC Diaz to secure its passbook. However, this
duty is also applicable to Solidbank when it gains possession of said passbook which
it did when the messenger left it to the banks possession through the banks teller.

Philippine Communications Satellite Corporation vs Globe Telecom, Inc.

G.R. No. 147324 May 25, 2004
Facts: Globe Telecom, Inc., formerly known as Globe McKay Cable and Radio
Corporation installed and configured communication facilities for the exclusive use
of the US Defense Communications Agency (USDCA) in Clark Air Base and Subic

Naval Base. Globe Telecom later contracted the Philippine Communications Satellite
Corporation (Philcomsat) for the provision of the communication facilities. As both
companies entered into an Agreement, Globe obligated itself to operate and provide
an IBS Standard B earth station with Cubi Point for the use of the USDCA. The term
of the contract was for 60 months, or five (5) years. In turn, Globe promised to pay
Philcomsat monthly rentals for each leased circuit involved.
As the saga continues, the Philippine Senate passed and adopted Senate Resolution
No. 141 and decided not to ratify the Treaty of Friendship, Cooperation and Security,
and its Supplementary Agreements to extend the term of the use by the US of Subic
Naval Base, among others. In other words, the RP-US Military Bases Agreement was
suddenly terminated.
Because of this event, Globe notified Philcomsat of its intention to discontinue the
use of the earth station effective 08 November 1992 in view of the withdrawal of US
military personnel from Subic Naval Base after the termination of the RP-US Military
Bases Agreement.
After the US military forces left Subic Naval Base, Philcomsat sent Globe a letter in
1993 demanding payment of its outstanding obligations under the Agreement
amounting to US$4,910,136.00 plus interest and attorneys fees. However, Globe
refused to heed Philcomsats demand. On the other hand, the latter with the
Regional Trial Court of Makati a Complaint against Globe, however, Globe filed an
Answer to the Complaint, insisting that it was constrained to end the Agreement due
to the termination of the RP-US Military Bases Agreement and the non-ratification by
the Senate of the Treaty of Friendship and Cooperation, which events constituted
force majeure under the Agreement. Globe explained that the occurrence of said
events exempted it from paying rentals for the remaining period of the Agreement.
Four years after, the trial court its decision but both parties appealed to the Court of
Appeals.
Issues:
1. Whether or not the non-ratification by the Senate of the Treaty of Friendship,
Cooperation and Security and its Supplementary Agreements constitutes force
majeure which exempts Globe from complying with its obligations under the
Agreement;
2. Whether Globe is not liable to pay the rentals for the remainder of the term of the
Agreement; and
3. Whether Globe is liable to Philcomsat for exemplary damages.
Held:

effective 31 December 1991 as stated in the Philippine Governments Note Verbale

to the US Government, are acts, directions, or requests of the Government of the
Philippines which constitute force majeure.
However, the Court of Appeals ruled that although Globe sought to terminate
Philcomsats services by 08 November 1992, it is still liable to pay rentals for the
December 1992, amounting to US$92,238.00 plus interest, considering that the US
military forces and personnel completely withdrew from Cubi Point only on 31
December 1992.
No reversible error was committed by the Court of Appeals in issuing the assailed
Decision; hence the petitions are denied.
Article 1174, which exempts an obligor from liability on account of fortuitous events
or force majeure, refers not only to events that are unforeseeable, but also to those
which are foreseeable, but inevitable:
A fortuitous event under Article 1174 may either be an "act of God," or natural
occurrences such as floods or typhoons,24 or an "act of man," such as riots, strikes
or wars.
Philcomsat and Globe agreed in Section 8 of the Agreement that the following
events shall be deemed events constituting force majeure:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Any law, order, regulation, direction or request of the Philippine Government;

Strikes or other labor difficulties;
Insurrection;
Riots;
National emergencies;
War;
Acts of public enemies;
Fire, floods, typhoons or other catastrophes or acts of God;
Other circumstances beyond the control of the parties.

Clearly, the foregoing are either unforeseeable, or foreseeable but beyond the
control of the parties. There is nothing in the enumeration that runs contrary to, or
expands, the concept of a fortuitous event under Article 1174.
The Supreme Court agrees with the Court of Appeals and the trial court that the
abovementioned requisites are present in the instant case. Philcomsat and Globe
had no control over the non-renewal of the term of the RP-US Military Bases
Agreement when the same expired in 1991, because the prerogative to ratify the
treaty extending the life thereof belonged to the Senate. Neither did the parties
have control over the subsequent withdrawal of the US military forces and personnel
from Cubi Point in December 1992.

Decision on Issue No. 1: Fortuitous Event under Article 1174

Decision on Issue No. 2: Exemption of Globe from Paying Rentals for the Facility
The appellate court ruled that the non-ratification by the Senate of the Treaty of
Friendship, Cooperation and Security, and its Supplementary Agreements, and the
termination by the Philippine Government of the RP-US Military Bases Agreement

The Supreme Court finds that the defendant is exempted from paying the rentals for
the facility for the remaining term of the contract. As a consequence of the

termination of the RP-US Military Bases Agreement (as amended) the continued stay
of all US Military forces and personnel from Subic Naval Base would no longer be
allowed, hence, plaintiff would no longer be in any position to render the service it
was obligated under the Agreement.

In the present case, it was not shown that Globe acted wantonly or oppressively in
not heeding Philcomsats demands for payment of rentals. It was established during
the trial of the case before the trial court that Globe had valid grounds for refusing to
comply with its contractual obligations after 1992.

The Court of Appeals was correct in ruling that the happening of such fortuitous
events rendered Globe exempt from payment of rentals for the remainder of the
term of the Agreement.

Ruling: WHEREFORE, the Petitions are DENIED for lack of merit. The assailed
Decision of the Court of Appeals in CA-G.R. CV No. 63619 is AFFIRMED.
SO ORDERED.

Decision on Issue No 3: No Exemplary Damages

Exemplary damages may be awarded in cases involving contracts or quasicontracts, if the erring party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.