MAKATI STOCK EXCHANGE, INC., MA. VIVIAN YUCHENGCO, ADOLFO M. DUARTE, MYRON C.

PAPA, NORBERTO C. NAZARENO, GEORGE UY-TIOCO, ANTONIO A. LOPA, RAMON B. ARNAIZ,

LUIS J.L. VIRATA, and ANTONIO GARCIA, JR.
Petitioners,- versus -MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE CAMPOS,
[1]
Respondent.

Facts

Issue/s

G.R. No. 138814

Promulgated:
April 16, 2009

Ruling

THIRD DIVISION

MAKATI STOCK EXCHANGE, INC., MA. VIVIAN YUCHENGCO, ADOLFO M. DUARTE, MYRON C.
PAPA, NORBERTO C. NAZARENO, GEORGE UY-TIOCO, ANTONIO A. LOPA, RAMON B. ARNAIZ,
LUIS J.L. VIRATA, and ANTONIO GARCIA, JR.
Petitioners,- versus -MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE CAMPOS,
[1]
Respondent.

Respondent Miguel V. Campos filed a petition

with the Securities, Investigation and
ClearingDepartment (SICD) of the Securities
and Exchange Commission (SEC) against the
petitioners MakatiStock Exchange, Inc. (MKSE)
The petition sought:
(1) to nullify the Resolution dated 3 June 1993
of theMKSE Board of Directors, which allegedly
deprived him of his right to participate equally
in the allocationof Initial Public Offerings (IPO) of
corporations registered with MKSE;
(2) the delivery of the IPO shareshe was
allegedly deprived of, for which he would pay
IPO prices;. SICD granted the issuance of
a Temporary Restraining Order to enjoin
petitioners fromimplementing or enforcing the
resolution of the MKSE. they also issued a writ
of preliminary injunction forthe 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)
Petitionbecame moot due to the cancellation of
the license of the MKSE (2) The SICD had no
jurisdiction over thepetition and (3) the petition
failed to state a cause of action. However, the
SICD denied petitioners motionto dismiss.

Whether or
not the
petition
failed to
state a cause
of action

G.R. No. 138814

Promulgated:
April 16, 2009

THIRD DIVISION

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.
However the terms right and obligation are not magic words that would
automatically lead to the conclusion that such Petition sufficiently states a cause of
action. Right and obligation are legal terms with specific legal meaning. A right is a
claim or title to an interest in anything whatsoever that is enforceable by law while
an obligation is defined in the Civil Code as a juridical necessity to give, to do or not
to do. Justice J.B.L. Reyes offers the definition given by Arias Ramos as a more
complete definition:
An obligation is a juridical relation whereby a person (called the creditor) may
demand from another (called the debtor) the observance of a determinative conduct
(the giving, doing or not doing), and in case of breach, may demand satisfaction
from the assets of the latter.
Article 1157 of the Civil Code provides that Obligations arise from: 1. Law; 2.
Contracts, 3. Quasi-Contracts, 4. Acts of omissions punished by law; and 5. Quasidelict.
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. (In the case at bar, although the Petition in SEC
Case No. 02-94-4678 does allege respondents right to subscribed to IPOs of
Corporations listed in the stock market at their offering prices, and petitioners
obligation to continue observing and respecting such right and /or petitioners
obligation.)
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, 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 subscribed to IPOs of
corporations listed in the stock market at their offering prices. (Allocation of IPO

MAKATI STOCK EXCHANGE, INC., MA. VIVIAN YUCHENGCO, ADOLFO M. DUARTE, MYRON C.
PAPA, NORBERTO C. NAZARENO, GEORGE UY-TIOCO, ANTONIO A. LOPA, RAMON B. ARNAIZ,
LUIS J.L. VIRATA, and ANTONIO GARCIA, JR.
Petitioners,- versus -MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE CAMPOS,
[1]
Respondent.

G.R. No. 138814

Promulgated:
April 16, 2009

THIRD DIVISION

shares was merely alleged to have been done in accord with a practice normally
observed by the members of the stock exchange). A practice or custom is, as a
general rule, not a source of a legally demandable or enforceable right

MAKATI STOCK EXCHANGE, INC., MA. VIVIAN YUCHENGCO, ADOLFO M. DUARTE, MYRON C.
PAPA, NORBERTO C. NAZARENO, GEORGE UY-TIOCO, ANTONIO A. LOPA, RAMON B. ARNAIZ,
LUIS J.L. VIRATA, and ANTONIO GARCIA, JR.
Petitioners,- versus -MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE CAMPOS,
[1]
Respondent.

G.R. No. 138814

Promulgated:
April 16, 2009

THIRD DIVISION

MAKATI STOCK EXCHANGE, INC., MA. VIVIAN YUCHENGCO, ADOLFO M. DUARTE, MYRON C.
PAPA, NORBERTO C. NAZARENO, GEORGE UY-TIOCO, ANTONIO A. LOPA, RAMON B. ARNAIZ,
LUIS J.L. VIRATA, and ANTONIO GARCIA, JR.
Petitioners,- versus -MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE CAMPOS,
[1]
Respondent.

G.R. No. 138814

Promulgated:
April 16, 2009

THIRD DIVISION