G.R. No.

138814

MAKATI STOCK EXCHANGE, INC., et. Al, Petitioners,

-versus-
MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE CAMPOS,
Respondent.

Article 1157. Sources of Obligations

April 16, 2009

FACTS OF THE CASE:

SEC Case No. 02-94-4678 was instituted on 10 February 1994 by respondent
Miguel V. Campos, who filed with the Securities, Investigation and Clearing Department
(SICD) of the Securities and Exchange Commission (SEC), a Petition against herein
petitioners Makati Stock Exchange, Inc. (MKSE) and MKSE directors, 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. Respondent.
In said Petition, sought:
(1) the nullification of 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; and
(3) the payment of P2 million as moral damages, P1 million as exemplary damages,
and P500,000.00 as attorneys fees and litigation expenses.
Respondent filed a Petition for Certiorari with the Court of Appeals assailing the
Orders of the SEC en banc dated 31 May 1995 and 14 August 1995 in SEC-EB No. 393
and SEC-EB No. 403, respectively.Respondents Petition before the appellate court was
docketed as CA-G.R. SP No. 38455.
On 11 February 1997, the Court of Appeals promulgated its Decision in CA-G.R.
SP No. 38455, granting respondents Petition for Certiorari, thus:
 WHEREFORE, the petition in so far as it prays for annulment of the Orders
dated May 31, 1995 and August 14, 1995 in SEC-EB Case Nos. 393 and 403 is
GRANTED. The said orders are hereby rendered null and void and set aside.
Petitioners filed a Motion for Reconsideration of the foregoing Decision but it was
denied by the Court of Appeals in a Resolution dated 18 May 1999.

ISSUE:
Whether or not respondent has a cause of action.

CONCLUSION:
A cause of action is the act or omission by which a party violates a right of another.
A complaint states a cause of action where it contains three essential elements of a cause
of action, namely:
(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 becomes vulnerable to dismissal on the ground of failure to
state a cause of action.
There is no question that the Petition in SEC Case No. 02-94-4678 asserts
a right in favor of respondent, particularly, respondents alleged right to subscribe to the
IPOs of corporations listed in the stock market at their offering prices; and stipulates the
correlative obligation of petitioners to respect respondents right, specifically, by
continuing to allow respondent to subscribe to the IPOs of corporations listed in the stock
market at their offering prices.
However, the terms right and obligation in respondents Petition 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. An obligation is defined in the Civil Code as a juridical necessity to give, to do or
not to do. For every right enjoyed by any person, there is a corresponding obligation on
the part of another person to respect such right.
Private respondent Campos has failed to establish the basis or authority for
his alleged right to participate equally in the IPO allocations of the Exchange. He cited
paragraph 11 of the amended articles of incorporation of the Exchange in support of his
position but a careful reading of the said provision shows nothing therein that would bear
out his claim. The provision merely created the position of chairman emeritus of the
Exchange but it mentioned nothing about conferring upon the occupant thereof the right
to receive IPO allocations.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of
Appeals dated 11 February 1997 and its Resolution dated 18 May 1999 in CA-G.R. SP
No. 38455 are REVERSED and SET ASIDE. The Orders dated 31 May 1995 and 14
August 1995 of the Securities and Exchange Commission en banc in SEC-EB Case No.
393 and No. 403, respectively, are hereby reinstated. No pronouncement as to costs.
SO ORDERED.