Makati Stock Exchange, Inc. vs.

Securities and Exchange Commission and Manila Stock Exchange

G.R. No. L-23004 June 30, 1965

Ponente: Bengzon, C. J.

Nature of the case

Petition for Review

Brief

Makati Exchange Commission (MakEC) filed a review on the resolution issued by the SEC denying them to
operate a stock exchange on the ground that the list of securities on its trading board is already listed in
the Manila Stock Exchange (ManEC).

Facts

Makati Exchange Commission (MakEC) filed a review on the resolution issued by the SEC denying them to
operate a stock exchange because the list of securities on its trading board is already listed in the Manila
Stock Exchange (ManEC).

MakEC argued that the Commission has no power to impose it because it is illegal, discriminatory and
unjust.

Under the law, a stock exchange can only do a business in the Ph when it is previously registered with the
Commission by filing a statement containing the information required by law (Sec. 17, Securities Act/
Commonwealth Act 83). It is assumed that the Commission may permit registration if this is complied
with; if not, it may refuse.

MakEC is challenging this particular requirement of the Commission (rule against double listing) may
deemed to have shown inability or refusal to abide by its rules, and thereby given ground for denying
registration.

Rule against double listing

Such rule provides: “… nor shall a security already listed in any securities exchange be listed anew in any
other securities exchange… .”

Objection of the MakEC on the above rule

The ManEC has been operating alone for 25years, and presumably, all available securities for trading in
the market are already listed there. In effect, the Commission permits MakEC to deal only with other
securities, which tantamount to a monopoly.

The Commission’s order/resolution makes it impossible for the MakEC to operate, thus, “permission is
tantamount to prohibition.

Issue/s

1. Whether or not the Commission has authority to promulgate and implement rules prohibiting
another exchange to operate on the ground that it is of the protection of “public interest”.
 2. Whether or not the establishment of another exchange environs of Manila would be inimical to
the public interest

3. Whether or not the double or multiple listing of securities should be prohibited for the
“protection of the investors”

Action of the court

The Court granted the petition.

Court rationale on the above case

Authority of the Commission to promulgate and implement the rule in question

It is fundamental that an administrative officer has only such powers as are expressly granted to him by
the statute, and those necessarily implied in the exercise thereof.

The test is not whether the Act forbids the Commission from imposing a prohibition, but whether it
empowers the Commission to prohibit. No specific portion of the statute has been cited to uphold this
power.

The general power to “regulate” which the Commission has (Sec. 33) does not imply authority to
prohibit.

ManEC contends that the power may be inferred from the express power of the Commission to suspend
trading in a security, under said sec. 28:

And if in its opinion, the public interest so requires, summarily to suspend trading in any registered
security on any securities exchange … . (Sec. 28[3], Securities Act.)

The Commission has not acted in pursuance of such authority, for the simple reason that suspension
under it may only be for ten days. Besides, the suspension of trading in the security should not be on one
exchange only, but on all exchanges; bearing in mind that suspension should be ordered “for the
protection of investors” (first par., sec. 28) in all exchanges, naturally, and if “the public interest so
requires” [sec. 28(3)].

The law allows the operation of two or more exchanges

Wherever two or more exchanges exist, the Commission, by order, shall require and enforce uniformity of
trading regulations in and/or between said exchanges. (Sec. 28b-13, Securities Act.)

The legislature has specified the conditions under which a stock exchange may operate (Sec. 17,
Securities Act); it is not for the Commission to impose others. Until otherwise directed by law, the
operation of exchanges should not be so regulated as practically to create a monopoly by preventing the
establishment of other stock exchanges and thereby contravening:

1. the organizers’ (Makati’s) Constitutional right to equality before the law;

2. their guaranteed civil liberty to pursue any lawful employment or trade; and

3. the investor’s right to choose where to buy or to sell, and his privilege to select the brokers in his
employment.
Where the licensing statute does not expressly or impliedly authorize the officer in charge, he may not
refuse to grant a license simply on the ground that a sufficient number of licenses to serve the needs of
the public have already been issued.

Ruling

Surely, this petition for review has suitably been coursed. And making reasonable allowances for the
presumption of regularity and validity of administrative action, we feel constrained to reach the
conclusion that the respondent Commission possesses no power to impose the condition of the rule,
which, additionally, results in discrimination and violation of constitutional rights.

ACCORDINGLY, the license of the petition to operate a stock exchange is approved without such
condition. Costs shall be paid by the Manila Stock Exchange. So ordered.

ANG YU V. CA (December 02, 1994)

FACTS:

Petitioner Ang Yu Asuncion and Keh Tiong leased a property of respondents Bobby Cu Unjieng, Rose Cu
Unjieng and Jose Tan in Binondo Manila.

Respondents informed plaintiffs that they are offering to sell the premises and are giving them priority
to acquire the same.

Respondents 6M for the property but petitioners offered 5M. Respondents acceted and asked
petitioners to put in writing the terms and conditions but the latter never provided such.

When defendants were about to sell the property, plaintiffs were compelled to file the complaint to
compel defendants to sell the property to them. Court recognizes the right of first refusal of the
petitioner. Notwithstanding the court’s decision, respondent sold the property to Buen Realty and
Development Corporation.

ISSUE:

WON petitioners can demand specific performance to the respondents to sell to them the property.

HELD:

The petitioners never accepted the offer when they refused to make the terms and condition of the
sale. As such, respondents has the right to sell the property to other parties.
Even if petitioners are aggrieved by the failure of private respondents to honor the right of first refusal,
the remedy is not a writ of execution on the judgment, since there is none to execute, but an action for
damages in a proper forum for the purpose

ANTONIO FRANCISCO v. CHEMICAL BULK CARRIERS, GR No. 193577, 2011-09-07

Facts:

Since 1965, Francisco was the owner and manager of a Caltex station in Teresa, Rizal. Sometime in
March 1993, four persons, including Gregorio Bacsa (Bacsa), came to Francisco's Caltex station and
introduced themselves as employees of CBCI. Bacsa offered to sell to Francisco a... certain quantity of
CBCI's diesel fuel.

After checking Bacsa's identification card, Francisco agreed to purchase CBCI's diesel fuel. Francisco
imposed the following conditions for the purchase: (1) that Petron Corporation (Petron) should deliver
the diesel fuel to Francisco at his business address which should be... properly indicated in Petron's
invoice; (2) that the delivery tank is sealed; and (3) that Bacsa should issue a separate receipt to
Francisco.

In February 1996, CBCI sent a demand letter to Francisco regarding the diesel fuel delivered to him but
which had been paid for by CBCI.[6] CBCI demanded that Francisco pay CBCI P1,053,527 for the diesel
fuel or CBCI would file a complaint against him in... court. Francisco rejected CBCI's demand.

On 16 April 1996, CBCI filed a complaint for sum of money and damages against Francisco and other
unnamed defendants.

CBCI demanded payment from Francisco but he... refused to pay. CBCI argued that Francisco should
have known that since only Petron, Shell and Caltex are authorized to sell and distribute petroleum
products in the Philippines, the diesel fuel came from illegitimate, if not illegal or criminal, acts.

Francisco explained that he operates the Caltex station with the help of his family because, in February
1978, he completely lost his eyesight due to sickness. Francisco claimed that he asked Jovito, his son,
to... look into and verify the identity of Bacsa, who introduced himself as a radio operator and
confidential secretary of a certain Mr. Inawat (Inawat), CBCI's manager for operations. Francisco said he
was satisfied with the proof presented by Bacsa. When asked to explain why CBCI... was selling its fuel,
Bacsa allegedly replied that CBCI was in immediate need of cash for the salary of its daily paid workers
and for petty cash. Francisco maintained that Bacsa assured him that the diesel fuel was not stolen
property and that CBCI enjoyed a big credit line... with Petron. Francisco agreed to purchase the diesel
fuel offered by Bacsa on the following conditions:

1. Defendant [Francisco] will not accept any delivery if it is not company (Petron) delivered, with
his name and address as shipping point properly printed and indicated in the invoice of Petron,
and that the product on the delivery tank is sealed; [and]
 2. Although the original invoice is sufficient evidence of delivery and payment, under ordinary
course of business, defendant still required Mr. Bacsa to issue a separate receipt duly signed by
him acknowledging receipt of the amount stated in the invoice, for and in behalf of

CBCI.[16]

During the first delivery on 5 April 1993, Francisco asked one of his sons to verify whether the delivery
truck's tank was properly sealed and whether Petron issued the invoice. Francisco said all his conditions
were complied with. There were 17 deliveries made from 5 April 1993... to 25 January 1994 and each
delivery was for 10,000 liters of diesel fuel at P65,865.[17] Francisco maintained that he acquired the
diesel fuel in good faith and for value. Francisco also filed a counterclaim for exemplary damages, moral
damages and... attorney's fees.

Issues:

WHETHER THE COURT OF APPEALS ERRED IN NOT FINDING THAT DEFENDANT ANTONIO FRANCISCO
EXERCISED THE REQUIRED DILIGENCE OF A BLIND PERSON IN THE CONDUCT OF HIS BUSINESS

Ruling:

Standard of conduct is the level of expected conduct that is required by the nature of the obligation and
corresponding to the circumstances of the person, time and place.[25] The most common standard of
conduct is that of a good father of a family or that... of a reasonably prudent person.[26] To determine
the diligence which must be required of all persons, we use as basis the abstract average standard
corresponding to a normal orderly person.

We note that Francisco, despite being blind, had been managing and operating the Caltex station for 15
years and this was not a hindrance for him to transact business until this time. In this instance, however,
we rule that Francisco failed to exercise the standard of conduct... expected of a reasonable person who
is blind. First, Francisco merely relied on the identification card of Bacsa to determine if he was
authorized by CBCI. Francisco did not do any other background check on the identity and authority of
Bacsa. Second, Francisco already expressed... his misgivings about the diesel fuel, fearing that they
might be stolen property,[29] yet he did not verify with CBCI the authority of Bacsa to sell the diesel
fuel. Third, Francisco relied on the receipts issued by Bacsa which were typewritten on a half... sheet of
plain bond paper.[30] If Francisco exercised reasonable diligence, he should have asked for an official
receipt issued by CBCI. Fourth, the delivery to Francisco, as indicated in Petron's invoice, does not show
that CBCI authorized Bacsa to sell... the diesel fuel to Francisco. Clearly, Francisco failed to exercise the
standard of conduct expected of a reasonable person who is blind.

Principles:

one who is physically disabled is required to use the same degree of care that a reasonably careful
person who has the same physical disability would use.[28] Physical handicaps and infirmities, such as
blindness or deafness, are treated as part of... the circumstances under which a reasonable person must
act. Thus, the standard of conduct for a blind person becomes that of a reasonable person who is blind.