MAKATI STOCK EXCHANGE v. MIGUEL V. CAMPOS, GR No.

138814, 2009-04-16

Facts:

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. Arnai... z, 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 attorney's fees and litigation expenses.

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 attorney's fees and litigation expenses.

On 14 February 1994, the SICD issued an Order granting respondent's prayer for the issuance of a
Temporary Restraining Order to enjoin petitioners from implementing or enforcing the 3 June 1993
Resolution of the MKSE Board of Directors.

The SICD subsequently issued another Order on 10 March 1994 granting respondent's application for a
Writ of Preliminary Injunction, to continuously enjoin, during the pendency of SEC Case No. 02-94-4678,
the implementation or enforcement of the MKSE Board Resolution in question.

Petitioners assailed this SICD Order dated 10 March 1994 in a Petition for Certiorari filed with the SEC en
banc, docketed as SEC-EB No. 393.
On 11 March 1994, petitioners filed a Motion to Dismiss respondent's Petition in SEC Case No. 02-94-
4678, based on the following grounds: (1) the Petition became moot due to the cancellation of the
license of MKSE; (2) the SICD had no jurisdiction over the Petition; and (3) the

Petition failed to state a cause of action.

The SICD denied petitioner's Motion to Dismiss in an Order dated 4 May 1994. Petitioners again
challenged the 4 May 1994 Order of SICD before the SEC en banc through another Petition for Certiorari,
docketed as SEC-EB No. 403.

In an Order dated 31 May 1995 in SEC-EB No. 393, the SEC en banc nullified the 10 March 1994 Order of
SICD in SEC Case No. 02-94-4678 granting a Writ of Preliminary Injunction in favor of respondent.
Likewise, in an Order dated 14 August 1995 in SEC-EB No. 403, the SEC... en banc annulled the 4 May
1994 Order of SICD in SEC Case No. 02-94-4678 denying petitioners' Motion to Dismiss, and accordingly
ordered the dismissal of respondent's Petition before the SICD.

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.
Respondent's 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
respondent's Petition for Certiorari, thus:

Issues:

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 attorney's fees and litigation expenses.

rtment (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 attorney's fees and litigation expense... estigation 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 attorney's fees and
litigation expenses.

the issue of whether respondent's Petition in SEC Case No. 02-94-4678 sufficiently states a cause of
action may be alternatively stated as whether, hypothetically admitting to be true the allegations in
respondent's Petition in SEC Case No. 02-94-4678, the

SICD may render a valid judgment in accordance with the prayer of said Petition.

allegations in respondent's Petition in SEC Case No. 02-94-4678, the

SICD may render a valid judgment in accordance with the prayer of said Petit... herefore, una

"ELEVENTH - WHEREAS, Mr. Miguel Campos is the only surviving incorporator of the Makati Stock
Exchange, Inc. who has maintained his membership;

"WHEREAS, he has unselfishly served the Exchange in various capacities, as governor from 1977 to the
present and as President from 1972 to 1976 and again as President from 1988 to the present;
"WHEREAS, such dedicated service and leadership which has contributed to the advancement and well
being not only of the Exchange and its members but also to the Securities industry, needs to be
recognized and appreciated;

"WHEREAS, as such, the Board of Governors in its meeting held on February 09, 1989 has
correspondingly adopted a resolution recognizing his valuable service to the Exchange, reward the
same, and preserve for posterity such recognition by proposing a resolution to the membership... body
which would make him as Chairman Emeritus for life and install in the Exchange premises a
commemorative bronze plaque in his honor;

"NOW, THEREFORE, for and in consideration of the above premises, the position of the "Chairman
Emeritus" to be occupied by Mr. Miguel Campos during his lifetime and irregardless of his continued
membership in the Exchange with the Privilege to attend all membership meetings as... well as the
meetings of the Board of Governors of the Exchange, is hereby created."

Accordingly, the instant Petition should be granted. The Petition in SEC Case No. 02-94-4678 should be
dismissed for failure to state a cause of action. It does not matter that the SEC en banc, in its Order
dated 14 August 1995 in SEC-EB No. 403, overstepped its bounds by... not limiting itself to the issue of
whether respondent's Petition before the SICD sufficiently stated a cause of action. The SEC en banc may
have been mistaken in considering extraneous evidence in granting petitioners' Motion to Dismiss, but
its discussion thereof are... merely superfluous and obiter dictum. In the main, the SEC en banc did
correctly dismiss the Petition in SEC Case No. 02-94-4678 for its failure to state the basis for
respondent's alleged right, to wit:

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.
he 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.

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.

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.

Ruling:

Principles: