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Makati Stock Exchange vs. Campos
Makati Stock Exchange vs. Campos
THIRD DIVISION
Promulgated:
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DECISION
CHICO-NAZARIO, J.:
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
respondents Petition before the SICD.
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.
Hence, the present Petition for Review raising the following arguments:
I.
THE SEC EN BANC DID NOT COMMIT GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT DISMISSED THE PETITION FILED BY RESPONDENT
BECAUSE ON ITS FACE, IT FAILED TO STATE A CAUSE OF ACTION.
II.
THE GRANT OF THE IPO ALLOCATIONS IN FAVOR OF
RESPONDENT WAS A MERE ACCOMMODATION GIVEN TO HIM BY
THE BOARD OF [DIRECTORS] OF THE MAKATI STOCK EXCHANGE,
INC.
III.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE SEC EN
BANC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION WHEN IT MADE AN
EXTENDED INQUIRY AND PROCEEDED TO MAKE A
DETERMINATION AS TO THE TRUTH OF RESPONDENTS
ALLEGATIONS IN HIS PETITION AND USED AS BASIS THE
EVIDENCE ADDUCED DURING THE HEARING ON THE
APPLICATION FOR THE WRIT OF PRELIMINARY INJUNCTION TO
DETERMINE THE EXISTENCE OR VALIDITY OF A STATED CAUSE
OF ACTION.
IV.
IPO ALLOCATIONS GRANTED TO BROKERS ARE NOT TO BE
BOUGHT BY THE BROKERS FOR THEMSELVES BUT ARE TO BE
DISTRIBUTED TO THE INVESTING PUBLIC. HENCE, RESPONDENTS
CLAIM FOR DAMAGES IS ILLUSORY AND HIS PETITION A
NUISANCE SUIT.3[3]
Petitioners want this Court to affirm the dismissal by the SEC en banc of
respondents Petition in SEC Case No. 02-94-4678 for failure to state a cause of
action. On the other hand, respondent insists on the sufficiency of his Petition
and seeks the continuation of the proceedings before the SICD.
A reading of the exact text of respondents Petition in SEC Case No. 02-
94-4678 is, therefore, unavoidable. Pertinent portions of the said Petition reads:
5 [5]Fil-Estate Golf and Development, Inc. v. Court of Appeals, 333 Phil. 465, 490-491
(1996).
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.
8. Hence, to this day, petitioner is not only an active member of the
respondent corporation, but its Chairman Emeritus as well.
9. Correspondingly, at all times material to this petition, as an active
member and Chairman Emeritus of respondent corporation, petitioner has
always enjoyed the right given to all the other members to participate equally
in the Initial Public Offerings (IPOs for brevity) of corporations.
10. IPOs are shares of corporations offered for sale to the public, prior
to the listing in the trading floor of the countrys two stock exchanges.
Normally, Twenty Five Percent (25%) of these shares are divided equally
between the two stock exchanges which in turn divide these equally among
their members, who pay therefor at the offering price.
11. However, on June 3, 1993, during a meeting of the Board of
Directors of respondent-corporation, individual respondents passed a resolution
to stop giving petitioner the IPOs he is entitled to, based on the ground that
these shares were allegedly benefiting Gerardo O. Lanuza, Jr., who these
individual respondents wanted to get even with, for having filed cases before
the Securities and Exchange (SEC) for their disqualification as member of the
Board of Directors of respondent corporation.
12. Hence, from June 3, 1993 up to the present time, petitioner has been
deprived of his right to subscribe to the IPOs of corporations listing in the stock
market at their offering prices.
13. The collective act of the individual respondents in depriving
petitioner of his right to a share in the IPOs for the aforementioned reason, is
unjust, dishonest and done in bad faith, causing petitioner substantial financial
damage.6[6]
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.7[7] An obligation is defined in the Civil
Code as a juridical necessity to give, to do or not to do.8[8] For every right
enjoyed by any person, there is a corresponding obligation on the part of
7 [7]Bailey v. Miller, 91 N.E. 24, 25, Ind. App. 475, cited in 37A Words and Phrases
363.
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.
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(5) Quasi-delicts.
In the case at bar, although the Petition in SEC Case No. 02-94-4678 does
allege respondents right to subscribe to the IPOs of corporations listed in the
stock market at their offering prices, and petitioners obligation to continue
respecting and observing such right, the Petition utterly failed to lay down the
source or basis of respondents right and/or petitioners obligation.
IPOs are shares of corporations offered for sale to the public, prior to their
listing in the trading floor of the countrys two stock exchanges. Normally,
Twenty-Five Percent (25%) of these shares are divided equally between
the two stock exchanges which in turn divide these equally among their
members, who pay therefor at the offering price.11[11] (Emphasis supplied)
There is no such law in this case that converts the practice of allocating
IPO shares to MKSE members, for subscription at their offering prices, into an
enforceable or demandable right. Thus, even if it is hypothetically admitted that
normally, twenty five percent (25%) of the IPOs are divided equally between
the two stock exchanges -- which, in turn, divide their respective allocation
equally among their members, including the Chairman Emeritus, who pay for
IPO shares at the offering price -- the Court cannot grant respondents prayer for
damages which allegedly resulted from the MKSE Board Resolution dated 3
12 [12] A distinction, however, should be made between Municipal Law and Public
International Law. Custom is one of the primary sources of International Law, and is
thus a source of legal rights within such sphere.
13 Arco Metal Products Co., Inc. v. Samahan ng mga Manggagawa sa Arco Metal-
[13]
NAFLU, G.R. No. 170734, 14 May 2008, 554 SCRA 110, 118.
June 1993 deviating from said practice by no longer allocating any shares to
respondent.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
DIOSDADO M. PERALTA
Associate
Justice
ATTESTATION
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice