MAKATI STOCK EXCHANGE v. CAMPOS G.R. No.

138814, THIRD DIVISION, April 16, 2009, CHICO-

NAZARIO, J.

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.

The Petition in SEC Case No. 02-94-4678, although asserts a right of Campos and a correlative obligation
of MKSE, failed to lay down the source of the obligation of MKSE or the basis of Campos’s right. The
petition merely quoted the MKSE Resolution, but nothing in the said Petition from which the Court can
deduce that Camposwas granted by law, contract, or any other legal source, the right to subscribe to the
IPOs of corporations listed in the stock market at their offering prices.

FACTS:
Respondent Campos instituted SEC Case No. 02-94-4678 with the Securities, Investigation and Clearing
Department (SICD) of the Securities and Exchange Commission, a petition against Makati Stock
Exchange, Inc., and its directors. Seeking for the nullification of a Resolution 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. The SICD issued a TRO and a Writ of Preliminary
Injunction to enjoin MKSE from enforcing the Resolution. MKSE appealed the case to the SEC en banc for
its failure to state a cause of action. SEC-EB reversed all of SICD’s orders. Campos then filed a Petition for
Certiorari before the CA and it annulled SEC-EB’s decisions.

ISSUE:
1. Whether SEC Case No. 02-94-4678 can state the source of respondent’s right and/or petitioners’
obligation. (No)
2. Whether or not SEC Case No. 02-94-4678 sufficiently states a cause of action. (NO)

MAKATI STOCK
EXCHANGE v. CAMPOS
G.R. No. 138814, THIRD
DIVISION, April 16, 2009,
CHICO-NAZARIO, J.
CASE DIGEST
FACTS:
Miguel V. Campos instituted
the SEC Case No. 02-94-
4678 with the
Securities, Investigation and
Clearing Department (SICD)
of the Securities
Exchange Commission against
Makati Stock Exchange, Inc. on
February 10,
1994 which sought the
nullification of the Resolution
dated June 3, 1993 of
the MKSE which allegedly
denied Campos of possessing
the right to take part
of allocation of Initial Public
Offerings (IPO) equally, the
delivery of IPO shares
that Campos allegedly deprived
of, and the payment of P2
million as moral
damages, P1 million as
exemplary damages, and
P500,000 as attorney’s fees
and litigation expenses.
 The SICD issued a Temporary
Restraining Order on February
14, 1994
and a Writ of Preliminary
Injunction on March 10, 1994 to
prohibit MKSE of
implementing the Resolution.
MKSE filed a Motion to
Dismiss Campos’s Petition in
SEC Case No. 02-
94-4678 on March 11, 1994.
The SICD denied this Motion to
Dismiss in an
Order on May 4, 1994.
MKSE responded by filing a
petition with the SEC en banc
dated on May
31, 1995 and August 14, 1995,
that reversed SICD’s Orders on
March 10,
1994 and May 4, 1994.
Campos filed a Petition for
Certiorari with the Court of
Appeals to annul
SEC en banc’s Orders on May
31, 1995 and August 14, 1995
that reversed
SICD’s Orders.
The petition that Campos filed
for Certiorari with the Court of
Appeals
was granted on February
11, 1997. Which then
annulled SEC en banc’s
decisions.
MKSE filed a Motion for
Reconsideration of the
Decision. The Motion for
Reconsideration was denied by
the Court of Appeals in a
Resolution dated 18
May 1999.
ISSUES:
Whether SEC Case No.
02-94-4678 can state the
source of
respondent’s right and/or
petitioners’ obligation. (No)
Whether or not SEC Case No.
02-94-4678 sufficiently states a
cause of
action. (No)
MAKATI STOCK
EXCHANGE v. CAMPOS
G.R. No. 138814, THIRD
DIVISION, April 16, 2009,
CHICO-NAZARIO, J.
CASE DIGEST
FACTS:
Miguel V. Campos instituted
the SEC Case No. 02-94-
4678 with the
Securities, Investigation and
Clearing Department (SICD)
of the Securities
Exchange Commission against
Makati Stock Exchange, Inc. on
February 10,
1994 which sought the
nullification of the Resolution
dated June 3, 1993 of
the MKSE which allegedly
denied Campos of possessing
the right to take part
of allocation of Initial Public
Offerings (IPO) equally, the
delivery of IPO shares
that Campos allegedly deprived
of, and the payment of P2
million as moral
damages, P1 million as
exemplary damages, and
P500,000 as attorney’s fees
and litigation expenses.
 The SICD issued a Temporary
Restraining Order on February
14, 1994
and a Writ of Preliminary
Injunction on March 10, 1994 to
prohibit MKSE of
implementing the Resolution.
MKSE filed a Motion to
Dismiss Campos’s Petition in
SEC Case No. 02-
94-4678 on March 11, 1994.
The SICD denied this Motion to
Dismiss in an
Order on May 4, 1994.
MKSE responded by filing a
petition with the SEC en banc
dated on May
31, 1995 and August 14, 1995,
that reversed SICD’s Orders on
March 10,
1994 and May 4, 1994.
Campos filed a Petition for
Certiorari with the Court of
Appeals to annul
SEC en banc’s Orders on May
31, 1995 and August 14, 1995
that reversed
SICD’s Orders.
The petition that Campos filed
for Certiorari with the Court of
Appeals
was granted on February
11, 1997. Which then
annulled SEC en banc’s
decisions.
MKSE filed a Motion for
Reconsideration of the
Decision. The Motion for
Reconsideration was denied by
the Court of Appeals in a
Resolution dated 18
May 1999.
ISSUES:
Whether SEC Case No.
02-94-4678 can state the
source of
respondent’s right and/or
petitioners’ obligation. (No)
Whether or not SEC Case No.
02-94-4678 sufficiently states a
cause of
action. (No)
MAKATI STOCK
EXCHANGE v. CAMPOS
G.R. No. 138814, THIRD
DIVISION, April 16, 2009,
CHICO-NAZARIO, J.
CASE DIGEST
FACTS:
Miguel V. Campos instituted
the SEC Case No. 02-94-
4678 with the
Securities, Investigation and
Clearing Department (SICD)
of the Securities
Exchange Commission against
Makati Stock Exchange, Inc. on
February 10,
1994 which sought the
nullification of the Resolution
dated June 3, 1993 of
the MKSE which allegedly
denied Campos of possessing
the right to take part
of allocation of Initial Public
Offerings (IPO) equally, the
delivery of IPO shares
that Campos allegedly deprived
of, and the payment of P2
million as moral
damages, P1 million as
exemplary damages, and
P500,000 as attorney’s fees
and litigation expenses.
 The SICD issued a Temporary
Restraining Order on February
14, 1994
and a Writ of Preliminary
Injunction on March 10, 1994 to
prohibit MKSE of
implementing the Resolution.
MKSE filed a Motion to
Dismiss Campos’s Petition in
SEC Case No. 02-
94-4678 on March 11, 1994.
The SICD denied this Motion to
Dismiss in an
Order on May 4, 1994.
MKSE responded by filing a
petition with the SEC en banc
dated on May
31, 1995 and August 14, 1995,
that reversed SICD’s Orders on
March 10,
1994 and May 4, 1994.
Campos filed a Petition for
Certiorari with the Court of
Appeals to annul
SEC en banc’s Orders on May
31, 1995 and August 14, 1995
that reversed
SICD’s Orders.
The petition that Campos filed
for Certiorari with the Court of
Appeals
was granted on February
11, 1997. Which then
annulled SEC en banc’s
decisions.
MKSE filed a Motion for
Reconsideration of the
Decision. The Motion for
Reconsideration was denied by
the Court of Appeals in a
Resolution dated 18
May 1999.
ISSUES:
Whether SEC Case No.
02-94-4678 can state the
source of
respondent’s right and/or
petitioners’ obligation. (No)
Whether or not SEC Case No.
02-94-4678 sufficiently states a
cause of
action. (No)
RULING:
Even the Petition in SEC Case
No. 02-94-4678 does allege a
right and
an obligation, it failed to state
the basis of his alleged right to
participat
RULING:

Even the Petition in SEC Case No. 02-94-4678 does allege a right and an obligation, it failed to state the
basis of his alleged right to participate equally in the Initial Public Offerings (IPO) allocations of Exchange,
and his alleged obligation of MKSE to respect the alleged right. The respondent’s petition merely created
the position of chairman emeritus of the Exchange but it did not mention anything that the court could
deduce that Campos was granted by law, contract, or any other legal source, the right. The Petition in
SEC Case No. 02-94-4678 is dismissed for failing to state the cause of action regardless of SEC en banc
Order on August 14, 1995 overstepping its bounds by not limiting itself to the matter of whether
Campos’ Petition before the SICD sufficiently stated a cause of action. With the dismissal of respondent’s
Petition in SEC Case No. 02-94- 4678, the Petition is granted. The decision of Court of Appeals on
February 11, 1997 and its Resolution on May 18, 1999 was reversed and set aside. The Orders of SEC en
banc on May 31, 1995 and August 14, 1995 are reinstated.

COMMENTS: SEC en banc’s dismissal of the respondent’s Petition in SEC Case No. 02-94-4678 before the
SICD should have ended this case regardless of SICD insisting that the petition did sufficiently stated the
cause of action even though it did not. The decision of the Court of Appeals dated on February 11, 1997
that granted the nullification SEC en banc’s decisions is a mistake. The Motion of Reconsideration should
have been granted to the petitioners by the Court of Appeals because the respondent’s Petition in SEC
Case No. 02-94- 4678, which is the root of this case, failed to state the cause of action in the first place.
But I do still agree to the decision of Justices that dismissed the respondent’s Petition in SEC Case No.
02-94-4678 and reversed the decisions of Court of Appeals on February 11, 1997 and its Resolution on
May 18, 1999 which then reinstated SEC EB’s Orders dated 31 May, 1995 and 14 August, 1995.

MAKATI STOCK
EXCHANGE v. CAMPOS
G.R. No. 138814, THIRD
DIVISION, April 16, 2009,
CHICO-NAZARIO, J.
CASE DIGEST
FACTS:
Miguel V. Campos instituted
the SEC Case No. 02-94-
4678 with the
Securities, Investigation and
Clearing Department (SICD)
of the Securities
Exchange Commission against
Makati Stock Exchange, Inc. on
February 10,
1994 which sought the
nullification of the Resolution
dated June 3, 1993 of
the MKSE which allegedly
denied Campos of possessing
the right to take part
of allocation of Initial Public
Offerings (IPO) equally, the
delivery of IPO shares
that Campos allegedly deprived
of, and the payment of P2
million as moral
damages, P1 million as
exemplary damages, and
P500,000 as attorney’s fees
and litigation expenses.
 The SICD issued a Temporary
Restraining Order on February
14, 1994
and a Writ of Preliminary
Injunction on March 10, 1994 to
prohibit MKSE of
implementing the Resolution.
MKSE filed a Motion to
Dismiss Campos’s Petition in
SEC Case No. 02-
94-4678 on March 11, 1994.
The SICD denied this Motion to
Dismiss in an
Order on May 4, 1994.
MKSE responded by filing a
petition with the SEC en banc
dated on May
31, 1995 and August 14, 1995,
that reversed SICD’s Orders on
March 10,
1994 and May 4, 1994.
Campos filed a Petition for
Certiorari with the Court of
Appeals to annul
SEC en banc’s Orders on May
31, 1995 and August 14, 1995
that reversed
SICD’s Orders.
The petition that Campos filed
for Certiorari with the Court of
Appeals
was granted on February
11, 1997. Which then
annulled SEC en banc’s
decisions.
MKSE filed a Motion for
Reconsideration of the
Decision. The Motion for
Reconsideration was denied by
the Court of Appeals in a
Resolution dated 18
May 1999.
ISSUES:
Whether SEC Case No.
02-94-4678 can state the
source of
respondent’s right and/or
petitioners’ obligation. (No)
Whether or not SEC Case No.
02-94-4678 sufficiently states a
cause of
action. (No)
RULING:
Even the Petition in SEC Case
No. 02-94-4678 does allege a
right and
an obligation, it failed to state
the basis of his alleged right to
participat
COMMENTS:
SEC en banc’s dismissal of the
respondent’s Petition in SEC
Case No.
02-94-4678 before the SICD
should have ended this case
regardless of SICD
insisting that the petition did
sufficiently stated the cause
of action even
though it did not. The decision
of the Court of Appeals dated
on February 11,
1997 that granted the
nullification SEC en banc’s
decisions is a mistake. The
Motion of Reconsideration
should have been granted to the
petitioners by the
Court of Appeals bec
COMMENTS:
SEC en banc’s dismissal of the
respondent’s Petition in SEC
Case No.
02-94-4678 before the SICD
should have ended this case
regardless of SICD
insisting that the petition did
sufficiently stated the cause
of action even
though it did not. The decision
of the Court of Appeals dated
on February 11,
1997 that granted the
nullification SEC en banc’s
decisions is a mistake. The
Motion of Reconsideration
should have been granted to the
petitioners by the
Court of Appeals bec