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 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).

The Petition, sought: (1) the nullification of the Resolution dated 3 June1993 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 SICD issued an Order granting respondent’s prayer for the issuance of a Temporary
Restraining Order to enjoin petitioners from implementing or enforcing the Resolution of the
MKSE Board of Directors. 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.

Issue

WHETHER OR NOT THE

PETITION FAILED TO
STATE A
CAUSE OF ACTION
WHETHER OR NOT THE
PETITION FAILED TO
STATE A
CAUSE OF ACTION
WHETHER OR NOT THE PETITION FAILED TO STATE A CAUSE OF ACTION.

Ruling

The petition filled by the respondent, Miguel Campos should be dismissed for failure to state a
cause of action.

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 acause of action

The mere assertion of a right and claim of an obligation in an initiatory pleading, whether a
Complaint or Petition, without identifying the basis or source thereof, is merely a conclusion of
fact and law. (In the case at bar, although the Petition in SEC Case No. 02-94-4678 does allege
respondent’s 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 respondent’s right and/or
petitioners’ obligation.)

Respondent merely quoted in his Petition the MKSE Board Resolution, passed sometime in
1989, granting him the position of Chairman Emeritus of MKSE for life. However, there is
nothing in the said Petition from which the Court can deduce that respondent, by virtue of his
position as Chairman Emeritus of MKSE, was 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. (allocation of IPO shares was merely alleged to have been done in accord
with a practice normally observed by the members of the stock exchange)A practice
or custom is, as a general rule, not a source of a legally demand ableor enforceable right.
 ANG YU ASUNCION v. CA, GR No. 109125,
1994-12-02
Facts

On July 29, 1987 a Second Amended Complaint for Specific Performance was filed by Ann Yu
Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan
before the Regional Trial Court, Branch 31, Manila in Civil Case No. 87-41058, alleging, among
others, that plaintiffs are tenants or lessees of residential and commercial spaces owned by
defendants described as Nos. 630-638 Ongpin Street, Binondo, Manila; that they have occupied
said spaces since 1935 and have been religiously paying the rental and complying with... all the
conditions of the lease contract; that on several occasions before October 9, 1986, defendants
informed plaintiffs that they are offering to sell the premises and are giving them priority to
acquire the same; that during the negotiations, Bobby Cu Unjieng offered a price... of P6-million
while plaintiffs made a counter offer of P5-million; that plaintiffs thereafter asked the defendants
to put their offer in writing to which request defendants acceded; that in reply to defendants'
letter, plaintiffs wrote them on October 24, 1986 asking that they... specify the terms and
conditions of the offer to sell; that when plaintiffs did not receive any reply, they sent another
letter dated January 28, 1987 with the same request; that since defendants failed to specify the
terms and conditions of the offer to sell and because of information received that defendants
were about to sell the property, plaintiffs were compelled to file the complaint to compel
defendants to sell the property to them.

Issue

Whether or not Buen Realty can be held bound by the writ of execution by virtue of the notice of
list pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the time of
the latter's purchase of the property on 15 November 1991 from the Cu Unjiengs.

Ruling

Among the sources of an obligation is a contract (Art. 1157, Civil Code), which is a meeting of
minds between two persons whereby one binds himself, with respect to the other, to give
something or to render some service (Art. 1305, Civil Code). A contract undergoes various...
stages that include its negotiation or preparation, its perfection and, finally, its consummation.
Negotiation covers the period from the time the prospective contracting parties indicate interest
in the contract to the time the contract is concluded (perfected). The perfection of the contract
takes place upon the concurrence of the essential elements thereof. A contract which is
consensual as to perfection is so established upon a mere meeting of minds, the concurrence of
offer and acceptance, on the object and on the cause thereof. A contract which requires, in
addition to the above, the delivery of the object of the agreement, as in a pledge or Commo
datum, is commonly referred to as a real contract. In a solemn contract, compliance with certain
formalities prescribed by law, such as in a donation of real property, is essential in order to make
the act valid, the prescribed form being thereby an essential element thereof. The stage of
consummation begins when the parties perform their respective undertakings under the contract
culminating in the extinguishment thereof.

Until the contract is perfected, it cannot, as an independent source of obligation, serve as a

binding juridical relation. In sales, particularly, to which the topic for discussion about the case at
bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a
price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer,
over which the latter agrees. Article 1458 of the Civil Code provides:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A negotiation is formally initiated by an offer. An imperfect promise (solicitation) is merely an
offer.

Thus, at any time prior to the perfection of the contract, either negotiating party may stop the
negotiation.' The offer, at this stage, may be withdrawn; the withdrawal is effective immediately
after its manifestation, such as by its mailing and not necessarily when the offeree learns of the
withdrawal.

FLAVIO MACASAET V. COA (G.R. NO. 83748)

Facts

Philippine Tourism Authority (PTA) entered into a contract with petitioner for "Project Design
and Management Services for the development of the proposed Zamboanga Golf and Country
Club, Calarian, Zamboanga City." It was agreed that seven percent (7%) of the "total
construction cost" would be paid to petitioner. During project progress, gradual payment based
on completion percentage would be paid to petitioner; upon completion, any balance due to
petitioner would be paid based on "final actual construction cost." Later, after completion, PTA
paid more than 3 million pesos to Supra Construction Company because of escalation in the cost
of materials. Petitioner discovered this and demanded payment of more than 200 thousand
representing seven percent (7%) of the 3 million pesos. PTA argued that, since there was no
extra service or work done by petitioner, the latter is not entitled to said amount. Petitioner went
to the Commission on Audit (COA) via a request for completion of payment; COA sided with
PTA.

Issue

Whether or not should the seven percent (7%) professional fee of Macasaet apply to the
escalation cost payment of PTA to Supra Construction Company.

Ruling

Even if the escalation clause is not indicated in the contract between PTA and Macasaet, it may
be considered as already “built-in” and understood from the very terms “actual construction
cost,” and eventually “final actual project cost.” And still observing the basic principle of
relativity of contracts where contracts can only bind the parties who entered into it, and cannot
favor or prejudice a third person, even if he is aware of such contract and has acted with
knowledge thereof. (Contributed by Danica R. Tuliao)

WHEREFORE, the ruling of respondent Commission on Audit is hereby SET ASIDE and
respondent Philippine Tourism Authority is hereby ordered to pay petitioner the additional
amount of P219,302.47 to complete the payment of its professional fee under their Contract for
Project Design and Management Services.

People's Car vs Commando Security G.R. No. L

36840.
Facts

The People's Car acquired a contract with Commando Security under a Guard Service Contract
to safeguard and protect the business premises of the plaintiff from theft, pilferage, robbery,
vandalism, and all other unlawful acts of any person/s prejudicial to the interest of the plaintiff.

Whilst the defendant took the car on April 5, 1970, around 1:00 am without any authority,
consent, approval, or orders of the plaintiff the guard lost control and damage the car amounting
to 8,489.10
The plaintiff claims that the defendant should acknowledge the sole responsibility for an act done
during their watch hours base on paragraph 5 of the contract they made. The defendant
contradicted that the liability shall not exceed ₱1,000.00 per guard post for any loss and damage
through the negligence of the guard as written under paragraph 4of the contract.

Issue

Whether or not the defendant is the sole responsible for the damages on the incident.

Ruling

In this appeal from the adverse judgment of the Davao court of first instance limiting plaintiff-
appellant’s recovery under its complaint to the sum of P1,000.00 instead of the actual damages of
P8,489.10 claimed and suffered by it as a direct result of the wrongful acts of defendant security
agency’s guard assigned at plaintiff’s premises in pursuance of their "Guard Service Contract",
the Court finds merit in the appeal and accordingly reverses the trial court’s judgment.

The appeal was certified to this Court by a special division of the Court of Appeals on a four-to-
one vote as per its resolution of April 14, 1973 that "since the case was submitted to the court a
quo for decision on the strength of the stipulation of facts, only questions of law can he involved
in the present appeal."

The Court has accepted such certification and docketed this appeal on the strength of its own
finding from the records that plaintiff’s notice of appeal was expressly to this Court (not to the
appellate court) "on pure questions of law" 1 and its record on appeal accordingly prayed that
"the corresponding records be certified and forwarded to the Honorable Supreme Court." 2 The
trial court so approved the same 3 on July 3, 1971 instead of having required the filing of a
petition for review of the judgment sought to be appealed from directly with this Court, in
accordance with the provisions of Republic Act 5440. By some unexplained and hitherto
undiscovered error of the clerk of court, furthermore, the record on appeal was erroneously
forwarded to the appellate court rather than to this Court.

Plaintiff in law could not tell its customer, as per the trial court’s view, that "under the Guard
Service Contract it was not liable for the damage but the defendant" — since the customer could
not hold defendant to account for the damages as he had no privity of contract with defendant.
Such an approach of telling the adverse party to go to court, notwithstanding his plainly valid
claim, aside from its ethical deficiency among others, could hardly create any goodwill for
plaintiff’s business, in the same way that defendant’s baseless attempt to evade fully discharging
its contractual liability to plaintiff cannot be expected to have brought it more business. Worse,
the administration of justice is prejudiced, since the court dockets are unduly burdened with
unnecessary litigation.

ACCORDINGLY, the judgment appealed from is hereby reversed and judgment is hereby
rendered sentencing defendant-appellee to pay plaintiff-appellant the sum of P8,489.10 as and by
way of reimbursement of the stipulated actual damages and expenses, as well as the costs of suit
in both instances. It is so ordered.

Pelayo v. Lauron G.R. No. 4089. January 12, 1909

Facts

On the 23d of November, 1900, Arturo Pelayo, a physician residing in Cebu, filed a complaint
against Marcelo Lauron and Juana Abella setting forth that on or about the 13th of October of
said year, at night, the plaintiff was called to the house of the defendants, situated in San Nicolas,
and that upon arrival he was requested by them to render medical assistance to their daughter-in-
law who was about to give birth to a child.

In answer to the complaint counsel for the defendants denied all of the allegations therein
contained and alleged as a special defense, that their daughter-in-law had died in consequence of
the said childbirth, and that when she was alive she lived with her husband independently and in
a separate house without any relation whatever with them, and that, if on the day when she gave
birth she was in the house of the defendants, her stay there was accidental and due to fortuitous
circumstances; therefore, he prayed that the defendants be absolved of the complaint with costs
against the plaintiff.

The plaintiff demurred to the above answer, and the court below sustained the demurrer,
directing the defendants, on the 23d of January, 1907, to amend their answer.

As a result of the evidence adduced by both parties, judgment was entered by the court below on
the 5th of April, 1907, whereby the defendants were absolved from the former complaint, on
account of the lack of sufficient evidence to establish a right of action against the defendants,
with costs against the plaintiff, who excepted to the said judgment and in addition moved for a
new trial on the ground that the judgment was contrary to law; the motion was overruled and the
plaintiff excepted and in due course presented the corresponding bill of exceptions.

Issue

Whether who's obligated to pay the bill for Pelayo

Ruling

If every obligation consists in giving, doing, or not doing something (art. 1088), and spouses are
mutually bound to support each other, there can be no question but that, when either of them by
reason of illness should be in need of medical assistance, the other is under the unavoidable
obligation to furnish the necessary services of a physician in order that health may be restored,
and he or she may be freed from the sickness by which life is jeopardized; the party bound to
furnish such support is therefore liable for all expenses, including the fees of the medical expert
for his professional services. This liability originates from the above-cited mutual obligation
which the law lias expressly established between the married couple.

The fact that it was not the husband who called the plaintiff and requested his assistance for his
wife is no bar to the fulfillment of the said obligation, as the defendants, in view of the imminent
danger to which the life of the patient was at that moment exposed, considered that medical
assistance was urgently needed, and the obligation of the husband to furnish his wife with the
indispensable services of a physician at such critical moments is specially established by the law,
as has been seen, and compliance therewith is unavoidable; therefore, the plaintiff, who believes
that he is entitled to recover his fees, must direct his action against the husband who is under
obligation to furnish medical assistance to his lawful wife in such an emergency.