#1 - G.R. No.

138814*

April 16, 2009

MAKATI STOCK EXCHANGE, INC., 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. Petitioners, vs.
MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE
CAMPOS, Respondent.

Miguel Campos filed with Securities, Investigation and Clearing Department (SICD)
of SEC a petition against MKSE and its directors for, among others, the nullification
of MKSE Board Resolution which allegedly deprived him of his right to participate
equally in the allocation of Initial Public Offerings (IPOs) of corporations registered
with MKSE. He further prayed for the issuance of TRO to enjoin petitioners from
implementing or enforcing the subject Board Resolution. The TRO was granted by
the SICD, and subsequently, granted the application for the issuance of WPI, which
order was assailed by the petitioners via Petition for Certiorari before the SEC
Enbanc.
Meanwhile, a Motion to Dismiss was filed by the petitioners before the SICD alleging
that the petition became moot due to the cancellation of MKSEs license; that SICD
had no jurisdiction; and for failure to state cause of action. Said MTD was denied by
SICD. The said denial was also assailed by the petitioners before the SEC Enbanc.
SEC Enbanc: Nullifies the order granting the issuance of WPI, and orders the
dismissal of petition filed by Campos before the SICD.
Court of Appeals: Granted Campos petition, rendering as null and void SEC
Enbanc orders, and subsequently denied the MR filed by the petitioners.
Thus, the present petition.
Issue:
Whether or not the petition failed to state a cause of action.
HELD: The petition filed by 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.
It contains three essential elements: 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 will be
dismissed on the ground of failure to state a cause of action.
Furthermore, the petition filed by respondent failed to lay down the source or basis
of respondents right and/or petitioners obligation.

Article 1157 of the Civil Code, provides that Obligations arise from:
law, Contracts, Quasi Contracts, Acts or omissions punished by law and quasi
delicts. Therefore an obligation imposed on a person and the corresponding right
granted to another, must be rooted in at least one of these five sources.
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. A pleading should state the ultimate facts
essential to the rights of action or defense asserted, as distinguished from mere
conclusions of fact or conclusions of law.
The 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.
The 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. 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.

#2 - G.R. No. 83748* May 12, 1989

FLAVIO K MACASAET & ASSOCIATES, INC., petitioner, vs.
COMMISSION ON AUDIT and PHILIPPINE TOURISM AUTHORITY, respondents.

Respondent PTA entered into a Contract with petitioner for Project Design and
Management Services for the development of the proposed Zamboanga Golf and
Country Club. Under the said contract, PTA obliged himself to pay petitioner a
professional fee of 7% of the actual construction cost. Upon completion of the
project, PTA paid petitioner what it perceived to be the balance of the latters
professional fees. However, it turned out that after project completion, PTA paid the
main contractor an additional amount representing the escalation cost of the
contract price due to the increase in the price of construction materials. Upon
learning of the price escalation, petitioner requested the payment of additional
professional fee representing the 7% of what it paid to the main contractor. PTA
denied payment on the ground that the subject price escalation referred to
increased cost of construction materials and did not entail additional work on the
part of the petitioner as to entitle it to additional compensation under the contract.
Petitioner sought reconsideration up to COA but to no avail. COA expressed the
opinion that to allow subject claim in the absence of a showing that extra or
additional services had been rendered by claimant would certainly result in
overpayment to him to the prejudice of the Government.

Hence, the present petition

ISSUE:
Whether or not petitioner is entitled to additional professional fees, or WON the
price escalation should be included in the final actual project cost.
HELD:
YES. The terminologies in the contract being clear, leaving no doubt as to the
intention of the contracting parties, their literal meaning control (Article 1370, Civil
Code). The price escalation cost must be deemed included in the final actual project
cost and petitioner held entitled to the payment of its additional professional fees.
Obligations arising from contract have the force of law between the
contracting parties and should be complied with in good faith (Article 11
59, Civil Code).