MAKATI STOCK EXCHANGE, INC.VS MIGUEL CAMPOS G.R. NO. 138814, APRIL 26, 2009 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 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 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. On 11 March 1994, petitioners filed a Motion to Dismiss respondent’s Petition 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. Petitioners again challenged Order of SICD before the SEC en banc through another Petition for Certiorari. The SEC en banc nullified the Order of SICD granting a Writ of Preliminary Injunction in favour of respondent. SEC en banc annulled the 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. Petitioners filed a Motion for Reconsideration but was denied by the Court of Appeals. ISSUE: 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 a cause of action. extendible for another 20 years. and petitioners’ obligation to continue respecting and observing such right. Fernandez Sts. whether a Complaint or Petition. not a source of a legally demandable or enforceable right. Visitacion received a letter12 from Mayor Comendador directing her to demolish her store in order to give way for the construction of a new municipal market building. a fire razed the public market of Nagcarlan. Justice J. This finding of Engineer Gorospe was contested by the Municipality of Nagcarlan.L. contract. Private Respondent Visitacion’s late mother Marciana Vda. Art.) Respondent merely quoted in his Petition the MKSE Board Resolution.However. Nagcarlan. 02-94-4678 does allege respondent’s right to subscribe to the IPOs of corporations listed in the stock market at their offering prices. by virtue of his position as Chairman Emeritus of MKSE. (In the case at bar. A right is a claim or title to an interest in anything whatsoever that is enforceable by law while an obligation is defined in the Civil Code as a juridical necessity to give.11 Regional Office No. found that the store of Visitacion remained intact and stood strong. Visitacion took over the store when her mother died sometime in 1984. De Coronado (Vda. Upon Visitacion’s request for inspection on 15 May 1986. 3(e) of Republic Act No. (3) Quasi-contracts. Right and obligation are legal terms with specific legal meaning. at Poblacion. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act" before the Office of the Ombudsman. doing or not doing). although the Petition in SEC Case No. or any other legal source. De Coronado could build a firewall on her rented property which must be at least as high as the store. granting him the position of Chairman Emeritus of MKSE for life. De Coronado) and the Municipality of Nagcarlan. passed sometime in 1989. as a general rule. and in case of modification of the public market. Mayor Comendador relying on the strength of Sangguniang Bayan Resolutions authorized the demolition of the store with Asilo and Angeles supervising the work. and (5) Quasi-delicts.10 Sometime in 1986.B. Asilo vs People On 15 March 1978. is merely a conclusion of fact and law. was granted by law. thereafter. may demand satisfaction from the assets of the latter.8 The lease contract provided that the late Vda. there is nothing in the said Petition from which the Court can deduce that respondent. Visitacion secured the yearly Mayor’s permits. (2) Contracts. in favor of the respondent’s mother for a period of twenty (20) years beginning on 15 March 1978 until 15 March 1998. 1157 of the Civil Code provides that Obligations arise from (1) Law. (4) Acts or omissions punished by law. The store of Visitacion continued to operate after the fire until 15 October 1993. Manalang) entered into a lease contract whereby the Municipality allowed the use and enjoyment of property comprising of a lot and a store located at the corner of Coronado and E. Reyes offers the definition given by Arias Ramos as a more complete definition: 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. District Engineer Marcelino B. Asilo and Angeles for violation of Sec. The mere assertion of a right and claim of an obligation in an initiatory pleading. and in case of breach. Laguna. without identifying the basis or source thereof. Gorospe (Engineer Gorospe) of the then Ministry of Public Works and Highways. However. Spouses Bombasi. the right to subscribe to the IPOs of corporations listed in the stock market at their offering prices. filed a criminal complaint21 against Mayor Comendador. she or her heir/s would be given preferential rights. the Petition utterly failed to lay down the source or basis of respondent’s right and/or petitioners’ obligation. (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. Laguna (represented by the then Municipal Mayor Crisostomo P. to do or not to do. IV-A.9 From then on up to January 1993. the terms right and obligation are not magic words that would automatically lead to the conclusion that such Petition sufficiently states a cause of action. . was established. 3019. Unlike its predecessor law. evident bad faithor gross inexcusable negligence. The partnership was still not initiated. In behalf of the said partnership and upon obtaining the said exclusive franchise the defendant stipulated to pay the plaintiff 30% of the profits. Art. through estoppel. and (5) that the public officers have acted with manifest partiality. the accused public officials were under the facts of this case. including the Government. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions. was placed in estoppel after it granted yearly business permits45 in favor of the Spouses Bombasi. advantage or preference in the discharge of his official. only the agreement to work with each other. 1167.33 We sustain the Sandiganbayan in its finding of criminal and civil liabilities against petitioner Asilo and petitioner Mayor Comendador as here represented by his widow Victoria Bueta.42the present Local Government Code43 does not expressly provide for the abatement of nuisance. HALILI Facts: The Plaintiff entered into an agreement with the defendant for the establishment of a partnership for bottling and distribution of Mission soft drinks. administrative or judicial functions throughmanifest partiality. the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful: xxxx (e) Causing any undue injury to any party.44 And even assuming that the power to abate nuisance is provided for by the present code. (2) that said public officers commit the prohibited acts during the performance of their official duties or in relation to their public positions. (4) OR that such injury is caused by giving unwarranted benefits. an admission or representation is rendered conclusive upon the person making it. The elements of the offense are as follows: (1) that the accused are public officers or private persons charged in conspiracy with them. Art. Furthermore. evident bad faith or gross inexcusable negligence. advantage or preference to the other party. WOODHOUSE VS. (3) that they caused undue injury to any party. It is utterly unjust for the Municipality to receive the benefits of the store operation and later on claim the illegality of the business. 3(e) of Republic Act No. . 3019 provides: In addition to acts or omissions of public officers already penalized by existing law. Angeles. The parties then proceeded with the signing of the agreement. Sangguniang Bayan resolutions are not enough to justify demolition. Laguna. subject only to 30 days. The plaintiff sought to obtain the said exclusive franchise but was only given a temporary one. or giving any private party any unwarranted benefits. Before the partnership was actually established the defendant required the plaintiff to secure an exclusive franchise for the said venture. and Mayor Comendador. 1431 of the New Civil Code provides that. the Municipality of Nagcarlan. and cannot be denied or disproved as against the person relying thereon. with the plaintiff as manager and the defendant as financer. the same shall be executed at his cost.Issue: Whether or not the government is stopped from questioning the legality of the market stalls thus establishing that the demolition was done in bad faith Held: Section 3(e) of Republic Act No. whether the Government or a private party. The representation made by the municipality that the Spouses Bombasi had the right to continuously operate its store binds the municipality. still devoid of any power to demolish the store. as represented by the then Mayor Comendador. If a person obliged to do something fails to do it. The bad faith of the petitioners completes the elements of the criminal offense of violation of Sec. The same bad faith serves as the source of the civil liability of Asilo. a passenger truck and an automobile of private ownership collided while attempting to pass each other on a bridge. ISSUE: Whether or not both the driver of the truck and automobile are liable for damages and indemnification due to their negligence. On the other hand. together with several other members of the Gutierrez family were accommodated therein. The parties cannot be compelled to enter into a contract of partnership. The fraud employed was not such as to render the contract null and void but only such as to hold the plaintiff liable for damages. Manuel Gutierrez. Fraud was undoubtedly employed by the plaintiff to secure the consent of the defendant to enter into the contract with him by representing himself as holder of exclusive franchise rights when in fact he only holds a temporary franchise right good for 30 days. When the operations of the business began he was paid P 2. Saturnino Cortez’s and his chauffeur Abelardo Velasco’s obligation rise from culpa contractual. NO. saying that there was no hurry to do so. But in the next month. Such amount was the spontaneous reaction of the defendant upon knowledge of the misrepresentation of the plaintiff and amounts to the virtual modification of their contract.000 and the car was withdrawn from him. the pay was decreased to P 1. Issues: (1) Whether the representation of the plaintiff in saying that he had exclusive franchise rights rather than the actual temporary right he possessed invalidated the contract (2) Whether the court may compel the defendant to execute the contract of partnership between the parties (3) What will be the amount of damages to be paid to the plaintiff? Held: The Decision of the Court of First Instance is affirmed with modification. The 15% that the Trial court ordered the defendant to pay the plaintiff is deemed to be the appropriate and reasonable. It does not invalidate the contract since fraud was only employed to secure the 30% stipulated share from the partnership. but the mother. and Mrs. The truck was driven by the chauffeur Abelardo Velasco. different from the exclusive franchise rights they stipulated in their contract. 34840 SEPTEMBER 23. and was owned by Bonifacio’s father and mother. . The law recognizes the liberty of an individual to do or not to do an act. The automobile was being operated by Bonifacio Gutierrez. Such fraud is merely incidental (dolo incidental) and not the causal fraud (dolo causante) that is detrimental to a contract. The collision between the bus and the automobile resulted in Narciso Gutierrez suffering a fractured right leg which required medical attendance for a considerable period of time.000 and was allowed the use of a car. Hence the present action. the father was not in the car. It also held that execution of the contract of partnership cannot be enforced upon the defendant and that fraud as alleged by the defendant was also not proved. but the defendant excused himself.Together the two parties went to the US to formally sign the contract of franchise with Mission Dry Corporation. 1930. What are the legal obligations of the defendants? HELD: Bonifacio Gutierrez’s obligation arises from culpa aquiliana. GUTIERREZ VS GUTIERREZ G. The Court of First Instance ordered the defendant to render an accounting of the profits and to pay the plaintiff 15% of such amount. The defendant then found out about the temporary franchise right given to the plaintiff. and was owned by saturnine Cortez. The plaintiff demanded the execution of the partnership. Mr.R. 1931 FACTS: On February 2. a lad 18 years of age. The action falls within Acto Personalisimo (a very personal act) which courts may not compel compliance. At the time of the collision. Court of Appeals.The youth Bonifacio was na incompetent chauffeur. The guaranty given by the father at the time the son was granted a license to operate motor vehicles made the father responsible for the acts of his son. and that if ever. 1903 of the Civil Code. Philippine National Construction Corporation. and MARVIN HILL. assuming the awards made in the two cases vary. In other words. minor. refers exclusively to civil liability founded on Article 100 of the Revised Penal Code. as father and Natural Guardian of said minor G. Based on these facts. No. L-24803 May 26. provided that the offended party is not allowed. to recover damages on both scores. and would be entitled in such eventuality only to the bigger award of the two.00 and shall be increased by five percent (5%) yearly" "shall be paid yearly in advance" "Property shall be used by the Lessee as the site. deceased vs. Elcano filed acriminal case against Reginald but Reginald was acquitted for “lack of intent coupled with mistake. al. if accused is actually charged also criminally. the extinction of civil liability referred to in Par. (e) of Section 3. he lost his head and so contributed by his negligence to the accident. that of contract. The term of the lease reads in part as follows: "commencing on the date of issuance of industrial clearance by the Ministry of Human Settlements" "monthly rate of Php 20. ISSUE: Whether or not Marvin Hill may be held civilly liable under Article 2180. A separate civil action lies against the offender in a criminal act. The acquittal of Reginald in the criminal case does not bar the filing of a separate civil action. the father alone and not the minor or the mother would be liable for the damages caused by the minor. that he was driving at an excessive rate of speed. was granted to erect structures and improvements necessary for or incidental to the Lessee's purpose" "may be terminated by mutual agreement" . Briefly stated. caused the death of Agapito (son of Elcano). pursuant to the provisions of Art. HELD: Yes. Furthermore.R. whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. vs. and his chauffeur Abelardo Velasco rests on a different basis. et. grounds and premises of rock crushing plant and field office. FACTS: The case sparked by the petitioners refusal to pay the rentals as stipulated in the contract of lease which was executed sometime in November 1985. REGINALD HILL. the owner of the truck. and that.000. a minor. whether or not he is criminally prosecuted and found guilty or acquitted. Petitioner. 1977 Facts: Reginald Hill.” Elcano then filed a civil action against Reginald and his dad (Marvin Hill) for damages based on Article 2180 of the Civil Code. on approaching the bridge and the truck. Rule 111. The liability of Saturnino Cortez. PEDRO ELCANO and PATRICIA ELCANO. his civil liability as a parent has been extinguished by the fact that his son is already an emancipated minor by reason of his marriage. in their capacity as Ascendants of Agapito Elcano. Hill argued that the civil action is barred by his son’s acquittal in the criminal case. culpa aquiliana includes voluntary and negligent acts which may be punishable by law. sleeping quarters and canteen/mess hall. namely. . After due hearing. difficulties. Second.000. It then expressed its intention to terminate the contract due to financial. Whether or not the petitioner can invoke Article 1266 and the principle of rebus sic stantibus in the case at bar? 3. the contract also ceases to exist. The petitioner objected to the respondent's claim and argued that they are only obligated to pay Php 20. The petitioner cannot successfully take refuge in the said article. which read: THE DEBTOR IN THE OBLIGATION TO DO SHALL BE RELEASED WHEN THE PRESTATION BECOME LEGALLY OR PHYSICALLY IMPOSSIBLE WITHOUT THE FAULT OF THE OBLIGOR. Article 1266 is one of the exceptions.000. once perfected. and not from the date of signing of the contract.00 is excessive? RULING: The petitioner's contentions were denied by the Supreme Court. the petitioner can not invoke 1266 and the principle of rebus sis stantibus. The petitioner then appealed to the Court of Appeals alleging that the trial court erred in ordering it to pay the private respondent and denying it the right to be heard. The private respondent wrote the petitioner requesting payment of the first annual rental. Whether or not the suspensive condition has been fulfilled and that the lease contract has become operative? 2. However. It is a fundamental rule that contracts.The petitioner obtained a Temporary Use Permit for the proposed rock crushing project. In this case. Under this theory. It can be deduced that the suspensive condition-issuance of industrial clearance-has already been fulfilled and the lease contract has become operative. The CA affirmed the trial courts decision and the denial of its motion to reconsideration. since it is applicable only in obligation to do and not on obligation to give. However.00 as rental payment for 1 month. petitioner argued that payment of rental would commence on the date of issuance of an industrial clearance by the Ministry of Human Settlements. and once these conditions cease to exist. In replyletter. They insisted on the performance of the obligation and reiterated their demand for payment. the trial court rendered a decision ordering petitioner to pay private respondents the amount of Php 492. First. the private respondent refused to accede to petitioner's request for the pretermination of the lease contract. ISSUE: 1. bind both the contracting parties. The obligation to pay rentals falls under obligation to give. and obligations arising therefrom have the force of law between the parties and should be complied with in good faith. as well as technical. the parties stipulate in the light of certain prevailing conditions. the petitioner considered the Temporary Use Permit as "Industrial permit" as showed in the petitioner's letter to the private respondent and recognized its obligation to pay rentals counted from the date the permit was issued. The principle of rebus sic stantibus neither fits in with the facts of the case.000. Whether or not the amount of Php 492. petitioner alleviated the case to the Supreme Court ascribing the same alleged errors and reiterating their arguments. the law recognizes exceptions to the principle of obligatory force of contracts. petitioner wants the Court to believe that the abrupt change in political climate and its poor financial condition rendered the performance of the obligation impractical and inimical. The private responded filed a case to the Regional Trial Court against petitioner for specific performance with damages.00 which represented the rentals for two years. (Central Bank vs.000. Third. Thus. Mere pecuniary inability to fulfill an engagement does not discharge a contractual obligation. the motive of a particular purpose in entering into a contract does not affect the validity nor existence of the contract. nor does it constitute a defense to an action for specific performance. the same will neither release the petitioner from the binding effect of the contract of lease. .However. and the award of Php492. the instant petition is DENIED and the decision of the CA is Affirmed in toto. Thus.00 is fair and just. anent petitioner alleged poor financial condition. in accordance with article 1659 of the Civil Code. CA) Non-materialization of purpose in entering the contract of lease. As a general principle. the private respondent unquestionably suffered pecuniary losses because of the inability to use the leased premises. they are entitled to indemnification for damages.