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SECOND DIVISION [G.R. No. 175554. December 23, 2008.] EDSEL LIGA, petitioner, vs. ALLEGRO RESOURCES CORP.

, respondent.

As the lease of La Paz had expired on 31 December 2000, the stallholders, through the Greenhills Shoppesville Unit Lessees' Association, Inc. (GSULAI), made several attempts to have their leasehold rights extended. Even prior to the expiration of their leaseholds, the sub-lessees made several overtures to Ortigas but these were all denied. These developments notwithstanding, Liga was allowed by Ortigas to remain in possession of her leased property. On 30 August 2001, Ortigas formally informed the GSULAI of the impending lease of the GSA to respondent Allegro Resources Corporation (Allegro). 5On 3 September 2001, Ortigas and Allegro executed the corresponding Contract of Lease. 6 On the same day, the same parties executed the Addendum to Agreement, Section 1 of which provides that "(t)he LESSEE (Allegro) shall take immediate possession and control of the leased premises upon the signing of the Contract of Lease". and "also assist in the collection of back rentals due to the LESSOR (Ortigas) in Shoppesville Arcade from 1 January 2001 up to the 31 August 2001, when it shall commence to pay rentals for its own account". 7 As the new lessee, Allegro offered to sublease Unit No. 26, Level A to Liga. Subsequently they entered into a lease agreement dubbed Rental Information 8 in which Liga agreed to pay rental of P40,000.00 monthly starting 1 September 2001. She also agreed to pay the back rentals covering the months of January through August 2001 due Ortigas. Upon signing the agreement, Liga also gave P40,000.00 as one month advance rental and another P40,000.00 as one month security deposit as provided in the agreement. 9 HCSEIT Liga's compliance with the agreement ended as soon as it was executed. Despite repeated demands from Allegro, Liga had failed to pay her rentals for the subleased property, as well as the back rentals from January to August 2001 due Ortigas. Hence, Allegro filed a complaint for ejectment on 15 March 2002 with the Metropolitan Trial Court (MeTC) of San Juan, Metro Manila, Branch 57. 10 The MeTC rendered a decision 11 in favor of Allegro, ordering Liga to vacate the subleased stall and to pay back rentals for her continuous possession of the property. The MeTC held that Allegro has rightful possession over the disputed stall since Liga's continued occupancy from 1 January 2001 to 31 August 2001 was by mere tolerance of Ortigas and that ceased upon the execution of a contract of lease between Ortigas and Allegro. The MeTC found that Liga had agreed to sublease the property for P40,000.00 per month. In compliance with the lease agreement with Allegro, Liga even paid the sum of P80,000.00 corresponding to one-month


TINGA, J p: Before the Court is the petition for review 1 under Rule 45 of the Rules of Court assailing the Court of Appeals' Decision 2 dated 25 January 2006 and Resolution 3 dated 22 November 2006 in CA-G.R. SP No. 86331. aDSHCc The undisputed factual antecedents of the case are as follows: On 10 October 1975, Ortigas & Company, Limited Partnership (Ortigas) entered into a lease agreement with La Paz Investment & Realty Corporation (La Paz) wherein the former leased to the latter its parcel of land located in San Juan, Metro Manila (now San Juan City) consisting of 5,514 square meters for a period of twenty-five (25) years from 1 January 1976 to 31 December 2000. Under the lease agreement, La Paz undertook to construct a two or three-storey concrete framed commercial building for the establishment of first class stores which would be subdivided into various stalls for subleasing to interested parties. 4 In compliance with its undertaking, La Paz constructed the Greenhills Shopping Arcade (GSA) and divided it into several stalls and subleased them to other people. One of the sub-lessees was Edsel Liga (Liga), who obtained the leasehold right to Unit No. 26, Level A of the GSA. DIESHT

advance rental and one-month security deposit as evidenced by a provisional receipt issued by the former. It thus ordered Liga to pay Allegro P210,000.00 representing back rentals from 1 October 2001 to February 2002 and P20,000.00 per month as reasonable compensation for the use of the premises from the filing of the ejectment suit until it is vacated. HTCaAD On appeal, the Regional Trial Court (RTC) affirmed the decision of the MeTC but made modifications with respect to its monetary awards. 12 It extended the period of lease over the property for two years at a rental rate of P20,000.00 per month, and ordered Liga to pay P80,000.00 as back rentals for the period of September 2001 to February 2002 and P20,000.00 per month as rental from March 2002 until the property is vacated. Allegro filed a petition for review 13 under Rule 42 of the Rules of Court before the Court of Appeals assailing the modified decision of the RTC. The appellate court, in a Decision dated 25 January 2006, granted Allegro's petition and set aside the RTC's decision. 14 It held that after the expiration of La Paz's lease with Ortigas on 31 December 2000, Liga occupied the property merely by tolerance of Ortigas and that it was incorrect for the RTC to extend the lease contract for two years since it would infringe on the parties right to contract and Liga herself had never raised as an issue the extension of the lease contract before the MeTC. It found that Liga signed the Rental Information with Allegro and agreed to a monthly rental of P40,000.00 starting 1 September 2001. The appellate court ordered Liga to pay Ortigas back rentals of P20,000.00 per month for the period of 1 January 2001 to 31 August 2001 and P40,000.00 per month as rentals to Allegro starting 1 September 2001 until the property is vacated. In a Resolution dated 22 November 2006, the Court of Appeals denied Liga's motion for reconsideration. 15 Hence, the present petition for review before this Court. The petition raised the following issues: whether the Court of Appeals had erred in ordering Liga to pay: (a) to Ortigas back rentals covering the period 1 January 2001 to 31 August 2001 totaling P160,000.00; (b) to Allegro back rentals in the amount of P40,000.00 a month starting from 1 September 2001 until such time as she vacates the leased property; and (c) to Allegro the amount of P20,000.00 as attorney's fees and the costs of suit. 16 Liga argues that the Court of Appeals erred in ordering her to pay Ortigas back rentals although the latter is not a party in the instant case. The ruling of the

appellate court ran counter to the Court's doctrine that judgment cannot bind persons who are not parties to the action. 17 She avers that Allegro was already estopped from claiming monthly rentals in the amount of P40,000.00 starting from 1 September 2001 since it filed the Motion to Release Cash Bond in Favor of Plaintiff 18 with the MeTC. By filing the motion, Allegro signified its concurrence in the monthly rental of P20,000.00. 19Since Liga is willing and able to pay the appropriate rentals as evidenced by the deposits she made before the RTC, she should not be made liable for attorney's fees in the amount of P20,000.00 and for the costs of suit. 20 The Court will discuss the issues in seriatim. We sustain Liga on the first issue. The Court of Appeals erred in awarding back rentals for the month of 1 January 2001 to 31 August 2001 in favor of Ortigas. HDTcEI Firstly, Ortigas is not a party to this case, whether as plaintiff or otherwise. It is basic that no relief can be extended in a judgment to a stranger or one who is not a party to a case. 21 Secondly, Allegro cannot justify the award as a legal representative by virtue of a provision in its lease agreement with Ortigas. Although Section 1 of Rule 70 of the Rules of Court 22 specifically allows "the legal representatives or assigns of any such lessor, vendor, vendee, or other person" to bring action for restitution of possession with damages and costs against persons who unlawfully withheld or deprived the lawful possessor of possession over any land or building, Allegro did not aver in its complaint that it was acting as Ortigas's legal representative and seeking the back rentals due Ortigas. CHDaAE Thirdly, there is no allegation or prayer in the complaint that Allegro was seeking the collection of the back rentals due Ortigas. Nor was there evidence to that effect. It is elementary that a judgment must conform to, and be supported by, both the pleadings and the evidence, and be in accordance with the theory of the action on which the pleadings are framed and the case was tried. 23 The judgment must be secundum allegata et probata. In Falcon v. Manzano, 24 the Court set aside the judgment of the trial court in conceding to her a remedy which was not prayed for in the complaint as the trial court rendered judgment allowing plaintiff to recover from the defendant the unpaid

portion of the purchase price of a parcel of land when the plaintiff only asked for the nullification of the contract of sale of the realty and the return of the property to her. We held that courts, in rendering decisions, ought to limit themselves to the issues presented by the parties in their pleadings. DcaECT In the analogous case of Lerma v. De la Cruz, 25 the plaintiff therein brought an action to recover accrued rents and damages for the injury to the land but the trial court extended the relief sought by giving judgment for possession of the land. The Court held that "(t)he plaintiff did not ask for possession, nor is there any prayer to that effect in the complaint, and the judgment must, therefore be reversed insofar as it undertakes to provide for the restitution of the land in question to the plaintiff."

plaintiff. Not only is such an act procedurally sound, it also serves the ends of justice. As the Court succinctly held in Sps. Catungal v. Jao: 33 Finally, respondent questions why petitioners would want to reinstate the RTC decision when in fact they had already applied for a writ of execution of the 8 March 1997 Decision. Respondent is of the view that since petitioners had already moved for the execution of the decision awarding a smaller amount of damages or fair rental value, the same is inconsistent with a petition asking for a greater fair rental value and, therefore, a possible case of unjust enrichment in favor of the petitioners. We are not persuaded. IEHDAT In order to avoid further injustice to a lawful possessor, an immediate execution of a judgment is mandated and the court's duty to order such execution is practically ministerial. In City of Manila, et al. v. CA, et al., We held that "Section 8 (now Section 19), Rule 70, on execution pending appeal, also applies even if the plaintiff-lessor appeals where, as in that case, judgment was rendered in favor of the lessor but it was not satisfied with the increased rentals granted by the trial court, hence the appeal . . . ." As above discussed, the petitioners have long been deprived of the exercise of their proprietary rights over the leased premises and the rightful amount of rentals at the rate of P40,000.00 a month. Consequently, petitioners are entitled to accrued monthly rentals of P27,000.00, which is the difference between P40,000.00 awarded by the Regional Trial Court and P13,000.00 awarded by the MeTC and affirmed by the Court of Appeals. Said amount of P27,000.00 should rightly be the subject of another writ of execution being distinct from the subject of the first writ of execution filed by petitioners.(Emphasis supplied.) cHaDIA On the last issue regarding damages, Liga also ends up at the shorter end. Law and jurisprudence support the award of attorney's fees and costs of suit in favor of Allegro. The award of damages and attorney's fees is left to the sound discretion of

As to the second issue, the Court cannot countenance the obstinate refusal of Liga to pay P40,000.00 a month to Allegro since she had already acquiesced to pay such rental rate when she signed the Rental Information. It is fundamental that a contract is the law between the parties. 26Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. 27 Unless the stipulations in a contract are contrary to law, morals, good customs, public order or public policy, the same are binding as between the parties. 28 It is a general principle of law that no one may be permitted to change his mind or disavow and go back upon his own acts, or to proceed contrary thereto, to the prejudice of the other party. 29 Likewise, it is settled that if the terms of the contract clearly express the intention of the contracting parties, the literal meaning of the stipulations would be controlling. 30 The filing by Allegro of the Motion to Release Cash Bond in Favor of the Plaintiff did not operate to estop it from claiming a monthly rental rate of P40,000.00. Estoppel cannot be sustained by mere argument or doubtful inference. 31 Allegro did not abandon its stance nor did it represent to Liga that it was doing so. Liga cannot feign ignorance of such fact since Allegro's petition for review before the Court of Appeals puts as an issue the reduction by the RTC of the monthly rentals from P40,000.00 to P20,000.00. 32 Allegro never made any deed or representation that could have misled Liga. aICHEc Moreover, the Court has previously sanctioned a similar partial execution of the trial court's decision awarding damages in an ejectment suit at the instance of the

the court, and if such discretion is well exercised, as in this case, it will not be disturbed on appeal. 34 Attorney's fees and costs of litigation are awarded in instances where "the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim." 35 Having delivered possession over the leased property to Liga, Allegro had already performed its obligation under the lease agreement. Liga should have exercised fairness and good judgment in dealing with Allegro by religiously paying the agreed monthly rental of P40,000.00. However, the Court deems it proper to award interest in favor of Allegro. In Eastern Shipping Lines, Inc. v. Court of Appeals, 36 we gave the following guidelines in the award of interest: cEISAD II.With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1.When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 37 The back rentals in this case being equivalent to a loan or forbearance of money, the interest due thereon is twelve percent (12%) per annum from the time of extrajudicial demand on 15 December 2001. 38 WHEREFORE, the petition for review is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 86331 is AFFIRMED with the MODIFICATIONS that the award of back rentals for the period of 1 January 2001 to 31 August 2001 to Ortigas & Company, Limited Partnership is DELETED and that petitioner Edsel Liga is ORDERED to pay respondent Allegro Resources Corporation legal interest of twelve percent (12%) per annum on the back rentals from the date of extrajudicial demand on 15 December 2001 until fully paid. DcCIAa

SO ORDERED. Quisumbing, Carpio-Morales, Velasco, Jr. and Brion, JJ., concur.



CHICO-NAZARIO, J p: This is a Petition for Review on Certiorari under Rule 45 seeking the reversal of the Decision 2 dated 11 February 1997 and Resolution dated 18 May 1999 of the Court of Appeals in CA-G.R. SP No. 38455. ADCIca The facts of the case are as follows: SEC Case No. 02-94-4678 was instituted on 10 February 1994 by respondent Miguel V. Campos, who filed 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) and MKSE directors, 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. Respondent, in said 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. On 14 February 1994, 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 3 June 1993 Resolution of the MKSE Board of Directors. The SICD 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. Petitioners assailed this SICD Order dated 10 March 1994 in a Petition for Certiorari filed with the SEC en banc, docketed as SEC-EB No. 393. On 11 March 1994, petitioners filed a Motion to Dismiss respondent's Petition in SEC Case No. 02-94-4678, 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 in an Order dated 4 May 1994. Petitioners again challenged the 4 May 1994 Order of SICD before the SEC en banc through another Petition for Certiorari, docketed as SEC-EB No. 403. 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 respondent's Petition before the SICD. aDcEIH Respondent filed a Petition for Certiorari with the Court of Appeals assailing the Orders of the SEC en banc dated 31 May 1995 and 14 August 1995 in SEC-EB No.

393 and SEC-EB No. 403, respectively. Respondent's Petition before the appellate court was docketed as CA-G.R. SP No. 38455. On 11 February 1997, the Court of Appeals promulgated its Decision in CA-G.R. SP No. 38455, granting respondent's Petition for Certiorari, thus: 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. Petitioners filed a Motion for Reconsideration of the foregoing Decision but it was denied by the Court of Appeals in a Resolution dated 18 May 1999. 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 RESPONDENT'S 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. DaIACS 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, RESPONDENT'S CLAIM FOR DAMAGES IS ILLUSORY AND HIS PETITION A NUISANCE SUIT. 3 On 18 September 2001, counsel for respondent manifested to this Court that his client died on 7 May 2001. In a Resolution dated 24 October 2001, the Court directed the substitution of respondent by his surviving spouse, Julia Ortigas vda. de Campos. Petitioners want this Court to affirm the dismissal by the SEC en banc of respondent's 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 cause of action is the act or omission by which a party violates a right of another. 4 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. If a defendant moves to dismiss the complaint on the ground of lack of cause of action, he is regarded as having hypothetically admitted all the averments thereof. The test of sufficiency of the facts found in a complaint as constituting a cause of action is whether or not admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer thereof. The hypothetical admission extends to the relevant and material facts well pleaded in the complaint and inferences fairly deducible therefrom. Hence, if the allegations in the complaint

furnish sufficient basis by which the complaint can be maintained, the same should not be dismissed regardless of the defense that may be assessed by the defendant. 5 Given the foregoing, the issue of whether respondent's Petition in SEC Case No. 02-94-4678 sufficiently states a cause of action may be alternatively stated as whether, hypothetically admitting to be true the allegations in respondent's Petition in SEC Case No. 02-94-4678, the SICD may render a valid judgment in accordance with the prayer of said Petition. A reading of the exact text of respondent's Petition in SEC Case No. 02-94-4678 is, therefore, unavoidable. Pertinent portions of the said Petition reads: aEIADT 7.In recognition of petitioner's invaluable services, the general membership of respondent corporation [MKSE] passed a resolution sometime in 1989 amending its Articles of Incorporation, to include the following provision therein: "ELEVENTH WHEREAS, Mr. Miguel Campos is the only surviving incorporator of the Makati Stock Exchange, Inc. who has maintained his membership; "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 country's 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. TcIaHC 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 There is no question that the Petition in SEC Case No. 02-94-4678 asserts a right in favor of respondent, particularly, respondent's 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 respondent's 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 respondent's 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 An obligation is defined in the Civil Code as a juridical necessity to give, to do or not to do. 8 For every right enjoyed by any person, there is a corresponding obligation on the part of another person to respect such right. Thus, Justice J.B.L. Reyes offers 9 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, doing or not doing), and in case of breach, may demand satisfaction from the assets of the latter. The Civil Code enumerates the sources of obligations:

Art. 1157.Obligations arise from: (1)Law; (2)Contracts; (3)Quasi-contracts; (4)Acts or omissions punished by law; and (5)Quasi-delicts. cTAaDC 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. 10 Thus, a Complaint or Petition filed by a person claiming a right to the Office of the President of this Republic, but without stating the source of his purported right, cannot be said to have sufficiently stated a cause of action. Also, a person claiming to be the owner of a parcel of land cannot merely state that he has a right to the ownership thereof, but must likewise assert in the Complaint either a mode of acquisition of ownership or at least a certificate of title in his name. 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.

A meticulous review of the Petition reveals that 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, to wit: IPOs are shares of corporations offered for sale to the public, prior to their listing in the trading floor of the country's 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 (Emphasis supplied) A practice or custom is, as a general rule, not a source of a legally demandable or enforceable right. 12 Indeed, in labor cases, benefits which were voluntarily given by the employer, and which have ripened into company practice, are considered as rights that cannot be diminished by the employer.13 Nevertheless, even in such cases, the source of the employees' right is not custom, but ultimately, the law, since Article 100 of the Labor Code explicitly prohibits elimination or diminution of benefits. SEIcAD 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 respondent's prayer for damages which allegedly resulted from the MKSE Board Resolution dated 3 June 1993 deviating from said practice by no longer allocating any shares to respondent. Accordingly, the instant Petition should be granted. The Petition in SEC Case No. 02-94-4678 should be dismissed for failure to state a cause of action. It does not matter that the SEC en banc, in its Order dated 14 August 1995 in SEC-EB No. 403, overstepped its bounds by not limiting itself to the issue of whether respondent's Petition before the SICD sufficiently stated a cause of action. The SEC en banc may have been mistaken in considering extraneous evidence in granting petitioners' Motion to Dismiss, but its discussion thereof are merely superfluous and obiter dictum. In the main, the SEC en banc did correctly dismiss the Petition in SEC Case No. 02-94-4678 for its failure to state the basis for respondent's alleged right, to wit:

Private respondent Campos has failed to establish the basis or authority for his alleged right to participate equally in the IPO allocations of the Exchange. He cited paragraph 11 of the amended articles of incorporation of the Exchange in support of his position but a careful reading of the said provision shows nothing therein that would bear out his claim. The provision merely created the position of chairman emeritus of the Exchange but it mentioned nothing about conferring upon the occupant thereof the right to receive IPO allocations. 14 With the dismissal of respondent's Petition in SEC Case No. 02-94-4678, there is no more need for this Court to resolve the propriety of the issuance by SCID of a writ of preliminary injunction in said case. WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated 11 February 1997 and its Resolution dated 18 May 1999 in CA-G.R. SP No. 38455 are REVERSED and SET ASIDE. The Orders dated 31 May 1995 and 14 August 1995 of the Securities and Exchange Commission en banc in SEC-EB Case No. 393 and No. 403, respectively, are hereby reinstated. No pronouncement as to costs. SO ORDERED. Ynares-Santiago, Austria-Martinez, Nachura and Peralta, JJ., concur.