LOPEZ, LOCSIN, LEDESMA & CO. INC.
VS COURT OF What will govern the sale of the said shares of stocks,
APPEALS
FACTS:
CMS Stock Brokerage, Inc. (CMS) sold to Lopez,
Locsin, Ledesma & Co., Inc. (LLL) on the floor of the Makati
Stock Exchange, 7650 Benquet Consolidated shares
amounting to Php 297,650.00 and to be delivered within 10-20
days from date of execution of the contratct.
However, CMS failed to deliver to LLL the said share
within the period agreed upon because of the oversight of the
huge volume of their transactions.
On the other hand, LLL refuse to accept the delivery of
the shares since their clients whom the purchases were made,
elected to cancel the same.
CMS filed a civil case against LLL to compel the latter to
accept the delivery of the said shares. They are contending
that LLL cannot just refuse to accept the delivery pursuant to
the rules and regulation of the Makati Stock Exchange.
LLL moved to dismiss the complaint on the following
grounmds:
1. that there is a LACK OF CAUSE OF ACTION,
2. it is NOT the rules and regulation of the Stock
Exchange that will affect the contractual relation
between the parties but rather the provisions of the
Civil Code.
ISSUE:
the rules and regulation and the by-laws of the Makati Stock
Exchange or the provisions of the Civil Code?
HELD:
There is no dispute that the contract was draw on the
floor of the Makati Stock Exchange between two member
stockholders. CMS as the seller and LLL as the buyer. As
members of the Stock Exchange, the rules and regulation as
well as the by-laws of the said stock exchange will govern their
relationship with regards to the sale of the said shares of
stocks.
According to their by-laws, in the event that the seller
fails to make the delivery, the buyer shall send thae former a
letter of demand and give him one full business day to make
the delivery.
If despite demand by the buyer, the seller still fails to
deliver the same, the buyer can notify the seller that he is
cancelling the delivery.
In the case at bar, LLL failed to follow the process
according to the rule and regulation and the by laws of the
Makati Stock Exchange and also it failed to notify CMS that
the former is cancelling the delivery due to the delay.
Therefore, LLL is still liable to accept and pay the delivery of
the shares.
It is safe to say that if the buyer fails to notify the seller
that he is cancelling his orders, then the orders placed still
stand