Full Text

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-51122 March 25, 1982
EUGENIO J. PUYAT, ERWIN L. CHIONGBIAN, EDGARDO P. REYES, ANTONIO G. PUYAT, JAIME R. BLANCO,
RAFAEL R. RECTO and REYNALDO L. LARDIZABAL, petitioners,
vs.
HON. SIXTO T. J. DE GUZMAN, JR., as Associate Commissioner of the Securities & Exchange Commission,
EUSTAQUIO T. C. ACERO, R. G. VILDZIUS, ENRIQUE M. BELO, MANUEL G. ABELLO, SERVILLANO DOLINA,
JUANITO MERCADO and ESTANISLAO A. FERNANDEZ, respondents.

MELENCIO-HERRERA, J.:
This suit for certiorari and Prohibition with Preliminary Injunction is poised against the Order of respondent Associate
Commissioner of the Securities and Exchange Commission (SEC) granting Assemblyman Estanislao A. Fernandez
leave to intervene in SEC Case No. 1747.
A question of novel import is in issue. For its resolution, the following dates and allegations are being given and made:
a) May 14,1979. An election for the eleven Directors of the International Pipe Industries Corporation (IPI) a private
corporation, was held. Those in charge ruled that the following were elected as Directors:
Eugenio J. Puyat Eustaquio T.C. Acero
Erwin L. Chiongbian R. G. Vildzius
Edgardo P. Reyes Enrique M. Belo
Antonio G. Puyat Servillano Dolina
Jaime R. Blanco Juanito Mercado
Rafael R. Recto
Those named on the left list may be called the Puyat Group; those on the right, the Acero Group. Thus, the Puyat Group
would be in control of the Board and of the management of IPI.
b) May 25, 1979. The Acero Group instituted at the Securities and Exchange Commission (SEC) quo
warrantoproceedings, docketed as Case No. 1747 (the SEC Case), questioning the election of May 14, 1979. The
Acero Group claimed that the stockholders' votes were not properly counted.
c) May 25-31, 1979. The Puyat Group claims that at conferences of the parties with respondent SEC Commissioner de
Guzman, Justice Estanislao A. Fernandez, then a member of the Interim Batasang Pambansa, orally entered his
appearance as counsel for respondent Acero to which the Puyat Group objected on Constitutional grounds. Section 11,
Article VIII, of the 1973 Constitution, then in force, provided that no Assemblyman could "appear as counsel before ...
any administrative body", and SEC was an administrative body. Incidentally, the same prohibition was maintained by the
April 7, 1981 plebiscite. The cited Constitutional prohibition being clear, Assemblyman Fernandez did not continue his
appearance for respondent Acero.
d) May 31, 1979. When the SEC Case was called, it turned out that:
(i) On May 15, 1979, Assemblyman Estanislao A. Fernandez had purchased from Augusto A.
Morales ten (10) shares of stock of IPI for P200.00 upon request of respondent Acero to qualify him
to run for election as a Director.

(ii) The deed of sale, however, was notarized only on May 30, 1979 and was sought to be registered
on said date.
(iii) On May 31, 1979, the day following the notarization of Assemblyman Fernandez' purchase, the
latter had filed an Urgent Motion for Intervention in the SEC Case as the owner of ten (10) IPI shares
alleging legal interest in the matter in litigation.
e) July 17, 1979. The SEC granted leave to intervene on the basis of Atty. Fernandez' ownership of the said ten
shares. 1 It is this Order allowing intervention that precipitated the instant petition for certiorari and

Prohibition with Preliminary Injunction.

f) July 3, 1979. Edgardo P. Reyes instituted a case before the Court of First Instance of Rizal (Pasig), Branch XXI,
against N.V. Verenigde Bueinzenfabrieken Excelsior De Maas and respondent Eustaquio T. C. Acero and others, to
annul the sale of Excelsior's shares in the IPI to respondent Acero (CC No. 33739). In that case, Assemblyman
Fernandez appeared as counsel for defendant Excelsior In L-51928, we ruled that Assemblyman Fernandez could not
appear as counsel in a case originally filed with a Court of First Instance as in such situation the Court would be one
"without appellate jurisdiction."
On September 4, 1979, the Court en banc issued a temporary Restraining Order enjoining respondent SEC Associate
Commissioner from allowing the participation as an intervenor, of respondent Assemblyman Estanislao Fernandez at
the proceedings in the SEC Case.
The Solicitor General, in his Comment for respondent Commissioner, supports the stand of the latter in allowing
intervention. The Court en banc, on November 6, 1979, resolved to consider the Comment as an Answer to the Petition.
The issue which will be resolved is whether or not Assemblyman Fernandez, as a then stockholder of IPI may intervene
in the SEC Case without violating Section 11, Article VIII of the Constitution, which, as amended, now reads:
SEC. 11.
No Member of the Batasang Pambansa shall appear as counsel before any court without appellate
jurisdiction.
before any court in any civil case wherein the Government, or any subdivision, agency, or
instrumentality thereof is the adverse party,
or in any criminal case wherein any officer or employee of the Government is accused of an offense
committed in relation to his office,
or before any administrative body.
Neither shall he, directly or indirectly be interested financially in any contract with, or in any franchise
or special privilege granted by the Government, or any subdivision, agency or instrumentality
thereof, including any government-owned or controlled corporation, during his term of office.
He shall not accept employment to intervene in any cause or matter where he may be called to act
on account of his office. (Emphasis supplied)
What really has to be resolved is whether or not, in intervening in the SEC Case, Assemblyman Fernandez is, in effect,
appearing as counsel, albeit indirectly, before an administrative body in contravention of the Constitutional provision.
Ordinarily, by virtue of the Motion for Intervention, Assemblyman Fernandez cannot be said to be appearing as counsel.
Ostensibly, he is not appearing on behalf of another, although he is joining the cause of the private respondents. His
appearance could theoretically be for the protection of his ownership of ten (10) shares of IPI in respect of the matter in
litigation and not for the protection of the petitioners nor respondents who have their respective capable and respected
counsel.

However, certain salient circumstances militate against the intervention of Assemblyman Fernandez in the SEC Case.
He had acquired a mere P200.00 worth of stock in IPI, representing ten shares out of 262,843 outstanding shares. He
acquired them "after the fact" that is, on May 30, 1979, after the contested election of Directors on May 14, 1979, after
the quo warranto suit had been filed on May 25, 1979 before SEC and one day before the scheduled hearing of the
case before the SEC on May 31, 1979. And what is more, before he moved to intervene, he had signified his intention to
appear as counsel for respondent Eustaquio T. C. Acero, 2 but which was objected to by petitioners. Realizing,

perhaps, the validity of the objection, he decided, instead, to "intervene" on the ground of legal
interest in the matter under litigation. And it maybe noted that in the case filed before the Rizal Court
of First Instance (L-51928), he appeared as counsel for defendant Excelsior, co-defendant of
respondent Acero therein.
Under those facts and circumstances, we are constrained to find that there has been an indirect "appearance as
counsel before ... an administrative body" and, in our opinion, that is a circumvention of the Constitutional prohibition.
The "intervention" was an afterthought to enable him to appear actively in the proceedings in some other capacity. To
believe the avowed purpose, that is, to enable him eventually to vote and to be elected as Director in the event of an
unfavorable outcome of the SEC Case would be pure naivete. He would still appear as counsel indirectly.
A ruling upholding the "intervention" would make the constitutional provision ineffective. All an Assemblyman need do, if
he wants to influence an administrative body is to acquire a minimal participation in the "interest" of the client and then
"intervene" in the proceedings. That which the Constitution directly prohibits may not be done by indirection or by a
general legislative act which is intended to accomplish the objects specifically or impliedly prohibited. 3
In brief, we hold that the intervention of Assemblyman Fernandez in SEC. No. 1747 falls within the ambit of the
prohibition contained in Section 11, Article VIII of the Constitution.
Our resolution of this case should not be construed as, absent the question of the constitutional prohibition against
members of the Batasan, allowing any stockholder, or any number of stockholders, in a corporation to intervene in any
controversy before the SEC relating to intra-corporate matters. A resolution of that question is not necessary in this
case.
WHEREFORE, respondent Commissioner's Order granting Atty. Estanislao A. Fernandez leave to intervene in SEC
Case No. 1747 is hereby reversed and set aside. The temporary Restraining Order heretofore issued is hereby made
permanent.
No costs.
SO ORDERED.
Fernando, C.J., Teehankee, Makasiar, Concepcion, Jr., Fernandez, Guerrero, Abad Santos, De Castro, Ericta, Plana
and Escolin, JJ., concur.
Aquino, J., took no part.
Barredo, J., I reserve my vote.

Footnotes
1 p. 23, Rollo.
2 p. 6, Ibid.
3 Am. Digest, 2d Dicennial Ed., Vol. 5, citing Atkinson vs. Board, etc., 108 P. 1046.

Digest

PUYAT, ET. AL. vs. DE GUZMAN JR., ET. AL. G.R. No. L-51122, 25 March
1982 Case Digest
The suit is for Certiorari and Prohibition with Preliminary Injunction poised against the Order of respondent Associate
Commissioner of the Securities and Exchange Commission (SEC), Hon. Sixto T. J. De Guzman, Jr., granting Assemblyman
Estanislao A. Fernandez leave to intervene in a SEC Case.
FACTS:
On 14 May 1979, an election for the eleven Directors of the International Pipe Industries (IPI), a private corporation, was held
six of the elected directors were herein petitioners that may be called the Puyat Group, while the other five were herein
respondents, the Acero Group. Thus, the Puyat Group would be in control of the Board and of the management of IPI.
On 25 May 1979, the Acero Group instituted at the SEC quo warranto proceedings questioning the election.
Conferences were held on 25-31 May 1979 and the Puyat Group objected on Constitutional grounds the appearance of Justice
Estanislao Fernandez, then a member of the Interim Batasang Pambansa, as counsel for the Acero group. Section 11, Article
VIII, 1973 Constitution, then in force, provided that no Assemblyman could "appear as counsel before xxx any administrative
body" and SEC was an administrative body. The prohibition being clear, Assemblyman Fernandez did not continue his
appearance.
When SEC Case was called on 31 May 1979, it turned out that Assemblyman Fernandez had purchased on 15 May 1979 ten
shares of IPI stock for Php200.00, but the deed of sale was notarized only on 30 May 1979. He then filed on 31 May 1979 an
Urgent Motion for Intervention in the SEC Case as the owner of 10 IPI shares alleging legal interest in the matter in litigation,
which motion was granted by the SEC Commissioner.
ISSUE:
Whether or not Assemblyman Fernandez, in intervening in the SEC Case, is in effect appearing as counsel, albeit
indirectly, before an administrative body in contravention of the Constitutional provision.
RULING:
The Court en banc ruled that ordinarily, by virtue of the Motion for Intervention, Assemblyman Fernandez cannot be said to be
appearing as counsel. His appearance could theoretically be for the protection of his ownership of ten (10) IPI shares.
However, certain salient circumstances militate against the intervention of Assemblyman Fernandez. He had acquired a mere
Php200.00 worth of stock in IPI. He acquired them "after the fact", that is, on 30 May 1979, after the contested election of
Directors, after the quo warranto suit had been filed, and one day before the scheduled hearing of the case before the SEC.
And what is more, before he moved to intervene, he had signified his intention to appear as counsel for the Acero group, but
which was objected to by petitioners Puyat group. Realizing, perhaps, the validity of the objection, he decided, instead, to
"intervene" on the ground of legal interest in the matter under litigation.
Under those facts and circumstances, there has been an indirect appearance as counsel before an administrative body, which
is a circumvention of the Constitutional prohibition. The "intervention" was an afterthought to enable him to appear actively in
the proceedings in some other capacity.
A ruling upholding the "intervention" would make the constitutional provision ineffective. All an Assemblyman need do, if he
wants to influence an administrative body is to acquire a minimal participation in the "interest" of the client and then "intervene"
in the proceedings. That which the Constitution directly prohibits may not be done by indirection or by a general
legislative act which is intended to accomplish the objects specifically or impliedly prohibited.
Thus, the intervention of Assemblyman Fernandez in the SEC Case falls within the ambit of the prohibition contained in the
1973 Constitution. Respondent Commissioner's Order granting Assemblyman Fernandez leave to intervene in the SEC Case
was reversed and set aside.

Puyatv.DeGuzman(113SCRA31);Digest

Puyat vs De Guzman
on January 4, 2012
Political Law Appearance in Court
On 14 May 1979, Puyat and his group were elected as
directors of the International Pipe Industries. The
election was subsequently questioned by Acero
(Puyats rival) claiming that the votes were not properly
counted hence he filed a quo warranto proceeding
before the Securities and Exchange Commission on 25
May 1979. Prior to Aceros filing of the case, Estanislao
Fernandez, then a member of the Interim Batasang
Pambansa purchased ten shares of stock of IPI from a
member of Aceros group. And during a conference held
by SEC Commissioner de Guzman (from May 25-31 79)
to have the parties confer with each other, Estanislao
Fernandez entered his appearance as counsel for Acero.
Puyat objected arguing that it is unconstitutional for an
assemblyman to appear as counsel (to anyone) before
any administrative body (such as the SEC). This being
cleared, Fernandez inhibited himself from appearing as
counsel for Acero. He instead filed an Urgent Motion for
Intervention in this said SEC case for him to intervene
not as a counsel but as a legal owner of IPI shares and
as a person who has a legal interest in the matter in
litigation. The SEC Commissioner granted the motion in
effect granting Fernandez leave to intervene. Puyat
then moved to question the Commissioners action.
ISSUE: Whether or not Fernandez, acting as a
stockholder of IPI, can appear and intervene in the SEC
case without violating the constitutional provision that
an assemblyman must not appear as counsel in such
courts or bodies?
HELD: No, Fernandez cannot appear before the SEC
body under the guise that he is not appearing as a
counsel. Even though he is a stockholder and that he
has a legal interest in the matter in litigation he is still
barred from appearing. He bought the stocks before the

litigation took place. During the conference he

presented himself as counsel but because it is clearly
stated that he cannot do so under the constitution he
instead presented himself as a party of interest which
is clearly a work around and is clearly an act after the
fact. A mere work around to get himself involved in the
litigation. What could not be done directly could not
likewise be done indirectly.
Other alternative digest:
Puyat vs. De Guzman, Jr. G.R. No. L-51122, March 25, 1982
Sunday, January 25, 2009 Posted by Coffeeholic Writes

Facts: After an election for the Directors of the International Pipe

Industries Corporation (IPI) was held, one group, the respondent Acero
group, instituted at the SEC quo warranto proceedings, questioning the
election. Justice Estanislao Fernandez, then a member of the Interim
Batasang Pambansa, entered his appearance as counsel for respondent
Acero to which the petitioner, Puyat group, objected on Constitutional
ground that no Assemblyman could appear as counselbefore
any administrative body, and SEC was an administrative body.
Assemblyman Fernandez did not continue his appearance for respondent
Acero.
Assemblyman Fernandez had purchased 10 shares of IPI for P200.00
upon request of respondent Acero. Following the notarization of
Assemblyman Fernandez purchase, he filed a motion for interventionin
the SEC case as the owner of 10 IPI shares alleging legal interest in the
matter in litigation. The SEC granted leave to intervene on the basis of
Fernandez ownership of the said 10 shares.

Issue:

Whether or not Assemblyman Fernandez, as a stockholder of

IPI, may intervene in the SEC case without violating Sec. 11, Art. VIII
(now Sec. 14, Art. VI) of the Constitution

Held: Ordinarily, by virtue of the motion for intervention,

Assemblyman Fernandez cannot be said to be appearing as counsel.
Ostensibly, he is not appearing on behalf of another, although he is joining
the cause of the private respondents. His appearance could theoretically
be for the protection of his ownership of 10 shares of IPI in respect of the
matter in litigation.

However, certain salient circumstances militate against the intervention of

Assemblyman Fernandez in the SEC case. He had acquired a mere
P200.00 worth of stock in IPI, representing 10 shares out of 262,843
outstanding shares. He acquired them after the fact that is, after
the contested election of directors, after the quo warranto suit had been
filed before the SEC and 1 day before the scheduled hearing of the
case before the SEC. And what is more, before he moved to intervene, he
had signified his intention to appear as counsel for respondent Acero, but
which was objected to by petitioners. Realizing, perhaps, the validity of
the objection, he decided, instead, to intervene on the ground of legal
interest in the matter under litigation.
Under those facts and circumstances, the Court is constrained to find that
there has been an indirect appearance as counsel before
anadministrative body. In the opinion of the Court, that is a circumvention
of the Constitutional prohibition contained in Sec. 11, Art. VIII (now Sec.
14, Art. VI). The intervention was an afterthought to enable him to
appear actively in the proceedings in some other capacity.