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8/25/2016 G.R.No.

L51122

TodayisThursday,August25,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L51122March25,1982

EUGENIOJ.PUYAT,ERWINL.CHIONGBIAN,EDGARDOP.REYES,ANTONIOG.PUYAT,JAIMER.BLANCO,
RAFAELR.RECTOandREYNALDOL.LARDIZABAL,petitioners,
vs.
HON.SIXTOT.J.DEGUZMAN,JR.,asAssociateCommissioneroftheSecurities&Exchange
Commission,EUSTAQUIOT.C.ACERO,R.G.VILDZIUS,ENRIQUEM.BELO,MANUELG.ABELLO,
SERVILLANODOLINA,JUANITOMERCADOandESTANISLAOA.FERNANDEZ,respondents.

MELENCIOHERRERA,J.:

This suit for certiorari and Prohibition with Preliminary Injunction is poised against the Order of respondent
AssociateCommissioneroftheSecuritiesandExchangeCommission(SEC)grantingAssemblymanEstanislaoA.
FernandezleavetointerveneinSECCaseNo.1747.

Aquestionofnovelimportisinissue.Foritsresolution,thefollowingdatesandallegationsarebeinggivenand
made:

a)May14,1979.AnelectionfortheelevenDirectorsoftheInternationalPipeIndustriesCorporation(IPI)aprivate
corporation,washeld.ThoseinchargeruledthatthefollowingwereelectedasDirectors:

EugenioJ.PuyatEustaquioT.C.Acero
ErwinL.ChiongbianR.G.Vildzius
EdgardoP.ReyesEnriqueM.Belo
AntonioG.PuyatServillanoDolina
JaimeR.BlancoJuanitoMercado
RafaelR.Recto

ThosenamedontheleftlistmaybecalledthePuyatGroupthoseontheright,theAceroGroup.Thus,thePuyat
GroupwouldbeincontroloftheBoardandofthemanagementofIPI.

b)May 25, 1979. The Acero Group instituted at the Securities and Exchange Commission (SEC) quo warranto
proceedings,docketedasCaseNo.1747(theSECCase),questioningtheelectionofMay14,1979.TheAcero
Groupclaimedthatthestockholders'voteswerenotproperlycounted.

c) May 2531, 1979. The Puyat Group claims that at conferences of the parties with respondent SEC
CommissionerdeGuzman,JusticeEstanislaoA.Fernandez,thenamemberoftheInterimBatasangPambansa,
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
Assemblymancould"appearascounselbefore...anyadministrativebody",andSECwasanadministrativebody.
Incidentally, the same prohibition was maintained by the April 7, 1981 plebiscite. The cited Constitutional
prohibitionbeingclear,AssemblymanFernandezdidnotcontinuehisappearanceforrespondentAcero.

d)May31,1979.WhentheSECCasewascalled,itturnedoutthat:

(i) On May 15, 1979, Assemblyman Estanislao A. Fernandez had purchased from Augusto A.
Moralesten(10)sharesofstockofIPIforP200.00uponrequestofrespondentAcerotoqualifyhim
torunforelectionasaDirector.

(ii)Thedeedofsale,however,wasnotarizedonlyonMay30,1979andwassoughttoberegistered
onsaiddate.

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(iii)OnMay31,1979,thedayfollowingthenotarizationofAssemblymanFernandez'purchase,the
latterhadfiledanUrgentMotionforInterventionintheSECCaseastheowneroften(10)IPIshares
alleginglegalinterestinthematterinlitigation.

e)July17,1979.TheSECgrantedleavetointerveneonthebasisofAtty.Fernandez'ownershipofthesaidten
shares. 1 It is this Order allowing intervention that precipitated the instant petition for certiorari and Prohibition with
PreliminaryInjunction.

f)July3,1979.EdgardoP.ReyesinstitutedacasebeforetheCourtofFirstInstanceofRizal(Pasig),BranchXXI,
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,
AssemblymanFernandezappearedascounselfordefendantExcelsiorInL51928,weruledthatAssemblyman
FernandezcouldnotappearascounselinacaseoriginallyfiledwithaCourtofFirstInstanceasinsuchsituation
theCourtwouldbeone"withoutappellatejurisdiction."

On September 4, 1979, the Court en banc issued a temporary Restraining Order enjoining respondent SEC
AssociateCommissionerfromallowingtheparticipationasanintervenor,ofrespondentAssemblymanEstanislao
FernandezattheproceedingsintheSECCase.

TheSolicitorGeneral,inhisCommentforrespondentCommissioner,supportsthestandofthelatterinallowing
intervention.TheCourtenbanc,onNovember6,1979,resolvedtoconsidertheCommentasanAnswertothe
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.

NoMemberoftheBatasangPambansashallappearascounselbeforeanycourtwithoutappellate
jurisdiction.

before any court in any civil case wherein the Government, or any subdivision, agency, or
instrumentalitythereofistheadverseparty,

orinanycriminalcasewhereinanyofficeroremployeeoftheGovernmentisaccusedofanoffense
committedinrelationtohisoffice,

orbeforeanyadministrativebody.

Neithershallhe,directlyorindirectlybeinterestedfinanciallyinanycontractwith,orinanyfranchise
orspecialprivilegegrantedbytheGovernment,oranysubdivision,agencyorinstrumentalitythereof,
includinganygovernmentownedorcontrolledcorporation,duringhistermofoffice.

Heshallnotacceptemploymenttointerveneinanycauseormatterwherehemaybecalledtoact
onaccountofhisoffice.(Emphasissupplied)

Whatreallyhastoberesolvediswhetherornot,ininterveningintheSECCase,AssemblymanFernandezis,in
effect,appearingascounsel,albeitindirectly,beforeanadministrativebodyincontraventionoftheConstitutional
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.Hisappearancecouldtheoreticallybefortheprotectionofhisownershipoften(10)sharesofIPIin
respect of the matter in litigation and not for the protection of the petitioners nor respondents who have their
respectivecapableandrespectedcounsel.

However, certain salient circumstances militate against the intervention of Assemblyman Fernandez in the SEC
Case.HehadacquiredamereP200.00worthofstockinIPI,representingtensharesoutof262,843outstanding
shares. He acquired them "after the fact" that is, on May 30, 1979, after the contested election of Directors on
May14,1979,afterthequowarrantosuithadbeenfiledonMay25,1979beforeSECandonedaybeforethe
scheduledhearingofthecasebeforetheSEConMay31,1979.Andwhatismore,beforehemovedtointervene,
hehadsignifiedhisintentiontoappearascounselforrespondentEustaquioT.C.Acero, 2butwhichwasobjected
tobypetitioners.Realizing,perhaps,thevalidityoftheobjection,hedecided,instead,to"intervene"onthegroundoflegal
interest in the matter under litigation. And it maybe noted that in the case filed before the Rizal Court of First Instance (L
51928),heappearedascounselfordefendantExcelsior,codefendantofrespondentAcerotherein.

Underthosefactsandcircumstances,weareconstrainedtofindthattherehasbeenanindirect"appearanceas
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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
DirectorintheeventofanunfavorableoutcomeoftheSECCasewouldbepurenaivete.Hewouldstillappearas
counselindirectly.

Arulingupholdingthe"intervention"wouldmaketheconstitutionalprovisionineffective.AllanAssemblymanneed
do,ifhewantstoinfluenceanadministrativebodyistoacquireaminimalparticipationinthe"interest"oftheclient
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

Inbrief,weholdthattheinterventionofAssemblymanFernandezinSEC.No.1747fallswithintheambitofthe
prohibitioncontainedinSection11,ArticleVIIIoftheConstitution.

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
interveneinanycontroversybeforetheSECrelatingtointracorporatematters.Aresolutionofthatquestionisnot
necessaryinthiscase.

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
herebymadepermanent.

Nocosts.

SOORDERED.

Fernando, C.J., Teehankee, Makasiar, Concepcion, Jr., Fernandez, Guerrero, Abad Santos, De Castro, Ericta,
PlanaandEscolin,JJ.,concur.

Aquino,J.,tooknopart.

Barredo,J.,Ireservemyvote.

Footnotes

1p.23,Rollo.

2p.6,Ibid.

3Am.Digest,2dDicennialEd.,Vol.5,citingAtkinsonvs.Board,etc.,108P.1046.

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