Puyat v. de Guzman: Warranto Proceedings Questioning The Above Elections. They Claimed That The Stockholders' Votes

[POLIREV] Art. VI – Sec.
14 - appearing
Puyat v. De Guzman “in intervention” in one’s behalf
48
G.R. No. L-51122 March 25, 1982 J. Melencio-Herrera Therese
Petitioners: Respondents:
Recit Ready Summary
The International Pipe Industries Corporation (IPI) is a private corporation. It held its elections and
voted the Puyat group as the controlling group over the Acero group. The Acero group instituted a case
before the SEC to question the elections claiming that the votes of the stockholders were not counted
properly. Assemblyman Fernandez, then a member of the Interim Batasang Pambansa, entered his
appearance for the Acero group. However, this was not allowed based on then Sec. 11, Art. VIII of the
Constituion which provided that no member of the Batasang Pambansa shall appear as counsel before
appear as counsel “before ... any administrative body.” Thus, A. Fernandez bought 10 shares of stock
of IPI and instead filed a motion to intervene in the SEC case. It must be noted that A. Fernandez filed
his motion for intervention the day after he had the deed of sale notarized. The court issued a TRO for
A. Fernandez to intervene based on the constitutional prohibition for any member of the Batasang
Pambansa to appear before any administrative body.
W/N A. Fernandez’s intervention as a stockholder before the SEC be allowed – NO
Assemblyman Fernandez seems to base his appearance on 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 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, 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. A ruling upholding the "intervention"
would make the constitutional provision ineffective.
Facts
1. 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. Those
from the Puyat group would be in control of the Board and of the management of IPI.
Puyat Group Acero Group

Eugenio J. Puyat Eustaquio T.C. Acero
Erwin L. Chiongbian R.G. Vildizius
Edgardo P. Reyes Enrique M. Belo
Antonio G. Puyat Servillano Dolina
Jaime R. Blanco Juanito Mercado
Rafael R. Recto
2. The Acero Group instituted at the Securities and Exchange Commission (SEC) quo
warranto proceedings questioning the above elections. They claimed that the stockholders’ votes
were not counted properly.
3. 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.
ALS B2021 1
4. 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.
5. The SEC proceedings showed that 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. The deed of sale, however, was notarized only on
May 30, 1979 and was sought to be registered on said date. 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. This was granted by the SEC.
6. 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. This TRO was supported by the
SolGen.
7. Note that in a case before the CFI, Assemblyman Fernandez appeared as counsel for another
company, Excelsior which was the co-defendant of Acero.
Issues Ruling
W/N Assemblyman Fernandez, as a then stockholder of IPI may intervene in the SEC No
Case and is effect appearing before an administrative body in contravention of the
Constitutional provision
Rationale
Allowing Assemblyman Fernandez to intervene would result in the contravention of the

Constitutional prohibition
- Assemblyman Fernandez seems to base his appearance on 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 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, 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, the court ruled that there has been an indirect
"appearance as counsel before ... an administrative body" which amounts to 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.
Disposition
TRO against the intervention of Assemblyman Fernandez is made permanent.
ALS B2021 2
ALS B2021 3

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[POLIREV] Art. VI – Sec.

Recit Ready Summary

W/N A. Fernandez’s intervention as a stockholder before the SEC be allowed – NO

Puyat Group Acero Group

Allowing Assemblyman Fernandez to intervene would result in the contravention of the

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