Puyat vs. de Guzman 1982

7/24/2019 Puyat vs. de Guzman 1982

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Full Text

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-51122 March 25, 1982

EUGENIO J. PUYAT, ERWIN L. CIONG!IAN, E"GAR"O P. REYES, ANTONIO G. PUYAT, JAIME R. !LANCO,

RA#AEL R. RECTO a$% REYNAL"O L. LAR"I&A!AL, petitioners,

vs.

ON. SI'TO T. J. "E GU&MAN, JR., a( A((oc)a*+ Co)(()o$+r o *h+ S+cr)*)+( / E0cha$+ Co)(()o$,

EUSTAUIO T. C. ACERO, R. G. 3IL"&IUS, ENRIUE M. !ELO, MANUEL G. A!ELLO, SER3ILLANO "OLINA,

JUANITO MERCA"O a$% ESTANISLAO A. #ERNAN"E&, respondents.

MELENCIO-ERRERA, J.:

This suit for certiorari and Prohibition ith Preli!inar" #n$unction is poised a%ainst the &rder of respondent Associate

Co!!issioner of the 'ecurities and Exchan%e Co!!ission ('EC) %rantin% Asse!bl"!an Estanislao A. Fernande*

leave to intervene in 'EC Case No. +-.

A uestion of novel i!port is in issue. For its resolution, the folloin% dates and alle%ations are bein% %iven and !ade/

a) May 14,1979. An election for the eleven 0irectors of the #nternational Pipe #ndustries Corporation (#P#) a private

corporation, as held. Those in char%e ruled that the folloin% ere elected as 0irectors/

Eu%enio 1. Pu"at Eustauio T.C. AceroErin 2. Chion%bian R. 3. 4ild*ius

Ed%ardo P. Re"es Enriue M. Belo

Antonio 3. Pu"at 'ervillano 0olina

1ai!e R. Blanco 1uanito Mercado

Rafael R. Recto

Those na!ed on the left list !a" be called the Pu"at 3roup5 those on the ri%ht, the Acero 3roup. Thus, the Pu"at 3roup

ould be in control of the Board and of the !ana%e!ent of #P#.

b) May 25, 1979. The Acero 3roup instituted at the 'ecurities and Exchan%e Co!!ission ('EC) quo

warrantoproceedin%s, doc6eted as Case No. +- (the 'EC Case), uestionin% the election of Ma" +-, +77. The

Acero 3roup clai!ed that the stoc6holders8 votes ere not properl" counted.

c) May 25-31, 1979. The Pu"at 3roup clai!s that at conferences of the parties ith respondent 'EC Co!!issioner de

3u*!an, 1ustice Estanislao A. Fernande*, then a !e!ber of the #nteri! Batasan% Pa!bansa, orall" entered his

appearance as counsel for respondent Acero to hich the Pu"at 3roup ob$ected on Constitutional %rounds. 'ection ++,

Article 4###, of the +79 Constitution, then in force, provided that no Asse!bl"!an could :appear as counsel before ...

an" ad!inistrative bod":, and 'EC as an ad!inistrative bod". #ncidentall", the sa!e prohibition as !aintained b" the

April , +7;+ plebiscite. The cited Constitutional prohibition bein% clear, Asse!bl"!an Fernande* did not continue his

appearance for respondent Acero.

d) May 31, 1979.


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(ii) The deed of sale, hoever, as notari*ed onl" on Ma" 9>, +77 and as sou%ht to be re%istered

on said date.

(iii) &n Ma" 9+, +77, the da" folloin% the notari*ation of Asse!bl"!an Fernande*8 purchase, the

latter had filed an @r%ent Motion for #ntervention in the 'EC Case as the oner of ten (+>) #P# shares

alle%in% le%al interest in the !atter in liti%ation.

e) July 17, 1979. The 'EC %ranted leave to intervene on the basis of Att". Fernande*8 onership of the said ten

shares. 1#t is this &rder alloin% intervention that precipitated the instant petition for certiorari and

Prohibition ith Preli!inar" #n$unction.

f) July 3, 1979.Ed%ardo P. Re"es instituted a case before the Court of First #nstance of Ri*al (Pasi%), Branch #,

a%ainst N.4. 4ereni%de Buein*enfabrie6en Excelsior 0e Maas and respondent Eustauio T. C. Acero and others, to

annul the sale of Excelsior8s shares in the #P# to respondent Acero (CC No. 9997). #n that case, Asse!bl"!an

Fernande* appeared as counsel for defendant Excelsior #n 2=+7?;, e ruled that Asse!bl"!an Fernande* could not

appear as counsel in a case ori%inall" filed ith a Court of First #nstance as in such situation the Court ould be one

:ithout appellate $urisdiction.:

&n 'epte!ber -, +77, the Court en bancissued a te!porar" Restrainin% &rder en$oinin% respondent 'EC AssociateCo!!issioner fro! alloin% the participation as an intervenor, of respondent Asse!bl"!an Estanislao Fernande* at

the proceedin%s in the 'EC Case.

The 'olicitor 3eneral, in his Co!!ent for respondent Co!!issioner, supports the stand of the latter in alloin%

intervention. The Court en banc,on Nove!ber D, +77, resolved to consider the Co!!ent as an Anser to the Petition.

The issue hich ill be resolved is hether or not Asse!bl"!an Fernande*, as a then stoc6holder of #P# !a" intervene

in the 'EC Case ithout violatin% 'ection ++, Article 4### of the Constitution, hich, as a!ended, no reads/

'EC. ++.

No Me!ber of the Batasan% Pa!bansa shall appear as counsel before an" court ithout appellate

$urisdiction.

before an" court in an" civil case herein the 3overn!ent, or an" subdivision, a%enc", or

instru!entalit" thereof is the adverse part",

or in an" cri!inal case herein an" officer or e!plo"ee of the 3overn!ent is accused of an offense

co!!itted in relation to his office,

or before any administratie body.

Neither shall he, directl" or indirectl" be interested financiall" in an" contract ith, or in an" franchise

or special privile%e %ranted b" the 3overn!ent, or an" subdivision, a%enc" or instru!entalit"

thereof, includin% an" %overn!entoned or controlled corporation, durin% his ter! of office.

e shall not accept e!plo"!ent to intervene in an" cause or !atter here he !a" be called to act

on account of his office. (E!phasis supplied)


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oever, certain salient circu!stances !ilitate a%ainst the intervention of Asse!bl"!an Fernande* in the 'EC Case.

e had acuired a !ere P?>>.>> orth of stoc6 in #P#, representin% ten shares out of ?D?,;-9 outstandin% shares. e

acuired the! :after the fact: that is, on Ma" 9>, +77, after the contested election of 0irectors on Ma" +-, +77, after

the quo warrantosuit had been filed on Ma" ?=, +77 before 'EC and one da" before the scheduled hearin% of the

case before the 'EC on Ma" 9+, +77. And hat is !ore, before he !oved to intervene, he had si%nified his intention to

appear as counsel for respondent Eustauio T. C. Acero, 2but hich as ob$ected to b" petitioners. Reali*in%,

perhaps, the validit" of the ob$ection, he decided, instead, to :intervene: on the %round of le%alinterest in the !atter under liti%ation. And it !a"be noted that in the case filed before the Ri*al Court

of First #nstance (2=+7?;), he appeared as counsel for defendant Excelsior, codefendant of

respondent Acero therein.

@nder those facts and circu!stances, e are constrained to find that there has been an indirect :appearance as

counsel before ... an ad!inistrative bod": and, in our opinion, that is a circu!vention of the Constitutional prohibition.

The :intervention: as an afterthou%ht to enable hi! to appear activel" in the proceedin%s in so!e other capacit". To

believe the avoed purpose, that is, to enable hi! eventuall" to vote and to be elected as 0irector in the event of an

unfavorable outco!e of the 'EC Case ould be pure naivete. e ould still appear as counsel indirectl".

A rulin% upholdin% the :intervention: ould !a6e the constitutional provision ineffective. All an Asse!bl"!an need do, if

he ants to influence an ad!inistrative bod" is to acuire a !ini!al participation in the :interest: of the client and then:intervene: in the proceedin%s. That hich the Constitution directl" prohibits !a" not be done b" indirection or b" a

%eneral le%islative act hich is intended to acco!plish the ob$ects specificall" or i!pliedl" prohibited. 4

#n brief, e hold that the intervention of Asse!bl"!an Fernande* in 'EC. No. +- falls ithin the a!bit of the

prohibition contained in 'ection ++, Article 4### of the Constitution.

&ur resolution of this case should not be construed as, absent the uestion of the constitutional prohibition a%ainst

!e!bers of the Batasan, alloin% an" stoc6holder, or an" nu!ber of stoc6holders, in a corporation to intervene in an"

controvers" before the 'EC relatin% to intracorporate !atters. A resolution of that uestion is not necessar" in this

case.


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Digest

PUYAT, ET. AL. vs. DE GUZMAN JR., ET. AL. G.R. No. L-51122, 25 March

1982 Cas D!"s#The suit is for Certiorari and Prohibition ith Preli!inar" #n$unction poised a%ainst the &rder of respondent AssociateCo!!issioner of the 'ecurities and Exchan%e Co!!ission ('EC), on. 'ixto T. 1. 0e 3u*!an, 1r., %rantin% Asse!bl"!an

Estanislao A. Fernande* leave to intervene in a 'EC Case.

FACT'/

&n +- Ma" +77, an election for the eleven 0irectors of the #nternational Pipe #ndustries (#P#), a private corporation, as held

six of the elected directors ere herein petitioners that !a" be called the Pu"at 3roup, hile the other five ere herein

respondents, the Acero 3roup. Thus, the Pu"at 3roup ould be in control of the Board and of the !ana%e!ent of #P#.

&n ?= Ma" +77, the Acero 3roup instituted at the 'EC uo arranto proceedin%s uestionin% the election.

Conferences ere held on ?=9+ Ma" +77 and the Pu"at 3roup ob$ected on Constitutional %rounds the appearance of 1ustice

Estanislao Fernande*, then a !e!ber of the #nteri! Batasan% Pa!bansa, as counsel for the Acero %roup. 'ection ++, Article4###, +79 Constitution, then in force, provided that no Asse!bl"!an could :appear as counsel before xxx an" ad!inistrative

bod": and 'EC as an ad!inistrative bod". The prohibition bein% clear, Asse!bl"!an Fernande* did not continue his

appearance.

#P# shares alle%in% le%al interest in the !atter in liti%ation,

hich !otion as %ranted b" the 'EC Co!!issioner.

#''@E/

>.>> orth of stoc6 in #P#. e acuired the! :after the fact:, that is, on 9> Ma" +77, after the contested election of

0irectors, after the uo arranto suit had been filed, and one da" before the scheduled hearin% of the case before the 'EC.

And hat is !ore, before he !oved to intervene, he had si%nified his intention to appear as counsel for the Acero %roup, but

hich as ob$ected to b" petitioners Pu"at %roup. Reali*in%, perhaps, the validit" of the ob$ection, he decided, instead, to

:intervene: on the %round of le%al interest in the !atter under liti%ation.

@nder those facts and circu!stances, there has been an indirect appearance as counsel before an ad!inistrative bod", hich

is a circu!vention of the Constitutional prohibition. The :intervention: as an afterthou%ht to enable hi! to appear activel" in

the proceedin%s in so!e other capacit".

A rulin% upholdin% the :intervention: ould !a6e the constitutional provision ineffective. All an Asse!bl"!an need do, if he

ants to influence an ad!inistrative bod" is to acuire a !ini!al participation in the :interest: of the client and then :intervene:

in the proceedin%s. Tha* h)ch *h+ Co$(*)**)o$ %)r+c*67 roh))*( a7 $o* + %o$+ 7 )$%)r+c*)o$ or 7 a +$+ra6

6+)(6a*):+ ac* h)ch )( )$*+$%+% *o acco6)(h *h+ o;+c*( (+c))ca667 or )6)+%67 roh))*+%.

Thus, the intervention of Asse!bl"!an Fernande* in the 'EC Case falls ithin the a!bit of the prohibition contained in the

+79 Constitution. Respondent Co!!issioner8s &rder %rantin% Asse!bl"!an Fernande* leave to intervene in the 'EC Case

as reversed and set aside.

Puyat v. De Guzman (113 SCRA 31); Digest


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Puyat vs De Guzman

onJanuary 4, 2012

Political Law Appearance in Court

On 14 May 1979, Puyat and his group were elected asdirectors o the !nternational Pipe !ndustries" #heelection was su$se%uently %uestioned $y &cero'Puyat(s rival) claiming that the votes were not properlycounted * hence he +led a %uo warranto proceeding$eore the ecurities and -.change /ommission on 0May 1979" Prior to &cero(s +ling o the case, -stanislao2ernandez, then a mem$er o the !nterim 3atasang

Pam$ansa purchased ten shares o stoc o !P! rom amem$er o &cero(s group" &nd during a conerence held$y -/ /ommissioner de Guzman 'rom May 0561 (79)to have the parties coner with each other, -stanislao2ernandez entered his appearance as counsel or &cero"Puyat o$ected arguing that it is unconstitutional or anassem$lyman to appear as counsel 'to anyone) $eoreany administrative $ody 'such as the -/)" #his $eing

cleared, 2ernandez inhi$ited himsel rom appearing ascounsel or &cero" 8e instead +led an rgent Motion or!ntervention in this said -/ case or him to intervenenot as a counsel $ut as a legal owner o !P! shares andas a person who has a legal interest in the matter inlitigation" #he -/ /ommissioner granted the motion ine:ect granting 2ernandez leave to intervene" Puyatthen moved to %uestion the /ommissioner(s action"ISSUE:

;hether or not 2ernandez, acting as astocholder o !P!, can appear and intervene in the -/case without violating the constitutional provision thatan assem$lyman must not appear as counsel in suchcourts or $odiesP$%a# vs. D G$&'a(, Jr. G.R. No. L-51122, March 25, 1982'unda", 1anuar" ?=, ?>>7 Posted b" Coffeeholic


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4oweer, certain salient circu"stances "ilitate against the interentionofAsse"#l%"an ernande! in the SEC case. 4e had acquired a "ereP++.++ worth of stoc0 in IPI, representing *+ shares out of 5,627outstanding shares. 4e acquired the" 'after the fact that is, afterthe contestedelection of directors, after the quo warranto suit had #een

filed #efore the SEC and * da% #efore the scheduled hearing of thecase#efore the SEC. And what is "ore, #efore he "oed to interene, hehad signified his intention to appear as counsel for respondent Acero, #utwhich was o#&ected to #% petitioners. 8eali!ing, perhaps, the alidit% ofthe o#&ection, he decided, instead, to interene on the ground of legalinterest in the "atter under litigation.

9nder those facts and circu"stances, the Court is constrained to find thatthere has #een an indirectappearance as counsel #eforeanad"inistratie #od%. In the opinion of the Court, that is a circu"ention

of the Constitutionalprohi#ition contained in Sec. **, Art. 1III (now Sec.*2, Art. 1I). he interention was an afterthought to ena#le hi" toappear actiel% in the proceedings in so"e other capacit%.

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Puyat vs. de Guzman 1982