Case Summary (P.E.T. Case No. 001)
Factual Background
An election for eleven IPI directors occurred on May 14, 1979. The Puyat Group was declared elected and would control the board. The Acero Group challenged the election in the SEC (SEC Case No. 1747) alleging improper vote counting. Assemblyman Fernandez had orally offered to appear as counsel for Acero but ceased after petitioner objections citing constitutional prohibitions on Assemblymen appearing before administrative bodies. Subsequently, Fernandez acquired ten IPI shares for P200.00, with the deed of sale notarized on May 30, 1979; on May 31, 1979 he filed a motion to intervene in the SEC Case as a stockholder claiming legal interest. The SEC granted intervention on July 17, 1979.
Procedural Posture
Petitioners filed a suit for Certiorari and Prohibition with Preliminary Injunction challenging the SEC Associate Commissioner’s order permitting Fernandez to intervene. The Court of First Instance matter (a separate case) is noted where Fernandez had appeared as counsel for a party (Excelsior) in an action filed originally in a Court of First Instance; in a related petition (L-51928) the Court had ruled that Assemblymen could not appear as counsel in cases originally filed with Courts of First Instance because such courts are “without appellate jurisdiction.” The Solicitor General supported the SEC Commissioner’s allowance of intervention. The Court en banc issued a temporary restraining order enjoining Fernandez’s participation pending resolution.
Applicable Constitutional Provision
The Court applied Section 11, Article VIII of the 1973 Constitution (the provision expressly cited by the Court). The provision prohibits any Member of the Batasang Pambansa from appearing as counsel before any administrative body, among other restrictions; it also bars indirect financial interests in government contracts and employment to intervene where the member may be called to act by reason of his office. The Court treated the constitutional ban on appearance before administrative bodies as the primary constitutional limitation at issue.
Legal Issue Presented
Whether Assemblyman Fernandez’s intervention in the SEC quo warranto proceeding, justified by his acquisition of ten shares and his filing of a motion to intervene as a stockholder, constituted an indirect or circumventing “appearance as counsel” before an administrative body in violation of Section 11, Article VIII of the 1973 Constitution.
Court’s Factual and Legal Analysis
The Court emphasized several salient circumstances: (1) Fernandez’s stock purchase was minimal (ten shares out of 262,843 outstanding) and inexpensive (P200.00); (2) the purchase and notarization occurred after the May 14, 1979 election and after the quo warranto suit had been filed (May 25, 1979) and one day before the scheduled SEC hearing (May 31, 1979); (3) prior to invoking intervention, Fernandez had signified his intention to appear as counsel for respondent Acero, an intention to which petitioners had objected on constitutional grounds; and (4) Fernandez had in fact previously appeared as counsel for a defendant in a related court action. The Court reasoned that on these facts the asserted basis for intervention—stock ownership—was an afterthought intended to gain a procedural vehicle to participate actively in the SEC proceedings despite the explicit constitutional prohibition on Assemblymen appearing as counsel before administrative bodies.
Constitutional Interpretation and Principle Applied
The Court treated the constitutional prohibition as substantive and not susceptible to circumvention by indirection. It held that an Assemblyman may not achieve the practical effect of appearing as counsel before an administrative body by acquiring a nominal financial interest and invoking intervention. The Court observed that upholding such an “intervention” would effectively render the constitutional prohibition nugatory because a member could always secure minimal interest and thereby “intervene” to influence administrative proceedings. The Court therefore construed the intervention, under the particular circumstances, as tantamount to an indirect appearance as counsel and a circumvention of the constitutional bar. The Court expressly disclaimed deciding the broader question whether any stockholde
...continue readingCase Syllabus (P.E.T. Case No. 001)
Facts
- May 14, 1979: An election for the eleven Directors of the International Pipe Industries Corporation (IPI) was held.
- Those ruled elected, referred to in the decision as the Puyat Group, were: Eugenio J. Puyat, Erwin L. Chiongbian, Edgardo P. Reyes, Antonio G. Puyat, Jaime R. Blanco, Rafael R. Recto, and Reynaldo L. Lardizabal.
- Those referred to as the Acero Group were: Eustaquio T. C. Acero, R. G. Vildzius, Enrique M. Belo, Manuel G. Abello, Servillano Dolina, and Juanito Mercado.
- The Puyat Group would be in control of the Board and management of IPI following that election.
- May 25, 1979: The Acero Group instituted quo warranto proceedings at the Securities and Exchange Commission (SEC), docketed as Case No. 1747 (the SEC Case), challenging the May 14, 1979 election on the ground that stockholders' votes were not properly counted.
- May 25–31, 1979: At conferences with respondent SEC Associate Commissioner de Guzman, Assemblyman Estanislao A. Fernandez, then a member of the Interim Batasang Pambansa, orally entered his appearance as counsel for respondent Acero; the Puyat Group objected on Constitutional grounds based on Section 11, Article VIII of the 1973 Constitution (then in force) which prohibited an Assemblyman from appearing as counsel before any administrative body.
- May 31, 1979 (events relevant to Assemblyman Fernandez's status as intervenor):
- (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 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 Fernandez's purchase, he 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.
- July 17, 1979: The Securities and Exchange Commission granted leave to intervene to Assemblyman Fernandez on the basis of his asserted ownership of the ten IPI shares; it is this Order allowing intervention that prompted the present petition for Certiorari and Prohibition with Preliminary Injunction.
- July 3, 1979: Separately, Edgardo P. Reyes filed an action before the Court of First Instance of Rizal (Pasig), Branch XXI (CC No. 33739), against N.V. Verenigde Buinzen-fabrieken Excelsior - De Maas and respondent Eustaquio T. C. Acero and others, to annul the sale of Excelsior's shares in IPI to respondent Acero; Assemblyman Fernandez appeared as counsel for defendant Excelsior in that case.
- 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 Assemblyman Estanislao Fernandez in the SEC proceedings.
- The Solicitor General, in his Comment for respondent Commissioner, supported the Commissioner’s allowance of intervention; on November 6, 1979 the Court en banc resolved to consider that Comment as an Answer to the Petition.
Procedural Posture
- The petition is for Certiorari and Prohibition with Preliminary Injunction, challenging the SEC Associate Commissioner’s Order granting Assemblyman Estanislao A. Fernandez leave to intervene in SEC Case No. 1747.
- A temporary Restraining Order was issued by the Court en banc and later made permanent by the final judgment in this matter.
Legal Provision in Issue
- The constitutional provision at the core of the dispute is Section 11, Article VIII of the 1973 Constitution, as amended, quoted in the decision as follows:
- "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