Case Digest (G.R. No. 239010)
Facts:
Securities and Exchange Commission v. AZ 17/31 Realty, Inc., G.R. No. 239010; and Azucena Locsin‑Garcia v. AZ 17/31 Realty, Inc., G.R. No. 240888, July 06, 2022, Supreme Court Second Division, Lazaro‑Javier, J., writing for the Court.The dispute began with the incorporation of AZ 17/31 Realty, Inc. on April 23, 2008. The Articles of Incorporation listed seven incorporators and showed subscriptions and paid amounts; among the incorporators was Pacita Javier who was recorded as having subscribed 1,437 shares and having paid Php1,437,000.00. The incorporators comprised the corporation’s first board. The principal shareholders and officers as of 2016 included members of the de Zuzuarregui family, with Antonio de Zuzuarregui, Jr. the majority shareholder.
By letter dated January 9, 2016, Azucena Locsin‑Garcia complained to the SEC’s Compliance and Enforcement Department (CED) that Pacita had been dead since August 17, 2004—three and a half years before incorporation—and that her inclusion was fraud in procuring the corporation’s certificate of registration. The SEC‑CRMD verified the death with the NSO; the death certificate listed Enrique (one of the incorporators) as informant.
The SEC‑CRMD, by Order dated May 30, 2016, revoked AZ 17/31’s certificate of registration, finding Pacita could not lawfully be an incorporator and holding the inclusion a misrepresentation that deceived the Commission and the investing public. On appeal, the SEC En Banc, by Decision dated August 10, 2017, affirmed CRMD’s revocation, upheld CRMD’s jurisdiction under SEC Resolution No. 359 (2010), and applied a liberal approach to Locsin‑Garcia’s failure to attach a certification against forum shopping.
AZ 17/31 Realty sought relief with the Court of Appeals under Rule 43 and secured a temporary restraining order on September 14, 2017 and a writ of preliminary injunction on November 10, 2017. The Court of Appeals, in a Decision dated April 24, 2018, reversed the SEC En Banc and set aside the revocation, holding that the inclusion of the deceased Pacita did not amount to fraud sufficient to revoke the corporation’s registration; reconsideration was denied on July 16, 2018.
Both the SEC (through the OSG) and Locsin‑Garcia filed separate Petitions for Review on Certiorari to the Supreme Court: the SEC sought reinstatement of its En Banc decision (G.R. No. 239010), while Locsin‑Garcia sought affirmance of the SEC’s revocation (G.R. No. 24088...(Subscriber-Only)
Issues:
- May the quasi‑judicial Securities and Exchange Commission file a petition for review to reinstate its En Banc disposition that was reversed by the Court of Appeals?
- Did the SEC’s Company Registration and Monitoring Department (SEC‑CRMD) properly assume jurisdiction over Locsin‑Garcia’s letter complaint?
- Does the inclusion of a deceased person as an incorporator constitute fraud in procuring a corporation’s certificate...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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