Case Digest (G.R. No. 239010) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Securities and Exchange Commission v. AZ 17/31 Realty, Inc. (G.R. Nos. 239010 and 240888, July 6, 2022), AZ 17/31 Realty, Inc. was organized on April 23, 2008 as a close corporation with seven incorporators, including Pacita Javier, who had in fact died on August 17, 2004. The Articles of Incorporation purported that Javier subscribed to and paid for 1,437 shares of stock and listed her among the initial directors. In January 2016, Azucena Locsin-Garcia filed a letter-complaint with the SEC’s Compliance and Enforcement Department seeking revocation of the company’s Certificate of Incorporation on the ground of fraud—namely, that Javier could not have signed the corporate documents posthumously. The SEC Company Registration and Monitoring Department (SEC-CRMD) revoked AZ 17/31 Realty’s registration for misrepresentation, which the SEC En Banc affirmed in August 2017. AZ 17/31 Realty secured a temporary restraining order and writ of preliminary injunction from the Court of Appe Case Digest (G.R. No. 239010) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Petitions
- The Securities and Exchange Commission (SEC) filed Petition G.R. No. 239010 to reinstate its En Banc decision revoking AZ 17/31 Realty, Inc.’s certificate of registration.
- Azucena Locsin-Garcia filed Petition G.R. No. 240888 to revoke AZ 17/31 Realty, Inc.’s Articles of Incorporation on the ground of fraud.
- Incorporation of AZ 17/31 Realty, Inc.
- Incorporated on April 23, 2008 as a close corporation with the purpose of acquiring, developing, leasing, subdividing, and disposing of real estate.
- Seven incorporators and their subscriptions: Antonio de Zuzuarregui, Jr. (Php18,682,000), Enrique de Zuzuarregui (Php1,437,000), Pacita Javier (Php1,437,000; deceased August 17, 2004), Antonette S. Rosca (Php100,000), Anthony de Zuzuarregui (Php144,000), Antoinette de Zuzuarregui (Php100,000), Maria Edna de Zuzuarregui (Php100,000).
- SEC-CRMD Proceedings
- Locsin-Garcia’s letter dated January 9, 2016 alleged fraud in including the deceased Pacita Javier as an incorporator.
- On May 30, 2016, the SEC Company Registration and Monitoring Department (CRMD) revoked AZ 17/31 Realty’s certificate of registration for fraud and misrepresentation.
- SEC-En Banc Proceedings
- AZ 17/31 Realty appealed to the SEC-En Banc, arguing lack of jurisdiction and cruel penalty.
- By Decision dated August 10, 2017, the SEC-En Banc affirmed the CRMD revocation, holding that inclusion of a deceased person was fraudulent.
- Court of Appeals Proceedings
- AZ 17/31 Realty secured a 60-day TRO on September 14, 2017, and a writ of preliminary injunction on November 10, 2017, enjoining SEC’s implementation.
- By Decision dated April 24, 2018, the CA reversed the SEC-En Banc, ruling that including Pacita’s name was mere surplusage and did not constitute fraud; reconsideration was denied July 16, 2018.
- Present Supreme Court Petitions
- SEC (G.R. No. 239010) seeks reinstatement of SEC-En Banc’s revocation, alleging forgery and misrepresentation under PD 902-A and SEC Regulation No. 359.
- Locsin-Garcia (G.R. No. 240888) reiterates that inclusion of a deceased incorporator is falsification warranting revocation; AZ 17/31 Realty counters harassment and urges lesser penalties.
Issues:
- Whether the SEC has capacity to file a petition for review as a real party in interest.
- Which SEC department (CRMD or CED) has jurisdiction to revoke a corporation’s certificate of registration.
- Whether including a deceased person as an incorporator constitutes fraud in procuring a certificate of registration.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)