B2022 REPORTS ANNOTATED
Baviera v Paglinawan
I. Recit-ready summary
Baviera bought unregistered stocks from SCB. He filed a
complaint with the DOJ for violation of the Securities Regulation Code
and estafa. The DOJ dismissed the complain so Baviera filed 2 petitions
for certiorari with the CA. The CA dismissed the petitions on the ground
of primary jurisdiction since a violation of the Securities Regulation Code
is a specialized dispute, Baviera should have filed with the SEC rather
than the DOJ. Courts will not determine a controversy falling under the
jurisdiction of an administrative tribunal, likewise requiring its specialized
knowledge and expertise.
II. Facts of the case
Manuel Baviera was the former head of HR service Delivery and
Industrial Relations of Standard Charted Bank (SCB). SCB is a foreign
banking corporation duly licensed to engage in banking, trust, and other
fiduciary business in the Philippines. SCB’s business in the Philippines are
regulated by BSP’s conditions which SCB did not comply with.
Apparently, SCB did not comply with the above conditions. Instead,
as early as 1996, it acted as a stock broker, soliciting from local residents
foreign securities called "GLOBAL THIRD PARTY MUTUAL FUNDS"
(GTPMF), denominated in US dollars. These securities were not registered
with the Securities and Exchange Commission (SEC). They were sold
under the guise of a custodianship agreement.
The BSP directed SCB not to include investments in global mutual
funds issued abroad in its trust investments portfolio without prior
registration with the SEC. SCB sent a letter to the BSP confirming that it
will withdraw third-party fund products which could be directly purchased
by investors. However, notwithstanding its commitment and the BSP
directive, SCB continued to offer and sell GTPMF securities in this country.
On February 7, 2004, petitioner filed with the DOJ a complaint for
violation of Section 8.1[9] of the Securities Regulation Code against private
respondents. Meanwhile, in a Resolution[11] dated April 4, 2004, the DOJ
dismissed petitioner's complaint in I.S. No. 2004-229 (violation of
G.R. NO: 168380
ARTICLE; TOPIC OF CASE: Primary Jurisdiction
VOL 32 [August 6, 1991]
Baviera v Paglinawan
Securities Regulation Code), holding that it should have been filed with the
SEC.
Petitioner's motions to dismiss his complaints were denied by the
DOJ. Thus, he filed with the Court of Appeals a petition for certiorari. He
alleged that the DOJ acted with grave abuse of discretion amounting to lack
or excess of jurisdiction in dismissing his complaint for syndicated estafa.
He also filed with the Court of Appeals a separate petition for certiorari
assailing the DOJ Resolution dismissing I.S. No. 2004-229 for violation of
the Securities Regulation Code
III. Issue/s
1. Issue #1: W/N the DOJ acted with grave abuse of discretion for
dismissing the case for for violation of the Securities Regulation
Code ? No. The case should have been filed with the SEC and
not the DOJ on the ground of principle of primary
jurisdiction
IV. Ratio/Legal Basis
A criminal charge for violation of the Securities Regulation Code is a
specialized dispute. Hence, it must first be referred to an administrative
agency of special competence, i.e., the SEC. Under the doctrine of
primary jurisdiction, courts will not determine a controversy involving
a question within the jurisdiction of the administrative tribunal, where
the question demands the exercise of sound administrative discretion
requiring the specialized knowledge and expertise of said
administrative tribunal to determine technical and intricate matters of
fact. The Securities Regulation Code is a special law. Its enforcement is
particularly vested in the SEC. Hence, all complaints for any violation of
the Code and its implementing rules and regulations should be filed with the
SEC. Where the complaint is criminal in nature, the SEC shall indorse the
complaint to the DOJ for preliminary investigation and prosecution as
provided in Section 53.1 earlier quoted.
PONENTE: Sandoval-Gutierrez, J.
DIGEST MAKER: Tin
 B2022 REPORTS ANNOTATED VOL 32 [August 6, 1991]

Baviera v Paglinawan Baviera v Paglinawan

We thus agree with the Court of Appeals that petitioner committed

a fatal procedural lapse when he filed his criminal complaint directly with
the DOJ. Verily, no grave abuse of discretion can be ascribed to the DOJ in
dismissing petitioner's complaint.

V. Disposition

WHEREFORE, we DENY the petitions and AFFIRM the assailed

Decisions of the Court of Appeals in CA-G.R. SP No. 87328 and in
CA-G.R. SP No. 85078.

Costs against petitioner.

G.R. NO: 168380 PONENTE: Sandoval-Gutierrez, J.

ARTICLE; TOPIC OF CASE: Primary Jurisdiction DIGEST MAKER: Tin