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12 BAVIERA V. PAGLINAWAN should be filed with the SEC.

The SC held
G.R. NO. 168380 | 8 FEBRUARY 2007 | that SRC being a special law, its
SANDOVAL-GUTIERREZ, J. endorsement is particularly vested with the
SEC. Thus, all complaints for the violation of
DIGESTED BY: Griar, Marie Stephanie the code should be filed with the SEC.
Therese A. When the complaint is criminal in nature,
the SEC should then indorse the same to
TOPIC: Securities Regulation Code the DOJ for preliminary investigation.

DOCTRINE/S: FACTS:
 Under the doctrine of primary  Baviera was the former head of the
jurisdiction, courts will not HR Service Deliver and Industrial
determine a controversy involving Relations of Standard Chartered
a question within the jurisdiction Bank Philippines (SCB)
of the administrative tribunal,  SCB is a foreign banking corporation
where the question demands the which is engaged in banking, trust,
exercise of sound administrative and other fiduciary business in the
discretion requiring the Philippines.
specialized knowledge and o It was subjected to the
expertise of said administrative following conditions by the
tribunal to determine technical BSP.
and intricate matters of fact.  At the end of the 1
 The rule in this jurisdiction is that year period from the
courts will not interfere with the beginning of its
conduct of preliminary operation, at least
investigations or reinvestigations 25% of the accounts
or in the determination of what mus be for the non-
constitutes sufficient probable residents and the
cause for the filing of the actual exchange had
corresponding information been remitted to the
against an offender. Philippines to fund the
accounts; or
EMERGENCY RECIT:  The establishment of
SCB acted as a stock broker and solicited the said accounts had
from local residents foreign securities called reduced the
GTPMF. These securities were not indebtedness of the
registered with the SEC and were remitted residents to non-
outwardly to SCB Hong Kong and residents.
Singapore. The ICAP filed with the SEC a  At the end of the 2nd
complaint on the ground that SCB violated year, the ratio will be
the Revised Securities Act on the prohibition increased to 50%
on the sale of securities without prior  All trust operations be
registration with the SEC as it will damage subjected to all
the local mutual fund industry. BSP directed existing laws, rules
SCB to restrain from offering their services and regulations;
without registering the same. Despite this,  Bank shall inform the
SCB continued to offer and sell these supervising and
securities in the country. When Baviera examining
learned about this prohibition, he filed with department of BSP at
the DOJ a complaint for the violation of the the start of its
SRC but was denied stating that the same operation.
 The conditions set by BSP were not  4 December 2003: a Cease and
complied with by SCB. Desist Order was issued by SEC to
o Instead, it acted as a stock restrain SCB from further offering,
broker, soliciting from local soliciting, and selling the securities
residents foreign securities to the public until they have been
known as Global Third Party registered with SEC.
Mutual Funds (GTPMF) in  SEC and SCB reached to an
dollars. agreement to pay P7Million pesos
o The same were not SEC and committed not to offer the
registered and were remitted securities in public unregistered.
outwardly to SCB-HK and  Complaint was filed with the DOJ for
Singapore. the violation of the SRC.
 18 July 1997: Investment Capital o Dismissed on the ground that
Association of the Philippines (ICAP) such should have been filed
filed with the SEC a complaint with the SEC.
against SCB for the violation of the o DOJ also dismissed all the
Revised Securities Act on the complaints filed by Baviera
prohibition of the sale of including the syndicated
unregistered securities. estafa.
 SCB denied the same saying that  Motion to Dismiss by the petitioner
they did not solicit for any of its were denied.
investment oulets abroad.  Baviera filed a petition for certiorari
 SEC: the operations of SCB was in alleging that DOJ acted with grave
violation of the Revised Securities abuse of discretion amounting to
Act, thus, its operations must cease. lack or excess of jurisdiction in
 BSP directed SCB not to include dismissing the case for syndicated
investments in global mutual funds estafa and the decision holding that
issued abroad in its trust complaint should have been filed
investments portfolio without prior with the SEC.
registration with the SEC.  CA: Dismissed the petition on the
 Despite the directive of BSP, SCB ground that the case should have
continued to offer and sell the been filed initially with SEC.
GTPMF securities in this country  CA: Rendered a decision dismissing
 BSP learned of the violation of SCB, the petition of Baviera on the ground
thus, it fined SCB in the amount of that the purpose of a petition for
P30,000.00 certiorari is not to evaluate and
 26 October 2001: Baviera learned weigh the parties’ evidence but to
from Gonzales of the Legal and determine whether the assailed
Compliance Department the resolution of the DOJ was issued
prohibition of the selling of GPTMF with GADALEJ.
securities so he filed a complaint for  Hence, this petition.
compensation for his lost
investment. ISSUE/S:
 15 July 2003: Baviera filed with DOJ Whether or not the Court of Appeals erred
a complaint agains the officers and in concluding that the DOJ did not commit
members of the Board of SCB with grave abuse of discretion in dismissing
syndicated estafa. petitioner’s complaint for the violation of
 29 September 2003: A complaint for Securities Regulation Code and for
perjury against Morris and Gonzales syndicated estafa – NO.
(private respondents)
HELD: investigation designed to secure the
NO. respondent from hasty, malicious and
oppressive prosecution. A preliminary
For violation of the SRC investigation is essentially an inquiry to
determine whether (a) a crime has been
A criminal charge for violation of the committed; and (b) whether there is
Securities Regulation Code is a specialized probable cause that the accused is guilty
dispute. Hence, it must first be referred to thereof. Thus, the decision whether or
an administrative agency of special not to dismiss the criminal complaint
competence, i.e., the SEC. Under the against the accused depends on the
doctrine of primary jurisdiction, courts sound discretion of the prosecutor.
will not determine a controversy
involving a question within the The rule in this jurisdiction is that courts
jurisdiction of the administrative will not interfere with the conduct of
tribunal, where the question demands preliminary investigations or
the exercise of sound administrative reinvestigations or in the determination
discretion requiring the specialized of what constitutes sufficient probable
knowledge and expertise of said cause for the filing of the corresponding
administrative tribunal to determine information against an offender. Courts
technical and intricate matters of fact. are not empowered to substitute their own
The Securities Regulation Code is a special judgment for that of the executive branch.
law. Its enforcement is particularly vested in Differently stated, as the matter of whether
the SEC. Hence, all complaints for any to prosecute or not is purely discretionary
violation of the Code and its on his part, courts cannot compel a public
implementing rules and regulations prosecutor to file the corresponding
should be filed with the SEC. Where the information, upon a complaint, where he
complaint is criminal in nature, the SEC finds the evidence before him insufficient to
shall indorse the complaint to the DOJ for warrant the filing of an action in court. In
preliminary investigation and prosecution sum, the prosecutors findings on the
existence of probable cause are not
For the case of Syndicated Estafa subject to review by the courts, unless
these are patently shown to have been
Section 5, Rule 110 of the 2000 Rules of made with grave abuse of discretion.
Criminal Procedure, as amended, provides
that all criminal actions, commenced by PETITION IS DENIED. CA DECISIONS
either a complaint or an information, shall ARE AFFIRMED.
be prosecuted under the direction and
control of a public prosecutor. This mandate
is founded on the theory that a crime is a
breach of the security and peace of the
people at large, an outrage against the
very sovereignty of the State. It follows that
a representative of the State shall direct and
control the prosecution of the offense.

Concomitant with his authority and power to


control the prosecution of criminal offenses,
the public prosecutor is vested with the
discretionary power to determine
whether a prima facie case exists or
not. This is done through a preliminary