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 Securities
Regulation Code), holding that it should have been filed with the SEC.
G.R. NO: 168380
ARTICLE; TOPIC OF CASE: Primary Jurisdiction
VOL 32 [August 6, 1991]
Baviera v Paglinawan
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.
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.
PONENTE: Sandoval-Gutierrez, J.
DIGEST MAKER: Tin
 B2022 REPORTS ANNOTATED VOL 32 [August 6, 1991]

Baviera v Paglinawan Baviera v Paglinawan

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