Baviera v. Standard Chartered Bank

G.R. No. 168380, 8 February 2007

FACTS:

Manuel Baviera, petitioner in these cases, was the former head of the HR Service Delivery and Industrial Relations of Standard Chartered Bank-Philippines. SCB did not comply with the conditions set forth by the BSP. Although unregistered with the SEC, SCB was able to sell securities worth around P6 billion to some 645 investors.

Petitioner entered into an Investment Trust Agreement with SCB wherein he purchased US$8,000.00 worth of securities upon the bank’s promise of 40% return on his investment and a guarantee that his money is safe. After six (6) months, however, petitioner learned that the value of his investment went down to US$7,000.00. He tried to withdraw his investment but was persuaded by Antonette de los Reyes of SCB to hold on to it for another six (6) months in view of the possibility that the market would pick up. The trend in the securities market, however, was bearish and the worth of petitioner’s investment went down further to only US$3,000.00.

On July 15, 2003, petitioner filed with the Department of Justice (DOJ), represented herein by its prosecutors, public respondents, a complaint charging the above-named officers and members of the SCB Board of Directors and other SCB officials, private respondents, with syndicated estafa. petitioner also filed with the DOJ a complaint for violation of Section 8.19 of the Securities Regulation Code against private respondents,

On February 23, 2004, the DOJ rendered its Joint Resolution dismissing all the complaints and counter-charges filed the herein parties. Petitioner filed with the Court of Appeals a petition for certiorari alleging that the DOJ acted with grave abuse of discretion amounting to lack or excess of jurisdiction tantamount to lack or excess of jurisdiction in holding that the complaint should have been filed with the SEC.

ISSUE:

Whether or not the Court of Appeals erred in concluding that the DOJ did not commit grave abuse of discretion in dismissing petitioner’s complaint for violation of Securities Regulation Code.

RULING:

NO. All criminal complaints for violations of this Code and the implementing rules and regulations enforced or administered by the Commission shall be referred to the Department of Justice for preliminary investigation and prosecution before the proper court.

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.

*Case Digest by April Rose B. Tuanda, JD-IV, Andres Bonifacio Law School, S.Y 2019-2020

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