Baviera V Paglinawan
Baviera V Paglinawan
Baviera V Paglinawan
FIRST DIVISION
MANUEL V. BAVIERA,
Petitioner,
versus -
RAMAN,
MARIVEL
GONZALES,
CHONA REYES, MARIA ELLEN
VICTOR, and ZENAIDA IGLESIAS,
Respondents.
x-----------------------------x
MANUEL V. BAVIERA,
Petitioner,
versus -
*Corona*On leave.
Present:
PUNO, C.J.,Chairperson,
SANDOVAL-GUTIERREZ,
,
*Corona
AZCUNA, and
GARCIA, JJ.
Promulgated:
February 8, 2007
x -------------------------------------------------------------------------------------------x
DECISION
SANDOVAL-GUTIERREZ, J.:
The common factual antecedents of these cases as shown by the records are:
[1] Rollo, G.R. No. 168380, Vol. I, pp. 48-62. Penned by Associate Justice Remedios A.
Salazar-Fernando and concurred in by Associate Justice Rosemarie D. Carandang and
Associate Justice Monina Arevalo-Zenarosa.
2[2] Id., G.R. No. 170602, Vol. I, pp. 63-73. Written by Associate Justice Juan Q.
Enriquez, Jr., with Associate Justice Portia Alio-Hormachuelos and Associate Justice
Vicente Q. Roxas, concurring.
Manuel Baviera, petitioner in these cases, was the former head of the HR
Service Delivery and Industrial Relations of Standard Chartered Bank-Philippines
(SCB), one of herein respondents. SCB is a foreign banking corporation duly
licensed to engage in banking, trust, and other fiduciary business in the Philippines.
Pursuant to Resolution No. 1142 dated December 3, 1992 of the Monetary Board
of the Bangko Sentral ng Pilipinas (BSP), the conduct of SCBs business in this
jurisdiction is subject to the following conditions:
1.
At the end of a one-year period from the date the SCB starts its trust
functions, at least 25% of its trust accounts must be for the account of nonresidents of the Philippines and that actual foreign exchange had been
remitted into the Philippines to fund such accounts or that the
establishment of such accounts had reduced the indebtedness of residents
(individuals or corporations or government agencies) of the Philippines to
non-residents. At the end of the second year, the above ratio shall be 50%,
which ratio must be observed continuously thereafter;
2. The trust operations of SCB shall be subject to all existing laws, rules and
regulations applicable to trust services, particularly the creation of a Trust
Committee; and
3.
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). These were then remitted outwardly to SCB-Hong Kong and
SCB-Singapore.
However, SCBs operations did not remain unchallenged. On July 18, 1997,
the Investment Capital Association of the Philippines (ICAP) filed with the SEC a
3
[3] SEC.72. In addition to the operations specifically authorized elsewhere in this Act, banking institutions other than building and loan
associations may perform the following services:
a)
Receive in custody funds, documents and valuable objects, and rent safety deposit boxes for the safeguarding of such effects;
b)
Act as financial agent and buy and sell, by order of and for the account of their customers, shares, evidences of indebtedness
and all other types of securities;
c)
Make collections and payments for the account of others and perform such other services for their customers as are not
incompatible with banking business;
d)
Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or administrator of investment
management advisory/consultancy accounts.
The banks shall perform the services permitted under subsections (a), (b), and (c) of this section as depositaries or as
agents. Accordingly they shall keep the funds, securities and other effects which they thus receive duly separated and apart from the
banks own assets and liabilities.
The Monetary Board may regulate the operations authorized by this section in order to insure that said operations do not
endanger the interest of the depositors and other creditors of the banks.
4[4] Now repealed by The General Banking Law of 2000 (Republic Act No. 8791).
complaint alleging that SCB violated the Revised Securities Act, 5[5] particularly
the provision prohibiting the selling of securities without prior registration with the
SEC; and that its actions are potentially damaging to the local mutual fund
industry.
In its answer, SCB denied offering and selling securities, contending that it
has been performing a purely informational function without solicitations for any
of its investment outlets abroad; that it has a trust license and the services it renders
under the Custodianship Agreement for offshore investments are authorized by
Section 726[6] of the General Banking Act; that its clients were the ones who took
the initiative to invest in securities; and it has been acting merely as an agent or
passive order taker for them.
[5] Batas Pambansa Blg. 178. Now repealed by Republic Act No. 8799 (The Securities
Regulation Code), which took effect on July 19. 2000.
On September 2, 1997, the SEC issued a Cease and Desist Order against
SCB, holding that its services violated Sections 4(a) 7[7] and 198[8] of the Revised
Securities Act.
Meantime, the SEC indorsed ICAPs complaint and its supporting documents
to the BSP.
On October 31, 1997, the SEC informed the Secretary of Finance that it
withdrew GTPMF securities from the market and that it will not sell the same
without the necessary clearances from the regulatory authorities.
[8] SEC. 19. Registration of brokers, dealers and salesmen.- No broker, dealer or
salesman shall engage in business in the Philippines as such broker, dealer or salesman or
sell any securities, including securities exempted under this Act, except in exempt
transactions, unless he has been registered as a broker, dealer, or salesman pursuant to the
provisions of this Section.
Meanwhile, on August 17, 1998, 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.
On August 31, 1998, SCB sent a letter to the BSP confirming that it will
withdraw third-party fund products which could be directly purchased by investors.
Meanwhile, on November 27, 2000, the BSP found that SCB failed to
comply with its directive of August 17, 1998. Consequently, it was fined in the
amount of P30,000.00.
The trend in the securities market, however, was bearish and the worth of
petitioners investment went down further to only US$3,000.00.
On October 26, 2001, petitioner learned from Marivel Gonzales, head of the
SCB Legal and Compliance Department, that the latter had been prohibited by the
BSP to sell GPTMF securities. Petitioner then filed with the BSP a letter-complaint
demanding compensation for his lost investment. But SCB denied his demand on
the ground that his investment is regular.
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, docketed as I.S. No. 20031059.
On September 29, 2003, petitioner also filed a complaint for perjury against
private respondents Paul Simon Morris and Marivel Gonzales, docketed as I.S. No.
2003-1278-A.
On December 4, 2003, the SEC issued a Cease and Desist Order against
SCB restraining it from further offering, soliciting, or otherwise selling its
securities to the public until these have been registered with the SEC.
On January 20, 2004, the SEC lifted its Cease and Desist Order and
approved the P7 million settlement offered by SCB. Thereupon, SCB made a
commitment not to offer or sell securities without prior compliance with the
requirements of the SEC.
On February 7, 2004, petitioner filed with the DOJ a complaint for violation
of Section 8.19[9] of the Securities Regulation Code against private respondents,
docketed as I.S. No. 2004-229.
On February 23, 2004, the DOJ rendered its Joint Resolution 10[10]
dismissing petitioners complaint for syndicated estafa in I.S. No. 2003-1059;
private respondents complaint for blackmail and extortion in I.S. No. 2003-1059A; private respondents complaint for blackmail and perjury in I.S. No. 2003-1278;
and petitioners complaint for perjury against private respondents Morris and
Gonzales in I.S. No. 2003-1278-A.
Petitioners motions to dismiss his complaints were denied by the DOJ. Thus,
he filed with the Court of Appeals a petition for certiorari, docketed as CA-G.R. SP
No. 85078. 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. This petition was docketed as CA-G.R. SP No. 87328.
10[10] Vol. I, Rollo, G.R. No. 170602, pp. 451-473.
Petitioner claimed that the DOJ acted with grave abuse of discretion tantamount to
lack or excess of jurisdiction in holding that the complaint should have been filed
with the SEC.
For our resolution is the fundamental issue of whether the Court of Appeals
erred in concluding that the DOJ did not commit grave abuse of discretion in
dismissing petitioners complaint in I.S. 2004-229 for violation of Securities
Regulation Code and his complaint in I.S. No. 2003-1059 for syndicated estafa.
G.R. No 168380
Re: I.S. No. 2004-229
For violation of the Securities Regulation Code
The Court of Appeals held that under the above provision, a criminal
complaint for violation of any law or rule administered by the SEC must first be
filed with the latter. If the Commission finds that there is probable cause, then it
should refer the case to the DOJ. Since petitioner failed to comply with the
foregoing procedural requirement, the DOJ did not gravely abuse its discretion in
dismissing his complaint in I.S. No. 2004-229.
[12] Saavedra, Jr. v. Securities and Exchange Commission, G.R. No. 80879, March 21,
1988, 159 SCRA 57, 62, citing Pambujan Sur United Mine Workers v. Samar Mining Co.
Inc., 94 Phil. 932 (1954).
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
petitioners complaint.
16[16] Ching v. Secretary of Justice, G.R. No. 164317, February 6, 2006, 481 SCRA 609.
would engender a well-founded belief that a crime has been committed and that the
respondent is probably guilty thereof and should be held for trial. It is the public
prosecutor who determines during the preliminary investigation whether probable
cause exists. Thus, the decision whether or not to dismiss the criminal complaint
against the accused depends on the sound discretion of the prosecutor.
18
[18] Glaxosmithkline Philippines, Inc. v. Malik and Ateeque, G.R. No. 166824, August
17, 2006, p. 5, citing Punzalan v. Dela Pea and Cagara. 434 SCRA 601 (2004).
19[19] Alcaraz v. Gonzales, G.R. No. 164715, September 20, 2006, 10, citing
Metropolitan Bank and Trust Company v. Tonda, 392 Phil. 797 (2000).
these are patently shown to have been made with grave abuse of discretion. 20
[20]
[20] Glaxosmithkline Philippines, Inc. v. Malik and Ateeque, supra, p. 5, citing Cabaling
v. People, 376 SCRA 113 (2002).
21[21] Soria v. Desierto, G.R. Nos. 153524-25, January 31, 2005, 450 SCRA 339.
345, citing Duero v. Court of Appeals, 373 SCRA 11 (2002), Perez v. Office of the
Ombudsman, 429 SCRA 357 (2004).
invest in the GTPMF securities. Nor did they act as a syndicate to misappropriate
his money for their own benefit. Rather, they invested it in accordance with his
written instructions. That he lost his investment is not their fault since it was highly
speculative.
Hence, we hold that the Court of Appeals was correct in dismissing the
petition for review against private respondents and in concluding that the DOJ did
not act with grave abuse of discretion tantamount to lack or excess of jurisdiction.
22[22] Vda. de Bagatua v. Revilla and Lombos, 104 Phil. 392 (1958).
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
(On leave)
RENATO C. CORONA
ADOLFO S. AZCUNA
Associate Justice
Associate Justice
CANCIO C. GARCIA
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice