Title
Baviera vs. Paglinawan
Case
G.R. No. 168380
Decision Date
Feb 8, 2007
SCB sold unregistered foreign securities to Baviera, causing losses. DOJ dismissed complaints; Supreme Court upheld, citing SEC's primary jurisdiction and lack of probable cause for estafa.
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Case Digest (G.R. No. 168380)

Facts:

Background of the Case
The case involves Manuel V. Baviera, petitioner, and several respondents, including Standard Chartered Bank (SCB) and its officers. SCB is a foreign banking corporation authorized to operate in the Philippines. The controversy arose from SCB's sale of unregistered foreign securities called "Global Third Party Mutual Funds" (GTPMF) to local investors, including Baviera.

SCB's Operations and Regulatory Violations
SCB was licensed to operate in the Philippines under specific conditions set by the Bangko Sentral ng Pilipinas (BSP). However, SCB failed to comply with these conditions and, beginning in 1996, engaged in the sale of unregistered GTPMF securities to local residents, remitting the funds to its branches in Hong Kong and Singapore. SCB's legal counsel advised the bank to proceed with the sales under the guise of a "custodianship agreement," invoking Section 72 of the General Banking Act as justification.

Investor Complaint and Regulatory Action
In July 1997, the Investment Capital Association of the Philippines (ICAP) filed a complaint with the Securities and Exchange Commission (SEC), alleging that SCB violated the Revised Securities Act by selling unregistered securities. The SEC issued a Cease and Desist Order against SCB on September 2, 1997, and the BSP later fined SCB for non-compliance with its directives.

Petitioner's Investment and Loss
In August 1998, Baviera entered into an Investment Trust Agreement with SCB, purchasing $8,000 worth of GTPMF securities based on SCB’s promise of a 40% return on investment. However, the value of his investment declined to $3,000, and SCB refused to compensate him for the loss.

Legal Proceedings
Baviera filed complaints with the Department of Justice (DOJ), accusing SCB and its officers of syndicated estafa and violations of the Securities Regulation Code. The DOJ dismissed Baviera’s complaints, leading him to file petitions for certiorari with the Court of Appeals, which were also dismissed. Baviera then appealed to the Supreme Court.

Issue:

  1. Whether the DOJ committed grave abuse of discretion in dismissing Baviera’s complaint for violation of the Securities Regulation Code.
  2. Whether the DOJ committed grave abuse of discretion in dismissing Baviera’s complaint for syndicated estafa.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)


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