MANUEL V. BAVIERA,
Petitioner, -
versus - ESPERANZA
PAGLINAWAN, in her capacity as Department of Justice State Prosecutor; LEAH
C. TANODRA-ARMAMENTO, In her capacity as Assistant Chief State Prosecutor and
Chairwoman of Task Force on Business Scam; JOVENCITO R. ZUNO, in his capacity
as Department of Justice Chief State Prosecutor; STANDARD CHARTERED BANK,
PAUL SIMON MORRIS, AJAY KANWAL, SRIDHAR RAMAN,
MARIVEL GONZALES, CHONA REYES, MARIA ELLEN VICTOR, and ZENAIDA IGLESIAS, Respondents. x
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - x |
G.R. No. 168380 |
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MANUEL
V. BAVIERA, Petitioner, -
versus - STANDARD CHARTERED BANK, BRYAN K.
SANDERSON, THE RIGHT HONORABLE LORD STEWARTBY, EVAN MERVYN DAVIES, MICHAEL
BERNARD DENOMA, CHRISTOPHER AVEDIS KELJIK, RICHARD HENRY MEDDINGS, KAI
NARGOLWALA, PETER ALEXANDER SANDS, RONNIE CHI CHUNG CHAN, SIR CK CHOW, BARRY
CLARE, HO KWON PING, RUDOLPH HAROLD PETER ARKHAM, DAVID GEORGE MOIR, HIGH
EDWARD NORTON, SIR RALPH HARRY ROBINS, ANTHONY WILLIAM PAUL STENHAM (Standard
Chartered Bank Chairman, Deputy Chairman, and Members of the Board), SHERAZAM MAZARI (Group Regional Head for Consumer Banking), PAUL SIMON MORRIS, AJAY KANWAL, SRIDHAR RAMAN,
MARIVEL GONZALES, CHONA REYES, ELLEN
VICTOR, RAMONA H. BERNAD, DOMINGO
CARBONELL, JR., and ZENAIDA IGLESIAS (Standard Chartered Bank-Philippines
Branch Heads/Officers),
Respondents.
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G.R. No. 170602 Present: PUNO, c.j.,chairperson, Sandoval-Gutierrez, * AZCUNA,
and GARCIA, JJ. Promulgated: February 8, 2007 |
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D E C I S I O N
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SANDOVAL-GUTIERREZ, J.: |
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Before
us are two consolidated Petitions for Review on Certiorari assailing the
Decisions of the Court of Appeals in CA-G.R. SP No. 87328[1]
and in CA-G.R. SP No. 85078.[2]
The
common factual antecedents of these cases as shown by the records are:
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
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 non-residents 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. The bank shall inform the appropriate supervising and examining department of the BSP at the start of its operations.
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.
SCB’s counsel, Romulo Mabanta Buenaventura Sayoc and Delos
Angeles Law Office, advised the bank to proceed with the selling of the foreign
securities although unregistered with the SEC, under the guise of a
“custodianship agreement;” and should it be questioned, it shall invoke Section
72[3] of
the General Banking Act (Republic Act No.337).[4] In sum, SCB was able to sell GTPMF securities
worth around P6 billion to some 645 investors.
However,
SCB’s operations did not remain unchallenged. On
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 72[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.
On
Revised Securities Act.
Meantime,
the SEC indorsed ICAP’s complaint and its supporting documents to the BSP.
On
Meanwhile,
on
On
However,
notwithstanding its commitment and the BSP directive, SCB continued to offer
and sell GTPMF securities in this country.
This prompted petitioner to enter 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.
Meanwhile,
on P30,000.00.
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
On
For
their part, private respondents filed the following as counter-charges against
petitioner: (1) blackmail and extortion, docketed as I.S. No. 2003-1059-A; and
blackmail and perjury, docketed as I.S. No. 2003-1278.
On
On
Subsequently,
the SEC and SCB reached an amicable settlement.
On
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
On
Meanwhile,
in a Resolution[11] dated
Petitioner’s
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. 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.
On
Petitioner
filed a motion for reconsideration but it was denied in a Resolution dated
Meanwhile,
on
Hence,
the instant petitions for review on certiorari.
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 petitioner’s 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
Section
53.1 of the Securities Regulation Code provides:
SEC.
53. Investigations, Injunctions and Prosecution of Offenses.–
53. 1. The Commission may, in its discretion, make such investigation as it deems necessary to determine whether any person has violated or is about to violate any provision of this Code, any rule, regulation or order thereunder, or any rule of an Exchange, registered securities association, clearing agency, other self-regulatory organization, and may require or permit any person to file with it a statement in writing, under oath or otherwise, as the Commission shall determine, as to all facts and circumstances concerning the matter to be investigated. The Commission may publish information concerning any such violations and to investigate any fact, condition, practice or matter which it may deem necessary or proper to aid in the enforcement of the provisions of this Code, in the prescribing of rules and regulations thereunder, or in securing information to serve as a basis for recommending further legislation concerning the matters to which this Code relates: Provided, however, That any person requested or subpoenaed to produce documents or testify in any investigation shall simultaneously be notified in writing of the purpose of such investigation: Provided, further, That 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: Provided, furthermore, That in instances where the law allows independent civil or criminal proceedings of violations arising from the act, the Commission shall take appropriate action to implement the same: Provided, finally; That the investigation, prosecution, and trial of such cases shall be given priority.
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.
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.[12] 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.
G.R. No. 170602
Re: I.S. No. 2003-1059 for
Syndicated Estafa
Section
5, Rule 110 of the 2000 Rules of Criminal Procedure, as amended, provides that
all criminal actions, commenced by either a complaint or an information, shall
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.[13] This representative of the State is the
public prosecutor, whom this Court described in the old case of Suarez v.
Platon,[14] as:
[T]he representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense a servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffers.
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.[15]
This is done through a preliminary investigation designed to secure the
respondent from hasty, malicious and oppressive prosecution. A preliminary
investigation is essentially an inquiry to determine whether (a) a crime has
been committed; and (b) whether there is probable cause that the accused is
guilty thereof.[16] In Pontejos v. Office of the Ombudsman,[17]
probable cause is defined as such facts and circumstances that 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.
Given
this latitude and authority granted by law to the investigating prosecutor, the
rule in this jurisdiction is that courts will not interfere with the conduct of
preliminary investigations or reinvestigations or in the determination of what
constitutes sufficient probable cause for the filing of the corresponding
information against an offender.[18] Courts are not empowered to substitute their
own judgment for that of the executive branch.[19] Differently stated, as the matter of whether
to prosecute or not is purely discretionary on his part, courts cannot compel a
public prosecutor to file the corresponding information, upon a complaint,
where he finds the evidence before him insufficient to warrant the filing of an
action in court. In sum, the prosecutor’s findings on the existence of
probable cause are not subject to review by the courts, unless these are
patently shown to have been made with grave abuse of discretion.[20]
Grave abuse of discretion is such
capricious and whimsical exercise of judgment on the part of the public officer
concerned which is equivalent to an excess or lack of jurisdiction. The abuse
of discretion must be as patent and gross as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law, or to act
at all in contemplation of law, as where the power is exercised in an arbitrary
and despotic manner by reason of passion or hostility.[21]
In
determining whether the DOJ committed grave abuse of discretion, it is expedient
to know if the findings of fact of herein public prosecutors were
reached in an arbitrary or despotic manner.
The
Court of Appeals held that petitioner’s evidence is insufficient to establish
probable cause for syndicated estafa. There is no showing from the
record that private respondents herein did induce petitioner by false
representations to 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.
Records
show that public respondents examined petitioner’s evidence with care, well
aware of their duty to prevent material damage to his constitutional right to
liberty and fair play. In Suarez previously cited, this Court made it clear
that a public prosecutor’s duty is two-fold. On one hand, he is bound by his
oath of office to prosecute persons where the complainant’s evidence is ample
and sufficient to show prima facie guilt of a crime. Yet, on the
other hand, he is likewise duty-bound to protect innocent persons from
groundless, false, or malicious prosecution.[22]
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.
On petitioner’s complaint
for violation of the Securities Regulation Code, suffice it to state that, as
aptly declared by the Court of Appeals, he should have filed it with the SEC,
not the DOJ. Again, there is no
indication here that in dismissing petitioner’s complaint, the DOJ acted
capriciously or arbitrarily.
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.
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE
CONCUR:
Chief
Justice
Chairperson
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(On leave) RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA Associate Justice |
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CANCIO C. GARCIA Associate Justice
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REYNATO S. PUNO
Chief Justice
* On leave.
[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]
[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] Now
repealed by The General Banking Law of 2000 (Republic Act No. 8791).
[5] Batas Pambansa Blg. 178. Now repealed by Republic Act No. 8799 (The Securities Regulation Code), which took effect on July 19. 2000.
[6] Supra at footnote 3.
[7] SEC. 4. Requirement of registration of securities. – (a) No securities, except of a class exempt under any of the provisions of Section five hereof or unless sold in any transaction exempt under any of the provisions of Section six hereof shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have been registered and permitted to be sold as hereinafter provided.
[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.
[9] Sec. 8. Requirement of Registration of Securities:
8.1.
Securities shall not be sold or offered for sale or distribution within the
[10] Vol. I, Rollo, G.R. No. 170602, pp. 451-473.
[11] Vol. I, Rollo, G.R. No. 168380, pp. 241-43.
[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).
[13] Tan, Jr. v. Gallardo, G.R.
Nos. 41213-14,
[14] 80 Phil. 556 (1940).
[15] Zulueta v. Nicolas, 102 Phil. 944 (1958).
[16] Ching v. Secretary of Justice,
G.R. No. 164317,
[17] G.R. Nos. 158613-14,
[18] Glaxosmithkline
Philippines, Inc. v. Malik and Ateeque, G.R. No. 166824,
[19] Alcaraz v. Gonzales, G.R. No. 164715, September 20, 2006, 10, citing Metropolitan Bank and Trust Company v. Tonda, 392 Phil. 797 (2000).
[20] Glaxosmithkline Philippines, Inc. v. Malik and Ateeque, supra, p. 5, citing Cabaling v. People, 376 SCRA 113 (2002).
[21] Soria
v. Desierto, G.R. Nos. 153524-25,
[22] Vda. de Bagatua v. Revilla and Lombos, 104 Phil. 392 (1958).