Thursday, January 26, 2012

Baviera v. Paglinawan, et al., G.R. No. 168380, February 8, 2007

Facts: SCB acted as a stock broker, soliciting from local residents foreign securities called GTPMF. These securities were not registered with the SEC and were then remitted outwardly to SCB-Hong Kong and SCB-Singapore. The Investment Capital Association of the Philippines (ICAP) filed with the SEC a complaint alleging that SCB violated the Revised Securities Act, 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. Notwithstanding the BSP directive, SCB continued to offer and sell GTPMF securities in this country. Petitioner learned that the SCB had been prohibited by the BSP to sell GPTMF securities. Petitioner filed with the DOJ a complaint for violation of Section 8.1 of the Securities Regulation Code against private respondents but was denied holding that it should have been filed with the SEC. 

Issue: Whether the SEC has jurisdiction over the case.

Held: Yes. 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.

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