Raja:

Usually, PhD faculty teach graduate courses and supervise students' graduate research. Non-PhD faculty usually teach under-graduate courses and sometimes supervise students' research depending on where they are in completing their PhD's. Quality of teaching would depend on the university's evaluation criteria, usually already established and includes student evaluation of the courses the faculty deliver to students.

Many thanks,

Debra

agree with debra in additional to debra's comment in western perspective PhD faculty usually teach first until second year students in undergraduate for foundation and basic subject as they usually have comprehensive and spesific knowledge of a subject, where as non PhD usually teach the upper years. while in asian country eg Indonesia usually PhD Teach third or fourth years undergraduate because they have more experience in thesis construction or streaming subject and non phd usually teach first or second years student.

But sometimes you need to take a look at expertise also sometimes non phd faculty has more enrichment of practical experience or industrial experience compare to PhD. 

so when it goes to applied or practical subject related to industrial needs non PhD is more recomended than PhD Faculty.

On a personal note, it seems that there is no significant difference between the teaching performances of PhD and non-PhD faculty. But of course on research, PhD holders are seen to be better than non-PhD researchers. And as such, if research is to be incorporated on teaching (which should be the case anyway), there lies the true difference.

Teaching performance is not related only to the degree that the instructor holds.  I have been a university administrator for almost 20 years, in charge of different undergraduate and graduate programs, and I can say, as Romer mentioned, that there are no big difference between PhD faculty vs. non-PhD.  In developing countries, there is a very small percentage of faculty members with PhD degrees.  Usually, a masters is the basic requirement for university teaching.  

Pay attention to factors like: number of students per class; type of position (part-time, hourly basis, full-time); number of hours dedicated to academic tasks in addition to class time, such as curriculum development, lesson planning, tutoring students, using a LMS to support teaching; quality of the syllabus; involvement in planning their own course; participation in academic development of the department or academic unit; training in teaching methods provided by the institution; institutional support for writing, participating in academic events, and professional development.

I have found that these factors play a key role in determining the quality of teaching.  You can have an all-PhD faculty, but if there is a weak connection with the university (for example, underpaid, no labor security, no training, no paid hours for academic development), their teaching will not have a great impact.