G.R. No. 180064 - Pua vs. Citibank, N.A.

On December 2, 2002, petitioners Jose U. Pua and Benjamin Hanben U. Pua filed a complaint before the Regional Trial Court (RTC) of Cauayan City, Isabela, Branch 19, seeking a declaration of nullity of contract and recovery of sums of money with damages.
The complaint arose from their longstanding relationship as depositors at Citibank Binondo since 1996, highlighting their existing financial dealings with the bank.

In 1999, Guada Ang, the Branch Manager of Citibank Binondo, invited petitioner Jose to a dinner party at the Manila Hotel where he was introduced to officers and employees of Citibank Hongkong.
Subsequently, Chingyee Yau, Vice-President of Citibank Hongkong, engaged petitioner Jose in transactions involving the sale of securities issued by various public limited companies in Jersey, Channel Islands.
It was alleged that as a condition for purchasing said securities, Jose was required to open an account with Citibank Hongkong.
The subscription agreements for the sale and purchase of these securities were effected at Citibank Binondo in the presence of its officers and employees.
Petitioners later discovered that the securities sold were not registered with the Securities and Exchange Commission (SEC) and that the related terms and conditions had not been submitted to the SEC for evaluation, approval, or registration.

Petitioners asserted that the sale of unregistered securities violated Republic Act No. 8799, the Securities Regulation Code.
They challenged the validity of the subscription agreements on the grounds that the transactions were illegal and contrary to public policy.

Respondent Citibank, N.A. filed a motion to dismiss the petition, arguing that the complaint should be dismissed for violation of the doctrine of primary jurisdiction.
It contended that since the case raised issues regarding potential violations of the SRC—specifically, the sale of unregistered securities—the matter should have first been filed with and investigated by the SEC, which is designated as the primary agency for such concerns.

The RTC, in an Order dated May 14, 2003, denied the motion to dismiss, finding that the complaint, being a civil suit for declaration of nullity and recovery of damages, fell within its jurisdiction despite involving the sale of securities.
A subsequent RTC Order dated July 16, 2003, likewise denied respondent’s omnibus motion for reconsideration regarding the prior ruling.
Dissatisfied with the RTC’s rulings, respondent elevated the matter to the Court of Appeals (CA) through a petition for certiorari.

On May 21, 2007, the CA reversed the RTC’s decisions and dismissed petitioners’ complaint for violation of the doctrine of primary jurisdiction, holding that the SRC granted exclusive jurisdiction to the SEC for addressing alleged violations involving unregistered securities.
The CA relied on the Baviera v. Paglinawan case to substantiate the argument that complaints involving violations of the SRC should initially be filed with the SEC.
Petitioners sought reconsideration through a CA Resolution dated October 16, 2007, which was subsequently denied, prompting the present petition for review before the Supreme Court.

Whether the petitioners’ civil action for damages and declaration of nullity of contract related to the alleged sale of unregistered securities falls within the exclusive original jurisdiction of the Regional Trial Court as provided by the Securities Regulation Code (SRC).
Whether the doctrine of primary jurisdiction, which directs certain cases to the SEC, should apply to civil suits or is limited only to criminal cases involving violations of the SRC.

Whether the precedent set in Baviera v. Paglinawan, which mandates that complaints involving SRC violations be first filed with the SEC, extends to civil suits for recovery of damages and declarations of nullity as opposed to solely criminal cases.