G.R. No. 180064; September 16, 2013
JOSE U. PUA and BENJAMIN HANBEN U. PUA, Petitioners, vs. CITIBANK, N. A., Respondent.
FACTS
Petitioners Jose U. Pua and Benjamin Hanben U. Pua, depositors of Citibank Binondo, filed a Complaint for declaration of nullity of contract and sums of money with damages (Civil Case No. 19-1159) before the Regional Trial Court (RTC) of Cauayan City, Isabela, Branch 19. They alleged that after being introduced to officers of Citibank Hongkong, they were sold various securities issued by companies in Jersey, Channel Islands, through subscription agreements signed at Citibank Binondo. They later discovered these securities were not registered with the Securities and Exchange Commission (SEC) and the terms were not submitted for SEC evaluation, approval, and registration, in alleged violation of the Securities Regulation Code (Republic Act No. 8799). Respondent Citibank filed a Motion to Dismiss, arguing the complaint should be dismissed for violation of the doctrine of primary jurisdiction, as the issue of whether there was a sale of unregistered securities in violation of the SRC falls within the special competence of the SEC, and thus the complaint should first be filed with the SEC. Petitioners opposed, asserting that Section 63 of the SRC grants the RTC exclusive jurisdiction to hear suits to recover damages under Sections 56 to 61 of the SRC. The RTC denied the motion to dismiss, holding it had jurisdiction over the civil complaint. Respondent’s omnibus motion for reconsideration was also denied. Respondent then filed a petition for certiorari before the Court of Appeals. The CA reversed the RTC, dismissing the complaint for violation of the doctrine of primary jurisdiction, agreeing with respondent and citing Baviera v. Paglinawan which stated all complaints for violations of the SRC should first be filed with the SEC. Petitioners’ motion for reconsideration was denied, prompting this petition.
ISSUE
Whether or not petitioners’ civil action for declaration of nullity of contract and sums of money with damages, based on alleged violations of the Securities Regulation Code, falls within the primary jurisdiction of the SEC, thereby requiring it to be filed first with the SEC instead of directly with the RTC.
RULING
The petition is meritorious. The Supreme Court ruled that petitioners’ civil suit does not fall within the primary jurisdiction of the SEC and was properly filed directly with the RTC. The Court clarified that its prior ruling in Baviera v. Paglinawan, which stated that “all complaints for any violation of the [SRC]… should be filed with the SEC,” applies only to criminal complaints for violations of the SRC, not to civil suits. The Court distinguished the case at bar, as it involves a civil complaint for declaration of nullity of contract and sums of money with damages, not a criminal prosecution. The Court emphasized that jurisdiction is conferred by law and must be explicitly stated. It noted that the SRC contains separate provisions for criminal suits (Section 53) and civil suits (Sections 56 to 61, with Section 63 granting exclusive jurisdiction to the RTC over all suits to recover damages pursuant to those sections). Therefore, the civil nature of petitioners’ action places it under the exclusive jurisdiction of the RTC as expressly provided by Section 63 of the SRC, and the doctrine of primary jurisdiction does not apply to require an initial filing with the SEC. The CA Decision and Resolution were reversed and set aside, and the Orders of the RTC denying the motion to dismiss were reinstated.
