Citibank v. Jose U. Pua

Summary

Citibank sold unregistered securities worth US$2 million to Filipino investors through its Manila branch, violating the Securities Regulation Code. The securities, issued by Jersey companies and marketed through Citibank's Hong Kong branch, were not registered with the SEC as required by Philippine law. When the investments became worthless, respondents sued for contract nullity and restitution. The courts at all levels declared the contracts void ab initio under Civil Code provisions regarding contracts contrary to mandatory laws. Citibank was ordered to return all amounts debited from respondents' accounts plus damages authorized under securities law. The Supreme Court affirmed, rejecting Citibank's procedural defenses and finding substantial Philippine nexus despite claims the transactions were foreign. The decision reinforces mandatory registration requirements for securities offered to Filipino investors and demonstrates that sophisticated financial institutions cannot circumvent securities laws through foreign branch structures when actively soliciting Philippine clients.