SECOND DIVISION
[G.R. No. 115412. November 19, 1999]
HOME BANKERS SAVINGS AND TRUST COMPANY, petitioner vs. COURT OF APPEALS and FAR EAST BANK & TRUST COMPANY, respondents.
D E C I S I O N
BUENA
, J.:
This appeal by certiorari
under Rule 45 of the Rules of Court seeks to annul and set aside the decision[1] of the Court of Appeals[2] dated January 21,
1994 in CA-G.R. SP No. 29725, dismissing the petition for certiorari
filed by petitioner to annul the two (2) orders issued by the Regional Trial
Court of Makati[3] in Civil Case No.
92-145, the first, dated April 30, 1992, denying petitioner's motion to dismiss
and the second, dated October 1, 1992 denying petitioner's motion for
reconsideration thereof.
The pertinent facts may
be briefly stated as follows: Victor
Tancuan, one of the defendants in Civil Case No. 92-145, 0issued Home Bankers
Savings and Trust Company (HBSTC) check No. 193498 for P25,250,000.00
while Eugene Arriesgado issued Far East Bank and Trust Company (FEBTC) check
Nos. 464264, 464272 and 464271 for P8,600,000.00, P8,500,000.00
and P8,100,000.00, respectively, the three checks amounting to P25,200,000.00. Tancuan and Arriesgado exchanged each
other's checks and deposited them with their respective banks for
collection. When FEBTC presented
Tancuan's HBSTC check for clearing, HBSTC dishonored it for being "Drawn
Against Insufficient Funds." On October 15, 1991, HBSTC sent Arriesgado's
three (3) FEBTC checks through the Philippine Clearing House Corporation (PCHC)
to FEBTC but was returned on October 18, 1991 as "Drawn Against
Insufficient Funds." HBSTC received the notice of dishonor on October 21,
1991 but refused to accept the checks and on October 22, 1991, returned them to
FEBTC through the PCHC for the reason "Beyond Reglementary Period,"
implying that HBSTC already treated the three (3) FEBTC checks as cleared and
allowed the proceeds thereof to be withdrawn.[4] FEBTC demanded reimbursement for the returned checks
and inquired from HBSTC whether it had permitted any withdrawal of funds
against the unfunded checks and if so, on what date. HBSTC, however, refused to make any reimbursement and to provide
FEBTC with the needed information.
Thus, on December 12,
1991, FEBTC submitted the dispute for arbitration before the PCHC Arbitration
Committee,[5] under the PCHC's Supplementary Rules on Regional
Clearing to which FEBTC and HBSTC are bound as participants in the regional
clearing operations administered by the PCHC.[6]
On January 17, 1992,
while the arbitration proceedings was still pending, FEBTC filed an action for
sum of money and damages with preliminary attachment[7] against HBSTC, Robert Young,
Victor Tancuan and Eugene Arriesgado with the Regional Trial Court of Makati,
Branch 133. A motion to dismiss was
filed by HBSTC claiming that the complaint stated no cause of action and
accordingly “…should be dismissed because it seeks to enforce an arbitral award
which as yet does not exist.”[8] The trial court issued an
omnibus order dated April 30, 1992 denying the motion to dismiss and an order
dated October 1, 1992 denying the motion for reconsideration.
On December 16, 1992,
HBSTC filed a petition for certiorari with the respondent Court of
Appeals contending that the trial court acted with grave abuse of discretion
amounting to lack of jurisdiction in denying the motion to dismiss filed by
HBSTC.
In a Decision[9] dated January 21,
1994, the respondent court dismissed the petition for lack of merit and held
that "FEBTC can reiterate its cause of action before the courts which it
had already raised in the arbitration case"[10] after finding that
the complaint filed by FEBTC "…seeks to collect a sum of money from HBT
[HBSTC] and not to enforce or confirm an arbitral award."[11] The respondent
court observed that "[i]n the Complaint, FEBTC applied for the issuance of
a writ of preliminary attachment over HBT's [HBSTC] property"[12] and citing section
14 of Republic Act No. 876, otherwise known as the Arbitration Law, maintained
that "[n]ecessarily, it has to reiterate its main cause of action for sum
of money against HBT [HBSTC],"[13] and that
"[t]his prayer for conservatory relief [writ of preliminary attachment]
satisfies the requirement of a cause of action which FEBTC may pursue in the
courts."[14]
Furthermore, the
respondent court ruled that based on section 7 of the Arbitration Law and the
cases of National Union Fire Insurance Company of Pittsburg vs.
Slolt-Nielsen Philippines, Inc.,[15] and Bengson
vs. Chan,[16] "…when there
is a condition requiring prior submission to arbitration before the institution
of a court action, the complaint is not to be dismissed but should be suspended
for arbitration."[17] Finding no merit
in HBSTC's contention that section 7 of the Arbitration Law "…contemplates
a situation in which a party to an arbitration agreement has filed a court
action without first resorting to arbitration, while in the case at bar, FEBTC
has initiated arbitration proceedings before filing a court action," the
respondent court held that "…if the absence of a prior arbitration may
stay court action, so too and with more reason, should an arbitration already
pending as obtains in this case stay the court action. A party to a pending arbitral proceeding may
go to court to obtain conservatory reliefs in connection with his cause of
action although the disposal of that action on the merits cannot as yet be
obtained."[18] The respondent
court discarded Puromines, Inc.
vs. Court of Appeals,[19] stating that
"…perhaps Puromines may have been decided on a different
factual basis."[20]
In the instant petition,[21] petitioner
contends that first, "no party litigant can file a non-existent
complaint,"[22] arguing that
"…one cannot file a complaint in court over a subject that is undergoing
arbitration."[23] Second,
petitioner submits that "[s]ince arbitration is a special proceeding by a
clear provision of law,[24] the civil suit filed below is, without a
shadow of doubt, barred by litis pendencia and should be dismissed de
plano insofar as HBSTC is concerned."[25] Third,
petitioner insists that "[w]hen arbitration is agreed upon and suit is
filed without arbitration having been held and terminated, the case that is
filed should be dismissed,"[26] citing Associated Bank vs. Court of Appeals,[27] Puromines, Inc. vs. Court of Appeals,[28] and Ledesma vs. Court of Appeals.[29] Petitioner demurs
that the Puromines ruling was deliberately not followed by the
respondent court which claimed that:
"xxx xxx.
It would really be much easier for Us to rule to dismiss the complainant as the petitioners here seeks to do, following Puromines. But with utmost deference to the Honorable Supreme Court, perhaps Puromines may have been decided on a different factual basis.
xxx xxx."[30]
Petitioner
takes exception to FEBTC's contention that Puromines cannot
modify or reverse the rulings in National Union Fire Insurance Company of
Pittsburg vs. Stolt-Nielsen Philippines, Inc.,[31] and Bengson
vs. Chan,[32] where this Court suspended the action filed pending
arbitration, and argues that "[s]ound policy requires that the conclusion
of whether a Supreme Court decision has or has not reversed or modified [a]
previous doctrine, should be left to the Supreme Court itself; until then, the latest
pronouncement should prevail."[33] Fourth, petitioner alleges that the writ of
preliminary attachment issued by the trial court is void considering that the
case filed before it "is a separate action which cannot
exist,"[34] and "…there is even no need for the attachment
as far as HBSTC is concerned because such automatic debit/credit procedure[35] may be regarded as a security for the transactions
involved and, as jurisprudence confirms, one requirement in the issuance of an
attachment [writ of preliminary attachment] is that the debtor has no
sufficient security."[36] Petitioner asserts further that a writ of preliminary
attachment is unwarranted because no ground exists for its issuance. According to petitioner, "…the only
allegations against it [HBSTC] are that it refused to refund the amounts of the
checks of FEBTC and that it knew about the fraud perpetrated by the other
defendants,"[37] which, at best, constitute only "incidental
fraud" and not causal fraud which justifies the issuance of the writ of
preliminary attachment.
Private respondent FEBTC,
on the other hand, contends that "…the cause of action for collection [of
a sum of money] can coexist in the civil suit and the arbitration
[proceeding]"[38] citing section 7
of the Arbitration Law which provides for the stay of the civil action until an
arbitration has been had in accordance with the terms of the agreement
providing for arbitration. Private
respondent further asserts that following section 4(3), article VIII[39]of the 1987
Constitution, the subsequent case of Puromines does not overturn
the ruling in the earlier cases of National
Union Fire Insurance Company of Pittsburg vs. Stolt-Nielsen Philippines, Inc.[40] and Bengson
vs. Chan,[41] hence, private
respondents concludes that the prevailing doctrine is that the civil action
must be stayed rather than dismissed pending arbitration.
In this petition, the
lone issue presented for the consideration of this Court is:
“WHETHER OR NOT PRIVATE
RESPONDENT WHICH COMMENCED AN ARBITRATION PROCEEDING UNDER THE AUSPICES OF THE
PHILIPPINE CLEARING HOUSE CORPORATION (PCHC) MAY SUBSEQUENTLY FILE A SEPARATE
CASE IN COURT OVER THE SAME SUBJECT MATTER OF ARBITRATION DESPITE THE PENDENCY
OF THAT ARBITRATION, SIMPLY TO OBTAIN THE PROVISIONAL REMEDY OF ATTACHMENT
AGAINST THE BANK, THE ADVERSE PARTY IN THE ARBITRATION PROCEEDINGS."[42]
We find no merit in the
petition. Section 14 of Republic Act
876, otherwise known as the Arbitration Law, allows any party to the
arbitration proceeding to petition the court to take measures to safeguard
and/or conserve any matter which is the subject of the dispute in arbitration,
thus:
Section 14. Subpoena and subpoena duces tecum. - Arbitrators shall have the power to require any person to attend a hearing as a witness. They shall have the power to subpoena witnesses and documents when the relevancy of the testimony and the materiality thereof has been demonstrated to the arbitrators. Arbitrators may also require the retirement of any witness during the testimony of any other witness. All of the arbitrators appointed in any controversy must attend all the hearings in that matter and hear all the allegations and proofs of the parties; but an award by the majority of them is valid unless the concurrence of all of them is expressly required in the submission or contract to arbitrate. The arbitrator or arbitrators shall have the power at any time, before rendering the award, without prejudice to the rights of any party to petition the court to take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. (emphasis supplied)
Petitioner's exposition
of the foregoing provision deserves scant consideration. Section 14 simply grants an arbitrator the
power to issue subpoena and subpoena duces tecum at any time before
rendering the award. The exercise of
such power is without prejudice to the right of a party to file a petition in
court to safeguard any matter which is the subject of the dispute in arbitration. In the case at bar, private respondent filed
an action for a sum of money with prayer for a writ of preliminary
attachment. Undoubtedly, such action
involved the same subject matter as that in arbitration, i.e., the sum of P25,200,000.00
which was allegedly deprived from private respondent in what is known in
banking as a "kiting scheme." However, the civil action was not a
simple case of a money claim since private respondent has included a prayer for
a writ of preliminary attachment, which is sanctioned by section 14 of the
Arbitration Law.
Petitioner cites the
cases of Associated Bank vs. Court of Appeals,[43] Puromines,
Inc. vs. Court of Appeals,[44] and Ledesma
vs. Court of Appeals[45] in contending that
"[w]hen arbitration is agreed upon and suit is filed without arbitration
having been held and terminated, the case that is filed should be
dismissed."[46] However, the said
cases are not in point. In Associated
Bank, we affirmed the dismissal of the third-party complaint filed by
Associated Bank against Philippine Commercial International Bank, Far East Bank
& Trust Company, Security Bank and Trust Company and Citytrust Banking
Corporation for lack of jurisdiction, it being shown that the said parties were
bound by the Clearing House Rules and Regulations on Arbitration of the
Philippine Clearing House Corporation.
In Associated Bank, we declared that:
"xxx xxx. Under the rules and regulations of the
Philippine Clearing House Corporation (PCHC), the mere act of participation of
the parties concerned in its operations in effect amounts to a manifestation of
agreement by the parties to abide by its rules and regulations. As a consequence of such participation, a
party cannot invoke the jurisdiction of the courts over disputes and
controversies which fall under the PCHC Rules and Regulations without first
going through the arbitration processes laid out by the body."[47] (emphasis supplied)
And thus we concluded:
"Clearly
therefore, petitioner Associated Bank, by its voluntary participation and its
consent to the arbitration rules cannot go directly to the Regional Trial Court
when it finds it convenient to do so.
The jurisdiction of the PCHC under the rules and regulations is clear,
undeniable and is particularly applicable to all the parties in the third party
complaint under their obligation to first seek redress of their disputes and
grievances with the PCHC before going to the trial court."[48] (emphasis supplied)
Simply put, participants
in the regional clearing operations of the Philippine Clearing House
Corporation cannot bypass the arbitration process laid out by the body and
seek relief directly from the courts.
In the case at bar, undeniably, private respondent has initiated
arbitration proceedings as required by the PCHC rules and regulations, and
pending arbitration has sought relief from the trial court for measures to
safeguard and/or conserve the subject of the dispute under arbitration, as
sanctioned by section 14 of the Arbitration Law, and otherwise not shown to be
contrary to the PCHC rules and regulations.
Likewise, in the case of
Puromines, Inc. vs. Court of Appeals,[49] we have ruled that:
"In any case, whether the liability of respondent should be based on the sales contract or that of the bill of lading, the parties are nevertheless obligated to respect the arbitration provisions on the sales contract and/or bill of lading. Petitioner being a signatory and party to the sales contract cannot escape from his obligation under the arbitration clause as stated therein."
In Puromines,
we found the arbitration clause stated in the sales contract to be valid and
applicable, thus, we ruled that the parties, being signatories to the sales
contract, are obligated to respect the arbitration provisions on the contract
and cannot escape from such obligation by filing an action for breach of contract
in court without resorting first to arbitration, as agreed upon by the parties.
At this point, we
emphasize that arbitration, as an alternative method of dispute resolution, is
encouraged by this Court. Aside from
unclogging judicial dockets, it also hastens solutions especially of commercial
disputes.[50] The Court looks with favor upon such amicable
arrangement and will only interfere with great reluctance to anticipate or nullify
the action of the arbitrator.[51]
WHEREFORE, premises considered, the petition is hereby
DISMISSED and the decision of the court a quo is AFFIRMED.
SO ORDERED.
Bellosillo, (Chairman),
Mendoza, Quisumbing, and De Leon, Jr., JJ. concur.
[1] Penned by Justice Cezar D. Francisco and
concurred in by Justices Manuel C. Herrera and Cancio C. Garcia.
[2] Special Fifth Division.
[3] Branch 133.
Presided by Judge Buenaventura J. Guerrero, now Associate Justice of the
Court of Appeals.
[4] Rollo, p. 128.
[5] Docketed
as PCHC Arbitration Case No. 91-069.
[6] Ibid.,
at p. 129.
[7] Docketed as Civil Case No. 92-145.
[8] Rollo, p. 131.
[9] Ibid., at p. 127.
[10] Ibid., at p. 135.
[11] Ibid., at p. 131.
[12] Ibid.,
at p. 136.
[13] Ibid.
[14] Ibid,
at p. 138.
[15] 184
SCRA 682 (1990).
[16] 78 SCRA 113 (1977).
[17] Rollo, p. 139.
[18] Ibid., at p. 140.
[19] 220 SCRA 281 (1993).
[20] Rollo, p. 141.
[21] Petitioner's
memorandum was filed on February 17, 1995.
[22] Rollo,
p. 314.
[23] Ibid., at p. 315.
[24]
Petitioner referring to section 22 of Republic Act No. 876.
[25] Rollo, p. 318.
[26] Ibid.
[27] 233 SCRA 137 (1994).
[28] 220
SCRA 281 (1993).
[29] 211 SCRA 753 (1992).
[30] Rollo, p. 141.
[31] 184 SCRA 682 (1990).
[32] 78 SCRA 113 (1977).
[33] Rollo, p. 320.
[34] Ibid., at p. 323.
[35] Under the arbitration system of the PCHC, an
award results in a mere automatic debit/credit procedure.
[36] Rollo, p. 324. Citation omitted.
[37] Ibid.
[38] Ibid.,
p. 278.
[39] Article VIII,
section 4(3) provides:
"xxx xxx; Provided, that no doctrine or principle of
law laid down by the court in a decision rendered en banc or in division
may be modified or reversed except by the court sitting en banc."
[40] 184
SCRA 682 (1990).
[41] 78
SCRA 113 (1977).
[42] Rollo, pp. 310-311.
[43] 233 SCRA 137 (1994).
[44] 220 SCRA 281 (1993).
[45] 211 SCRA 753 (1992). This case involves the application of the Katarungang
Pambarangay Law (P.D. 1508).
[46] Rollo, p. 318.
[47] Associated Bank vs. Court of Appeals, 233 SCRA
137, 142-143 (1994).
[48] Ibid., at p. 145.
[49] 220 SCRA 281 (1993).
[50] Allied Banking Corporation vs. Court of Appeals,
294 SCRA 803, 812 (1998).
[51] Puromines, Inc. vs. Court of Appeals, 220
SCRA 281, 290 (1993).