Allied Banking Corporation v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Hyatt Terraces Baguio issued two crossed checks drawn against Allied Banking Corp. (ALLIED) in favor of Meszellen Commodities Services, Inc. (MESZELLEN). These checks were deposited with Commercial Bank and Trust Company (COMTRUST), which stamped a warranty of prior endorsements. After clearing through the Philippine Clearing House Corporation (PCHC), ALLIED paid the proceeds to COMTRUST. Subsequently, MESZELLEN sued ALLIED for damages, alleging that the checks were paid to an unauthorized person. 2. Procedural History: Nearly ten years after MESZELLEN filed its suit, ALLIED filed a third-party complaint against Bank of the Philippine Islands (BPI), as COMTRUST's successor-in-interest, seeking reimbursement. The Regional Trial Court (RTC) initially admitted this complaint. However, BPI moved to dismiss it, arguing lack of jurisdiction and prescription. The RTC granted the motion and dismissed the third-party complaint, a decision later affirmed by the Court of Appeals (CA). The CA found that the cause of action had prescribed as ALLIED could have sued COMTRUST in August 1980 when the checks were paid, and the third-party complaint was filed on January 10, 1991. The CA also noted that allowing the complaint would delay the original case. 3. The Petition: Petitioner ALLIED BANK CORPORATION filed a petition for review on certiorari under Rule 45 of the Rules of Court with the Supreme Court. It assailed the CA's decision, primarily arguing that the CA erred in holding that the cause of action for the third-party complaint had prescribed and that its filing would unduly delay the resolution of the original case. The core issue before the Supreme Court, however, revolved around whether the trial court had jurisdiction over a third-party complaint between banks concerning a check cleared through the PCHC, given the PCHC's arbitration rules.
Issue(s)
Whether the Court of Appeals erred in holding that the cause of action of the third-party complaint had already prescribed. Whether the Court of Appeals erred in holding that the filing of the third-party complaint should be disallowed as it would only delay the resolution of the case. Whether the trial court had jurisdiction over a third-party complaint between banks involving a check cleared through the PCHC.
Ruling
The petition is denied for lack of merit. The Supreme Court affirmed the dismissal of the third-party complaint.
Ratio Decidendi
On the issue of prescription: While the Court did not extensively rule on prescription, it noted that the cause of action for the third-party complaint, based on COMTRUST's warranties made in August 1980, could have accrued at that time. Since the third-party complaint was filed on January 10, 1991, it was filed more than ten years after the alleged breach, potentially barring the claim on grounds of prescription. However, the primary ground for dismissal was the lack of mandatory recourse to PCHC arbitration. On the issue of delay: The Court acknowledged the CA's finding that allowing the third-party complaint, especially after the main case had progressed significantly with several witnesses already presented, would unduly delay the resolution of the original case. This procedural consideration further supported the dismissal of the third-party complaint, aligning with the principle of speedy disposition of cases. On the issue of jurisdiction and mandatory recourse to PCHC: The Court held that banks participating in the PCHC clearing operations are bound by its rules and regulations, which mandate the arbitration of disputes between member banks. Section 38 of the PCHC Clearing House Rules and Regulations explicitly states that any dispute between clearing participants involving a cleared check shall be submitted to the Arbitration Committee. The Court cited Banco de Oro Sayings and Mortgage Bank v. Equitable Banking Corporation and Associated Bank v. Court of Appeals, which upheld the PCHC's primary jurisdiction over such disputes. By participating in PCHC operations, banks give their written and subscribed consent to the arbitration agreement, making it valid and irrevocable except on grounds for revocation of any contract. Therefore, ALLIED BANK's third-party complaint was premature as it failed to first exhaust the arbitral remedies provided by the PCHC. The general rule that a trial court acquiring jurisdiction over the main action also acquires jurisdiction over a third-party complaint does not apply in this specific instance due to the mandatory arbitration clause agreed upon by the member banks.
Main Doctrine
Banks that have agreed to submit their disputes over check clearings to arbitration under the rules of the Philippine Clearing House Corporation (PCHC) must first resort to the PCHC Arbitration Committee before filing a third-party complaint in court, as such recourse is mandatory and failure to do so renders the third-party complaint premature.